Addendum 1 to Correspondence Filing March 27, 2007
P5I - 1
PINNACLE V VARIABLE ANNUITY
MAY 1, 2007
INTEGRITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT II
This prospectus describes the Pinnacle V flexible premium variable annuity
contract and the Investment Options available under the contract. You may invest
your contributions in any of the Investment Options listed below.
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DWS INVESTMENT VIT FUND TOUCHSTONE VARIABLE SERIES TRUST
- ----------------------- --------------------------------
DWS Small Cap Index VIP Fund, Class B Touchstone VST Balanced Fund
Touchstone VST Baron Small Cap Fund
FIDELITY VIP TRUST - ALL SERVICE CLASS 2 Touchstone VST Core Bond Fund
- ---------------------------------------- Touchstone VST Eagle Capital Appreciation Fund
Fidelity VIP Asset ManagerSM Portfolio Touchstone VST Enhanced Dividend 30 Fund
Fidelity VIP Balanced Portfolio Touchstone VST Growth & Income Fund
Fidelity VIP Contrafund(R) Portfolio Touchstone VST High Yield Fund
Fidelity VIP Disciplined Small Cap Touchstone VST Mid Cap Growth Fund
Fidelity VIP Dynamic Capital Appreciation Portfolio Touchstone VST Money Market Fund, Service Class
Fidelity VIP Equity-Income Portfolio Touchstone VST Third Avenue Value Fund
Fidelity VIP Freedom 2010 Portfolio Touchstone VST Value Plus Fund
Fidelity VIP Freedom 2015 Portfolio Touchstone VST Aggressive ETF Fund, Service Class
Fidelity VIP Freedom 2020 Portfolio Touchstone VST Conservative ETF Fund, Service Class
Fidelity VIP Freedom 2025 Portfolio Touchstone VST Enhanced ETF Fund, Service Class
Fidelity VIP Freedom 2030 Portfolio Touchstone VST Moderate ETF Fund, Service Class
Fidelity VIP Growth Portfolio
Fidelity VIP Growth & Income Portfolio VAN KAMPEN LIFE INVESTMENT TRUST (LIT) AND
Fidelity VIP Growth Opportunities Portfolio ------------------------------------------
Fidelity VIP High Income Portfolio UNIVERSAL INSTITUTIONAL FUNDS (UIF) - ALL CLASS II
Fidelity VIP Index 500 Portfolio --------------------------------------------------
Fidelity VIP Investment Grade Bond Portfolio Van Kampen LIT Comstock Portfolio
Fidelity VIP Mid Cap Portfolio Van Kampen LIT Strategic Growth Portfolio
Fidelity VIP Overseas Portfolio Van Kampen UIF Emerging Markets Debt Portfolio
Van Kampen UIF Emerging Markets Equity Portfolio
FRANKLIN TEMPLETON VIP TRUST - ALL CLASS 2 Van Kampen UIF U.S. Real Estate Portfolio
FTVIPT Franklin Growth and Income Securities Fund
FTVIPT Franklin Income Securities Fund FIXED ACCOUNTS
FTVIPT Franklin Large Cap Growth Securities Fund --------------
FTVIPT Franklin Small Cap Value Securities Fund Guaranteed Rate Options
FTVIPT Mutual Shares Securities Fund Systematic Transfer Option
FTVIPT Templeton Foreign Securities Fund
FTVIPT Templeton Growth Securities Fund
- ----------------------------------------------------------------- ---------------------------------------------------------------
This prospectus contains information about the contract that you should know
before investing. You should read this prospectus and any supplements, and
retain them for future reference.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED THAT THIS PROSPECTUS IS ADEQUATE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
THIS ANNUITY IS NOT A BANK PRODUCT AND IS NOT AN OBLIGATION OF, NOR GUARANTEED
BY, THE FINANCIAL INSTITUTION WHERE IT IS OFFERED. IT IS NOT INSURED BY THE
FDIC, NCUSIF OR OTHER FEDERAL ENTITY. IT IS SUBJECT TO INVESTMENT RISKS,
INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED.
P51 - 1
A registration statement relating to this contract, which includes a Statement
of Additional Information (SAI) dated May 1, 2007, has been filed with the
Securities and Exchange Commission. The SAI is incorporated by reference into
this prospectus. A free copy of the SAI is available by sending in the form at
the bottom of this page, or by writing or calling our Administrative Office
listed in the Glossary. The table of contents for the SAI is found in Part 9 of
this prospectus.
You can review and copy information about this annuity contract at the SEC's
Public Reference Room in Washington, D.C. For hours of operation of the Public
Reference Room, please call 202-551-8090. You may also obtain information about
annuity contract on the SEC's Internet site at http://www.sec.gov. Copies of
that information are also available, after paying a duplicating fee, by
electronic request to publicinfo@sec.gov or by writing the SEC's Public
Reference Section, 100 F. Street NE, Washington, D.C. 20459-0102.
- --------------------------------------------------------------------------------
We offer a contract with lower expenses that is otherwise substantially similar
to this one. This contract's higher expenses are related to factors that include
additional features and higher commissions or other expenses paid on this
contract.
This prospectus does not constitute an offering in any jurisdiction in which
such offering may not lawfully be made. No person is authorized to make any
representations in connection with this offering other than those contained in
this prospectus.
Not all terms, conditions, benefits, programs, features and Investment Options
are available or approved for use in every state. For more information, contact
your financial advisor or our Administrative Office listed in the Glossary.
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iShares is a registered mark of Barclays Global Investors, N.A. (BGI). All other
trademarks, service marks or registered trademarks are the property of their
respective owners. BGI's only relationship to Integrity is the licensing of
certain trademarks and trade names of BGI. Integrity's variable annuity products
are not sponsored, endorsed, sold or promoted by BGI. BGI makes no
representations or warranties to the owners of Integrity's variable annuity
products or any member of the public regarding the advisability of investing in
them. BGI has no obligation or liability in connection with the operation,
marketing or trading of Integrity's variable annuity products.
- --------------------------------------------------------------------------------
TO REQUEST A COPY OF THE STATEMENT OF ADDITIONAL INFORMATION,
TEAR OFF THIS CARD AND MAIL IT TO US.
[FORM TO BE INSERTED]
P51 - 2
TABLE OF CONTENTS
[PAGE NUMBERS WILL BE ADDED IN A FILING UNDER RULE 485(B) IN APRIL, 2007]
PAGE P5I-
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GLOSSARY 5
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PART 1 - FEES AND EXPENSE TABLE AND SUMMARY
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Contract Owner Transaction Expenses
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Annual Administrative Charge
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Separate Account Annual Expenses
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Total Annual Portfolio Operating Expenses
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Examples
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Accumulation Unit Values
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Summary of Contract
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Investment Goals and Risks
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Your Rights and Benefits
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Account Value and Surrender Value
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Your Right to Revoke (Free Look Period)
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How Your Contract is Taxed
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PART 2 - INTEGRITY AND THE SEPARATE ACCOUNT
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Integrity Life Insurance Company
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Separate Account II and the Variable Account Options
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Distribution of Variable Annuity Contracts
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Changes In How We Operate
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PART 3 - YOUR INVESTMENT OPTIONS
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The Variable Account Options
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The Fixed Accounts
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PART 4 - DEDUCTIONS AND CHARGES
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Mortality and Expenses Risk Charge
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Annual Administrative Charge
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Reduction or Elimination of Mortality and Expense Risk or Administrative Charges
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Portfolio Charges
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Withdrawal Charge
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Reduction or Elimination of the Withdrawal Charge
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Hardship Waiver
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Commission Allowance and Additional Payments to Distributors
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Optional Benefit Charges
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Transfer Charge
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Tax Reserve
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State Premium Tax
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PART 5 - TERMS OF YOUR VARIABLE ANNUITY
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Your Contributions
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Units in Our Separate Account
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How We Determine Unit Value
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Transfers
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Excessive Trading
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Specific Notice Regarding the Use of this Annuity for Market Timing
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Withdrawals
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Assignments
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Death Benefit Paid on Death of Annuitant
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Distribution on Death of Owner
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Death Claims
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Spousal Continuation
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Retirement Date and Annuity Benefit
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Annuity Payments
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Timing of Payment
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How You Make Requests and Give Instructions
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P51 - 3
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PART 6 - OPTIONAL BENEFITS
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Guaranteed Minimum Accumulation Benefit Rider
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Guaranteed Minimum Withdrawal Benefit Rider
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Enhanced Earnings Benefit Rider
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PART 7 - VOTING RIGHTS
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How Portfolio Shares Are Voted
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How We Determine Your Voting Shares
- ---------------------------------------------------------------------------------------------- ---------------
Separate Account Voting Rights
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PART 8 - TAX ASPECTS OF THE CONTRACT
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Introduction
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Your Contract is an Annuity
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Taxation of Annuities Generally
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Tax-Favored Retirement Programs
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Federal and State Income Tax Withholding
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Impact of Taxes on the Company
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Transfers Among Investment Options
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PART 9 - ADDITIONAL INFORMATION
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Systematic Withdrawal Program
- ---------------------------------------------------------------------------------------------- ---------------
Income Plus Withdrawal Program
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Choices Plus Required Minimum Distribution Program
- ---------------------------------------------------------------------------------------------- ---------------
Dollar Cost Averaging
- ---------------------------------------------------------------------------------------------- ---------------
Systematic Transfer Program
- ---------------------------------------------------------------------------------------------- ---------------
Customized Asset Rebalancing
- ---------------------------------------------------------------------------------------------- ---------------
Systematic Contributions
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Legal Proceedings
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Table of Contents of Statement of Additional Information
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PART 10 - PRIOR CONTRACTS
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APPENDIX A - FINANCIAL INFORMATION FOR SEPARATE ACCOUNT II (UNITS AND VALUES)
- ---------------------------------------------------------------------------------------------- ---------------
APPENDIX B - ILLUSTRATION OF A MARKET VALUE ADJUSTMENT
- ---------------------------------------------------------------------------------------------- ---------------
APPENDIX C - GUARANTEED MINIMUM WITHDRAWAL BENEFIT EXAMPLES
- ---------------------------------------------------------------------------------------------- ---------------
APPENDIX D - ENHANCED EARNINGS BENEFIT CALCULATION EXAMPLE
- ---------------------------------------------------------------------------------------------- ---------------
- ---------------------------------------------------------------------------------------------- ---------------
P51 - 4
GLOSSARY
ACCOUNT VALUE - the value of your contract, which consists of the values of your
Investment Options added together.
ADJUSTED ACCOUNT VALUE - your Account Value increased or decreased by any Market
Value Adjustment made to your Guaranteed Rate Option.
ADMINISTRATIVE OFFICE - Integrity Life Insurance Company, P.O. Box 5720,
Cincinnati, Ohio 45201-5720. Our express mail address is Integrity Life
Insurance Company, 400 Broadway, Cincinnati, Ohio 45202-3341. You may also call
us at 1-800-325-8583.
ANNUITANT - the person whose life is used to determine the amount of the Annuity
Benefit. The Annuitant must be a natural person, and cannot be changed after the
Contract Date.
ANNUITY BENEFIT - payments beginning on your Retirement Date that you may elect
instead of a lump sum.
BUSINESS DAY - any day that the New York Stock Exchange is open.
CONTRACT ANNIVERSARY - occurs once annually on the same day as the Contract
Date.
CONTRACT DATE - the date we issue you the contract. It is shown on the schedule
page of your contract.
CONTRACT YEAR - a year that starts on your Contract Date or any Contract
Anniversary.
DEATH BENEFIT - benefit paid to a named Annuitant's beneficiary on the death of
the Annuitant.
DISTRIBUTION ON DEATH - a distribution paid to a named owner's beneficiary on
the death of the owner.
ENHANCED EARNINGS BENEFIT (EEB) - an optional Death Benefit.
FIXED ACCOUNTS - Guaranteed Rate Options and the Systematic Transfer Option.
FREE WITHDRAWAL AMOUNT - the amount you may withdraw in any Contract Year
without paying withdrawal charges.
GENERAL ACCOUNT - the account that contains all of our assets other than those
held in Separate Accounts.
GUARANTEED MINIMUM ACCUMULATION BENEFIT (GMAB) - an optional benefit that
provides a guaranteed minimum future value of amounts invested under a GMAB
Rider.
GMAB INVESTMENT OPTIONS - Investment Options available for contributions
under the GMAB Rider
GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) - an optional benefit that provides
a guaranteed minimum value will be available for withdrawal when invested under
a GMWB Rider.
GMWB INVESTMENT OPTIONS - Investment Options available for contributions
under the GMWB Rider
GUARANTEED RATE OPTION (GRO) - a Fixed Account which offers Guarantee Periods of
two, three, five, seven and ten years and locks in a fixed annual effective
interest rate.
GUARANTEE PERIOD - the length of time from the date of your contribution
into a GRO, until the GRO matures.
MARKET VALUE ADJUSTMENT (MVA) - an upward or downward adjustment made to
the value of your
P51 - 5
GRO for withdrawals or transfers made from the GRO before the end of the
Guarantee Period.
INVESTMENT OPTIONS - Variable Account Options and Fixed Accounts, collectively.
PORTFOLIO - a mutual fund in which a Variable Account Option invests.
RETIREMENT DATE - the date you choose to begin your Annuity Benefit or receive a
lump sum payment.
RIDER - a supplement to your contract that provides optional benefit at an
additional cost.
SEPARATE ACCOUNT - Separate Account II of Integrity Life Insurance Company. Its
assets are segregated by Integrity and invested in Variable Account Options.
SURRENDER VALUE - your Adjusted Account Value reduced by any withdrawal charge,
pro rata annual administrative charges and optional benefit charges.
SYSTEMATIC TRANSFER OPTION (STO) - a Fixed Account that accepts new
contributions, which must be transferred from the STO into other Investment
Options within either a six or twelve month period. The STO provides a
guaranteed fixed interest rate that is effective for the STO period selected.
UNIT - measure of your ownership interest in a Variable Account Option.
UNIT VALUE - value of each Unit calculated on any Business Day.
VARIABLE ACCOUNT OPTIONS - Investment Options available to you under the
contract, other than the Fixed Accounts. Each Variable Account Option invests in
a corresponding Portfolio with the same name.
P51 - 5
PART 1 - FEES AND EXPENSE TABLES AND SUMMARY
The following tables describe the fees and expenses that you will pay when
buying, owning, withdrawing from and surrendering the contract.(1)
The first table describes the fees and expenses that you will pay at the time
you buy the contract, withdraw from or surrender the contract, or transfer cash
value among Investment Options. State premium tax may also be deducted.(2)
CONTRACT OWNER TRANSACTION EXPENSES
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Maximum Deferred Sales Load (Withdrawal Charge) as a percentage of contributions(3) 8%
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Transfer Charge (for each transfer after 12 transfers in one Contract Year)(4) $20
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The following tables describe the fees and expenses that you will pay
periodically during the time that you own the contract, not including Total
Annual Portfolio Operating Expenses.
ANNUAL ADMINISTRATIVE CHARGE
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Annual Administrative Charge(5) $30
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SEPARATE ACCOUNT ANNUAL EXPENSES as a percentage of value charged
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Mortality and Expense Risk Charge(6) 1.55%
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Optional Enhanced Earnings Benefit Charge (maximum charge)(2) 0.50%
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Optional Guaranteed Minimum Accumulation Benefit Charge(3) 0.60%
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Optional Guaranteed Minimum Withdrawal Benefit Charge(4) 0.60%
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Highest Possible Total Separate Account Annual Expenses(5) 2.05%
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(1) Expenses for prior versions of the contract are located in Part 10, Prior
Contracts
(2) State premium taxes currently range from 0 to 4%
(3) Withdrawal charges decrease based on the age of each contribution. See Part
4
(4) Does not apply to transfers made in the Dollar Cost Averaging, Customized
Asset Rebalancing, or Systematic Transfer programs
(5) This charge will be waived if the Account Value is at least $50,000 on the
last day of the Contract Year
(6) Assessed daily on the amount allocated to the Variable Account Options
(7) Assessed quarterly to the Account Value and is based on the Annuitant's age
on the Contract Date:
-------------------- ------------------------------ -----------------------------------------
Age Charge at annual effective Total Charge to Variable Account
rate Options
-------------------- ------------------------------ -----------------------------------------
59 or less 0.20% 1.75%
-------------------- ------------------------------ -----------------------------------------
60-69 0.40% 1.95%
-------------------- ------------------------------ -----------------------------------------
70-79 0.50% 2.05%
-------------------- ------------------------------ -----------------------------------------
(8) Assessed daily on the amount allocated to your GMAB Investment Options
(9) Assessed annually based on the Adjusted GWB. See Part 6
(10) You may elect only one of the optional benefits: EEB, GMAB or the GMWB.
Therefore the highest possible total separate account annual charges
reflect the election of one of the two benefits with the higher cost.
P51 - 7
The following table shows the total operating expenses charged by the Portfolios
that you will pay periodically during the time you own the contract. More detail
concerning each Portfolio's fees and expenses is contained in the prospectus for
each Portfolio. The range of expenses (prior to reimbursements and fee waivers)
that are deducted from the Portfolios' assets, including management fees,
distribution or 12b-1 fees and other expenses are:
Minimum: 0.35% Maximum: 1.98%
--------------
TOTAL ANNUAL PORTFOLIO OPERATING EXPENSES
Gross Portfolio annual expenses prior to any waivers and reimbursements as a
percentage of average net assets in each Portfolio:
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MANAGE- ACQUIRED TOTAL
PORTFOLIO MENT 12B-1 OTHER FUND ANNUAL
FEES FEE EXPENSES EXPENSES EXPENSES
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
DWS Small Cap Index VIP Fund, Class B(1) 0.45% 0.25% 0.05% N/A 0.75%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Asset Manager Portfolio, Service Class 2 (2) 0.52% 0.25% 0.15% N/A 0.92%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Balanced Portfolio, Service Class 2 (3) 0.42% 0.25% 0.20% N/A 0.87%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Contrafund Portfolio, Service Class 2 (2) 0.57% 0.25% 0.09% N/A 0.91%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Disciplined Small Cap Portfolio, Service Class 2 4, (5) 0.71% 0.25% 0.73% N/A 1.69%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Dynamic Capital Appreciation Portfolio, Service Class 2 (3) 0.56% 0.25% 0.24% N/A 1.05%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Equity-Income Portfolio, Service Class 2 0.47% 0.25% 0.10% N/A 0.82%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Freedom 2010 Portfolio, Service Class 2 N/A 0.25% N/A 0.62% 0.87%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Freedom 2015 Portfolio, Service Class 2 N/A 0.25% N/A 0.66% 0.91%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Freedom 2020 Portfolio, Service Class 2 N/A 0.25% N/A 0.70% 0.95%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Freedom 2025 Portfolio, Service Class 2 N/A 0.25% N/A 0.71% 0.96%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Freedom 2030 Portfolio, Service Class 2 N/A 0.25% N/A 0.74% 0.99%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Growth Portfolio, Service Class 2 (2) 0.57% 0.25% 0.12% N/A 0.94%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Growth & Income Portfolio, Service Class 2 2 0.47% 0.25% 0.13% N/A 0.85%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Growth Opportunities Portfolio, Service Class 2 (3) 0.57% 0.25% 0.17% N/A 0.99%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP High Income Portfolio, Service Class 2 0.57% 0.25% 0.15% N/A 0.97%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Index 500 Portfolio, Service Class 2 (6) 0.10% 0.25% 0.00% N/A 0.35%
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Fidelity VIP Investment Grade Bond Portfolio, Service Class 2 0.32% 0.25% 0.12% N/A 0.69%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Fidelity VIP Mid Cap Portfolio, Service Class 2 (2) 0.57% 0.25% 0.11% N/A 0.93%
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Fidelity VIP Overseas Portfolio, Service Class 2 (2) 0.72% 0.25% 0.16% N/A 1.13%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
FTVIPT Franklin Growth and Income Securities Fund, Class 2 (7) 0.49% 0.25% 0.05% N/A 0.79%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
FTVIPT Franklin Income Securities Fund, Class 2 (7) 0.46% 0.25% 0.01% N/A 0.72%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
FTVIPT Franklin Large Cap Growth Securities Fund, Class 2 (7) 0.72% 0.25% 0.04% N/A 1.01%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
FTVIPT Franklin Small Cap Value Securities Fund, Class 2 (9) 0.51% 0.25% 0.17% 0.03%(8) 0.96%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
FTVIPT Mutual Shares Securities Fund, Class 2 0.60% 0.25% 0.21% N/A 1.06%
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FTVIPT Templeton Foreign Securities, Class 2 (10) 0.63% 0.25% 0.15% 0.03%(8) 1.06%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
FTVIPT Templeton Growth Securities, Class 2 (7) 0.74% 0.25% 0.04% N/A 1.03%
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Touchstone VST Balanced Fund(11) 0.80% 0.00% 0.53% N/A 1.33%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Baron Small Cap Fund(11) 1.05% 0.00% 0.50% N/A 1.55%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Core Bond Fund(11) 0.55% 0.00% 0.46% N/A 1.01%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Eagle Capital Appreciation Fund(11) 0.75% 0.00% 0.48% 0.01% 1.23%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Enhanced Dividend 30 Fund(11) 0.65% 0.00% 0.55% N/A 1.20%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Growth & Income Fund(11) 0.80% 0.00% 0.51% 0.02% 1.31%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST High Yield Fund(11) 0.50% 0.00% 0.48% N/A 0.98%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Mid Cap Growth Fund(11) 0.80% 0.00% 0.48% N/A 1.28%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Money Market Fund, Service Class(11) 0.18% 0.25% 0.25% N/A 0.68%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Third Avenue Value Fund(11) 0.79% 0.00% 0.36% 0.02% 1.15%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Value Plus Fund(11) 0.75% 0.00% 0.69% 0.01% 1.44%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Aggressive ETF Fund, Service Class11, (12) 0.40% 0.25% 0.53% 0.20% 1.18%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Conservative ETF Fund, Service Class11, (12) 0.40% 0.25% 0.76% 0.18% 1.41%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
P51 - 8
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
MANAGE- ACQUIRED TOTAL
PORTFOLIO MENT 12B-1 OTHER FUND ANNUAL
FEES FEE EXPENSES EXPENSES EXPENSES
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Enhanced ETF Fund, Service Class 11, (12) 0.40% 0.25% 0.20% 0.26% 0.85%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Touchstone VST Moderate ETF Fund, Service Class11, (12) 0.40% 0.25% 0.37% 0.20% 1.02%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Van Kampen LIT Comstock Portfolio, Class II 0.56% 0.25% 0.03% N/A 0.84%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Van Kampen LIT Strategic Growth Portfolio, Class II 0.70% 0.25% 0.08% N/A 1.03%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Van Kampen UIF Emerging Markets Debt Portfolio, Class II(1)(3) 0.75% 0.35% 0.35% N/A 1.45%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Van Kampen UIF Emerging Markets Equity Portfolio, Class II(13) 1.23% 0.35% 0.40% N/A 1.98%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
Van Kampen UIF U.S. Real Estate Portfolio, Class II(13) 0.73% 0.35% 0.28% N/A 1.36%
- ------------------------------------------------------------------------ ------------- --------- ----------- ----------- -----------
(1) Includes 0.10% administration fee.
(2) A portion of the brokerage commissions that each Fidelity VIP Portfolio
pays may be reimbursed and used to reduce that portfolio's expenses. In
addition, through arrangements with the Portfolios' custodian, credits
realized as a result of uninvested cash balances are used to reduce the
portfolio's custodian expenses. Including these reductions, the total class
operating expenses for these Portfolios would have been as set forth in the
table in below. These offsets may be discontinued at any time.
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Fidelity VIP Portfolio Net Total Expenses after Arrangements
Described Above
---------------------------------------------------------------- ---------------------------------------
Asset Manager, Service Class 2 0.90%
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Contrafund, Service Class 2 0.90%
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Growth, Service Class 2 0.92%
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Growth & Income, Service Class 2 0.84%
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Mid Cap, Service Class 2 0.91%
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Overseas, Service Class 2 1.06%
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(3) A portion of the brokerage commissions that the portfolio pays may be
reimbursed and used to reduce the portfolio's expenses. Including this
reduction, the total class operating expenses for these portfolios would
have been as set forth in the table below. These offsets may be
discontinued at any time.
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Fidelity VIP Portfolio Net Total Expenses after Arrangements
Described Above
---------------------------------------------------------------- ---------------------------------------
Balanced, Service Class 2 0.84%
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Dynamic Capital Appreciation, Service Class 2 1.04%
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Growth Opportunities, Service Class 2 0.94%
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(4) The portfolio's manager has voluntarily agreed to reimburse the class to
the extent that the total operating expenses (excluding interest, taxed
certain security lending costs, brokerage commissions and extraordinary
expenses) as a percentage of its average net assets, exceed 1.25%. This
arrangement can be discontinued by the fund's manger at any time.
(5) Through arrangements with the Portfolios' custodian, credits realized as a
result of uninvested cash balances are used to reduce the portfolio's
custodian expenses. Including these reductions, the total class operating
expenses for these Portfolios would have been 1.23%. These offsets may be
discontinued at any time.
(6) Management fees for the portfolio have been reduced to 0.10%, and class
expenses are limited to 0.35% (these limits do not apply to interest,
taxes, brokerage commissions, security lending fees, or extraordinary
expenses). This expense limit may not be increased without approval of the
portfolio's shareholders and board of trustees. Thus, the expense limit is
required by contract and is not voluntary on the fund manager's part.
(7) The portfolio administration fee is paid indirectly through the management
fee.
(8) The manager has agreed in advance to reduce its fee from assets invested by
the portfolio in a Franklin Templeton money market fund (the acquired fund)
to the extent that the portfolio's fees and expenses are due to those of
the acquired fund. This reduction is required by the Trust's board of
trustees and an exemptive order of the SEC.
(9) Net total annual portfolio expenses after management and administration fee
reductions were 0.93%.
(10) Net total annual portfolio expenses after management and administration fee
reductions were 1.03%.
(11) The advisor has contractually agreed until at least December 31, 2007 to
waive a portion of its advisory fee and/or reimburse certain fund expenses
in order to limit net expenses as follows:
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Touchstone Variable Series Trust Portfolio Net Total Expenses after Arrangements
Described Above
----------------------------------------------------------------- ---------------------------------------
Balanced 0.90%
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Baron Small Cap 1.65%
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Core Bond 0.75%
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Eagle Capital Appreciation 1.05%
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Enhanced Dividend 30 0.75%
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Growth & Income 0.85%
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High Yield 0.80%
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Mid Cap Growth 1.15%
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Money Market, Service Class 0.54%
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Third Avenue Value 1.05%
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Value Plus 1.15%
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Aggressive ETF, Service Class 0.75%
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Conservative ETF, Service Class 0.75%
----------------------------------------------------------------- ---------------------------------------
Enhanced ETF, Service Class 0.75%
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Moderate ETF, Service Class 0.75%
----------------------------------------------------------------- ---------------------------------------
(12) The Service Class shares began operations in July, 2006. Integrity and
Touchstone Advisors have agreements which provide that Integrity is
responsible for payment of expenses exceeding the expense caps on the ETF
Portfolios.
(13) The fees disclosed reflect gross ratios prior to any voluntary
waivers/reimbursements of expenses by the advisor. The advisor has
voluntarily agreed to waive a portion or all of its management fee and/or
reimburse expenses to the extent necessary so that total annual operating
expenses, excluding certain investment related expenses such as foreign
country tax expense and interest expense on borrowing, do not exceed the
1.35% for Emerging Markets Debt, Class II, 1.65% for the Emerging Markets
Equity, Class II and 1.35% for U.S. Real Estate, Class II. The advisor may
terminate these voluntary waivers at any time at its sole discretion.
Additionally the distributor has agreed to waive a portion of the 12b-1 fee
for Class II shares. The distributor may terminate these voluntary waivers
at any time at its sole discretion.
We have entered into agreements with the investment advisors or distributors of
each of the Portfolios. Under the terms of these agreements, we will provide
administrative, marketing and distribution services to the Portfolios. The
Portfolios or their investment advisors or distributors pay us fees equal to an
annual rate ranging from 0.05% to 0.45% of the average daily net assets invested
by the Variable Account Options in the Portfolios. These fees may be paid by the
investment advisors from the investment advisors' assets or from the Portfolios
under distribution and/or servicing plans adopted by the Portfolios pursuant to
Rule 12b-1 under the Investment Company Act of 1940 (1940 Act.)
EXAMPLES
The examples that follow are intended to help you compare the cost of investing
in the contract with the cost of investing in other variable annuity contracts.
Each example assumes that you invest $10,000 in the contract for the time period
indicated. Each example also assumes that your investment has a 5% return each
year. Your actual costs may be higher or lower.
The following example includes withdrawal charges, the annual administrative
charge, the mortality and expense risk charge, and maximum Portfolio operating
expenses. Based on these assumptions, your costs would be:
If you surrender your contract at the end of the applicable period:
------------------------------ -------------------- ------------------------ ------------------------
1 year 3 years 5 years 10 years
------------------------------ -------------------- ------------------------ ------------------------
$1,197 $1,804 $2,425 $4,150
------------------------------ -------------------- ------------------------ ------------------------
If you select an Annuity Benefit with a life contingency at the end of the
applicable period:
-------------------------- ------------------------ ------------------------ ------------------------
1 year 3 years 5 years 10 years
-------------------------- ------------------------ ------------------------ ------------------------
$397 $1,204 $2,025 $4,150
-------------------------- ------------------------ ------------------------ ------------------------
If you do not surrender the contract:
-------------------------- ------------------------ ------------------------ ------------------------
1 year 3 years 5 years 10 years
-------------------------- ------------------------ ------------------------ ------------------------
$397 $1,204 $2,025 $4,150
-------------------------- ------------------------ ------------------------ ------------------------
The following example includes withdrawal charges, the annual administrative
charge, the mortality and expense risk charge, maximum Portfolio operating
expenses, and the cost of the GMWB Rider, which carries the highest charge of
the optional benefits. Based on these assumptions, your costs would be:
If you surrender your contract at the end of the applicable period:
-------------------------- ------------------------ ------------------------ ------------------------
1 year 3 years 5 years 10 years
-------------------------- ------------------------ ------------------------ ------------------------
$1,257 $1,986 $2,732 $4,769
-------------------------- ------------------------ ------------------------ ------------------------
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If you select and Annuity Benefit with a life contingency at the end of the
applicable period:
-------------------------- ------------------------ ------------------------ ------------------------
1 year 3 years 5 years 10 years
-------------------------- ------------------------ ------------------------ ------------------------
$457 $1,386 $2,332 $4,769
-------------------------- ------------------------ ------------------------ ------------------------
If you do not surrender the contract:
-------------------------- ------------------------ ------------------------ ------------------------
1 year 3 years 5 years 10 years
-------------------------- ------------------------ ------------------------ ------------------------
$457 $1,386 $2,332 $4,769
-------------------------- ------------------------ ------------------------ ------------------------
ACCUMULATION UNIT VALUES
See Appendix A
SUMMARY OF CONTRACT
"We," "our," "us," "the Company" and "Integrity" mean Integrity Life Insurance
Company. "You" and "your" mean the owner. This variable annuity contract is a
contract between you and us. You, as the owner, have certain rights under the
contract. The Annuitant named by you may be you or another person. It is
important that you carefully select the owner, Annuitant, the owner's
beneficiary and the Annuitant's beneficiary in order to achieve your objectives.
See Part 5, sections titled "Death Benefits" and "Distribution on Death."
INVESTMENT GOALS AND RISKS
This contract allows you to accumulate money for retirement or other long term
goals. An investment in any of the Variable Account Options carries with it
certain risks, including the risk that the value of your investment will decline
and you could lose money. The Variable Account Options invest in Portfolios,
most of which invest in common stocks. You could lose money if one of the
issuers of the stocks in which your Variable Account Option invests through its
underlying Portfolio becomes financially impaired or if the stock market as a
whole declines. There's also the inherent risk that holders of common stock
generally are behind creditors and holders of preferred stock for payments in
the event of the bankruptcy of a stock issuer.
For a complete discussion of the risks associated with investing in any
particular Variable Account Option, see the prospectus of the corresponding
Portfolio with the same name.
YOUR RIGHTS AND BENEFITS
As the owner of the contract, you have the following rights, subject to the
rules and significant limitations stated in this prospectus:
o To contribute, transfer and withdraw money. See Part 5
o To invest in the Investment Options. See Part 3
o To elect an Annuity Benefit. See Part 5, section titled "Retirement
Date and Annuity Benefit"
o To name the Annuitant
o To name the Annuitant's beneficiary and the owner's beneficiary. The
Annuitant's beneficiary will receive the Death Benefit upon the death
of the Annuitant; OR the owner's beneficiary will receive a
distribution upon your death, as owner. If there are joint owners, the
death of either one will be treated as the death of both under this
contract, which triggers a required Distribution on Death. See Part 5,
sections titled "Death Benefit Paid on Death of Annuitant" and
"Distribution on Death of Owner."
ACCOUNT VALUE AND SURRENDER VALUE
Your Account Value consists of the values of your Investment Options added
together. Any amount
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allocated to a Variable Account Option will go up or down in value depending on
the investment experience of that Variable Account Option. The value of
contributions allocated to the Variable Account Options is not guaranteed. The
value of your contributions allocated to the Fixed Accounts is guaranteed,
subject to any applicable MVAs. Your Account Value is subject to various
charges. See Part 4.
Your Adjusted Account Value is your Account Value, as increased or decreased by
any MVAs. See Part 3, Market Value Adjustment
Your Surrender Value is equal to your Adjusted Account Value, minus any
withdrawal charge and minus the pro rata portion of the annual administrative
charges and optional benefit charges, if applicable. See Part 4.
Your minimum Account Value is $1,000. If the Account Value goes below $1,000 and
we have received no contributions from you for two years, we reserve the right
to terminate the contract and pay you the Account Value. We will notify you in
advance and will give you at least 60 days to make additional contributions.
YOUR RIGHT TO REVOKE (FREE LOOK PERIOD)
You may cancel your contract within ten days after you receive it by returning
it to our Administrative Office. We will extend the ten day period if required
by state law. If you cancel your contract, we'll return your contribution net of
any investment performance and applicable charges, which may be more or less
than your original contribution depending upon the investment experience of the
Investment Options you selected. You bear the investment risk during the ten-day
period, as well as any fees and charges incurred during the period your contract
is in force. See Part 4.
HOW YOUR CONTRACT IS TAXED
Your benefits under the contract are controlled by the Internal Revenue Code of
1986, as amended (the Code) and the associated rules and regulations governing
annuities, including the deferral of taxes on your investment growth until you
actually make a withdrawal. You should read Part 8, "Tax Aspects of the
Contract" for more information, and consult a tax advisor. Most of the
withdrawals you make before you are 59 1/2 years old are subject to a 10%
federal tax penalty on the taxable portion of the amounts withdrawn. THIS
CONTRACT CAN PROVIDE BENEFITS UNDER CERTAIN TAX-FAVORED RETIREMENT PROGRAMS,
SUCH AS IRAS; HOWEVER, IT PROVIDES NO ADDITIONAL TAX DEFERRAL BENEFIT, AS THESE
PROGRAMS ALREADY PROVIDE TAX-DEFERRAL.
PART 2 - INTEGRITY AND THE SEPARATE ACCOUNT
INTEGRITY LIFE INSURANCE COMPANY
Integrity is a stock life insurance company organized under the laws of Arizona
on May 3, 1966, and redomesticated to Ohio on January 3, 1995. Our principal
executive office is located at 400 Broadway, Cincinnati, Ohio 45202. We are
authorized to sell life insurance and annuities in 46 states and the District of
Columbia. Integrity is a subsidiary of The Western and Southern Life Insurance
Company, a life insurance company organized under the laws of the State of Ohio
on February 23, 1888. The Western and Southern Life Insurance Company has
guaranteed the insurance obligations of Integrity to its contract owners,
including the owners of this contract (the Guarantee). Insurance obligations
include the Account Value invested in the Fixed Account, the Death Benefit and
Annuity Benefit. The Guarantee does not guarantee investment performance or the
portion of your Account Value invested in the Variable Account Options. The
Guarantee provides that contract owners can enforce the Guarantee directly.
SEPARATE ACCOUNT II AND THE VARIABLE ACCOUNT OPTIONS
Separate Account II of Integrity Life Insurance Company was established in 1992,
and is maintained under the insurance laws of the State of Ohio. The Separate
Account is a unit investment trust, which is
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a type of investment company under the 1940 Act. The Separate Account invests in
the Variable Account Options. Each Variable Account Option invests in shares of
a corresponding Portfolio (or "Fund") with the same name. We may add, substitute
or close Variable Account Options from time to time. The Variable Account
Options currently available to you are listed in Part 3.
Under Ohio law, we own the assets of our Separate Account and use them to
support the Variable Account Options of your contract and other variable annuity
contracts. Each variable annuity contract owner participates in the Separate
Account in proportion to the amounts in his contract.
Income, gains and losses, whether realized or unrealized, from assets allocated
to the Separate Account are credited to or charged against the Separate Account
without regard to our other income, gains or losses. The assets of the Separate
Account may not be charged with the liabilities arising out of our other
businesses. We may allow fees that are owed to us to stay in the Separate
Account, and, in that way, we can participate proportionately in the Separate
Account.
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
Touchstone Securities, Inc., an affiliate of Integrity, serves as the principal
underwriter for the variable annuity contracts. The principal business address
of Touchstone Securities is 303 Broadway, Cincinnati, Ohio, 45202. The contracts
are sold by individuals who represent us as insurance agents and who are also
registered representatives of broker-dealers or financial institutions that have
entered into distribution agreements with us.
CHANGES IN HOW WE OPERATE
We can change how the Company or our Separate Account operates, subject to your
approval when required by the 1940 Act or other applicable laws. We'll notify
you if any changes result in a material change in the underlying investments of
a Variable Account Option. We may:
o add, remove or combine Investment Options or withdraw assets relating
to your contract from one Variable Account Option and put them into
another;
o register or end the registration of the Separate Account under the
1940 Act;
o operate our Separate Account under the direction of a committee or
discharge a committee at any time (the committee may be composed of a
majority of persons who are "interested persons" of Integrity);
o restrict or eliminate any voting rights of owners or others that
affect our Separate Account;
o cause one or more Variable Account Options to invest in a Portfolio
other than or in addition to the Portfolios; or
o operate our Separate Account or one or more of the Investment Options
in any other form the law allows, including a form that allows us to
make direct investments. We may make any legal investments we wish.
PART 3 - YOUR INVESTMENT OPTIONS
You may invest your contributions to this contract in the Variable Account
Options, the Fixed Accounts or both. (If you purchase the GMWB Rider, your
Investment Options are limited. See Part 6.)
Each Variable Account Option invests in shares of a mutual fund, referred to as
a Portfolio (or "Fund"). Each Variable Account Option and its corresponding
Portfolio share the same name. The value of your Variable Account Option will
vary with the performance of the corresponding Portfolio. For a full description
of each Portfolio, see that Portfolio's prospectus and Statement of Additional
Information.
THE VARIABLE ACCOUNT OPTIONS
The investment objective and advisor of each Portfolio are described below.
Management fees and other expenses deducted from each Portfolio are described in
that Portfolio's prospectus. FOR A PROSPECTUS CONTAINING MORE COMPLETE
INFORMATION ON ANY PORTFOLIO, CALL OUR ADMINISTRATIVE OFFICE
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TOLL-FREE AT 1-800-325-8583.
DWS SCUDDER INVESTMENTS VIP FUNDS
The investment advisor for the DWS Scudder Investments VIP Funds is Deutsche
Asset Management, Inc. (DeAM). DeAM is a broad-based global investment firm that
provides asset management capabilities to a variety of institutional clients
worldwide. DeAM's presence in all of the major investment markets gives its
clients a global network and product range. DeAM manages U.S., international,
emerging markets, and fixed income investments and is a leader in index
strategies.
Following is a summary of the investment objectives of the DWS Investments VIP
Fund. We can't guarantee that these objectives will be met. YOU SHOULD READ THE
DWS INVESTMENTS VIP FUND'S PROSPECTUS CAREFULLY BEFORE INVESTING.
DWS Small Cap Index VIP Fund
The Small Cap Index Fund seeks to match, as closely as possible (before expenses
are deducted), the performance of the Russell 2000 Index, which emphasizes
stocks of small U.S. companies. The fund attempts to invest in stocks and other
securities that are representative of the Russell 2000 Index as a whole. The
Index includes the reinvestment of all distributions and is not available for
direct investment.
FIDELITY(R) VIP TRUST
The investment advisor to each Portfolio is Fidelity Management & Research
Company (FMR), a registered investment advisor under the Investment Advisors Act
of 1940.
Below is a summary of the investment objectives and strategies of Fidelity's VIP
Portfolios. There are no guarantees that a Portfolio will be able to achieve its
objective. YOU SHOULD READ FIDELITY'S VIP FUNDS' PROSPECTUS CAREFULLY BEFORE
INVESTING.
Fidelity VIP Asset ManagerSM Portfolio
VIP Asset ManagerSM Portfolio seeks high total return with reduced risk over the
long term by allocating its assets among stocks, bonds and short-term
instruments maintaining a neutral mix over time of 50% of assets in stocks, 40%
of assets in bonds, and 10% of assets in short-term and money market
instruments. FMR invests in domestic and foreign issuers. FMR analyzes issuers
using fundamental and/or quantitative factors and evaluates each security's
current price relative to estimated long-term value.
Fidelity VIP Balanced Portfolio
VIP Balanced Portfolio seeks income and capital growth consistent with
reasonable risk by investing approximately 60% of assets in stocks and other
equity securities and the remainder in bonds and other debt securities,
including lower-quality debt securities, when its outlook is neutral. FMR
invests at least 25% of the Portfolio's total assets in fixed-income senior
securities, including debt securities and preferred stock. FMR invests in
domestic and foreign issuers. With respect to equity investments, FMR emphasizes
above-average income-producing equity securities, leading to investment in
stocks that have more "value" characteristics than "growth" characteristics.
Fidelity VIP Contrafund(R) Portfolio
VIP Contrafund(R) Portfolio seeks long-term capital appreciation. FMR normally
invests the Portfolio's assets primarily in common stocks of domestic and
foreign issuers. FMR invests the Portfolio's assets in securities of companies
whose value FMR believes is not fully recognized by the public. At any given
time, FMR may tend to buy "growth" stocks or "value" stocks, or a combination of
both types. In buying and selling securities for the Portfolio, FMR relies on
fundamental analysis of each issuer and its potential for success in light of
current financial condition, its industry position, and economic and market
conditions.
Fidelity VIP Disciplined Small Cap Portfolio
Fidelity VIP Dynamic Capital Appreciation
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VIP Dynamic Capital Appreciation Portfolio seeks capital appreciation. FMR
normally invests the Portfolio's assets primarily in common stocks of domestic
and foreign issuers. At any given time, FMR may tend to buy "growth" stocks or
"value" stocks, or a combination of both types. FMR uses fundamental analysis of
each issuer and its potential for success in light of its current financial
condition, its industry position, and economic and market conditions.
Fidelity VIP Equity-Income Portfolio
VIP Equity-Income Portfolio seeks reasonable income by investing primarily in
income-producing equity securities and potentially investing in other types of
equity securities and debt securities, including lower-quality debt securities.
FMR invests in domestic and foreign issuers. FMR uses fundamental analysis of
each issuer and its potential for success in light of its current financial
condition, its industry position, and market and economic conditions. The
Portfolio seeks a yield that exceeds the composite yield on the securities
comprising the S&P 500 Index. FMR normally invests at least 80% of the
Portfolio's total assets in equity securities.
Fidelity VIP Freedom 2010 Portfolio
Fidelity VIP Freedom 2015 Portfolio
Fidelity VIP Freedom 2020 Portfolio
Fidelity VIP Freedom 2025 Portfolio
Fidelity VIP Freedom 2030 Portfolio
Fidelity VIP Growth Portfolio
VIP Growth Portfolio seeks capital appreciation by the Portfolio's assets in
common stocks of domestic and foreign companies FMR believes have above-average
growth potential. FMR uses fundamental analysis of each issuer and its potential
for success in light of its current financial condition, its industry position,
and market and economic conditions.
Fidelity VIP Growth & Income Portfolio
VIP Growth & Income Portfolio seeks high total return through a combination of
current income and capital appreciation. FMR normally invests a majority of the
Portfolio's assets in common stocks of domestic and foreign issuers with a focus
on those that pay current dividends and show potential for capital appreciation.
FMR may also invest the Portfolio's assets in bonds, including lower-quality
debt securities, as well as stocks that are not currently paying dividends, but
offer prospects for future income or capital appreciation. FMR uses fundamental
analysis of each issuer and its potential for success in light of its current
financial condition, its industry position, and market and economic conditions.
Fidelity VIP Growth Opportunities Portfolio
VIP Growth Opportunities Portfolio seeks to provide capital growth. FMR invests
the Portfolio's assets primarily in common stocks of domestic and foreign
issuers. At any given time, FMR may tend to buy "growth" stocks or "value"
stocks, or a combination of both types. FMR uses fundamental analysis of each
issuer and its potential for success in light of its current financial
condition, its industry position, and economic and market conditions.
Fidelity VIP High Income Portfolio
VIP High Income Portfolio seeks a high level of current income, while also
considering growth of capital. FMR normally invests the Portfolio's assets
primarily in income-producing debt securities, preferred stocks, and convertible
securities, with an emphasis on lower-quality debt securities. FMR may also
invest the Portfolio's assets in non-income producing securities, including
defaulted securities and common stocks. FMR invests in domestic and foreign
issuers. FMR uses fundamental analysis of each issuer and its potential for
success in light of its current financial condition, its industry position, and
market and economic conditions.
Fidelity VIP Index 500 Portfolio
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Fidelity VIP Investment Grade Bond Portfolio
VIP Investment Grade Bond Portfolio seeks as high a level of current income as
is consistent with the preservation of capital by normally investing at least
80% of assets in investment-grade debt securities of all types and repurchase
agreements for those securities. FMR allocates assets across different market
sectors and maturities, and analyzes a security's structural features and
current pricing, trading opportunities, and the credit quality of the issuer.
Fidelity VIP Mid Cap Portfolio
VIP Mid Cap Portfolio seeks long-term growth of capital. FMR invests the
Portfolio's assets primarily in common stocks of domestic and foreign issuers.
FMR normally invests at least 80% of the Portfolio's total assets in securities
of companies with medium market capitalizations. Medium market capitalization
companies are those with market capitalization similar to companies in the S&P
Mid Cap 400. FMR may tend to buy "growth" stocks or "value" stocks, or a
combination of both types, and may potentially invest in companies with smaller
or larger market capitalizations. FMR uses fundamental analysis of each issuer
and its potential for success in light of its current financial condition, its
industry position, and market and economic conditions.
Fidelity VIP Overseas Portfolio
VIP Overseas Portfolio seeks long-term growth of capital primarily through
investments in common stock. FMR normally invests at least 80% of the
Portfolio's assets in non-U.S. common stocks. FMR allocates investments across
countries and regions considering the size of the market in each country and
region relative to the size of the international market as a whole. FMR uses
fundamental analysis of each issuer and its potential for success in light of
its current financial condition, its industry position, and market and economic
conditions.
THE FRANKLIN TEMPLETON VARIABLE INSURANCE PRODUCTS TRUST FUNDS
Each Portfolio is a series of the Trust, which is a mutual fund registered with
the SEC. Affiliates of Franklin Resources, Inc., which operates as Franklin
Templeton Investments, serve as the investment advisors for the funds, as
indicated below.
Below is a summary of the investment objectives of the Franklin Templeton
Variable Insurance Products Trust Funds. There are no guarantees that a fund
will be able to achieve its objective. YOU SHOULD READ FRANKLIN TEMPLETON VIPT
FUNDS' PROSPECTUS CAREFULLY BEFORE INVESTING.
FTVIPT Franklin Growth and Income Securities Portfolio
The FTVIPT Franklin Growth and Income Securities Portfolio seeks capital
appreciation with current income as a secondary goal. The Portfolio normally
invests predominantly in a broadly diversified portfolio of equity securities
that the Portfolio's manager considers to be financially strong but undervalued
by the market. The investment advisor for this Portfolio is Franklin Advisers,
Inc.
FTVIPT Franklin Income Securities Portfolio
The FTVIPT Franklin Income Securities Portfolio seeks to maximize income while
maintaining prospects for capital appreciation. The Portfolio normally may
invest in both debt and equity securities. The Portfolio seeks income by
investing in corporate, foreign and U.S. Treasury bonds, as well as stocks with
dividend yields the advisor believes are attractive. The investment advisor for
this Portfolio is Franklin Advisers, Inc.
FTVIPT Franklin Large Cap Growth Securities Portfolio
The FTVIPT Franklin Large Cap Growth Securities Portfolio seeks capital
appreciation. The Portfolio normally invests at least 80% of its net assets in
investments of large capitalization companies, and normally invests
predominantly in equity securities. For this Portfolio, large-capitalization
companies are those with market capitalization values within those of the top
50% of companies in the Russell 1000 Index at the time of purchase. The
investment advisor for this Portfolio is Franklin Advisers, Inc.
FTVIPT Franklin Small Cap Securities Portfolio
P51 - 16
FTVIPT Mutual Shares Securities Portfolio
The FTVIPT Mutual Shares Securities Portfolio seeks capital appreciation, with
income as a secondary goal. The Portfolio normally invests mainly in equity
securities that the advisor believes are undervalued. The Portfolio normally
invests primarily in undervalued stocks and to a lesser extent in risk arbitrage
securities and distressed companies. The investment advisor for this Portfolio
is Franklin Mutual Advisers, LLC.
FTVIPT Templeton Foreign Securities Portfolio
The FTVIPT Templeton Foreign Securities Portfolio seeks long-term capital
growth. The Portfolio normally invests at least 80% of its net assets in
investments of issuers located outside the U.S., including those in emerging
markets, and normally invests predominantly in equity securities. The investment
advisor for this Portfolio is Templeton Investment Counsel, LLC.
FTVIPT Templeton Growth Securities Portfolio
The FTVIPT Templeton Growth Securities Portfolio seeks long-term capital growth.
The Portfolio normally invests mainly in equity securities of companies located
anywhere in the world, including those in the U.S. and emerging markets. The
investment advisor for this Portfolio is Templeton Global Advisors Limited.
TOUCHSTONE VARIABLE SERIES TRUST
Each Portfolio of the Touchstone Variable Series Trust is an open-end management
investment company. Touchstone Advisors, Inc., which is affiliated with
Integrity, advises each of the Portfolios, along with a sub-advisor that is
listed under each Portfolio description below.
Below is a summary of the investment objectives of the Portfolios of Touchstone
Variable Series Trust. There are no guarantees that a Portfolio will be able to
achieve its objective. YOU SHOULD READ TOUCHSTONE VARIABLE SERIES TRUST FUNDS'
PROSPECTUS CAREFULLY BEFORE INVESTING.
Touchstone VST Balanced Fund
Oppenheimer Capital LLC is the sub-advisor for the Touchstone VST Balanced Fund.
The fund seeks to achieve both an increase in share price and current income by
investing in both equity securities (generally about 60% of assets) and debt
securities (generally about 40%, but at least 25%). The fund may also invest up
to one-third of its assets in securities of foreign companies, and up to 15% in
securities of companies in emerging market countries. In choosing equity
securities for the fund, the portfolio manager will seeks companies that are in
a strong position within their industry, are owned in part by management and are
selling at a price lower than the company's intrinsic value. Debt securities are
also chosen using a value style, and will be rated investment grade or at the
two highest levels of non-investment grade. The portfolio manager will focus on
higher yielding securities, but will also consider expected movements in
interest rates and industry position.
Touchstone VST Baron Small Cap Fund
BAMCO, Inc., a subsidiary of Baron Capital Group, Inc. is the sub-advisor for
the Touchstone VST Baron Small Cap Fund. The fund seeks long-term capital
appreciation. It invests primarily (at least 80% of assets) in common stocks of
smaller companies with market values under $2.5 billion selected for their
capital appreciation potential. In making investment decisions for the fund, the
portfolio manager seeks securities believed to have (1) favorable price to value
characteristics based on the portfolio manager's assessment of their prospects
for future growth and profitability, and (2) the potential to increase in value
at least 100% over four subsequent years.
Touchstone VST Core Bond Fund
Ft. Washington Investment Advisors, Inc., which is affiliated with Integrity, is
the sub-advisor for the Touchstone VST Core Bond Fund. The fund seeks to provide
a high level of current income as is consistent with the preservation of capital
by investing primarily (at least 80% of assets) in bonds. The fund invests in
mortgage-related securities, asset-backed securities, U.S. government securities
and corporate debt securities. The fund invests at least 65% of assets in
investment grade debt securities, but may invest up to 35% of assets in
non-investment grade debt securities rated as low as B. In making investment
decisions for the fund, the portfolio manager analyzes the overall investment
opportunities
P51 - 17
and risks in different sectors of the debt securities markets by focusing on
maximizing total return while reducing volatility.
Touchstone VST Eagle Capital Appreciation Fund
Eagle Asset Management, Inc., which is affiliated with Integrity, is the
sub-advisor for the Touchstone VST Eagle Capital Appreciation Fund. The fund
seeks long-term capital appreciation. In selecting equity securities for the
fund, the portfolio management team begins with the largest 500 stocks (by
market capitalization) in the Russell 1000 Index. It immediately eliminates
deeply cyclical stocks, stocks believed to be over-valued, companies with
unproven business models, businesses without a sustainable competitive advantage
and companies whose business models they simply do not understand. The initial
screening leaves about 150 stocks, which are assigned to the four co-portfolio
managers based on sector.
Each portfolio manager then uses fundamental research to develop five-year
earnings estimates for each company based on historical data, current
comparables and a thorough understanding of each company and the relevant
industry drivers. The portfolio managers generally do not rely on a company's
earnings projection or consensus Wall Street estimates. Instead, they do their
own research.
The portfolio managers will then assign either a premium or discount multiple to
each stock based on what the multiple of that stock has been versus the S&P 500
Index historically and what it is expected to be over the next five years.
The earnings estimates and premium/discount assigned by each portfolio manager
are then entered into a proprietary valuation model which ranks each stock based
on the five year expected rates of return. The team will generally only invest
in those stocks ranked in the top third of the valuation model's rankings. Any
stock held which falls into the bottom third of the rankings will normally be
sold by the fund.
Touchstone VST Enhanced Dividend 30 Fund
Todd Investment Advisors, Inc., which is affiliated with Integrity, is the
sub-advisor for Touchstone VST Enhanced Dividend 30 Fund. The fund seeks to
achieve a total return that is higher than the total return of the Dow Jones
Industrial Average ("DJIA"). The fund's portfolio is based on the 30 stocks that
comprise the DJIA. The DJIA is a measurement of general market price movement
for 30 widely held stocks. The fund uses a quantitative approach to improve on
the index returns, investing in all of the DJIA components, but increasing the
weighting of those with the highest dividend yield. The fund seeks to overweight
the top three highest yielding stocks in the DJIA by adding approximately 8% to
the original weight of each, and underweight the remaining 27 stocks of the Dow
that have a lower relative dividend yield.
Touchstone VST Growth & Income Fund
Deutsche Investment Management Americas Inc. is the sub-advisor for the
Touchstone VST Growth & Income Fund. The fund seeks to increase the value of
fund shares over the long-term, while receiving dividend income, by investing at
least 50% of total assets in dividend paying common stock, preferred stocks and
convertible securities in a variety of industries. The portfolio manager may
purchase securities that do not pay dividends (up to 50%) but which are expected
to increase in value or produce high-income payments in the future. The
portfolio manager invests in stocks with lower valuations than the broad market
that are believed to have long-term dividend and earnings fundamentals.
Touchstone VST High Yield Fund
Ft. Washington Investment Advisors, Inc., which is affiliated with Integrity, is
the sub-advisor for the Touchstone VST High Yield Fund. The fund seeks to
achieve a high level of current income as its main goal, with capital
appreciation as a secondary consideration. The fund invests primarily (at least
80% of assets) in non-investment grade debt securities of domestic corporations.
Non-investment grade securities are often referred to as "junk bonds" and are
considered speculative.
Touchstone VST Mid Cap Growth Fund
Westfield Capital Management Company, LLC and TCW Investment Management Company
are the sub-advisors for the Touchstone VST Mid Cap Growth Fund. The fund seeks
to increase the value of fund
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shares as a primary goal and to earn income as a secondary goal. The fund
invests primarily (at least 80% of assets) in common stocks of mid cap
companies. The fund is sub-advised by two separate management teams that use
different style methodologies. Mid cap growth companies can include companies
that have earnings that the portfolio manager believes may grow faster than the
U.S. economy in general, due to new products, management changes at the company
or economic shocks such as high inflation or sudden increases or decreases in
interest rates. Mid cap growth companies can also include companies that are
believed to be undervalued, including those with unrecognized asset values,
undervalued growth or those undergoing turnaround.
Touchstone VST Money Market Fund
Ft. Washington Investment Advisors, Inc., which is affiliated with Integrity, is
the sub-advisor for the Touchstone VST Money Market Fund. The fund seeks high
current income, consistent with liquidity and stability of principal by
investing primarily in high-quality money market instruments. The fund is a
money market fund and tries to maintain a constant share price of $1.00 per
share, although there is no guarantee that it will do so.
Touchstone VST Third Avenue Value Fund
Third Avenue Management LLC is the sub-advisor for the Touchstone VST Third
Avenue Value Fund. The fund seeks long-term capital appreciation. It is a
non-diversified fund that seeks to achieve its objective mainly by investing in
common stocks of well-financed companies (companies without significant debt in
comparison to their cash resources) at a discount to what the portfolio manager
believes is their liquid value. The fund invests in companies regardless of
market capitalization and invests in both domestic and foreign securities. The
mix of the fund's investments at any time will depend on the industries and
types of securities that the portfolio manager believes hold the most value.
Touchstone VST Value Plus Fund
Ft. Washington Investment Advisors, Inc., which is affiliated with Integrity, is
the sub-advisor for the Touchstone VST Value Plus Fund. The fund seeks to
increase value of the fund shares over the long-term by investing primarily (at
least 65% of assets) in common stock of larger companies that the portfolio
manager believes are undervalued. In choosing undervalued stocks, the portfolio
manager looks for companies that have proven management and unique features or
advantages, but are believed to be priced lower than their true value. These
companies may not pay dividends. Approximately 75% of assets will generally be
invested in large cap companies and approximately 25% will generally be invested
in mid cap companies.
TOUCHSTONE VST ETF FUNDS
This Part specifically provides information about the Touchstone VST ETF Funds
("ETF Funds"), which are mutual funds that invest fixed percentages of assets in
various exchange-traded funds, including series of the iShares(R) Funds Trust.
Because the ETF Funds invest in other mutual funds rather than in individual
securities, each ETF Fund is considered a "fund of funds" and bears a
proportionate share of the expenses charged by the underlying funds in which it
invests. You can invest directly in ETF Funds and do not have to invest through
a variable annuity or mutual fund.
In addition, the underlying exchange-traded funds trade like a stock on a
securities exchange and may be purchased and sold throughout the trading day
based on their market price. Each exchange-traded fund that is held by one of
the ETF Funds is an "index fund," which seeks investment results that correspond
generally to the price and yield performance, before fees and expenses, of a
particular index. It is not possible to invest directly in the index.
Each ETF Fund allocates its assets among a group of exchange-traded funds in
different percentages. Therefore, each ETF Fund has different indirect asset
allocations of stocks, bonds, and cash, reflecting varying degrees of potential
investment risk and reward for different investment styles and life stages.
These asset allocations provide four distinct options that can meet a wide
variety of investment needs. The allocation of stocks and bonds in each ETF Fund
reflects greater or lesser emphasis on pursuing current income or growth of
capital.
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As a result of market gains or losses by the underlying exchange-traded funds,
the percentage of any of the ETF Funds' assets invested in stocks or bonds at
any given time may be different than that ETF Fund's planned asset allocation
model. Stock and bond markets, and the sub-categories of assets within them
(value, growth, large cap, small cap, etc.) have returns that vary from year to
year. Because the changes in returns for these assets affect their expected
return in the future, they require monitoring and potentially some rebalancing
of the allocation models. The sub-advisor will monitor the models and may update
and revise the asset allocation percentages employed by each model to reflect
changes in the marketplace. The sub-advisor will rebalance each ETF Fund's
assets annually (except the Touchstone VST Enhanced ETF Fund, which will be
assessed by the sub-advisor on a semi-annual basis and may be reallocated if
market conditions so indicate) in accordance with the asset allocation model
then in effect. The sub-advisor reserves the right to rebalance more or less
frequently depending upon market conditions, investment experience, and other
factors it deems appropriate.
Touchstone Advisors, Inc. is the investment advisor and Todd Investment
Advisors, Inc. is the sub-advisor for the VST Enhanced Dividend 30 Fund, as well
as the VST Aggressive ETF, VST Conservative ETF, VST Enhanced ETF and VST
Moderate ETF Funds. Both Touchstone Advisors, Inc. and Todd Investment advisors,
Inc. are affiliated with Integrity.
Touchstone VST Conservative ETF Fund
The Touchstone VST Conservative ETF Fund seeks total return by investing for
income and capital appreciation. The fund invests primarily in a group of funds
of the iShares Trust using a system that prescribes allocations among asset
classes intended to minimize expected risk (i.e. volatility), while structuring
the portfolio to optimize potential returns based on historical measures on how
each asset class performs. For the Conservative Fund that typically results in
an allocation of about 65% of assets in bonds and 35% in stocks. In selecting a
diversified portfolio of underlying funds, the sub-advisor analyzes many
factors, including the underlying ETF fund's investment objectives, total
return, volatility, and expenses. The fund will also hold a minimal amount of
cash or cash equivalent positions, such as money market instruments, U.S.
government securities, commercial paper, and repurchase agreements.
Touchstone VST Moderate ETF Fund
The Touchstone VST Moderate ETF Fund seeks total return by investing primarily
for capital appreciation and secondarily for income. The fund invests primarily
in a group of funds of the iShares Trust using a system that prescribes
allocations among asset classes intended to minimize expected risk (i.e.
volatility), while structuring the portfolio to optimize potential returns based
on historical measures on how each asset class performs. For the Moderate Fund
that typically results in an allocation of about 60% of assets in stocks and 40%
in bonds. In selecting a diversified portfolio of underlying funds, the
sub-advisor analyzes many factors, including the underlying ETF fund's
investment objectives, total return, volatility, and expenses. The fund will
also hold a minimal amount of cash or cash equivalent positions, such as money
market instruments, U.S. government securities, commercial paper, and repurchase
agreements.
Touchstone VST Aggressive ETF Fund
The Touchstone VST Aggressive ETF Fund seeks capital appreciation. The fund
invests primarily in a group of funds of the iShares Trust using a system that
prescribes allocations among asset classes intended to minimize expected risk
(i.e. volatility), while structuring the portfolio to optimize potential returns
based on historical measures on how each asset class performs. For the
Aggressive Fund that typically results in an allocation of about 80% of assets
in stocks and 20% in bonds. In selecting a diversified portfolio of underlying
funds, the sub-advisor analyzes many factors, including the underlying ETF
fund's investment objectives, total return, volatility, and expenses. The fund
will also hold a minimal amount of cash or cash equivalent positions, such as
money market instruments, U.S. government securities, commercial paper, and
repurchase agreements.
Touchstone VST Enhanced ETF Fund
The Touchstone VST Enhanced ETF Fund seeks high capital appreciation. The fund
invests primarily in a group of funds of the iShares Trust using a system that
prescribes allocations among asset classes intended to minimize expected risk
(i.e. volatility), while structuring the portfolio to optimize potential returns
based on historical measures on how each asset class performs. Those asset
classes with the best relative strength, as measured by their relative
performance over the prior six months, are
P51 - 20
overweighted for six months, while the other asset classes are underweighted,
thereby increasing the potential for enhanced performance with lower volatility.
In selecting a diversified portfolio of underlying funds, the sub-advisor
analyzes many factors, including the underlying ETF fund's investment
objectives, total return, volatility, and expenses. The fund will also hold a
minimal amount of cash or cash equivalent positions, such as money market
instruments, U.S. government securities, commercial paper, and repurchase
agreements.
VAN KAMPEN LIT PORTFOLIOS
Van Kampen Asset Management is the investment advisor for each of the LIT
Portfolios.
Investment Objectives of the Portfolios. Below is a summary of the investment
objectives of the Portfolios of Van Kampen Life Investment Trust. There are no
guarantees that a Portfolio will be able to achieve its objective. YOU SHOULD
READ VAN KAMPEN LIT FUNDS' PROSPECTUS CAREFULLY BEFORE INVESTING.
Van Kampen LIT Comstock Portfolio
The Portfolio's investment objective is to seek capital growth and income
through investment in equity securities, including common stocks, preferred
stocks and securities convertible into common and preferred stocks. The
Portfolio may invest up to 25% of its total assets in securities of foreign
issuers.
Van Kampen LIT Strategic Growth Portfolio
The Portfolio's investment objective is to seek capital appreciation. Under
normal market conditions, the Portfolio's investment advisor seeks to achieve
the Portfolio's investment objective by investing primarily in a portfolio of
common stocks of companies considered by the investment advisor to be strategic
growth companies.
VAN KAMPEN UIF PORTFOLIOS
Morgan Stanley Investment Management Inc., doing business as Van Kampen, is the
investment advisor for each of the UIF Portfolios.
Below is a summary of the investment objectives of the Portfolios of Van Kampen
Universal Institutional Funds. There are no guarantees that a Portfolio will be
able to achieve its objective. YOU SHOULD READ VAN KAMPEN UIF FUNDS' PROSPECTUS
CAREFULLY BEFORE INVESTING.
Van Kampen UIF Emerging Markets Debt Portfolio
The Portfolio seeks high total return by investing primarily in fixed income
securities of government and government-related issuers and, to a lesser extent,
of corporate issuers in emerging market countries. Using macroeconomic and
fundamental analysis, the advisor seeks to identify developing countries that
are believed to be undervalued and have attractive or improving fundamentals.
After the country allocation is determined, the sector and security selection is
made within each country.
Van Kampen UIF Emerging Markets Equity Portfolio
The Portfolio seeks long-term capital appreciation by investing primarily in
growth-oriented equity securities of issuers in emerging market countries. The
Advisor's investment approach combines top-down country allocation with
bottom-up stock selection. Investment selection criteria include attractive
growth characteristics, reasonable valuations and company managements with
strong shareholder value orientation.
Van Kampen UIF U.S. Real Estate Portfolio
The Portfolio seeks to achieve above-average current income and long-term
capital appreciation by investing primarily in equity securities of companies in
the U.S. real estate industry, including real estate investment trusts
("REITs"). The Portfolio focuses on REITs as well as real estate operating
companies that invest in a variety of property types and regions. The Advisor's
approach emphasizes bottom-up stock selection with a top-down asset allocation
overlay.
THE FIXED ACCOUNTS
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Our Fixed Accounts, General Account and the non-unitized separate account are
not registered under the Securities Act of 1933 (1933 Act) or the 1940 Act. The
General Account supports the Account Value you invest in the Fixed Accounts
(unless otherwise supported by a separate account), the Death Benefit in excess
of Account Value and the Annuity Benefit. The non-unitized separate account
supports the GROs. We have been advised that the staff of the SEC has not
reviewed the disclosure in this prospectus relating to the Fixed Accounts or the
General Account. Disclosures regarding the Fixed Accounts or the General Account
are subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of statements made in
prospectuses.
GUARANTEED RATE OPTIONS
We offer GROs with Guarantee Periods of two, three, five, seven and ten years.
We can change the Guarantee Periods available from time to time. Each
contribution or transfer to a GRO establishes a new GRO for the Guarantee Period
you choose at the guaranteed interest rate that we declare as the current rate
(Guaranteed Interest Rate). When you put a contribution into a GRO, a Guaranteed
Interest Rate is locked in for the entire Guarantee Period you select. We won't
declare an interest rate less than the minimum interest rate stated in your
contract. Each GRO matures at the end of the Guarantee Period you have selected.
The GRO Value at the end of the Guarantee Period, assuming you haven't
transferred or withdrawn any amounts, will be the amount you contributed plus
interest at the Guaranteed Interest Rate less any annual administrative charge
and optional benefit charges that may apply (GRO Value). We credit interest
daily at an annual effective rate equal to the Guaranteed Interest Rate.
We may declare an enhanced rate of interest in the first year for any
contribution allocated to a GRO that exceeds the Guaranteed Interest Rate
credited during the rest of the Guarantee Period. This enhanced rate will be
guaranteed for the Guarantee Period's first year and declared at the time of
purchase. We can declare and credit a special interest rate or additional
interest at any time on any nondiscriminatory basis. Any enhanced rate, special
interest rate or additional interest credited to your GRO will be separate from
the Guaranteed Interest Rate and will not be used in the MVA formula.
Each group of GROs of the same duration is considered one GRO for Account Value
reporting purposes. For example, when you receive a statement from us, all of
your three-year GROs will be shown as one GRO while all of your five-year GROs
will appear as another GRO, even though they may have different maturity dates.
However, you will receive separate notices concerning GRO renewals for each
contribution you have made, since each contribution will have a different
maturity date.
We'll notify you in writing before the end of your GRO Guarantee Period. You
must tell us before the end of your Guarantee Period if you want to transfer
your GRO Value to another Investment Option. If you do nothing, when the
Guarantee Period ends, we will set up a new GRO for the same length of time as
your old one, at the then-current Guaranteed Interest Rate for that Guarantee
Period.
If a GRO matures and it can't be renewed for the same length of time, the new
GRO will be set up for the next shortest available Guarantee Period. For
example, if your mature GRO was for 10 years and when it matures, we don't offer
a 10-year Guarantee Period, but we do offer a seven-year Guarantee Period, your
new GRO will be for seven years. You can't renew a GRO that would mature after
your Retirement Date.
All contributions you make to a GRO are placed in a non-unitized separate
account. The value of your GROs is supported by the reserves in our non-unitized
separate account.
You can get our current Guaranteed Interest Rates by calling our Administrative
Office.
MARKET VALUE ADJUSTMENTS
An MVA is an adjustment, either up or down, that we make to your GRO Value if
you make an early withdrawal, surrender or transfer from your GRO. An MVA also
applies on a Distribution on Death of the owner, but not on the calculation of
Death Benefits (on death of the Annuitant). No MVA is made for withdrawals of
the Free Withdrawal Amount or for withdrawals or transfers made within 30 days
of the
P51 - 22
expiration of the GRO Guarantee Period. No MVA shall be made when withdrawals
are taken to meet required minimum distributions under the Code. The value after
the MVA may be higher or lower than the GRO Value, but will never be less than
an amount equal to your contribution to the GRO, less withdrawals (including any
associated charges and adjustments), less transfers out of a GRO, plus interest
accumulated at the minimum interest rate declared in your contract, less any
annual administrative charge and less any charges for the optional benefits, if
elected (Minimum Value). Withdrawal charges, any annual administrative charge
and optional benefit charges, can invade the Minimum Value.
The MVA we make to your GRO is based on the changes in our Guaranteed Interest
Rate. Generally, if our Guaranteed Interest Rate has increased since the time of
your contribution, the MVA will reduce your GRO Value. On the other hand, if our
Guaranteed Interest Rate has decreased since the time of your contribution, the
MVA will generally increase your GRO Value.
The MVA for a GRO is determined by the following formula:
MVA = GRO Value x [(1 + A)N/12 / (1 + B + .0025)N/12 - 1], where
A is the Guaranteed Interest Rate being credited to the GRO subject to the
MVA,
B is the current Guaranteed Interest Rate, as of the effective date of the
application of the MVA, for current allocations to a GRO, the length of
which is equal to the number of whole months remaining in your GRO. Subject
to certain adjustments, if that remaining period isn't equal to an exact
period for which we have declared a new Guaranteed Interest Rate, B will be
determined by a formula that finds a value between the Guaranteed Interest
Rates for GROs of the next highest and next lowest Guarantee Period.
N is the number of whole months remaining in your GRO.
For contracts issued in certain states, the formula above will be adjusted to
comply with state requirements.
If the remaining term of your GRO is 30 days or less, the MVA for your GRO will
be zero. If for any reason we are no longer declaring current Guaranteed
Interest Rates, then to determine B we will use the yield to maturity of United
States Treasury Notes with the same remaining term as your GRO, using a formula
when necessary, in place of the current Guaranteed Interest Rate or Rates.
See Appendix B for illustrations of the MVA.
SYSTEMATIC TRANSFER OPTION
We offer a STO that provides a fixed interest rate on your contributions to the
STO that is effective for the STO period selected. STOs are available for 6
months or 1 year. All STO contributions must be transferred into other
Investment Options within either six months or one year of your STO
contribution, depending on which STO you select. We will automatically transfer
installments of $1,000 or more each. Transfers are made monthly for the 6 month
STO and either monthly or quarterly for the one-year STO. The STO is available
for new contributions only. You can't transfer from other Investment Options
into the STO. See "Systematic Transfer Program" in Part 9 for more details on
this program.
PART 4 - DEDUCTIONS AND CHARGES
MORTALITY AND EXPENSE RISK CHARGE
We deduct a daily charge equal to an annual effective rate of 1.55% of your
Account Value in each of the Variable Account Options to cover mortality and
expense risk and certain administrative expenses. A portion of the 1.55% pays us
for assuming the mortality risk and the expense risk under the contract. The
mortality risk, as used here, refers to the risk we take that annuitants, as a
class of persons, will live longer than estimated and we will be required to pay
out more Annuity Benefits or greater Death Benefits than anticipated. The
expense risk is the risk that the actual expenses of administering and
distributing the contract will exceed the reimbursement for administrative
expenses. A portion of the 1.55% is used
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to reimburse us for administrative expenses not covered by the annual
administrative charge described below, including the cost of distribution of the
contracts. We expect to make a profit from this fee. The mortality and expense
risk charge can't be increased without your consent.
ANNUAL ADMINISTRATIVE CHARGE
We charge an annual administrative charge of $30, which is deducted on the last
day of the Contract Year if your Account Value is less than $50,000 on that day.
This charge is taken pro rata from your Account Value in each Investment Option.
The part of the charge deducted from the Variable Account Options reduces the
number of Units we credit to you. The part of the charge deducted from the Fixed
Accounts is withdrawn in dollars. The annual administrative charge is pro-rated
in the event of the Annuitant's death, or if you surrender the contract or
select an Annuity Benefit during a Contract Year.
REDUCTION OF THE MORTALITY AND EXPENSE RISK CHARGE OR ANNUAL ADMINISTRATIVE
CHARGE
We can reduce or eliminate the mortality and expense risk charge or the annual
administrative charge for individuals or groups of individuals if we anticipate
expense savings. We may do this based on the size and type of the group or the
amount of the contributions. We won't unlawfully discriminate against any person
or group if we reduce or eliminate these charges.
PORTFOLIO CHARGES
The Variable Account Options buy shares of the corresponding Portfolios at each
Portfolio's net asset value. The price of the shares reflects investment
management fees and other expenses that have already been deducted from the
assets of the Portfolios. The amount charged for investment management can't be
increased without shareholder approval. Please refer to the Portfolio
prospectuses for complete details on Portfolio expenses and related items.
WITHDRAWAL CHARGE
If you withdraw your contributions, you may be charged a withdrawal charge of up
to 8%. The amount of the withdrawal charge is a percentage of each contribution
and not of the Account Value. As shown below, the charge varies, depending upon
the "age" of the contributions included in the withdrawal - that is, the number
of years that have passed since each contribution was made.
------------------------------------ ---------------------------------
Contribution Charge as a percentage of the
Year contribution withdrawn
------------------------------------ ---------------------------------
1 8%
------------------------------------ ---------------------------------
2 7%
------------------------------------ ---------------------------------
3 6%
------------------------------------ ---------------------------------
4 5%
------------------------------------ ---------------------------------
5 4%
------------------------------------ ---------------------------------
6 3%
------------------------------------ ---------------------------------
7 2%
------------------------------------ ---------------------------------
thereafter 0
------------------------------------ ---------------------------------
The maximum of 8% would apply if the entire amount of the withdrawal consisted
of contributions made during your current Contract Year. We don't deduct a
withdrawal charge when you withdraw contributions made more than seven years
prior to your withdrawal. The oldest contributions are treated as the first
withdrawn and more recent contributions next.
Partial withdrawals up to the Free Withdrawal Amount of 10% are not subject to
the withdrawal charge. Details on the Free Withdrawal Amount are in Part 5, in
the section titled "Withdrawals."
We won't deduct a withdrawal charge if:
o we calculate the Death Benefits on the death of the Annuitant dies; or
o you use the withdrawal to buy an immediate Annuity Benefit from us
with either (i) life
P51 - 24
contingencies, or (ii) a restricted prepayment option that provides
for level payments over five or more years.
REDUCTION OR ELIMINATION OF THE WITHDRAWAL CHARGE
We can reduce or eliminate the withdrawal charge for individuals or a group of
individuals if we anticipate expense savings. We may do this based on the size
and type of the group, the amount of the contribution, or whether there is some
relationship with us. Examples of these relationships would include being an
employee of Integrity or an affiliate, receiving distributions or making
internal transfers from other contracts we issued, or transferring amounts held
under qualified plans that we, or our affiliate, sponsored. We won't unlawfully
discriminate against any person or group if we reduce or eliminate the
withdrawal charge.
HARDSHIP WAIVER
We may the waive withdrawal charge on full or partial withdrawal requests of
$1,000 or more under a hardship circumstance. We may also waive the MVA on any
amounts withdrawn from the GROs. Hardship circumstances may include the owner's
(1) confinement to a nursing home, hospital or long term care facility, (2)
diagnosis of terminal illness with any medical condition that would result in
death or total disability, and (3) unemployment. We can require reasonable
notice and documentation including, but not limited to, a physician's
certification and Determination Letter from a State Department of Labor. Some of
the hardship circumstances listed above may not apply in some states, and, in
other states, may not be available at all. The waivers of the withdrawal charge
and MVA apply to the owner, not to the Annuitant. If there are joint owners, the
waivers apply to both the owner and the joint owner.
COMMISSION ALLOWANCE AND ADDITIONAL PAYMENTS TO DISTRIBUTORS
We generally pay a commission to the sales representative equal to a maximum of
7.00% of contributions, plus up to 1.00% trail commission paid on Account Value
starting in the second Contract Year. Commissions may vary due to differences
between states, sales channels, sales firms and special sales initiatives.
A broker-dealer or financial institution that distributes our variable annuity
contracts may receive additional compensation from us for, among other things,
training, marketing or other services provided. In addition to commissions, we
may pay additional promotional incentives, in the form of cash or other
compensation. We may also pay a broker-dealer additional fees to ensure that
firm's registered representatives have access, or preferred access, to our
products.
Depending on the arrangements in place at any particular time, a broker-dealer,
and the registered representatives associated with it, may have a financial
incentive to recommend a particular variable annuity contract. This could be
considered a conflict of interest.
Integrity has agreements with the following broker-dealer firms under which we
pay varying amounts on contributions paid, but no more than 0.25%, for enhanced
access to their registered representatives. The broker-dealer firms are Cadaret
Grant Co, Inc. Cadaret Grant Agency, Inc., Securities America Inc., Summit
Equities, National Equity Advisors, Investacorp, Inc., Central Jersey Financial,
Stifel, Nicolaus and Company, Centaurus Financial, FFP Securities, Raymond
James, American Portfolios, Sterne, Agee & Leach and Linsco/Private Ledger.
OPTIONAL BENEFIT CHARGES
You may purchase one of the Riders offered with this contract, which provide
optional benefits for an additional cost. The additional cost of each Rider,
along with complete details about the benefits, is provided in Part 6.
TRANSFER CHARGE
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You have twelve free transfers during a Contract Year. Then we charge $20 for
each additional transfer during that Contract Year. Transfers under our Dollar
Cost Averaging, Customized Asset Rebalancing, or Systematic Transfer Programs
described in Part 9 do not count towards the twelve free transfers and we do not
charge for transfers made under these programs
TAX RESERVE
We can make a charge in the future for taxes or for reserves set aside for
taxes, which will reduce the investment performance of the Variable Account
Options.
STATE PREMIUM TAX
We won't deduct state premium taxes from your contributions before investing
them in the Investment Options, unless required by your state law. If you elect
an Annuity Benefit, we'll deduct any applicable state premium taxes from the
amount available for the Annuity Benefit. State premium taxes currently range
from 0 to 4%.
PART 5 - TERMS OF YOUR VARIABLE ANNUITY
YOUR CONTRIBUTIONS
o Minimum initial contribution $1,000
o Minimum additional contribution $ 100
o Maximum total contribution $1,000,000 if the Annuitant is
age 75 or younger
$ 500,000 if the Annuitant is
age 76 or older
Different contribution limits apply if you select the GMAB or GMWB. See Part 6.
Contributions may also be limited by various state or federal laws or prohibited
by us for all owners under the contract. If your contract is an individual
retirement account (IRA), we will measure your contributions against the maximum
limits for annual contributions set by federal law. Contributions will be
accepted at any time up to eight years before your Retirement Date.
Your contributions are invested in the Investment Options you select. Each
contribution is credited as of the date we have received both the contribution
and instructions for allocation among the Investment Options in good order at
our Administrative Office. Wire transfers are deemed received on the day of
transmittal if credited to our account by 3 p.m. Eastern Time, otherwise they
are deemed received on the next Business Day. Contributions by check sent
through the mail are deemed received when they are delivered in good order to
our Administrative Office.
You can change your choice of Investment Options at any time by writing to the
Administrative Office. The request should indicate your contract number and the
specific change, and you should sign the request. When the Administrative Office
receives it, the change will be effective for any contribution that accompanies
it and for all future contributions. We can also accept changes by telephone.
See "Transfers" in Part 5. Different rules apply to the GMAB Investment Options
and the GMWB Investment Options. See Part 6.
UNITS IN OUR SEPARATE ACCOUNT
Your investment in the Variable Account Options is used to purchase Units. On
any given day, the value you have in a Variable Account Option is the number of
Units credited to you in that Variable Account Option multiplied by the Unit
Value. The Units of each Variable Account Option have different Unit Values.
Units are purchased when you make new contributions or transfer amounts to a
Variable Account Option. Units are redeemed (sold) when you make withdrawals or
transfer amounts out of a Variable Account Option into a different Investment
Option. We also redeem Units to pay the Death Benefit when
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the Annuitant dies, to make Distribution on Death of owner, to pay the annual
administrative charge and to pay for certain optional benefits. The number of
Units purchased or redeemed in any Variable Account Option is calculated by
dividing the dollar amount of the transaction by the Variable Account Option's
Unit Value, calculated as of the next close of business of the New York Stock
Exchange.
The Unit Values of the Variable Account Options fluctuate with the investment
performance of the corresponding Portfolios, which reflects the investment
income and realized and unrealized capital gains and losses of the Portfolios,
as well as the Portfolio's expenses.
HOW WE DETERMINE UNIT VALUE
We determine Unit Values for each Variable Account Option after the close of
business of the New York Stock Exchange, which is normally 4 p.m. Eastern Time
on each Business Day. The Unit Value of each Variable Account Option for any
Business Day is equal to the Unit Value for the previous Business Day,
multiplied by the net investment factor for that Variable Account Option on the
current Business Day. We determine a net investment factor for each Variable
Account Option as follows:
o First, we take the value of the Portfolio shares which belong to the
corresponding Variable Account Option at the close of business that
day. For this purpose, we use the share value reported to us by the
Portfolios.
o Next, we add any dividends or capital gains distributions by the
Portfolio on that day.
o Then we charge or credit for any taxes or amounts set aside as a
reserve for taxes.
o Then we divide this amount by the value of the Portfolio shares which
belong to the corresponding Variable Account Option at the close of
business on the last day that a Unit Value was determined.
o Finally, we subtract the mortality and expense risk charge for each
calendar day since the last day that a Unit Value was determined (for
example, a Monday calculation will include charges for Saturday and
Sunday). The daily charge is an amount equal to an annual effective
rate of 1.55%, or 2.15% if you have purchased the GMAB Rider.
Generally, this means that we adjust Unit Values to reflect the investment
experience of the Portfolios and for the mortality and expense risk charge and a
GMAB Rider charge, if elected.
TRANSFERS
You may transfer all or any part of your Account Value among the Variable
Account Options and the GROs, subject to our transfer restrictions:
o The amount transferred must be at least $100 or, if less, the entire
amount in the Investment Option.
o Transfers into to a GRO must be to a newly elected GRO (that is, to a
GRO you haven't already purchased) at the then-current Guaranteed
Interest Rate.
o Transfers into the GMAB Investment Options, GMWB Investment Options or
the STO are not permitted.
o Transfers out of a GRO more than 30 days before the end of the
Guarantee period are subject to an MVA. See Part 3.
o Transfers out of the GMAB are not permitted for the first seven years
after each contribution into the GMAB. See Part 6.
o Transfers out of the GMWB Investment Options are restricted. See Part
6.
COST OF TRANSFER
You have twelve free transfers during a Contract Year. Then we charge $20 for
each additional transfer during that Contract Year. Transfers under our Dollar
Cost Averaging, Customized Asset Rebalancing,
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or Systematic Transfer Programs described in Part 9 do not count towards the
twelve free transfers and we do not charge for transfers made under these
programs
HOW TO TRANSFER
You may request a transfer by writing to our Administrative Office at the
address in the Glossary. Each request for a transfer must specify:
o the contract number
o the amounts to be transferred, and
o the Investment Options to and from which the amounts are to be
transferred.
Transfers may also be arranged through our telephone transfer service using your
personal identifiers. We'll honor telephone transfer instructions from any
person who provides correct identifying information. We aren't responsible for
fraudulent telephone transfers we believe to be genuine according to these
procedures. Accordingly, you bear the risk of loss if unauthorized persons make
transfers on your behalf.
Telephone transfers may be requested from 9:00 a.m. - 5:00 p.m., Eastern Time,
on any day we're open for business. If we receive your transfer request before
4:00 p.m. Eastern Time on a Business Day, you will receive the Unit Values for
the Variable Account Options as of the close of business on the day you call.
Transfer requests for Variable Account Options received by us at or after 4:00
p.m. Eastern Time (or the close of the New York Stock Exchange, if earlier) on a
Business Day or on a day other than a Business Day, will be processed using Unit
Values as of the close of business on the next Business Day after the day you
call. All transfers will be confirmed in writing.
A transfer request doesn't change the allocation of current or future
contributions among the Investment Options. Different rules apply to the GMWB
Investment Options. See Part 6.
EXCESSIVE TRADING
We reserve the right to limit the number of transfers in any Contract Year or to
refuse any transfer request for an owner or certain owners if: (a) we believe in
our sole discretion that excessive trading or a specific transfer request or
group of transfer requests may have a detrimental effect on Unit Values or the
share prices of the Portfolios; or (b) we are informed by one or more of the
Portfolios that the purchase or redemption of shares is to be restricted because
of excessive trading, or that a specific transfer or group of transfers is
expected to have a detrimental effect on share prices of affected Portfolios.
We reserve the right to modify these restrictions or to adopt new restrictions
at any time and in our sole discretion.
We will notify you or your designated representative if your requested transfer
is not made. Current SEC rules preclude us from processing your request at a
later date if it is not made when initially requested. ACCORDINGLY, YOU WILL
NEED TO SUBMIT A NEW TRANSFER REQUEST IN ORDER TO MAKE A TRANSFER THAT WAS NOT
MADE BECAUSE OF THESE LIMITATIONS.
SPECIFIC NOTICE REGARDING THE USE OF THIS ANNUITY FOR MARKET TIMING OR FREQUENT
TRADING
This contract is not designed to serve as a vehicle for frequent trading in
response to short-term fluctuations in the stock market. Any individual or legal
entity that intends to engage in stale price arbitrage, utilize market timing
practices or make frequent transfers to take advantage of inefficiencies in
mutual fund pricing or for any other reason should not purchase this contract.
These abusive or disruptive transfers can have an adverse impact on management
of a Portfolio, increase Portfolio expenses and affect Portfolio performance.
The following policies for transfers between Investment Options are designed to
protect contract owners from frequent trading activity. However, we may not be
able to detect all frequent trading, and we may not be able to prevent transfers
by those we do detect. As detecting frequent trading and preventing its
recurrence is, in many circumstances, a reactive response to improper trading,
we cannot guarantee,
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despite our policies and procedures, that we will detect all frequent trading in
our contracts, prevent all frequent trading and prevent all harm caused by
frequent trading.
1. Prohibited Transfers. Under normal market conditions, we will refuse to
honor, unless made by first class U.S. mail:
o a transfer request into an International or High Yield Variable
Account Option (as defined by us) if, within the preceding five
Business Days, there was a transfer out of the same Variable Account
Option;
o a transfer request out of an International or High Yield Variable
Account Option if, within the preceding five Business Days, there was
a purchase or transfer into the same Variable Account Option.
2. Allowable Transfers Accompanying A Prohibited Transfer. We cannot honor an
otherwise allowable transfer request if it is made at the same time or
accompanies a request for a Prohibited Transfer.
3. Notification. We will notify you if your requested transfer is not made.
4. Revocation of Same-Day Transfer Privileges. Contract owners (or agents
acting on their behalf) who engage in market timing, as determined by us in
our sole discretion, will have their same-day transfer privileges revoked
immediately.
o If your same-day transfer privileges are revoked, you will be required
to submit all future transfer requests by U.S. mail or overnight
delivery service. Transfer requests made by telephone or the Internet
or sent by fax, same-day mail or courier service will not be accepted.
o In addition, if you wish to cancel a transfer request, your
cancellation request must also be in writing and received by U.S. Mail
or overnight delivery service. The cancellation request will be
processed as of the day it is received.
5. 20 Investment Option Transfers Permitted. You may submit 20 Investment
Option transfers each Contract Year for each contract by U.S. Mail,
Internet, telephone request, or fax.
o All requests for transfers among your Investment Options in excess of
20 per Contract Year must be submitted by regular U.S. mail or
overnight mail. Transfer requests made by telephone or the Internet or
sent by fax, same day mail or courier service will not be accepted,
and Internet trading privileges will be suspended. If you want to
cancel a written Investment Option transfer, you must also cancel it
in writing by U.S Mail or overnight delivery service. We will process
the cancellation request as of the day we receive it.
o Upon reaching your next Contract Anniversary, you will again be
provided with 20 Investment Option transfers. Investment Option
transfers are non-cumulative and may not be carried over from year to
year.
o Transfers made under our Dollar Cost Averaging Program, Systematic
Transfer Option Program, Customized Asset Rebalancing Program, or
other related programs we may offer are not counted toward the 20
Investment Option transfer limitation. If we determine in our sole
discretion that you are manipulating these or similar programs to
circumvent our transfer policies, however, we may take any action that
we deem appropriate to stop this activity. This could include (but is
not limited to) revoking your same-day transfer privileges or your
ability to utilize these programs.
Conformity with these policies does not necessarily mean that trading will not
be deemed to constitute market timing. If it is determined, in our sole
discretion, that a contract owner is attempting to engage in improper trading,
we reserve the right to revoke their same-day transfer privileges. We will also
take into consideration any information and data provided to us by the
Portfolios' investment advisors regarding
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improper trading. If we are notified by a Portfolio's investment advisor that
the frequency or size of trades by an individual or group of individuals is
disruptive to the management of the Portfolio, and the investment advisor asks
us to restrict further trading in that Portfolio by the individual or group, we
will comply with that request promptly. We will impose the Portfolio's
investment advisor's restriction even if the transactions otherwise conform to
our policies. We do not grant waivers of these policies to particular investors
or classes of investors.
We may modify these restrictions at any time in our sole discretion.
WITHDRAWALS
You may make withdrawals as often as you wish. Each withdrawal must be at least
$100. The withdrawal will be taken from your Investment Options, pro rata, in
the same proportion their value bears to your total Account Value. For example,
if your Account Value is divided in equal 25% shares among four Investment
Options, when you make a withdrawal, 25% of the Account Value will come from
each of your four Investment Options. You can tell us if you want your
withdrawal handled differently.
For partial withdrawals, the total amount deducted from your Account Value will
include the withdrawal amount requested, plus or minus any MVA that may apply,
and any withdrawal charges that apply, so that the net amount you receive will
be the amount you requested, less any applicable tax withholding.
During the first seven years after each contribution, there is a withdrawal
charge for any withdrawals other than your Free Withdrawal Amount. See Part 4,
section titled "Withdrawal Charge" for details. This charge is in addition to
any MVAs made to early withdrawals from your GROs. When you make a partial
withdrawal, the total amount deducted from your Account Value will include the
withdrawal amount requested plus any withdrawal charges and plus or minus any
MVAs. The total amount that you receive will be the total amount that you
requested, less any applicable tax withholding.
The Free Withdrawal Amount is the greater of:
o 10% of your Account Value at the time you make your first withdrawal
request during a Contract Year; or
o 10% of your Account Value at your most recent Contract Anniversary.
During your first Contract Year, the Free Withdrawal Amount is 10% of your
initial contribution received on the Contract Date.
You may take your Free Withdrawal Amount each Contract Year without a withdrawal
charge or MVA. If you don't take the Free Withdrawal Amount in any one Contract
Year, you can't add it to the next year's Free Withdrawal Amount. If you
completely surrender the contract, withdrawal charges on your contributions will
not be reduced by your Free Withdrawal Amount.
Most of the withdrawals you make before you are 59 1/2 years old are subject to
a 10% federal tax penalty. If your contract is part of a tax-favored retirement
plan, the plan may limit your withdrawals. See Part 8.
Your financial professional or a third party may offer you asset allocation or
investment advisory services for your contract. Fees you pay for such investment
advisory services are in addition to any contract charges. If you want to pay
for such services from your Account Value, you must complete a form authorizing
us to pay the amount requested by the third party from your Account Value. These
payments are withdrawals from your Account Value. We will withdraw the requested
payment according to the third party's instructions (including instructions
about which Investment Options to withdraw the fee from) and send you a
confirmation of the transaction. We will not verify the accuracy of the amount
being requested.
Additional restrictions apply to withdrawals from the GMAB Investment Options
and the GMWB Investment Options. See Part 6.
ASSIGNMENTS
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We do not allow partial or collateral assignment of your contract.
DEATH BENEFIT PAID ON DEATH OF ANNUITANT
Unlike some other variable annuities, our contract pays the Death Benefit upon
the Annuitant's death, rather than upon the owner's death. You name the
Annuitant's beneficiary (or beneficiaries). We will pay a Death Benefit to the
Annuitant's surviving beneficiary if:
o the Annuitant dies before the Retirement Date; and
o there is no contingent Annuitant.
If an Annuitant's beneficiary doesn't survive the Annuitant, then the Death
Benefit is generally paid to the Annuitant's estate.
A Death Benefit won't be paid after the Annuitant's death if there is a
contingent Annuitant. In that case, the contingent Annuitant becomes the new
Annuitant under the contract. The Annuitant and any contingent Annuitants may
not be changed once the contract has been issued.
The Death Benefit varies depending on the Annuitant's age on the Contract Date.
For contracts where the Annuitant's age on the Contract Date is up to and
including age 85, the Death Benefit will be the greatest of:
o highest Account Value on any Contract Anniversary before Annuitant's
age 81, plus any subsequent contributions received after that Contract
Anniversary, minus an adjustment for any subsequent withdrawals
received after that Contract Anniversary; or
o total contributions, minus an adjustment for withdrawals; or
o your current Account Value on the Business Day we receive due proof of
death and the beneficiary's election in good order.
For contracts where the Annuitant's age on the Contract Date is 86 or older the
Death Benefit is:
o your current Account Value on the Business Day we receive due proof of
death and the beneficiary's election in good order.
The Death Benefit can be paid in a lump sum or as an annuity. You may select
either option. If you have not selected an option before the Annuitant dies, the
Annuitant's beneficiary may select either option at the Annuitant's death.
However, a beneficiary that is not a natural person automatically receives a
lump sum distribution.
If you take withdrawals from the Account Value the Death Benefit will be reduced
proportionally. We'll also adjust the Death Benefit for any applicable charges.
DISTRIBUTION ON DEATH OF OWNER
When you, as owner, die before the Retirement Date, your entire interest in this
contract is required to be distributed to the owner's beneficiary within five
years. However, any interest that is payable to the owner's beneficiary may be
payable over the life of that beneficiary or over a period not extending beyond
the life expectancy of that beneficiary, as long as distributions begin within
one year after the owner's death. This distribution is required by Section 72(s)
of the Code.
You name the owner's beneficiary (or beneficiaries). We will pay the owner's
surviving beneficiary the Distribution on Death. If an owner's beneficiary
doesn't survive the owner, then the Distribution on Death of the owner is
generally paid to the owner's estate.
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If there are joint owners, the first death of one of the joint owners will be
treated as the death of both owners, and a Distribution on Death to the owners'
beneficiary will be required.
If you, as owner, die on or after the Retirement Date and before the entire
interest in the contract has been distributed, then the rest of the annuity must
be distributed to the owner's beneficiary at least as quickly as the method in
effect when you died.
If the owner's sole beneficiary is the owner's spouse, the contract (along with
its deferred tax status) may be continued in the spouse's name as the owner.
You may change any beneficiary by sending the appropriate form in good order to
the Administrative Office. We reserve the right to limit the number of
beneficiaries you can name at one time. Please consult your financial
professional and tax advisor in order to properly identify your beneficiaries so
that the Death Benefit is paid to the intended beneficiary, and to structure
your contract so that spousal continuation can occur, if that is your intention.
SPOUSAL CONTINUATION
If you (as owner) die, the Code allows your surviving spouse to continue the
annuity contract, along with its tax-deferred status, so long as your spouse is
your sole owner's beneficiary.
This contract also provides an enhanced type of spousal continuation if you have
structured your contract as follows:
o you are the sole owner and Annuitant;
o no contingent Annuitant is named; and
o your spouse is the owner's sole beneficiary and the Annuitant's sole
beneficiary.
Under this enhanced spousal continuation, we will increase the continued
contract's Account Value to the same amount that would have been paid to the
surviving spouse had they taken a lump sum distribution. This increase will be
added to the Fixed and Variable Account Options you have selected on a pro-rata
basis. For example, if the Account Value at death was $100,000, but we would
have paid out a Death Benefit of $115,000, the surviving spouse's contract will
continue with a $115,000 Account Value. The surviving spouse continues the
contract with its tax deferred earnings and may exercise all rights and
privileges under the contract. When the surviving spouse dies, the Death Benefit
will be paid to the surviving spouse's beneficiary.
Under this enhanced spousal continuation, we may also waive any withdrawal
charges applicable to full or partial withdrawals made after the spousal
continuation is elected. But the MVA will apply. Also, certain Investment
Options or administrative programs may not be available on the continued
contract. We reserve the right at any time to make changes to continued
contracts that are permitted by law.
DEATH CLAIMS
A death claim will be effective on the Business Day we receive due proof of
death of either the owner or Annuitant. This means we have received an original
certified death certificate and company death claim paperwork that is in good
order. During the period from the date of death until we receive all required
paperwork in good order, the Account Value will remain invested in the
Investment Options you chose, will continue to reflect the investment
performance of any Variable Account Options during this period and will be
subject to market fluctuations. Fees and expenses will continue to apply. If
there are multiple beneficiaries, after one beneficiary submits death claim
paperwork, the Death Benefit or Distribution on Death of owner will be
calculated and the first beneficiary will receive payment according to his
election.
RETIREMENT DATE AND ANNUITY BENEFIT
Your Annuity Benefit under this contract is calculated as of the Retirement Date
you select. You can change the Retirement Date to a date no later than the last
Annuitant's 100th birthday (Maximum
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Retirement Date) by writing to the Administrative Office any time before the
Maximum Retirement Date. Contract terms that apply to the various retirement
programs, along with the federal tax laws and state insurance laws, establish
certain minimum and maximum retirement ages. If your contract is a qualified
retirement plan (including an IRA or TSA), distributions may continue beyond the
Maximum Retirement Date.
Upon your Retirement Date, you may elect to receive a lump sum of your Surrender
Value, or you may elect an Annuity Benefit. The amount applied toward the
purchase of an Annuity Benefit will be the Adjusted Account Value, less any
pro-rata annual administrative charge, except that the Surrender Value will be
the amount applied if the Annuity Benefit does not have a life contingency and
either (i) the term is less than five years, or (ii) the annuity can be changed
to a lump sum payment without a withdrawal charge.
An Annuity Benefit can provide for fixed payments, which may be made monthly,
quarterly, semi-annually or annually. You can't change or redeem the annuity
once payments have begun. For any annuity, the minimum initial payment must be
at least $100 monthly.
We currently offer the following types of annuities, funded through our General
Account:
o Life and ten years certain annuity, which provides a fixed life income
annuity with 10 years of payments guaranteed.
o Period certain annuity, which provides for fixed payments for a fixed
period. The amount is determined by the period you select when you
select the type of annuity you want. If the Annuitant dies before the
end of the period selected, the Annuitant's beneficiary will receive
the remaining periodic payments.
o Period certain life annuity, which provides for fixed payments for at
least the period selected and after that for the life of the Annuitant
or the lives of the Annuitant and any joint Annuitant under a joint
and survivor annuity. If the Annuitant (or the Annuitant and the joint
Annuitant under a joint and survivor annuity) dies before the period
selected ends, the remaining payments will go to the Annuitant's
beneficiary.
o Life income annuity, which provides fixed payments for the life of the
Annuitant, or until the Annuitant and joint Annuitant both die under a
joint and survivor annuity.
If you haven't already selected a form of Annuity Benefit, within six months
prior to your Retirement Date, we'll send you a notice form. You can tell us on
the form the type of annuity you want or confirm to us that you want the normal
form of annuity, which is the life and ten years certain annuity. However, if we
don't receive a completed form from you on or before your Retirement Date, we'll
extend the Retirement Date, subject to the limitations imposed by federal or
state law, until we receive your written instructions at our Administrative
Office. During this extension, the values under your contract in the various
Investment Options will remain invested in those options and amounts remaining
in Variable Account Options will continue to be subject to the associated
investment risks.
ANNUITY PAYMENTS
Fixed annuity payments won't change and are based upon annuity rates provided in
your contract. The size of payments will depend on the form of annuity that was
chosen and, in the case of a life income annuity, on the Annuitant's age and
gender (except under most tax-favored retirement programs, and under certain
state laws, where gender-neutral rates apply). If our annuity rates then in
effect would yield a larger payment, those rates will apply instead of the
contract rates.
If the age or gender of an Annuitant has been misstated, any benefits will be
those that would have been purchased at the correct age and gender. Any
overpayments or underpayments made by us will be charged or credited with
interest at the rate required by your state. If we have made overpayments
because of incorrect information about age or gender, we'll deduct the
overpayment from the next payment or payments due. We add underpayments to the
next payment.
TIMING OF PAYMENT
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We normally apply your Adjusted Account Value to the purchase of an annuity, or
send you partial or total withdrawals, within seven days after receipt of the
required form at our Administrative Office. We can defer our action as to
Account Value allocated to the Variable Account Options, however, for any period
during which:
(1) the New York Stock Exchange has been closed or trading on it is restricted;
(2) an emergency exists as determined by the SEC so that disposal of securities
isn't reasonably practicable or it isn't reasonably practicable for the
Separate Account fairly to determine the value of its net assets; or
(3) the SEC, by order, permits us to defer action in order to protect persons
with interests in the Separate Account.
HOW YOU MAKE REQUESTS AND GIVE INSTRUCTIONS
When you write to our Administrative Office, use the address listed in the
Glossary of this prospectus. We can't honor your requests unless they are in
proper and complete form. Whenever possible, use one of our printed forms, which
may be obtained from our Administrative Office.
PART 6 - OPTIONAL BENEFITS
You may purchase one of the Riders offered with this contract, which provide
optional benefits for an additional cost. The Riders may only be elected at the
time of application and will replace or supplement the standard contract
benefits. Charges for the optional benefit Riders are in addition to the
standard contract charges. Be sure you understand the charges. Carefully
consider whether you need the benefit and whether it is appropriate for your
particular circumstances. Also consider whether you can buy the benefit more
cheaply as part of the variable annuity or with a separate contract.
GUARANTEED MINIMUM ACCUMULATION BENEFIT RIDER
The GMAB, which we call the "Guarantee Return Plus" in our marketing material,
is an optional benefit Rider that you may purchase for an additional fee. The
GMAB Rider guarantees the future value of amounts contributed to a GMAB
Investment Option for a specified accumulation period.
OVERVIEW OF THE BENEFIT AND INVESTMENT OPTIONS
We currently offer a ten-year accumulation period in three Investment Options,
designated as "GMAB Investment Options." You may select only one of the three
GMAB Investment Options. We provide a guarantee minimum value for each
contribution to a GMAB Investment Option as shown in the table below:
----------------------------------------------------- ------------------------------------------
GMAB INVESTMENT OPTION GUARANTEED MINIMUM VALUE AT THE END OF
10 YEARS
----------------------------------------------------- ------------------------------------------
Touchstone VST Conservative ETF Fund,
Service Class 125%
----------------------------------------------------- ------------------------------------------
Touchstone VST Moderate ETF Fund,
Service Class 115%
----------------------------------------------------- ------------------------------------------
Touchstone VST Aggressive ETF Fund,
Service Class 100%
----------------------------------------------------- ------------------------------------------
We guarantee that the minimum value of each contribution to your GMAB Investment
Option, at the end of its ten-year accumulation period, will be at least the
percentage of the contribution amount indicated in the table above, adjusted for
partial withdrawals and costs.
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At the end of the ten-year accumulation period:
>> If the accumulated value of a contribution to your GMAB Investment Option
is greater than the guaranteed minimum value due to market performance, you
will receive the accumulated value.
>> If the accumulated value of a contribution to your GMAB Investment Option
is less than the guaranteed minimum value due to market performance, we
will increase the accumulated value of that contribution to equal the
guaranteed minimum value.
RIDER FEE
We will assess the cost of the GMAB Rider by deducting an additional daily
charge equal to an annual effective rate of 0.60% from the amount invested in
your GMAB Investment Option. Therefore, the total daily charge deducted from
your GMAB Investment Option (including the mortality and expense risk charge)
will be an annual effective rate of 2.15%.
CONTRIBUTION LIMITS
Your initial contribution to a GMAB Investment Option must be at least $10,000.
Each additional contribution must be at least $1,000 and must be made to the
same GMAB Investment Option. We reserve the right to revise the minimum
contribution amounts and to limit the maximum total contribution you may make to
your GMAB Investment Option.
WITHDRAWALS AND TRANSFERS
o In years 1-7 of the accumulation period for each contribution, you may
withdraw some or all of your contribution to the GMAB Investment Option or
surrender your contract entirely. In either case, a withdrawal charge will
apply. See Part 4.
o In years 8-10 of the accumulation period for each contribution, you may
withdraw some or all of your contribution to a GMAB Investment Option,
surrender your contract entirely or transfer funds from the GMAB Investment
Options to other available Investment Options.
Partial withdrawals at any time before the end of the 10-year accumulation
period from will reduce the guaranteed minimum value of your GMAB Investment
Option on a proportional basis. For Example:
o You contribute $100,000 to the Touchstone VST Moderate ETF Fund, which
has a guaranteed minimum value of $115,000 at the end of the 10-year
accumulation period.
o In year 8, the accumulated value of the contribution is $90,000 and
you request a $10,000 withdrawal.
o The withdrawal reduces the accumulated value by 11.11%
($10,000/$90,000)
o Therefore the guaranteed minimum value of $115,000 is also reduced by
11.11%, which is $12,777.
Because the guaranteed minimum value in this example is greater than the
accumulated value, the guaranteed minimum value is decrease by a larger dollar
amount than the partial withdrawal amount. If the guaranteed minimum value was
less than the accumulated value at the time of the withdrawal, the guaranteed
minimum value would be decreased by a smaller dollar amount than the partial
withdrawal amount.
If you withdrawal (or transfer in years 8-10) all of a contribution to your GMAB
Investment Option before the end of a 10-year accumulation period for that
contribution (or surrender your contract entirely), the value of that
contribution will be its current accumulated value with no guaranteed minimum
value, reduced by prior partial withdrawals, withdrawal charges and costs. Also,
if the Annuitant dies and a death benefit is calculated, the value of a
contribution to a GMAB Investment Option will be its current accumulated value
with no guaranteed minimum value.
P51 - 35
At the end of a 10-year accumulation period for each contribution, you may
transfer that amount to any Fixed Account or Variable Account Option then
available. We will notify you at least 45 days before the end of the
accumulation period for each contribution to your GMAB Investment Option. If we
do not receive your instructions prior to the end of the ten-year accumulation
period, the amount will be transferred to the Touchstone VST ETF Fund, without
the GMAB benefit or the fee.
Partial Withdrawals from your Account Value taken pro-rata among your Investment
Options will include your GMAB Investment Options and will reduce the guaranteed
minimum value of your GMAB Investment Option on a proportional basis, unless you
specify that your withdrawal should be taken from certain Investment Options.
Withdrawals from your GMAB Investment Option will be taken first from the
earliest contributions you made to your GMAB Investment Option, then from the
next contribution and so on (first-in-first-out.) We reserve the right to
require a minimum balance in the GMAB Investment Option.
The GMAB Investment Option is not available if the accumulation period ends on a
date later than either the Retirement Date or in the Contract Year in which the
Annuitant attains age 100.
The GMAB Rider will terminate on the earliest of the following:
o the owner's beneficiary succeeds as the owner of the contract, unless
the owner's beneficiary is the owner's spouse and elects to continue
the contract in lieu of taking a distribution of the Surrender Value;
o a Death Benefit is calculated under the contract;
o you transfer ownership of the contract;
o you elect an Annuity Benefit under the contract;
o the contract terminates.
If the GMAB is selected, the EEB and the GMWB are not available.
GUARANTEED MINIMUM WITHDRAWAL BENEFIT RIDER
The GMWB, which we refer to as the "Guaranteed Lifetime Income Advantage" in our
marketing material, is an optional benefit Rider, which you may purchase for an
additional fee. The GMWB Rider guarantees that you can withdraw a certain amount
each Contract Year as long as the Rider is in effect and you limit your
withdrawals to the amount available under the Rider. If you withdraw more than
the amount available under the Rider, your guaranteed values will usually
decrease. Once you purchase this Rider, you cannot voluntarily terminate or
cancel it for 10 years. A description of the guarantees, limits and fees
associated with the GMWB Rider are described in this section.
DEFINITIONS
In addition to the definitions located in the Glossary at the beginning of this
prospectus, we use the following terms to describe how the GMWB Rider works:
Annual Processing Date is the close of business on the day before a Contract
Anniversary. If the Annual Processing Date is not a Business Day, we will use
the values from the next Business Day for all calculations occurring on the
Annual Processing Date. If a Withdrawal is taken on an Annual Processing Date,
we will process the Withdrawal first. Then we will deduct the Rider fee and the
Annual Administrative Charge, if applicable. See Part 4. After deduction of the
fees, we will apply a Bonus, if any, and then determine whether to Step-Up the
Guaranteed Withdrawal Balance.
Bonus is an increase in the Guaranteed Withdrawal Balance on an Annual
Processing Date during the Bonus period if you have taken no withdrawals during
that Contract Year.
GMWB Investment Option Portfolios are the Portfolios available within the GMWB
Investment Options.
P51 - 36
Guaranteed Annual Withdrawal Amount (GAWA) is the amount we guarantee to be
available for Withdrawal each Contract Year until the Guaranteed Withdrawal
Balance is depleted. The initial GAWA is set at 5% of the initial Guaranteed
Withdrawal Balance.
Guaranteed Payment Phase begins when the Account Value of your contract is zero
but either the Guaranteed Withdrawal Balance or the Lifetime Payout Amount is
more than zero.
Guaranteed Withdrawal Balance (GWB) is the total amount we guarantee to be
available for withdrawals while the Rider is in effect. The initial GWB is equal
to your initial contribution. The maximum GWB permitted at any time is $x
million.
Lifetime Payout Amount (LPA) is the amount we guarantee to be available for
withdrawal each Contract Year during the life of the primary Annuitant, once
that amount is determined. We determine the initial LPA on the Annual Processing
Date prior to the Contract Anniversary on or after which the primary Annuitant
reaches age 65. If the primary Annuitant is already age 65 when you purchase the
Rider, the LPA is determined on the Contract Date. The initial LPA is set at 5%
of the GWB.
Reset is a reduction in the GWB, which may occur any time you withdraw more than
your GAWA during a Contract Year.
Step-Up is an increase in the GWB to equal the Account Value if the Account
Value is greater than the GWB on an Annual Processing Date.
Withdrawal, for purposes of the GMWB, means the amount withdrawn plus income
taxes that we withhold from the amount withdrawn, but does not include any
applicable Withdrawal Charge. A Withdrawal Charge may still be deducted from
your Account Value. See "Withdrawal Charge" in Part 4 and the "Other Important
Facts About Withdrawals" section below.
OVERVIEW OF THE GMWB RIDER
If you elect the GMWB Rider, we will separately track two values: the Account
Value under your contract and the GWB under your GMWB Rider. Market performance,
contributions and Withdrawals affect both values, but in different ways.
Market Performance
Your Account Value increases or decreases daily due to the performance of the
GMWB Investment Option Portfolios you choose. In contrast, the GWB is affected
by market performance only when we apply a Step-Up or Reset.
>> If the value of your GMWB Investment Option Portfolios increases due to
market performance, your GWB may increase when we apply a Step-Up.
>> If the value of your GMWB Investment Option Portfolios decreases due to
market performance, your GWB may decrease if we apply a Reset.
Contributions and Withdrawals
Your contributions increase both your Account Value and your GWB
dollar-for-dollar. Withdrawals decrease your Account Value dollar-for-dollar.
However, the effect of Withdrawals on your GWB can be significantly greater than
dollar-for-dollar depending on the amounts you withdraw in each Contract Year.
See the section below titled "Effect of Withdrawals and Reset."
GMWB FEE
We charge a fee for the GMWB Rider of 0.60% on each Annual Processing Date while
the GMWB is in effect. The 0.60% fee is multiplied by the Adjusted GWB. The
Adjusted GWB is the GWB at the end of the prior Annual Processing Date, plus any
additional contributions you made during the current Contract Year. We will
deduct the fee from your GMWB Investment Option Portfolios in the same
proportion that the value of each of the Portfolios bears to the Account Value
(pro-rata). If the GMWB Rider terminates on any day other than an Annual
Processing Date, we will charge a proportional share of the fee for the
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part of the Contract Year the Rider was in effect. We do not deduct the fee
during the Guaranteed Payment Phase. This fee decreases your Account Value
dollar-for-dollar, but does not decrease your GWB.
We reserve the right to increase the annual GMWB Rider fee up to 1.20%. If we do
increase the fee, we will give you prior written notice of the increase and an
opportunity to reject the increase. If you reject the increase by giving us
written notice, your fee will remain at the then-current rate, but you will not
receive any Step-Ups that would otherwise take place after the effective date of
the Rider fee increase. Your decision to reject an increase is permanent and
once an increase is rejected, you will not receive additional Step-Ups. If you
do not reject the increase in writing, the annual fee for your GMWB Rider will
increase and you will continue to receive Step-Ups under the terms of the Rider.
We may implement more than one Rider fee increase, up to the maximum annual fee
of 1.20%. Once you have rejected a fee increase, you will no longer be eligible
to receive notice of or accept additional fee increases.
RESET AND THE EFFECT OF WITHDRAWALS ON YOUR GWB AND GAWA
Each time you make a Withdrawal, we decrease the GWB. As long as your total
Withdrawals in any Contract Year are less than or equal to the GAWA, we will
simply decrease the GWB dollar-for-dollar.
However, once your total Withdrawals during a Contract Year are more than the
GAWA, we will lower or "Reset" the GWB to equal the Account Value, if your
Account Value is less than the GWB. Then, each time you take an additional
Withdrawal during that Contract Year, if your Account Value is less than the GWB
immediately after each Withdrawal, we will again Reset the GWB to equal the
Account Value. THIS RESET CAN HAVE A SIGNIFICANT NEGATIVE EFFECT ON YOUR GWB AND
GAWA, ESPECIALLY IN A DECLINING MARKET.
Each time we Reset the GWB, we also recalculate the GAWA. The new GAWA will be
the lesser of:
o the GAWA before the Withdrawal; or
o 5% of the Account Value after the Withdrawal.
IF YOU WITHDRAW MORE THAN YOUR GAWA IN ANY CONTRACT YEAR, YOU MAY REDUCE OR
ELIMINATE YOUR GUARANTEED VALUES.
Effect of Withdrawals on Your LPA
After we determine the LPA, if you limit your Withdrawals in each Contract Year
to the LPA, you may continue to receive the LPA even if your Account Value
reduces to zero as long as the primary Annuitant is alive and the GMWB Rider is
in effect. See the section below titled "Guaranteed Payment Phase."
However, once your total Withdrawals during a Contract Year are more than the
LPA, we will recalculate the LPA. The new LPA will be the lesser of:
o the LPA before the Withdrawal; or
o 5% of the Account Value after the Withdrawal.
If you take any Withdrawals before we determine the LPA, the initial amount of
the LPA may be less than the GAWA. IF YOU WITHDRAW MORE THAN YOUR LPA IN ANY
CONTRACT YEAR, YOU MAY REDUCE OR ELIMINATE YOUR GUARANTEED VALUES.
Other Important Facts About Withdrawals:
>> The GAWA is not cumulative. If you withdraw less than the GAWA in any
Contract Year, you cannot carry over or add the remaining GAWA to
Withdrawals made in future years.
>> If you withdraw more than your Free Withdrawal Amount (10% in any Contract
Year) a Withdrawal Charge may apply, even if the Withdrawal amount is less
than your GAWA or LPA. A Withdrawal charge applies to each contribution for
the first 7 years after you make a contribution. See Part 4, "Withdrawal
Charge" and Part 5, "Withdrawals." The Withdrawal Charge is deducted from
your Account Value, but not from your GWB.
P51 - 38
>> Withdrawals will be taken pro-rata from your GMWB Investment Option
Portfolios. You cannot make a Withdrawal from specific Portfolios.
>> If you take Withdrawals under our Required Minimum Distribution program
(see "Required Minimum Distributions" below), we will not Reset the GWB, or
recalculate the GAWA and/or the LPA, even where a Withdrawal exceeds the
GAWA and/or LPA for a Contract Year.
>> The taxable portion of your Withdrawals is taxed as ordinary income. You
may be subject to a 10% tax penalty if you are under 59 1/2 at the time of
the Withdrawal.
>> Since the benefit of the GMWB Rider is accessed through Withdrawals, the
GMWB Rider may not be appropriate if you do not expect to take Withdrawals
while this Rider is in effect. YOU SHOULD CONSULT WITH YOUR FINANCIAL
ADVISOR BEFORE PURCHASING THIS RIDER.
BONUS
We will increase your GWB if you make no Withdrawals in a Contract Year during
the GMWB Bonus period. The GMWB Bonus period is the lesser of: o the first 10
Contract Years; or o each Contract Year up to and including the Contract Year in
which the primary Annuitant reaches age 80.
The Bonus amount is 5% of the sum of all contributions minus 5% of the sum of
all Withdrawals. We calculate and apply the Bonus on the Annual Processing Date
before any Step-Up that may be applied.
Each time we apply a Bonus to the GWB, we will recalculate the GAWA. The new
GAWA will be the greater of:
o the GAWA before the Bonus; or
o 5% of the GWB after the Bonus.
Each time we apply a Bonus to the GWB after the LPA has been determined, we will
recalculate the LPA. The new LPA will be the greater of: o the LPA before the
Bonus; or o 5% of the GWB after the Bonus.
STEP-UP
Your GWB may increase due to favorable market performance. On each Annual
Processing Date up to and including the 30th Annual Processing Date as long as
the GMWB Rider is in effect, we will compare your Account Value to your GWB. If
your Account Value is greater than the GWB, we will increase or "step up" the
GWB to equal the Account Value, up to the maximum GWB of $x million.
Each time we apply a Step-Up, we will recalculate the GAWA. The new GAWA will be
the greater of:
o the GAWA before the Step-Up; or
o 5% of the GWB after the Step-Up.
Each time we apply a Step-Up after the LPA has been determined, we will
recalculate the LPA. The new LPA will be the greater of: o the LPA before the
Step-Up; or o 5% of the GWB after the Step-Up.
ADDITIONAL CONTRIBUTIONS
Your GWB will increase dollar-for-dollar by the amount of any additional
contribution, up to the maximum GWB of $5 million.
Each time you make an additional contribution, we will recalculate the GAWA. The
new GAWA will be the lesser of:
o the GAWA before the additional contribution, plus 5% of the additional
contribution; or
P51 - 39
o 5% of the GWB after the additional contribution.
Each time you make an additional contribution after the LPA has been determined,
we will recalculate the LPA. The new LPA will be the lesser of:
o the LPA before the additional contribution, plus 5% of the additional
contribution; or
o 5% of the GWB after the additional contribution.
Contribution Limits
Your initial contribution must be at least $25,000 and each additional
contribution must be at least $1,000. Your initial contribution cannot be more
than $1 million. Each additional contribution cannot be more than any amount
that would cause the total additional contributions in that Contract Year to be
greater than $100,000, or would cause the Account Value to exceed $5 million.
We reserve the right to refuse to accept additional contributions at any time
after the first Contract Anniversary to the extent permitted in the state we
issue your contract, and subject to the requirements of tax qualified retirement
plans, including IRAs. If we refuse to accept additional contributions, we will
do so on a nondiscriminatory basis. You cannot make additional contributions
during the Guaranteed Payment Phase.
GMWB INVESTMENT OPTIONS
If you elect to purchase the GMWB Rider, you must invest 100% of your Account
Value at all times in ONLY ONE of the three GMWB Investment Options described
below.
GMWB INVESTMENT OPTION 1 - You may invest 100% in the three GMWB Investment
Option Portfolios listed below. You may select one or more of the three
Portfolios, as long as your allocations add up to 100% and do not exceed the
percentage indicated for any particular Portfolio.
Touchstone VST Touchstone VST Touchstone VST
Conservative ETF Portfolio Moderate ETF Portfolio Aggressive ETF Portfolio
0 - 100% 0 - 100% 0% - 50%
GMWB INVESTMENT OPTION 2 - You may invest 100% in the five GMWB Investment
Option Portfolios listed below. You may select one or more of the five
Portfolios, as long as your allocations add up to 100%.
Fidelity VIP Freedom Fidelity VIP Freedom Fidelity VIP Freedom Fidelity VIP Freedom Fidelity VIP Freedom
2010 Portfolio 2015 Portfolio 2020 Portfolio 2025 Portfolio 2030 Portfolio
GMWB INVESTMENT OPTION 3 - You may invest 100% in the GMWB Investment Option
Portfolios listed below. You may select more than one Portfolio in each column
and Portfolios in more than one column, but your total allocations must add up
to 100% and your allocations in each column must stay within the specified range
for that column. You must allocate a minimum of x% to the Fixed Income
Portfolios.
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Fixed Income Portfolios Core Equity Portfolios Other Portfolios Cash Equivalents
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
35% - 100% 0 - 65% 0 - 10% 0 - 10%
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Fidelity VIP Investment Fidelity VIP Asset Manager, Service DWS Small Cap Index VIP, Class B Touchstone VST Money
Grade Bond Class 2 Market, Service Class
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Touchstone VST Core Bond Fidelity VIP Balanced, Service Fidelity VIP Disciplined Small Cap,
Class 2 Service Class 2
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Fidelity VIP Contrafund, Service Fidelity VIP Dynamic Capital Appreciation,
Class 2 Service Class 2
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Fidelity VIP Equity-Income, Service Fidelity VIP Growth, Service Class 2
Class 2
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Fidelity VIP Index 500, Service Fidelity VIP Growth Opportunities ,
Class 2 Service Class 2
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Fidelity VIP Growth & Income, Fidelity VIP High Income , Service Class 2
Service Class 2
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
P51 - 40
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
FTVIPT Franklin Growth and Income Fidelity VIP Mid Cap, Service Class 2
Securities, Class 2
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
FTVIPT Franklin Large Cap Growth Fidelity VIP Overseas, Service Class 2
Securities, Class 2
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
FTVIPT Mutual Shares Securities, FTVIPT Franklin Income Securities, Class 2
Class 2
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
FTVIPT Templeton Growth Securities, FTVIPT Franklin Small Cap Value
Class 2 Securities, Class 2
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
FTVIPT Templeton Foreign Touchstone VST Baron Small Cap
Securities, Class 2
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Touchstone VST Enhanced Dividend 30 Touchstone VST Enhanced ETF, Service Class
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Touchstone VST Value Plus Touchstone VST Mid Cap Growth
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Van Kampen LIT Comstock, Class II Touchstone VST Third Avenue Value
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Van Kampen UIF Emerging Markets Touchstone VST High Yield
Debt, Class II
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Van Kampen UIF Emerging Markets Equity,
Class II
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Van Kampen LIT Strategic Growth, Class II
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
Van Kampen UIF U.S. Real Estate, Class II
- -------------------------- ------------------------------------- -------------------------------------------- ----------------------
For more information regarding these Portfolios, including information relating
to their investment objectives and policies, and the risks of investing, see
Part 3, "Your Investment Options" as well as the prospectuses for the applicable
Portfolios. You can obtain a copy of the Portfolio prospectuses by contacting
the Administrative Office. You should read the Portfolio prospectuses carefully
before investing.
Subject to required approvals by federal and state authorities, we reserve the
right to add, close, eliminate or substitute GMWB Investment Options or
Portfolios at any time.
TRANSFER AND ALLOCATION RESTRICTIONS
The following special limitations apply to your allocations and transfers among
the GMWB Investment Options and the GMWB Investment Option Portfolios.
>> Only one investment allocation may be in place at any time. This allocation
applies to all current and future contributions and automatic rebalancing.
>> To change your investment allocation, you can make one or more transfers
among the GMWB Investment Option Portfolios, or you can move 100% of your
investment from one GMWB Investment Option to another GMWB Investment
Option. You must make your transfers at the same time.
>> Your first transfer is allowed 90 days after the Contract Date, and no more
than once every 90 days after that. Each transfer starts a 90-day waiting
period before you can make another transfer.
>> Each transfer changes your investment allocation.
>> We will automatically rebalance your GMWB Investment Option Portfolios
quarterly. The transfers resulting from automatic rebalancing do not count
against your transfers allowed once every 90 days.
YOUR FINANCIAL PROFESSIONAL OR A THIRD PARTY MAY OFFER YOU ASSET ALLOCATION OR
INVESTMENT ADVISORY SERVICES RELATED TO THIS CONTRACT OR RIDER FOR AN ADDITIONAL
FEE TO BE DEDUCTED FROM YOUR CONTRACT. SUCH FEES ARE CONSIDERED WITHDRAWALS AND
COULD CAUSE A RESET OR MAKE YOU INELIGIBLE TO RECEIVE A BONUS. THEREFORE, IF YOU
PURCHASE THE GMWB RIDER, WE DO NOT RECOMMEND USING THIS CONTRACT TO PAY FOR SUCH
SERVICES.
REQUIRED MINIMUM DISTRIBUTIONS
If you have elected the GMWB Rider, we offer a special program to provide you
the minimum distributions from your tax-qualified contracts as required by the
Code (RMD Program). If you enroll in the RMD Program, follow its rules and only
make Withdrawals through the program, those Withdrawals will reduce the Account
Value and the GWB on a dollar-for-dollar basis, regardless of the size of the
Withdrawal. In other words, we will not Reset your GWB.
P51 - 41
The required minimum distribution amount (RMDA) is calculated based on the prior
calendar year-end fair market value of this contract only. We do not take into
account your other assets or distributions in making this calculation. The RMDA
is calculated and automatically distributed in monthly withdrawals each calendar
year. During the calendar year in which you enter the RMD Program, the entire
RMDA for that calendar year will be paid in equal monthly payments.
The first yearly RMDA is taken in the calendar year you attain age 70 1/2. If
you are 70 1/2 or older in the calendar year of issue, you may not enter the RMD
Program until the following calendar year.
To enter the RMD Program, you must not have taken any Withdrawals during the
current Contract Year. To remain in the RMD program, you may not make any
Withdrawals (other than through the RMD Program) from the contract. If you opt
out of the RMD Program or make a Withdrawal other than through the RMD Program,
you will be removed from the RMD Program and cannot be reinstated. Thereafter,
any Withdrawals will be treated as ordinary Withdrawals, subject to the terms of
this Rider. So even if you take Withdrawals for the purpose of meeting your
required minimum distributions, if you are not enrolled in our RMD Program, you
will not be protected against Reset. See "Effect of Withdrawals and Reset,"
above.
The RMD Program is not available during the Guaranteed Payment Phase. We reserve
the right to make any changes we deem necessary to comply with the Code and
related regulations. YOU SHOULD DISCUSS THESE MATTERS WITH YOUR TAX ADVISOR
PRIOR TO ELECTING THE GMWB RIDER.
GUARANTEED PAYMENT PHASE
The Guaranteed Payment Phase begins on the date the Account Value decreases to
zero, but either the GWB or LPA is more than zero. During this phase, you will
receive automatic payments.
Once the Guaranteed Payment Phase begins, all other rights, benefits, values and
charges under the contract, the GMWB Rider and any other Riders, will terminate,
except those described in this section and in the "Alternate Death Benefit"
section below. We will send you a written notice when the contract enters the
Guaranteed Payment Phase.
During the Guaranteed Payment Phase, we will make annual payments on each
Contract Anniversary. The amount of the annual payment will be equal to the LPA
on the date of the first annual payment, except that we will pay the GAWA as of
the date of the first annual payment instead of the LPA if:
o the LPA is zero;
o the LPA has not yet been determined; or
o the GAWA is more than the LPA and you request the GAWA in writing.
If the LPA is paid, the payments will continue until the death of the primary
Annuitant. If the GAWA is paid, payments will reduce the GWB dollar-for-dollar
and the payments will continue until the GWB decreases to zero. However, in
either case, the Guaranteed Payment Phase will end and payments will cease if
the Rider terminates. See "Termination" section below.
ALTERNATE DEATH BENEFIT
If the primary Annuitant dies while this Rider is in effect, the Annuitant's
beneficiary may choose either:
o the Alternate Death Benefit under the GMWB Rider, which is the
remaining GWB, as determined on the Death Benefit Date; or
o the Death Benefit otherwise payable under the contract.
If the Annuitant's beneficiary chooses the Alternate Death Benefit, that amount
will be paid out annually over a Payment Certain Period. The Payment Certain
Period will be a number of years that is equal to the lesser of:
o the GWB divided by the GAWA as of the Death Benefit Date; or
o the life expectancy (in whole years) of the Annuitant's beneficiary.
P51 - 42
The amount of the annual payment will be the GWB divided by the Payment Certain
Period. If the annual payment is less than $1,000, we will pay the GWB as a lump
sum. If the primary Annuitant's death occurs during the Guaranteed Payment
Phase, we will automatically pay this benefit to the Annuitant's beneficiary.
If the Annuitant's beneficiary dies before all payments have been made, the
remaining payments will be paid to the person designated by the Annuitant's
beneficiary to receive payments, if any, and otherwise to the estate of the
Annuitant's beneficiary.
If the Annuitant's beneficiary chooses the Alternate Death Benefit, all other
rights, benefits, values and charges under the contract, this Rider, and all
other Riders, will terminate.
TERMINATION OF RIDER
Owner's Death
This Rider will terminate on the date you, as owner, die unless:
o you are also the primary Annuitant; or
o your sole primary beneficiary is your spouse and he or she elects to
continue the contract instead of taking a distribution of the
Surrender Value.
If you have a joint owner, the first of you or the joint owner to die triggers
this termination.
Annuitant's Death
This Rider will also terminate on the date the primary Annuitant dies unless the
Alternate Death Benefit is elected.
Other triggers for automatic termination of the Rider are any one of the
following:
o the Account Value, the GWB and the LPA all equal zero;
o the Guaranteed Payment Phase ends;
o you transfer ownership of the contract;
o you assign the contract;
o a Death Benefit is calculated under the contract;
o the last Alternate Death Benefit payment is made under this Rider;
o you elect an Annuity Benefit under the contract;
o you request termination of this Rider after the 10th Contract
Anniversary; or
o the contract terminates.
On the first Contract Anniversary in the Guaranteed Payment Phase, or under the
Alternate Death Benefit, if the amount of the annual payment would be less than
$1,000, we may pay the GWB in a lump sum and this Rider will terminate.
Once terminated, this Rider may not be reinstated.
ADDITIONAL RESTRICTIONS
The following additional restrictions apply to your contract if you elect the
GMWB Rider:
>> You may elect the GMWB Rider only at the time you purchase a contract.
>> The primary Annuitant must be between 50 and 80 years old.
>> You cannot cancel the GMWB Rider for 10 Contract Years.
>> We reserve the right to discontinue offering the GMWB Rider at any
time, but this will not affect your GMWB Rider once it is issued.
>> The Guaranteed Rate Options and Systematic Transfer Options are not
available.
>> Dollar Cost Averaging is not available.
>> Systematic contributions are not available.
>> The Guaranteed Minimum Accumulation Benefit is not available.
>> The Enhanced Earnings Benefit is not available.
>> Contingent Annuitants are allowed on contracts with the GMWB; however,
while the Rider is in effect, the primary Annuitant will be the only
measuring life with respect to the Rider and the contract. If you
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name a contingent Annuitant, it will have no effect on the benefits
available under the GMWB Rider or the contract, as long as this Rider is in
effect.
THE ADDITION OF THE GMWB RIDER TO YOUR CONTRACT MAY NOT ALWAYS BE IN YOUR
INTEREST. YOU SHOULD CONSULT WITH YOUR TAX AND FINANCIAL ADVISORS AND CAREFULLY
CONSIDER YOUR ALTERNATIVES BEFORE DECIDING IF THE GMWB RIDER IS SUITABLE FOR
YOUR NEEDS. KEEP IN MIND THE FOLLOWING:
>> An additional fee is imposed annually for this benefit.
>> Your Investment Options are limited to the GMWB Investment Option
Portfolios.
>> The GMWB Investment Option Portfolios are available, in addition to
other Portfolios, without the Rider and the associated guarantees and
fees.
>> Withdrawals in excess of the limits described above may reduce or
eliminate your guaranteed values.
>> The GMWB Rider terminates and provides no guaranteed withdrawal
benefits once you begin receiving Annuity Benefits as described in
Part 5, Terms of Your Variable Annuity, in the section titled "Annuity
Benefits."
EXAMPLES
Please refer to Appendix D for hypothetical examples that illustrate how the
GMWB Rider works.
ENHANCED EARNINGS BENEFIT RIDER
The EEB is an optional benefit Rider, which you may purchase for an additional
fee. The EEB Rider provides an enhancement of the Death Benefit where a
percentage of the gain in the contract is paid in addition to the standard Death
Benefit. If there is a gain in the contract when we calculate the Death Benefit,
we will pay an amount equal to a portion of the gain as an additional Death
Benefit. This additional benefit is intended to help offset potential income tax
payments made by the Annuitant's beneficiaries. If there is no gain or if a
Death Benefit is not paid, the EEB will provide no benefit.
The cost of the EEB and the benefit paid depends on the Annuitant's age on the
Contract Date. We will assess the cost of the EEB by deducting a quarterly fee
equal to an annual effective rate as indicated in the chart below from your
Account Value. The quarterly charge is assessed at the end of each calendar
quarter.
- --------------------------------------------- ------------------------------ --------------------------------------------
ANNUITANT AGE ON THE CONTRACT DATE BENEFIT PAID CHARGE AT ANNUAL EFFECTIVE RATE
(FEES ARE ASSESSED QUARTERLY)
- --------------------------------------------- ------------------------------ --------------------------------------------
59 or less 40% of Gain 0.20%
- --------------------------------------------- ------------------------------ --------------------------------------------
60-69 40% of Gain 0.40%
- --------------------------------------------- ------------------------------ --------------------------------------------
70-79 25% of Gain 0.50%
- --------------------------------------------- ------------------------------ --------------------------------------------
80 or more Not Available Not Available
- --------------------------------------------- ------------------------------ --------------------------------------------
The maximum available benefit is 150% of the contributions less adjustments for
withdrawals. Contributions received in the first seven Contract Years will be
included for purposes of calculating the maximum EEB payment. Contributions
received after the seventh Contract Anniversary will not be included in
calculating the maximum EEB until they have been in the contract for six months.
Please see Appendix C for examples of how the EEB works.
The EEB automatically terminates if you surrender the contract or elect an
Annuity Benefit. If either the GMAB or the GMWB is selected, the EEB is not
available.
Contributions received from exchanged contracts shall be treated as a
contribution for purposes of the EEB and determination of the benefit paid. The
gain in the exchanged contract will not be carried over to the new contract for
purposes of calculating the EEB. It will be carried over for purposes of income
tax or exclusion allowance calculations.
Based on our current interpretation of the tax law, the additional benefit
provided by the EEB will be treated as earnings under the contract and taxed as
income upon distribution. You should consult your
P51 - 44
tax advisor and your investment professional to determine if the EEB is suitable
for your needs.
A SPECIAL NOTE IF YOU ARE PURCHASING THIS ANNUITY FOR USE AS AN IRA: If you are
purchasing this contract as an IRA and are electing the EEB there is no
assurance that the contract will meet the qualification requirements for an IRA.
You should carefully consider selecting the EEB if this contract is an IRA.
Consult your tax or legal advisor if you are considering using the EEB with an
IRA. The contract owner bears the risk of any adverse tax consequences.
PART 7 - VOTING RIGHTS
HOW PORTFOLIO SHARES ARE VOTED
Integrity is the legal owner of the shares of the Portfolios held by the
Separate Account and, as such, has the right to vote on certain matters. Among
other things, we may vote to elect a Portfolio's Board of Directors, to ratify
the selection of independent auditors for a Portfolio, and on any other matters
described in a Portfolio's current prospectus or requiring a vote by
shareholders under the 1940 Act.
Whenever a shareholder vote is taken, we give you the opportunity to tell us how
to vote the number of shares purchased as a result of contributions to your
contract. We'll send you Portfolio proxy materials and a form for giving us
voting instructions.
If we don't receive instructions in time from all owners, we'll vote shares in a
Portfolio for which we have not received instructions in the same proportion as
we vote shares for which we have received instructions. As a result of this
proportional voting, the vote of a small number of contract owners may determine
the outcome of a proposal. Under eligible deferred compensation plans and
certain qualified plans, your voting instructions must be sent to us indirectly,
through your employer, but we aren't responsible for any failure by your
employer to ask for your instructions or to tell us what your instructions are.
We'll vote any Portfolio shares that we're entitled to vote directly, because of
amounts we have accumulated in our Separate Account, in the same proportion that
other owners vote. If the federal securities laws or regulations or
interpretations of them change so that we're permitted to vote shares of the
Portfolios in our own right or to restrict owner voting, we may do so.
If shares of the Portfolios are sold to separate accounts of other insurance
companies, the shares voted by those companies in accordance with instructions
received from their contract holders will dilute the effect of voting
instructions received by us from our owners.
HOW WE DETERMINE YOUR VOTING SHARES
You vote only on matters concerning the Portfolios which correspond to the
Variable Account Options in which your contributions are invested on the record
date set by the Portfolio's Board of Directors. We determine the number of
Portfolio shares in each Variable Account Option under your contract by dividing
the amount of your Account Value allocated to that Variable Account Option by
the net asset value of one share of the corresponding Portfolio as of the record
date set by a Portfolio's Board for its shareholders' meeting. We count
fractional shares. The record date for this purpose can't be more than 60 days
before the shareholders' meeting.
All Portfolio shares are entitled to one vote; fractional shares have
fractional votes.
SEPARATE ACCOUNT VOTING RIGHTS
Under the 1940 Act, certain actions (such as some of those described under
"Changes in How We Operate" in Part 2) may require contract owner approval. In
that case, you'll be entitled to a number of votes based on the value you have
in the Variable Account Options. We'll cast votes attributable to amounts we
have in the Variable Account Options in the same proportions as votes cast by
owners.
PART 8 - TAX ASPECTS OF THE CONTRACT
P51 - 45
INTRODUCTION
The effect of federal income taxes on your contract values or payments under
your Annuity Benefits varies depending on many factors including:
o our tax status
o the tax status of the contract
o the type of retirement plan, if any, for which the contract is
purchased
o the tax and employment status of the persons receiving payments
The following discussion of the federal income tax treatment of the contract
isn't designed to cover all situations and isn't intended to be tax advice. It
is based upon our understanding of the present federal income tax laws as
currently interpreted by the Internal Revenue Service (IRS) and various courts.
The IRS or the courts may change their views on the treatment of these
contracts. Future legislation may have a negative effect on annuity contracts.
Also, we have not attempted to consider any applicable state or other tax laws.
Because of the complexity of the tax laws and the fact that tax results will
vary according to the particular circumstances, anyone considering buying a
contract, or selecting annuity payments under the contract, or receiving annuity
payments under a contract should consult a qualified tax advisor. Integrity does
not guarantee the tax status, federal, state, or local, of any contract or any
transaction involving the contracts.
YOUR CONTRACT IS AN ANNUITY
>> You can purchase an annuity with after-tax dollars, in which case
taxes on earnings under the contract are generally deferred until you
make a withdrawal.
>> You (or your employer) may purchase an annuity with after-tax dollars
to fund a Roth IRA, in which case earnings under the contract are
generally fully excluded from taxable income at distribution.
>> You (or your employer) may also purchase an annuity with pre-tax
dollars to fund a tax-favored retirement program, such as an IRA or
qualified plan.
This prospectus covers the basic tax rules that apply to an annuity purchased
with after-tax dollars, which are not Roth IRAs (nonqualified annuity), and some
of the special tax rules that apply to an annuity purchased to fund a
tax-favored retirement program, such as IRAs, 401(k)s and Roth IRAs (qualified
annuity).
TAXATION OF ANNUITIES GENERALLY
Section 72 of the Code governs the taxation of annuities. In general,
contributions you put into the annuity (your "basis" or "investment in the
contract") will not be taxed when you receive those amounts back in a
distribution. Also, you are not generally taxed on the annuity's earnings until
some form of withdrawal or distribution is made under the contract. However,
under certain circumstances, the increase in value may be subject to current
federal income tax. For example, corporations, partnerships, and other
non-natural persons can't defer tax on the annuity's income unless an exception
applies. In addition, if an owner transfers an annuity as a gift to someone
other than a spouse (or former spouse), all increases in its value are taxed at
the time of transfer. The assignment or pledge of any portion of the value of a
contract will be treated as a distribution of that portion of the value of the
contract.
You can take withdrawals from the contract or you can elect and Annuity Benefit
when the Annuitant reaches a certain age. The tax implications are different for
each type of distribution. Withdrawals from a contract before Annuity Benefit
payments begin are treated first as taxable income, but only to the extent of
the increase of the Account Value. The rest of the withdrawal, representing your
basis in the annuity, isn't taxable. Generally, the investment or basis in the
contract equals the contributions made by you or on your behalf, minus any
amounts previously withdrawn that were not treated as taxable income. Special
rules may apply if the contract includes contributions made prior to August 14,
1982 that were rolled over to the contract in a tax-free exchange.
P51 - 46
If you elect an Annuity Benefit, part of each payment will be the tax-free
return of your investment in the contract, based on a ratio of the owner's
investment to his or her expected return under the contract (exclusion ratio).
The rest of each payment will be ordinary income. That means that part of your
payment is tax-free and part of it is taxable. When all of these tax-free
portions add up to your investment in the contract, future payments are entirely
ordinary income. If the Annuitant dies before the total investment is recovered,
a deduction for the remaining basis will generally be allowed on the owner's
final federal income tax return.
We may be required to withhold federal income taxes on all distributions unless
the eligible recipients elect not to have any amounts withheld and properly
notify us of that election.
You may be subject to a tax penalty of 10% on the taxable portion of a
distribution unless one of the following conditions apply:
o You are 59 1/2 or older
o payment is a result of the owner's death
o payment is part of a series of substantially equal periodic payments
(paid at least annually) for the life (or life expectancy) of the
taxpayer or joint lives (or joint life expectancies) of the taxpayer
and beneficiary
o payment is a result of the taxpayer becoming disabled within the
meaning of Code section 72(m)(7)
o payment is from certain qualified plans (note, however, other
penalties may apply)
o payment is under a qualified funding asset (as defined in Section
130(d) of the Code);
o payment is under a certain types of qualified plans held by the
employer until the employee separates from service
o payment is under an immediate annuity as defined in Code Section
72(u)(4) (non-qualified contracts only)
o payment is for the purchase of a first home (distribution up to
$10,000) (IRA only)
o payment is for certain higher education expenses (IRA only)
o payment is for certain deductible medical expenses, or to cover health
insurance premiums if you are unemployed (IRA only)
The IRS will treat all annuity contracts issued by us or our affiliates to one
owner during any calendar year as a single contract in measuring the taxable
income that results from surrenders and withdrawals under any one of the
contracts.
TAX-FAVORED RETIREMENT PROGRAMS
An owner can use this annuity with certain types of retirement plans that
receive favorable tax treatment under the Code. Numerous tax rules apply to the
participants in qualified plans and to the contracts used in connection with
those qualified plans. These tax rules vary according to the type of plan and
the terms and conditions of the plan itself, regardless of the terms and
conditions of the contract. Special rules also apply to the time at which
distributions must begin and the form in which the distributions must be paid.
Also, we do not offer loans through annuity contracts even if the qualified plan
does.
INHERITED IRAS
This contract may be issued as an inherited IRA. This occurs if, after the death
of the owner of an IRA, the owner's beneficiary directs that the IRA death
proceeds be transferred to a new contract issued and titled as an inherited IRA.
The owner's beneficiary of the original IRA contract will become the owner under
the inherited IRA and may generally exercise all rights under the inherited IRA
contract, including the right to name his or her own beneficiary in the event of
death.
Special tax rules apply to an inherited IRA. The tax law does not permit
additional contributions to an inherited IRA contract. Also, in order to avoid
certain income tax penalties, a required minimum distribution (RMD) must be
withdrawn each year from an inherited IRA. The first RMD must be taken on or
before December 31 of the calendar year following the year of the original IRA
owner's death.
P51 - 47
The tax penalty equals 50% of the excess of the RMD over the amount actually
withdrawn from the inherited IRA during the calendar year.
ANNUITIES IN QUALIFIED PLANS
IRAs and employer sponsored 401(k) plans provide you with tax-deferred growth
and other tax advantages. For most investors, it will be advantageous to make
maximum allowable contributions to IRAs and 401(k) plans before investing in a
variable annuity. IN ADDITION, IF YOU ARE INVESTING IN A VARIABLE ANNUITY
THROUGH A TAX-ADVANTAGED RETIREMENT PLAN (SUCH AS A 401(K) OR IRA), YOU WILL GET
NO ADDITIONAL TAX ADVANTAGE FROM THE VARIABLE ANNUITY. Under these
circumstances, consider buying a variable annuity only if it makes sense because
of the annuity's other features, such as the Death Benefit, Annuity Benefit or
Optional Riders.
This contract offers an enhanced Death Benefit. THE IRS HAS NOT RULED WHETHER AN
ENHANCED DEATH BENEFIT COULD BE CHARACTERIZED AS LIFE INSURANCE, THE AMOUNT OF
WHICH IS LIMITED IN A CODE SECTION 401(A), 403(B) OR IRA PLAN. AN EMPLOYER OR
QUALIFIED PLAN ADMINISTRATOR MAY WANT TO CONSULT THEIR TAX OR LEGAL ADVISOR
REGARDING SUCH LIMITATIONS BEFORE USING AN ANNUITY OFFERING AN ENHANCED DEATH
BENEFIT IN ONE OF THESE PLANS.
FEDERAL AND STATE INCOME TAX WITHHOLDING
Certain states have indicated that pension and annuity withholding will apply to
payments made to their residents. Generally, an election out of federal
withholding will also be considered an election out of state withholding. For
more information concerning a particular state, call our Administrative Office
listed in the Glossary.
IMPACT OF TAXES ON THE COMPANY
We may charge the Separate Account for taxes. We can also set up reserves for
taxes.
TRANSFERS AMONG INVESTMENT OPTIONS
There won't be any current tax liability if you transfer any part of the Account
Value among the Investment Options of your contract.
PART 9 - ADDITIONAL INFORMATION
SYSTEMATIC WITHDRAWAL PROGRAM
We offer a program that allows you to pre-authorize periodic withdrawals from
your contract prior to your Retirement Date. You can choose to have withdrawals
made monthly, quarterly, semi-annually or annually and can specify the day of
the month (other than the 29th, 30th or 31st) on which the withdrawal is to be
made. If you do not select how often you want to receive withdrawals, we will
make them on a monthly basis. You may specify a dollar amount for each
withdrawal, an annual percentage to be withdrawn, or elect the Free Withdrawal
Amount to be used. The minimum Systematic Withdrawal currently is $100. If on
any withdrawal date you don't have enough Account Value to make all of the
withdrawals you have specified, no withdrawal will be made and your enrollment
in the program will be ended. You may specify an account for direct deposit of
your Systematic Withdrawals.
To enroll in our Systematic Withdrawal Program, send the appropriate form to our
Administrative Office. You may terminate your participation in the program upon
one day's prior written notice, and we may terminate or change the Systematic
Withdrawal Program at any time.
If you elect the Free Withdrawal Amount to be withdrawn under the Systematic
Withdrawal Program, we won't deduct a withdrawal charge or make an MVA. See in
Part 4 section titled "Withdrawal Charge." Amounts withdrawn under the
Systematic Withdrawal Program in excess of the Free Withdrawal Amount will be
subject to a withdrawal charge and an MVA if applicable. Withdrawals will be
subject to income tax and may also be subject to the 10% federal tax penalty for
a withdrawal before you are age 59 1/2 .
P51 - 48
See Part 8.
Amounts withdrawn under the Systematic Withdrawal Program will reduce the
guaranteed minimum value of your GMAB Investment Option on a proportional basis.
See Part 6.
INCOME PLUS WITHDRAWAL PROGRAM
We offer an Income Plus Withdrawal Program that allows you to pre-authorize
equal periodic withdrawals, based on your life expectancy, from your contract
before you reach age 59 1/2. You won't have to pay a tax penalty for these
withdrawals, but they will be subject to ordinary income tax. See Part 8. Once
you begin receiving distributions, they shouldn't be changed or stopped until
the later of:
o the date you reach age 59 1/2; or
o five years from the date of the first distribution.
If you change or stop the distribution or take an additional withdrawal, you may
have to pay a 10% penalty tax that would have been due on all prior
distributions before you reached age 59 1/2 made under the Income Plus
Withdrawal Program, plus interest.
You can choose the Income Plus Withdrawal Program any time before you reach age
59 1/2. You may choose to have withdrawals made monthly, quarterly,
semi-annually or annually and may specify the day of the month (other than the
29th, 30th or 31st) on which the withdrawal is made. We'll calculate the amount
of the distribution under a method you select, subject to a $100 minimum. If on
any withdrawal date you don't have enough Account Value to make all of the
withdrawals you have specified, no withdrawal will be made and your enrollment
in the program will end. You must also specify an account for direct deposit of
your withdrawals.
To enroll in our Income Plus Withdrawal Program, send the appropriate form to
our Administrative Office. You may end your participation in the program upon
seven Business Days' prior written notice, and we may terminate or change the
Income Plus Withdrawal Program at any time. This program isn't available in
connection with the Systematic Withdrawal Program, Dollar Cost Averaging,
Systematic Transfer Option, or Customized Asset Rebalancing Program.
If your withdraws under the Income Plus Withdrawal Program are within the Free
Withdrawal Amount, no withdrawal charge or MVA will be applied. However, amounts
withdrawn in excess of the Free Withdrawal Amount will be subject to a
withdrawal charge and an MVA if applicable. See Part 4, section titled
"Withdrawal Charge" and Part 4, section titled "Market Value Adjustment."
CHOICES PLUS REQUIRED MINIMUM DISTRIBUTION PROGRAM
We offer a Choices Plus Minimum Required Distribution Program that allows you to
pre-authorize withdrawals from your contract after you attain age 70 1/2.
Section 401(a)(9)(A) of the Code requires that you take minimum distributions
from an IRA beginning on or before April 1st of the year following the year in
which the you turn 70 1/2 years old. You won't have to pay any tax penalty for
these withdrawals, but they are subject to ordinary income tax. See Part 8.
You can choose the Choices Plus Program for your IRA at any time if you're age
70 1/2 or older. You can elect this option by sending the election form to our
Administrative Office. You can choose to have withdrawals made monthly,
quarterly, semiannually, or annually and can specify the day of the month (other
than the 29th, 30th, or 31st) on which the withdrawal is made. We'll calculate
the amount of the distribution using current IRS guidance. We are not
responsible for any tax or other liability you may incur if our good faith
calculations are not correct. You should consult with your tax advisor to ensure
these calculations are appropriate to your situation. Withdrawals of Account
Value that are made as part of the Choices Plus program are not subject to
withdrawal charges or MVAs.
This program is open to new contract owners, as well as existing contract owners
who are already taking minimum required distributions from their Integrity IRAs.
Payments can be made to you by check or by
P51 - 49
direct deposit. This program is not available with the GMWB Rider. See Part 6,
"Guaranteed Minimum Withdrawal Benefits, Required Minimum Distributions."
DOLLAR COST AVERAGING
Dollar cost averaging refers to the practice of investing the same amount in the
same investment at regular intervals (like once a month), regardless of market
conditions. Thus, you automatically buy more Units when the price is low and
fewer when the price is high. Over time, you may reduce the risk of buying Units
when their cost is highest. Dollar cost averaging does not assure a profit and
does not protect against investment losses.
We offer a Dollar Cost Averaging Program under which we transfer contributions
that you have allocated to the Touchstone VST Money Market Fund, Service Class,
to one or more other Investment Options on a monthly, quarterly, semi-annual or
annual basis. You must tell us how much you want transferred into each
Investment Option. The current minimum transfer to each Investment Option is
$100. We won't charge a transfer charge under our Dollar Cost Averaging Program,
and these transfers won't count towards your twelve free transfers.
To enroll in our Dollar Cost Averaging Program, send the appropriate form to our
Administrative Office. You may terminate your participation in the program upon
one day's prior written notice, and we may terminate or change the Dollar Cost
Averaging Program at any time. If you don't have enough Account Value in the
Touchstone VST Money Market Fund to transfer to each Investment Option
specified, no transfer will be made and your enrollment in the program will end.
This program is not available in connection with the GMAB Investment Options or
the GMWB Investment Options.
SYSTEMATIC TRANSFER PROGRAM
We also offer a Systematic Transfer Program under which we transfer
contributions from a STO to one or more other Investment Options on a monthly or
quarterly basis. We'll transfer your STO contributions in approximately equal
installments of at least $1,000 over either a six-month or one-year period,
depending on the option you select. If you don't have enough Account Value in
the STO to transfer to each Investment Option specified, a final transfer will
be made on a pro rata basis and your enrollment in the program will be ended.
All interest accrued and any Account Value remaining in the STO at the end of
the period during which transfers are scheduled to be made will be transferred
at the end of that period on a pro rata basis to the Investment Options you
chose for this program. There is no charge for transfers under this program, and
these transfers won't count towards the twelve free transfers you may make in a
Contract Year.
To enroll in our Systematic Transfer Program, send the appropriate form to our
Administrative Office. We can end the Systematic Transfer Program in whole or in
part, or restrict contributions to the program. This program may not be
currently available in some states.
You cannot transfer Account Value into the STO or a GMAB Investment Option. This
feature is not available with the GMWB Rider.
CUSTOMIZED ASSET REBALANCING
Asset rebalancing allows you to maintain a diversified investment mix that is
appropriate for your goals and risk tolerance. Because some of your investments
may grow faster than others, your asset allocation may shift from your preferred
mix. Asset rebalancing periodically resets your investments to your original
allocations, ensuring that your asset mix stays in line with your investment
strategy.
We offer a Customized Asset Rebalancing Program that allows you to determine how
often rebalancing occurs. You can choose to rebalance monthly, quarterly,
semi-annually or annually. The value in the Variable Account Options will
automatically be rebalanced by transfers among your Variable Account
P51 - 50
Options, and you will receive a confirmation notice after each rebalancing.
Transfers will occur only to and from those Variable Account Options where you
have current contribution allocations. Fixed Accounts and the GMAB Investment
Options are not included in the Customized Asset Rebalancing Program. If you
elect the GMWB Rider, a different rebalancing program is used. See Part 6. We
won't charge a transfer charge for transfers under our Customized Asset
Rebalancing Program, and they won't count towards your twelve free transfers.
To enroll in our Customized Asset Rebalancing Program, send the appropriate form
to our Administrative Office. Other allocation programs, such as Dollar Cost
Averaging, as well as transfers and withdrawals that you make, may not work with
the Customized Asset Rebalancing Program. You should, therefore, monitor your
use of other programs, transfers, and withdrawals while the Customized Asset
Rebalancing Program is in effect. You may terminate your participation in the
program upon one day's prior written notice, and we may end or change the
Customized Asset Rebalancing Program at any time. We recommend you consult with
your financial professional when establishing your investment portfolio. This
feature is not available with the GMWB Rider.
SYSTEMATIC CONTRIBUTIONS
We offer a program for systematic contributions that allows you to pre-authorize
monthly, quarterly, or semi-annual withdrawals from your checking account to
make your contributions. To enroll in this program, send the appropriate form to
our Administrative Office. You or we may end your participation in the program
with 30 days' prior written notice. We may end your participation if your bank
declines to make any payment. The minimum amount for systematic contributions is
$100 per month.
Contributions to the GMAB Investment Options or the GMWB Investment Options may
not be made via the systematic contribution program.
LEGAL PROCEEDINGS
Integrity is a party to litigation and arbitration proceedings in the ordinary
course of its business. None of these matters is expected to have a material
adverse effect on Integrity.
TABLE OF CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
Part 1 - Integrity and Custodian
Part 2 - Distribution of the Contract
Part 3 - Performance Information
Part 4 - Determination of Accumulation Unit Values
Part 5 - Distributions from Tax Favored Retirement Programs
Part 6 - Financial Statements
If you would like to receive a copy of the Statement of Additional Information,
please write:
Administrative Office
Integrity Life Insurance Company
P.O. Box 5720 Cincinnati, OH 45201-5720
ATTN: Request for SAI of Separate Account II (Pinnacle V)
PART 10 - PRIOR CONTRACTS
Over time, we have made changes to the Pinnacle variable annuity contract. You
may own a prior version of the Pinnacle contract. Material features in prior
versions of the Pinnacle contract that differ from the Pinnacle contract we are
currently offering are described below. The dates given are the approximate and
will vary state by state. Please check your contract and the prospectus you
received when you purchased your annuity if you are uncertain about whether
these features are in your contract.
P51 - 51
PINNACLE IV - ALL CONTRACTS ISSUED FROM MAY 1, 2004 TO MAY 1, 2007
SEPARATE ACCOUNT ANNUAL EXPENSES as a percentage of value charged
- --------------------------------
-------------------------------------------------------------------------------------- -----------------
Mortality and Expense Risk Charge 1.45%
-------------------------------------------------------------------------------------- -----------------
Optional Enhanced Earnings Benefit Charge (maximum charge) 0.50%
-------------------------------------------------------------------------------------- -----------------
Optional Guaranteed Minimum Accumulation Benefit Charge 0.60%
-------------------------------------------------------------------------------------- -----------------
Highest Possible Total Separate Account Annual Expenses(11) 2.05%
-------------------------------------------------------------------------------------- -----------------
PINNACLE I, II AND III - CONTRACTS ISSUED BEFORE MAY 1, 2004(12)
Separate Account Annual Expenses as a percentage of value charged
-------------------------------------------------------------------------------------- -----------------
Mortality and Expense Risk Charge (13) 1.35%
-------------------------------------------------------------------------------------- -----------------
Total Annual Portfolio Operating Expenses
Gross Portfolio annual expenses prior to any waivers and reimbursements as a
percentage of average net assets in each Portfolio:
- ------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
MANAGE- ACQUIRED TOTAL
PORTFOLIO FEES 12B-1 OTHER FUND ANNUAL
MENT FEE EXPENSES EXPENSES EXPENSES
- ------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Fidelity VIP Contrafund Portfolio, Initial Class (1) 0.57% N/A 0.09% N/A 0.66%
- ------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Fidelity VIP Equity-Income Portfolio, Initial Class (14) 0.47% N/A 0.10% N/A 0.57%
- ------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Fidelity VIP Growth & Income Portfolio, Initial Class (14) 0.47% N/A 0.13% N/A 0.60%
- ------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Fidelity VIP Growth Opportunities Portfolio, Initial Class (14) 0.57% N/A 0.15% N/A 0.72%
- ------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
FTVIPT Franklin Income Securities Fund, Class 1 (2) 0.46% N/A 0.01% N/A 0.47%
- ------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Touchstone VST Money Market Fund, Initial Class (3) 0.18% N/A 0.50% N/A 0.68%
- ------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Touchstone VST Aggressive ETF Fund, Initial Class(16) 0.40% N/A 0.78% 0.20% 1.18%
- ------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Touchstone VST Conservative ETF Fund, Initial Class (16) 0.40% N/A 1.01% 0.18% 1.41%
- ------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
(11) You may elect only one of these optional benefits: EEB or GMAB. Therefore
the highest possible total separate account annual charges reflect the
election of GMAB, which carries the higher cost.
(12) Pinnacle with the mortality and expense risk charge of 1.35% was available
only through some sales channels and in some states between July 16, 2001
and May 1, 2004.
(13) The Mortality and Expense Risk Charge reduced to 1.10% after the sixth
Contract Anniversary for Contracts issued between January 1, 1995 and
February 1, 1997
(14) A portion of the brokerage commissions that each Fidelity VIP Portfolio
pays may be reimbursed and used to reduce that portfolio's expenses. In
addition, through arrangements with the Portfolios' custodian, credits
realized as a result of uninvested cash balances are used to reduce the
portfolio's custodian expenses. Including these reductions, the total class
operating expenses for these Portfolios would have been as set forth in the
table in below. These offsets may be discontinued at any time.
--------------------------------------------------------------- ---------------------------------------
Fidelity VIP Portfolio Net Total Expenses after Arrangements
Described Above
---------------------------------------------------------------- ---------------------------------------
Asset Manager, Initial Class 0.63%
---------------------------------------------------------------- ---------------------------------------
Contrafund, Initial Class 0.65%
---------------------------------------------------------------- ---------------------------------------
Growth & Income, Initial Class 0.59%
---------------------------------------------------------------- ---------------------------------------
Growth Opportunities, Initial Class 0.67%
---------------------------------------------------------------- ---------------------------------------
Equity-Income, Initial Class 0.56%
---------------------------------------------------------------- ---------------------------------------
(15) The Fund administration fee is paid indirectly through the management fee.
(16) The advisor has contractually agreed until at least December 31, 2007 to
waive a portion of its advisory fee and/or reimburse certain fund expenses
in order to limit net expenses as follows:
----------------------------------------------------------------- ---------------------------------------
Touchstone Variable Series Trust Portfolio Net Total Expenses after Arrangements
Described Above
----------------------------------------------------------------- ---------------------------------------
Aggressive ETF, Initial Class 0.50%
----------------------------------------------------------------- ---------------------------------------
Conservative ETF, Initial Class 0.50%
----------------------------------------------------------------- ---------------------------------------
Enhanced ETF, Initial Class 0.50%
----------------------------------------------------------------- ---------------------------------------
Moderate ETF, Initial Class 0.50%
----------------------------------------------------------------- ---------------------------------------
Money Market, Initial Class 0.28%
----------------------------------------------------------------- ---------------------------------------
P51 - 52
- -------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Touchstone VST Enhanced ETF Fund, Initial Class (16) 0.40% N/A 0.45% 0.26% 0.85%
- -------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Touchstone VST Moderate ETF Fund, Initial Class (16) 0.40% N/A 0.62% 0.20% 1.02%
- -------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Van Kampen UIF Emerging Markets Debt Portfolio, Class I 0.75% N/A 0.35% N/A 1.10%
- -------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Van Kampen UIF U.S. Real Estate Portfolio, Class I 0.73% N/A 0.28% N/A 1.01%
- -------------------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
LIMITATION ON NUMBER OF INVESTMENT OPTIONS FOR CONTRACTS ISSUED BEFORE JULY 17,
2000
You may not have more than ten Investment Options at any one time, including
each of your GROs, the Investment Options that are closed to new contribution,
and the Investment Options to which you have current allocations.
WITHDRAWAL CHARGES FOR ALL CONTRACTS ISSUED BEFORE DECEMBER 31, 1996
- ------------------------------------ --------------------------------------
Contribution Charge as a percentage of the
Year contribution withdrawn
- ------------------------------------ --------------------------------------
1 7%
- ------------------------------------ --------------------------------------
2 6%
- ------------------------------------ --------------------------------------
3 5%
- ------------------------------------ --------------------------------------
4 4%
- ------------------------------------ --------------------------------------
5 3%
- ------------------------------------ --------------------------------------
6 2%
- ------------------------------------ --------------------------------------
thereafter 0
- ------------------------------------ --------------------------------------
HARDSHIP WAIVERS WEREN'T AVAILABLE FOR CONTRACTS ISSUED PRIOR TO FEBRUARY 15,
1997.
DEATH BENEFITS PAID ON DEATH OF ANNUITANT
CONTRACTS ISSUED BETWEEN MAY 1, 1998 AND MAY 1, 2004
For contracts issued before the Annuitant's 86th birthday, if the Annuitant dies
before age 90 (or the contract's 10th anniversary date, if later) and before
annuity payments have started, the Death Benefit is the highest of:
o your highest Account Value on any Contract Anniversary before Annuitant's
age 81, plus subsequent contributions and minus a proportional adjustment
for subsequent withdrawals (and associated charges);
o total contributions, minus an subsequent withdrawals (and associated
charges); or
o your current Account Value.
For contracts issued after the Annuitant's 86th birthday, the Death Benefit is
the your current Account Value.
CONTRACTS ISSUED BETWEEN JANUARY 1, 1997 AND MAY 1, 1998
For contracts issued before the Annuitant's 80th birthday, the Death Benefit is
the highest of:
o your highest Account Value on any Contract Anniversary before Annuitant's
age 81, plus subsequent contributions and minus a proportional adjustment
for subsequent withdrawals (and associated charges);
o total contributions, minus an subsequent withdrawals (and associated
charges); or
o your current Account Value. For contracts issued after the Annuitant's 80th
birthday, the Death Benefit is the your current Account Value.
FOR CONTRACTS ISSUED BETWEEN MAY 1, 1996 AND DECEMBER 31, 1996, the Death
Benefit is the greatest of:
o your current Account Value on the Business Day we receive due proof of
death and the beneficiary's election in good order;
o the highest Account Value at the beginning of any Contract Year, plus
subsequent contributions and minus an adjustment for subsequent withdrawals
(and associated charges); or
o your total contributions less the sum of withdrawals (and associated
charges)
P51 - 53
FOR CONTRACTS ISSUED BETWEEN JANUARY 1, 1995 AND MAY 1, 1996, the Death Benefit
is the greatest of:
o your Account Value on the seventh Contract Anniversary plus subsequent
contributions, minus adjustments for any subsequent withdrawals (and
associated charges), or the highest Account Value after the seventh
Contract Anniversary;
o total contributions minus any withdrawals (and associated charges); or
o your current Account Value on the Business Day we receive due proof of
death and the beneficiary's election in good order.
FOR CONTRACTS ISSUED BEFORE JANUARY 1, 1995, the amount of the Death Benefit is
the greatest of:
o your Adjusted Account Value;
o the Account Value at the beginning of the seventh Contract Year, your total
contributions less the sum of withdrawals plus subsequent contributions and
minus a proportional adjustment for subsequent withdrawals (and associated
charges); or
o for Annuitants younger than 70 years old on the birthday nearest the
Contract Date, an enhanced minimum Death Benefit, explained below.
The enhanced minimum Death Benefit is the same as the guaranteed Death Benefit,
except that the guaranteed Death Benefit may not exceed the maximum guaranteed
Death Benefit.
The guaranteed Death Benefit on your Contract Date is your initial contribution.
After that, every month we recalculate that portion of your guaranteed Death
Benefit allocated to the Variable Investment Options by adding interest at an
annual rate of 7% until the Contract Anniversary nearest the Annuitant's 70th
birthday, subject to the maximum. We subtract from that the sum of any
withdrawals or transfers from the Variable Account Options during the month and
a pro rata amount of the interest accumulated that applies to the withdrawn or
transferred amount. Therefore, your guaranteed Death Benefit at any time,
subject to the maximum, is the sum of (1) your Guarantee Period Values, and (2)
your contributions allocated to the Variable Account Options, including the
amount of interest calculated on the values allocated to your Variable Account
Options for purposes of determining the guaranteed Death Benefit, less any
withdrawals or transfers and less the interest calculated on a pro rata basis on
those withdrawals or transfers.
Your maximum guaranteed Death Benefit is determined by totaling your
contributions during your first five Contract Years, subtracting all withdrawals
(and associated charges), multiplying the result by two, and then adding that to
your total contributions made after the first five Contract Years.
P51 - 54
APPENDIX A
FINANCIAL INFORMATION FOR SEPARATE ACCOUNT II OF INTEGRITY (PINNACLE V)
For the Variable Account Options we currently offer, the table below shows the
following data for Pinnacle V contracts with a mortality and expense risk charge
of 1.55% issues after approximately May 1, 2007 (date varies by state): Unit
Value at inception.
- --------------------------------------------------- ----------- ------------
2006 INCEPTION
DATE AND
VALUE
- --------------------------------------------------- ----------- ------------
DWS SMALL CAP INDEX VIP, CLASS B
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP ASSET MANAGER SERVICE, CLASS 2
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP BALANCED, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP CONTRAFUND, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP DISCIPLINED SMALL CAP, SERVICE
CLASS 2 $10.00
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
P51 - 55
- --------------------------------------------------- ----------- ------------
2006 INCEPTION
DATE AND
VALUE
- --------------------------------------------------- ----------- ------------
FIDELITY VIP DYNAMIC CAPITAL APPRECIATION,
SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP EQUITY-INCOME, SERVICE CLASS 2
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP FREEDOM 2010, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period 4-30-07
- --------------------------------------------------- ----------- ------------
FIDELITY VIP FREEDOM 2015, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period 4-30-07
- --------------------------------------------------- ----------- ------------
FIDELITY VIP FREEDOM 2020, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period 4-30-07
- --------------------------------------------------- ----------- ------------
FIDELITY VIP FREEDOM 2025, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period 4-30-07
- --------------------------------------------------- ----------- ------------
FIDELITY VIP FREEDOM 2030, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period 4-30-07
- --------------------------------------------------- ----------- ------------
P51 - 56
- --------------------------------------------------- ----------- ------------
2006 INCEPTION
DATE AND
VALUE
- --------------------------------------------------- ----------- ------------
FIDELITY VIP GROWTH, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP GROWTH & INCOME, SERVICE CLASS 2
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP GROWTH OPPORTUNITIES, SERVICE CLASS 2
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP HIGH INCOME, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP INDEX 500, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period 4-30-07
- --------------------------------------------------- ----------- ------------
FIDELITY VIP INVESTMENT GRADE BOND, SERVICE
CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP MID CAP, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FIDELITY VIP OVERSEAS, SERVICE CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
P51 - 57
- --------------------------------------------------- ----------- ------------
2006 INCEPTION
DATE AND
VALUE
- --------------------------------------------------- ----------- ------------
FTVIPT FRANKLIN GROWTH & INCOME SECURITIES,
CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FTVIPT FRANKLIN INCOME SECURITIES, CLASS 2
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FTVIPT FRANKLIN LARGE CAP GROWTH SECURITIES,
CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES, CLASS
2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period 4-30-07
- --------------------------------------------------- ----------- ------------
FTVIPT MUTUAL SHARES SECURITIES, CLASS 2
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FTVIPT TEMPLETON FOREIGN SECURITIES, CLASS 2
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
FTVIPT TEMPLETON GROWTH SECURITIES, CLASS 2
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST BALANCED
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
P51 - 58
- --------------------------------------------------- ----------- ------------
2006 INCEPTION
DATE AND
VALUE
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST BARON SMALL CAP
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST CORE BOND
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST EAGLE CAPITAL APPRECIATION
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST ENHANCED DIVIDEND 30
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST GROWTH & INCOME FUND
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST HIGH YIELD FUND
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST MID CAP GROWTH
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST MONEY MARKET, SERVICE CLASS
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
P51 - 59
- --------------------------------------------------- ----------- ------------
2006 INCEPTION
DATE AND
VALUE
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST THIRD AVENUE VALUE
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST VALUE PLUS FUND
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST AGGRESSIVE ETF SERVICE CLASS
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST CONSERVATIVE ETF, SERVICE CLASS
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST ENHANCED ETF, SERVICE CLASS
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST MODERATE ETF, SERVICE CLASS
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST AGGRESSIVE ETF, SERVICE CLASS -
GMAB OPTION
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
P51 - 60
- --------------------------------------------------- ----------- ------------
2006 INCEPTION
DATE AND
VALUE
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST CONSERVATIVE ETF, SERVICE CLASS -
GMAB OPTION
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
TOUCHSTONE VST MODERATE ETF, SERVICE CLASS - GMAB
OPTION
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
VAN KAMPEN LIT COMSTOCK, CLASS II
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
VAN KAMPEN LIT STRATEGIC GROWTH, CLASS II
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
VAN KAMPEN UIF EMERGING MARKETS DEBT,
CLASS II
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
VAN KAMPEN UIF EMERGING MARKETS EQUITY, CLASS II Unit value at beginning of
period
Unit value at end of period $10.00
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
VAN KAMPEN UIF U.S. REAL ESTATE, CLASS II
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------------- ----------- ------------
P51 - 61
FINANCIAL INFORMATION FOR SEPARATE ACCOUNT II OF INTEGRITY (PINNACLE IV)
For the Variable Account Options we currently offer, the table below shows the
following data for Pinnacle IV contracts with a mortality and expense risk
charge of 1.45% issued between July 16, 2001 and May 1, 2007 (dates vary by
state): Unit Value at inception; the number of Units outstanding at December 31
of each year since inception; and the Unit Value at the beginning and end of
each period since inception.
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
DWS SMALL CAP INDEX VIP, CLASS A (254) (1)
Unit value at beginning of period $13.54 $13.17 $11.35 $7.87 $10.05 - -
Unit value at end of period $15.68 $13.54 $13.17 $11.35 $7.87 $10.05
Number of units outstanding at end of period 12,554 14,397 21,250 23,855 22,298 2,706
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
DWS SMALL CAP INDEX VIP, CLASS B (284)
Unit value at beginning of period $13.00 $12.68 $10.96 $7.61 - - -
Unit value at end of period $15.01 $13.00 $12.68 $10.96 $7.61
Number of units outstanding at end of period 38,787 45,071 75,214 87,223 1,993
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP ASSET MANAGER, SERVICE CLASS 2
(232)
Unit value at beginning of period $10.60 $10.36 -
Unit value at end of period $11.19 $10.60 $10.36
Number of units outstanding at end of period 24,312 20,867 10,421
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP BALANCED, SERVICE CLASS 2 (214)
Unit value at beginning of period
Unit value at end of period $12.04 $11.58 $11.17 - - - -
Number of units outstanding at end of period $13.23 $12.04 $11.58 $11.17
87,376 79,635 69,254 10,517
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP CONTRAFUND, SERVICE CLASS 2 (239)
Unit value at beginning of period
Unit value at end of period $14.25 $12.40 $10.92 $8.65 $9.71 - -
Number of units outstanding at end of period $15.65 $14.25 $12.40 $10.92 $8.65 $9.71
1,042,041 680,077 540,747 329,238 181,656 48,780
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP DISCIPLINED SMALL CAP, SERVICE
CLASS 2 (1298)
Unit value at beginning of period
Unit value at end of period - - - - - - -
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
- ---------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- ---------------------------------------------- ----------- ----------- ------------ ------------
DWS SMALL CAP INDEX VIP, CLASS A (254) (1)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
DWS SMALL CAP INDEX VIP, CLASS B (284)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP ASSET MANAGER, SERVICE CLASS 2
(232)
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP BALANCED, SERVICE CLASS 2 (214)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP CONTRAFUND, SERVICE CLASS 2 (239)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP DISCIPLINED SMALL CAP, SERVICE
CLASS 2 (1298)
Unit value at beginning of period $10.00
Unit value at end of period - - - 4-27-07
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
P51 - 62
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP DYNAMIC CAPITAL APPRECIATION,
SERVICE CLASS 2 (243)
Unit value at beginning of period $12.55 $10.55 $10.57 $8.59 - - -
Unit value at end of period $14.08 $12.55 $10.55 $10.57 $8.59
Number of units outstanding at end of period 31,971 9,977 4,900 3,073 3,106
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP EQUITY-INCOME, SERVICE CLASS 2
(237)
Unit value at beginning of period $11.50 $11.05 $10.08 $7.87 $9.64 - -
Unit value at end of period $13.59 $11.50 $11.05 $10.08 $7.87 $9.64
Number of units outstanding at end of period 380,396 738,896 751,530 556,770 347,235 89,239
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP FREEDOM 2010, SERVICE CLASS 2
(1283)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP FREEDOM 2015, SERVICE CLASS 2
(1284)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP FREEDOM 2020, SERVICE CLASS 2
(1285)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP FREEDOM 2025, SERVICE CLASS 2
(1286)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP FREEDOM 2030, SERVICE CLASS 2
(1287)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
- ---------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP DYNAMIC CAPITAL APPRECIATION,
SERVICE CLASS 2 (243)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP EQUITY-INCOME, SERVICE CLASS 2
(237)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP FREEDOM 2010, SERVICE CLASS 2
(1283) $10.00
Unit value at beginning of period - - - 4-30-07
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP FREEDOM 2015, SERVICE CLASS 2
(1284) $10.00
Unit value at beginning of period - - - 4-30-07
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP FREEDOM 2020, SERVICE CLASS 2
(1285) $10.00
Unit value at beginning of period - - - 4-30-07
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP FREEDOM 2025, SERVICE CLASS 2
(1286) $10.00
Unit value at beginning of period - - - 4-30-07
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP FREEDOM 2030, SERVICE CLASS 2
(1287) $10.00
Unit value at beginning of period - - - 4-30-07
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
P51 - 63
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP GROWTH, SERVICE CLASS 2 (238)
Unit value at beginning of period $8.93 $8.59 $8.45 $6.47 $9.42 - -
Unit value at end of period $9.38 $8.93 $8.59 $8.45 $6.47 $9.42
Number of units outstanding at end of period 216,974 446,998 365,952 362,460 121,212 40,739
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP GROWTH & INCOME, SERVICE CLASS 2
(240)
Unit value at beginning of period $10.86 $10.26 9.87 $8.11 $9.90 - -
Unit value at end of period $12.08 $10.86 $10.26 $9.87 $8.11 $9.90
Number of units outstanding at end of period 173,304 485,577 473,443 262,336 113,847 26,772
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP GROWTH OPPORTUNITIES, SERVICE
CLASS 2 (241)
Unit value at beginning of period $10.60 $9.89 $9.39 $7.36 $9.58 - -
Unit value at end of period $10.98 $10.60 $9.89 $9.39 $7.36 $9.58
Number of units outstanding at end of period 38,742 37,725 28,497 21,009 10,430 4,696
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP HIGH INCOME, SERVICE CLASS 2
(286)
Unit value at beginning of period
Unit value at end of period $12.48 $12.38 $11.49 - - - -
Number of units outstanding at end of period $13.66 $12.48 $12.38 $11.49
136,410 95,381 190,138 274,622
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP INDEX 500, SERVICE CLASS 2
(1291)
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period - - - - - - -
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP INVESTMENT GRADE BOND, SERVICE
CLASS 2 (408)
Unit value at beginning of period $10.36 $10.32 - -
Unit value at end of period $10.64 $10.36 $10.32
Number of units outstanding at end of period 108,388 77,215 17,787
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
- ---------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP GROWTH, SERVICE CLASS 2 (238)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP GROWTH & INCOME, SERVICE CLASS 2
(240)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP GROWTH OPPORTUNITIES, SERVICE
CLASS 2 (241)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP HIGH INCOME, SERVICE CLASS 2
(286)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP INDEX 500, SERVICE CLASS 2
(1291)
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period - - - 4-27-07
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP INVESTMENT GRADE BOND, SERVICE
CLASS 2 (408)
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
P51 - 64
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP MID CAP, SERVICE CLASS 2 (242)
Unit value at beginning of period $17.67 $15.19 $12.36 $9.07 $10.23 - -
Unit value at end of period $19.57 $17.67 $15.19 $12.36 $9.07 $10.23
Number of units outstanding at end of period 665,105 452,006 397,893 312,716 209,207 39,530
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP OVERSEAS, SERVICE CLASS 2 (409)
Unit value at beginning of period
Unit value at end of period $12.95 $11.06 - -
Number of units outstanding at end of period $15.03 $12.95 $11.06
90,264 20,469 5,234
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FTVIPT FRANKLIN GROWTH & INCOME SECURITIES,
CLASS 2 (216)
Unit value at beginning of period $13.05 $12.79 $11.73 - - - -
Unit value at end of period $15.01 $13.05 $12.79 $11.73
Number of units outstanding at end of period 93,147 93,656 89,108 56,286
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FTVIPT FRANKLIN INCOME SECURITIES, CLASS 2
(215)
Unit value at beginning of period
Unit value at end of period $14.13 $14.11 $12.58 - - - -
Number of units outstanding at end of period $16.46 $14.13 $14.11 $12.58
826,981 461,086 362,610 208,303
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FTVIPT FRANKLIN LARGE CAP GROWTH SECURITIES,
CLASS 2 (217)
Unit value at beginning of period $12.59 $12.64 $11.89 - - - -
Unit value at end of period $13.76 $12.59 $12.64 $11.89
Number of units outstanding at end of period 73,919 85,891 68,991 24,231
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES,
CLASS 2 (1288)
Unit value at beginning of period
Unit value at end of period - - - - - - -
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FTVIPT MUTUAL SHARES SECURITIES, CLASS 2
(219)
Unit value at beginning of period $14.64 $13.44 $12.10 - - - -
Unit value at end of period $17.08 $14.64 $13.44 $12.10
Number of units outstanding at end of period 320,805 232,478 148,509 69,557
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
- ---------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP MID CAP, SERVICE CLASS 2 (242)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP OVERSEAS, SERVICE CLASS 2 (409)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FTVIPT FRANKLIN GROWTH & INCOME SECURITIES,
CLASS 2 (216)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FTVIPT FRANKLIN INCOME SECURITIES, CLASS 2
(215)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FTVIPT FRANKLIN LARGE CAP GROWTH SECURITIES,
CLASS 2 (217)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES,
CLASS 2 (1288)
Unit value at beginning of period $10.00
Unit value at end of period - - - 4-30-07
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FTVIPT MUTUAL SHARES SECURITIES, CLASS 2
(219)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
P51 - 65
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FTVIPT TEMPLETON FOREIGN SECURITIES, CLASS 2
(218)
Unit value at beginning of period $15.92 $14.66 $12.55 - - - -
Unit value at end of period $19.06 $15.92 $14.66 $12.55
Number of units outstanding at end of period 160,397 153,586 80,323 26,269
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FTVIPT TEMPLETON GROWTH SECURITIES, CLASS 2
(220)
Unit value at beginning of period $15.25 $14.22 $12.43 - - - -
Unit value at end of period $18.31 $15.25 $14.22 $12.43
Number of units outstanding at end of period 527,334 129,680 104,979 37,346
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST BALANCED (298)
Unit value at beginning of period $12.56 $11.95 $11.07 $9.24 - - -
Unit value at end of period $13.73 $12.56 $11.95 $11.07 $9.24
Number of units outstanding at end of period 90,677 94,972 61,605 31,766 1,332
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST BARON SMALL CAP VALUE (246)
Unit value at beginning of period $14.90 $14.04 $11.14 $8.47 - - -
Unit value at end of period $17.36 $14.90 $14.04 $11.14 $8.47
Number of units outstanding at end of period 168,193 191,511 154,482 103,621 72,718
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST CORE BOND (292)
Unit value at beginning of period $10.89 $10.87 $10.68 $10.47 - - -
Unit value at end of period $11.17 $10.89 $10.87 $10.68 $10.47
Number of units outstanding at end of period 136,349 128,106 97,024 57,926 6,674
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST EAGLE CAPITAL APPRECIATION
(247)
Unit value at beginning of period $9.17 $9.30 $8.21 $6.30 - - -
Unit value at end of period $10.56 $9.17 $9.30 $8.21 $6.30
Number of units outstanding at end of period 21,688 27,220 38,197 42,469 21,232
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST MID CAP GROWTH (288)
Unit value at beginning of period $13.97 $12.29 $11.13 $7.67 - - -
Unit value at end of period $15.99 $13.97 $12.29 $11.13 $7.67
Number of units outstanding at end of period 111,045 106,474 112,887 66,114 756
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
- ---------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- ---------------------------------------------- ----------- ----------- ------------ ------------
FTVIPT TEMPLETON FOREIGN SECURITIES, CLASS 2
(218)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
FTVIPT TEMPLETON GROWTH SECURITIES, CLASS 2
(220)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST BALANCED (298)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST BARON SMALL CAP VALUE (246)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST CORE BOND (292)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST EAGLE CAPITAL APPRECIATION
(247)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST MID CAP GROWTH (288)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
P51 - 66
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST ENHANCED DIVIDEND 30 (291)
Unit value at beginning of period $10.52 $11.01 $10.62 $8.17 - - -
Unit value at end of period $13.12 $10.52 $11.01 $10.62 $8.17
Number of units outstanding at end of period 152,979 155,170 167,840 136,184 -
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST GROWTH & INCOME (297)
Unit value at beginning of period $11.77 $11.72 $10.81 $8.25 - - -
Unit value at end of period $13.18 $11.77 $11.72 $10.81 $8.25
Number of units outstanding at end of period 81,596 86,525 74,576 31,848 -
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST HIGH YIELD (289)
Unit value at beginning of period $13.08 $12.85 $11.90 $9.74 - - -
Unit value at end of period $13.90 $13.08 $12.85 $11.90 $9.74
Number of units outstanding at end of period 389,140 236,776 384,963 124,089 133,376
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST MONEY MARKET, SERVICE CLASS
(299)
Unit value at beginning of period $10.06 $9.92 $9.96 -
Unit value at end of period $10.38 $10.06 $9.92 $9.96
Number of units outstanding at end of period 543,497 686,295 251,288 325,822
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST THIRD AVENUE VALUE (244)
Unit value at beginning of period $16.02 $13.85 $11.16 $8.08 $9.93 - -
Unit value at end of period $18.30 $16.02 $13.85 $11.16 $8.08 $9.93
Number of units outstanding at end of period 734,191 728,452 586,207 428,861 311,194 57,286
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST VALUE PLUS (290)
Unit value at beginning of period $10.93 $10.86 $9.97 $7.80 - - -
Unit value at end of period $12.90 $10.93 $10.86 $9.97 $7.80
Number of units outstanding at end of period 46,001 66,088 68,426 61,804 -
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST AGGRESSIVE ETF, SERVICE CLASS
(1278)
Unit value at beginning of period $10.00 - - - - - -
Unit value at end of period $10.90
Number of units outstanding at end of period 17,788
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
- ---------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST ENHANCED DIVIDEND 30 (291)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST GROWTH & INCOME (297)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST HIGH YIELD (289)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST MONEY MARKET, SERVICE CLASS
(299)
Unit value at beginning of period $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST THIRD AVENUE VALUE (244)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST VALUE PLUS (290)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST AGGRESSIVE ETF, SERVICE CLASS
(1278) $10.00
Unit value at beginning of period - - -
Unit value at end of period 7-31-06
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
P51 - 67
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST CONSERVATIVE ETF, SERVICE
CLASS (1268)
Unit value at beginning of period $10.00 - - - - - -
Unit value at end of period $10.58
Number of units outstanding at end of period 47,703
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST ENHANCED ETF, SERVICE CLASS
(1279) -
Unit value at beginning of period $10.00 - - - - -
Unit value at end of period $11.03
Number of units outstanding at end of period 46,599
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST MODERATE ETF, SERVICE CLASS
(1273)
Unit value at beginning of period $10.00 - - - - - -
Unit value at end of period $10.72
Number of units outstanding at end of period 36,896
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST AGGRESSIVE ETF, SERVICE
CLASS - GMAB OPTION (1296)
Unit value at beginning of period $10.00 - - - - - -
Unit value at end of period $10.87
Number of units outstanding at end of period 18,140
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST CONSERVATIVE ETF, SERVICE
CLASS - GMAB OPTION (1293)
Unit value at beginning of period $10.00 - - - - - -
Unit value at end of period $10.55
Number of units outstanding at end of period 22,257
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
- ---------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST CONSERVATIVE ETF, SERVICE
CLASS (1268) $10.00
Unit value at beginning of period - - -
Unit value at end of period 7-31-06
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST ENHANCED ETF, SERVICE CLASS
(1279) $10.00
Unit value at beginning of period - - -
Unit value at end of period
Number of units outstanding at end of period 7-31-06
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST MODERATE ETF, SERVICE CLASS
(1273) $10.00
Unit value at beginning of period - - -
Unit value at end of period 7-31-06
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST AGGRESSIVE ETF, SERVICE
CLASS - GMAB OPTION (1296) $10.00
Unit value at beginning of period - - -
Unit value at end of period 7-31-06
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST CONSERVATIVE ETF, SERVICE
CLASS - GMAB OPTION (1293) $10.00
Unit value at beginning of period - - -
Unit value at end of period 7-31-06
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
P51 - 68
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST MODERATE ETF, SERVICE CLASS -
GMAB OPTION (1294)
Unit value at beginning of period $10.00 - - - - - -
Unit value at end of period $10.69
Number of units outstanding at end of period 4,291
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
VAN KAMPEN LIT COMSTOCK, CLASS II (208)
Unit value at beginning of period $14.54 $14.17 $12.24 $10.00 - - -
Unit value at end of period $16.62 $14.54 $14.17 $12.24
Number of units outstanding at end of period 89,764 107,217 81,001 20,908
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
VAN KAMPEN LIT STRATEGIC GROWTH, CLASS II
(209)
Unit value at beginning of period $13.30 $12.54 $11.92 $10.00 - - -
Unit value at end of period $13.45 $13.30 $12.54 $11.92
Number of units outstanding at end of period 27,453 31,560 31,296 3,144
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
VAN KAMPEN UIF EMERGING MARKETS DEBT,
CLASS II (1289)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
VAN KAMPEN UIF EMERGING MKTS EQUITY,
CLASS II (210)
Unit value at beginning of period $22.97 $17.42 $14.37 - - - -
Unit value at end of period $31.05 $22.97 $17.42 $14.37
Number of units outstanding at end of period 81,270 65,905 60,000 19,728
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
VAN KAMPEN UIF U.S. REAL ESTATE, CLASS II
(1299)
Unit value at beginning of period
Unit value at end of period - - - - - - -
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
- ---------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- ---------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST MODERATE ETF, SERVICE CLASS -
GMAB OPTION (1294) $10.00
Unit value at beginning of period - - -
Unit value at end of period 7-31-06
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
VAN KAMPEN LIT COMSTOCK, CLASS II (208)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
VAN KAMPEN LIT STRATEGIC GROWTH, CLASS II
(209)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ----------------------------------------------- ----------- ----------- ------------ ------------
VAN KAMPEN UIF EMERGING MARKETS DEBT,
CLASS II (1289)
Unit value at beginning of period - - - $10.00
Unit value at end of period 4-28-07
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
VAN KAMPEN UIF EMERGING MKTS EQUITY,
CLASS II (210)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- ---------------------------------------------- ----------- ----------- ------------ ------------
VAN KAMPEN UIF U.S. REAL ESTATE, CLASS II
(1299)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period 4-28-07
- ---------------------------------------------- ----------- ----------- ------------ ------------
(1) Only available in certain contracts.
P51 - 69
FINANCIAL INFORMATION FOR SEPARATE ACCOUNT II OF INTEGRITY (PINNACLE I, II &
III)
For the Variable Account Options we currently offer, the table below shows the
following data for Pinnacle I, II and III contracts with a mortality and expense
risk charge of 1.35% issued prior to approximately May 1, 2004 (date varies by
state): Unit Values at inception; the number of units outstanding at December 31
of each year since inception; and the Unit Value at the beginning and end of
each period since inception.
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP ASSET MANAGER, SERVICE CLASS 2
(402)
Unit value at beginning of period $10.62 $10.37 - - - - -
Unit value at end of period $11.22 $10.62 $10.37
Number of units outstanding at end of period 1,522 24,002 -
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP BALANCED, SERVICE CLASS 2 (403)
Unit value at beginning of period $10.93 $10.50 - - - - -
Unit value at end of period $12.02 $10.93 $10.50
Number of units outstanding at end of period 36,736 36,541 49,805
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP CONTRAFUND, INITIAL CLASS (442)
Unit value at beginning of period $18.16 $15.74 $13.82 $10.90 $12.19 $14.08 $15.29
Unit value at end of period $20.01 $18.16 $15.74 $13.82 $10.90 $12.19 $14.08
Number of units outstanding at end of period 916,926 1,201,431 1,260,440 1,298,178 1,425,302 1,519,016 1,735,357
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP DISCIPLINED SMALL CAP, SERVICE
CLASS 2 (045)
Unit value at beginning of period
Unit value at end of period - - - - - - -
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP DYNAMIC CAPITAL APPRECIATION,
SERVICE CLASS 2 (404) -
Unit value at beginning of period $12.69 $10.66 $10.66 - - - -
Unit value at end of period $14.25 $12.69 14,692
Number of units outstanding at end of period 18,516 17,795
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP EQUITY-INCOME, INITIAL
CLASS (444)
Unit value at beginning of period $14.11 $13.51 $12.28 $9.55 $11.66 $12.43 $11.62
Unit value at end of period $16.73 $14.11 $13.51 $12.28 $9.55 $11.66 $12.43
Number of units outstanding at end of period 674,841 900,224 1,276,954 1,346,565 1,422,524 1,532,888 1,303,950
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
- --------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- --------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP ASSET MANAGER, SERVICE CLASS 2
(402)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP BALANCED, SERVICE CLASS 2 (403)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP CONTRAFUND, INITIAL CLASS (442)
Unit value at beginning of period $12.47 $9.73 $10.00
Unit value at end of period $15.29 $12.47 $9.73
Number of units outstanding at end of period 1,652,352 893,485 129,361
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP DISCIPLINED SMALL CAP, SERVICE
CLASS 2 (045)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period 4-30-07
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP DYNAMIC CAPITAL APPRECIATION,
SERVICE CLASS 2 (404)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP EQUITY-INCOME, INITIAL
CLASS (444)
Unit value at beginning of period $11.08 $10.06 $10.00
Unit value at end of period $11.62 $11.08 $10.06
Number of units outstanding at end of period 1,571,231 1,206,214 155,520
- --------------------------------------------- ------------ ----------- ------------ -----------
P51-70
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP FREEDOM 2010, SERVICE CLASS 2
(023)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP FREEDOM 2015, SERVICE CLASS 2
(024)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP FREEDOM 2020, SERVICE CLASS 2
(025)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP FREEDOM 2025, SERVICE CLASS 2
(026)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP FREEDOM 2030, SERVICE CLASS 2
(027)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP GROWTH, SERVICE CLASS 2 (049)
Unit value at beginning of period
Unit value at end of period - - - - - - -
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
- --------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- --------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP FREEDOM 2010, SERVICE CLASS 2
(023)
Unit value at beginning of period - - - $10.00
Unit value at end of period 4-30-07
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP FREEDOM 2015, SERVICE CLASS 2
(024)
Unit value at beginning of period - - - $10.00
Unit value at end of period 4-30-07
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP FREEDOM 2020, SERVICE CLASS 2
(025)
Unit value at beginning of period - - - $10.00
Unit value at end of period 4-30-07
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP FREEDOM 2025, SERVICE CLASS 2
(026)
Unit value at beginning of period - - - $10.00
Unit value at end of period 4-30-07
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP FREEDOM 2030, SERVICE CLASS 2
(027)
Unit value at beginning of period - - - $10.00
Unit value at end of period 4-30-07
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP GROWTH, SERVICE CLASS 2 (049)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period 4-27-07
- --------------------------------------------- ------------ ----------- ------------ -----------
P51-71
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FIDELITY VIP GROWTH & INCOME, INITIAL CLASS
(445)
Unit value at beginning of period $13.44 $12.66 $12.13 $9.93 $12.07 $13.41 $14.11
Unit value at end of period $15.00 $13.44 $12.66 $12.13 $9.93 $12.07 $13.41
Number of units outstanding at end of period 379,608 556,026 747,678 901,629 952,583 1,130,965 1,111,831
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP GROWTH OPPORTUNITIES, INITIAL
CLASS (443)
Unit value at beginning of period $10.06 $9.36 $8.86 $6.91 $8.97 $10.62 $12.98
Unit value at end of period $10.47 $10.06 $9.36 $8.86 $6.91 $8.97 $10.62
Number of units outstanding at end of period 149,274 256,861 392,637 465,755 472,524 661,779 768,638
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP HIGH INCOME, SERVICE CLASS 2
(405)
Unit value at beginning of period $10.85 $10.75 - - - - -
Unit value at end of period $11.88 $10.85 $10.75
Number of units outstanding at end of period 109,560 17,348 377,400
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP INDEX 500, SERVICE CLASS 2
(029)
Unit value at beginning of period
Unit value at end of period
Number of units outstanding at end of period - - - - - - -
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP INVESTMENT GRADE BOND, SERVICE
CLASS 2 (406)
Unit value at beginning of period $10.38 $10.33 - - - - -
Unit value at end of period $10.67 $10.38 $10.33
Number of units outstanding at end of period 75,137 98,143 58,076
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP MID CAP, SERVICE CLASS 2 (047)
Unit value at beginning of period
Unit value at end of period - - - - - - -
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FIDELITY VIP OVERSEAS,- SERVICE CLASS 2 (407)
Unit value at beginning of period $12.97 $11.07 - - - - -
Unit value at end of period $15.07 $12.97 $11.07
Number of units outstanding at end of period 48,216 23,441 4,618
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
- --------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- --------------------------------------------- ----------- ----------- ------------ ------------
FIDELITY VIP GROWTH & INCOME, INITIAL CLASS
(445)
Unit value at beginning of period $13.10 $10.24 $10.00
Unit value at end of period $14.11 $13.10 $10.24
Number of units outstanding at end of period 1,291,885 859,704 119,576
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP GROWTH OPPORTUNITIES, INITIAL
CLASS (443)
Unit value at beginning of period $12.62 $10.26 $10.00
Unit value at end of period $12.98 $12.62 $10.26
Number of units outstanding at end of period 948,352 617,513 78,180
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP HIGH INCOME, SERVICE CLASS 2
(405)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP INDEX 500, SERVICE CLASS 2
(029)
Unit value at beginning of period
Unit value at end of period $10.00
Number of units outstanding at end of period - - - 4-27-07
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP INVESTMENT GRADE BOND, SERVICE
CLASS 2 (406)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP MID CAP, SERVICE CLASS 2 (047)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period 4-27-07
- --------------------------------------------- ------------ ----------- ------------ -----------
FIDELITY VIP OVERSEAS,- SERVICE CLASS 2 (407)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
P51-72
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
FTVIPT FRANKLIN GROWTH & INCOME SECURITIES,
CLASS 2 (044)
Unit value at beginning of period - - - - - - -
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FTVIPT FRANKLIN INCOME SECURITIES, CLASS 1
(433)
Unit value at beginning of period $14.28 $14.22 $12.63 $10.00 - - -
Unit value at end of period $16.70 $14.28 $14.22 $12.63
Number of units outstanding at end of period 1,467,377 1,913,947 2,225,251 2,619,202
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FTVIPT FRANKLIN LARGE CAP GROWTH SECURITIES,
CLASS 2 (435)
Unit value at beginning of period $12.63 $12.67 $11.90 $10.00 - - -
Unit value at end of period $13.82 $12.63 $12.67 $11.90
Number of units outstanding at end of period 31,380 40,911 32,611 15,672
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES,
CLASS 2 (028)
Unit value at beginning of period
Unit value at end of period - - - - - - -
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FTVIPT MUTUAL SHARES SECURITIES, CLASS 2
(436)
Unit value at beginning of period $14.68 $13.46 $12.12 $10.00 - - -
Unit value at end of period $17.15 $14.68 $13.46 $12.12
Number of units outstanding at end of period 281,299 277,130 155,623 147,344
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FTVIPT TEMPLETON FOREIGN SECURITIES, CLASS 2
(439)
Unit value at beginning of period $15.97 $14.69 $12.57 $10.00 - - -
Unit value at end of period $19.13 $15.97 $14.69 $12.57
Number of units outstanding at end of period 132,385 178,899 98,229 82,198
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
FTVIPT TEMPLETON GROWTH SECURITIES, CLASS 2
(437)
Unit value at beginning of period $15.30 $14.24 $12.45 $10.00 - - -
Unit value at end of period $18.38 $15.30 $14.24 $12.45
Number of units outstanding at end of period 198,244 214,122 97,800 32,447
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
- --------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- --------------------------------------------- ----------- ----------- ------------ ------------
FTVIPT FRANKLIN GROWTH & INCOME SECURITIES,
CLASS 2 (044)
Unit value at beginning of period - - - $10.00
Unit value at end of period 4-27-07
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FTVIPT FRANKLIN INCOME SECURITIES, CLASS 1
(433)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FTVIPT FRANKLIN LARGE CAP GROWTH SECURITIES,
CLASS 2 (435)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FTVIPT FRANKLIN SMALL CAP VALUE SECURITIES,
CLASS 2 (028)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period 4-30-07
- --------------------------------------------- ------------ ----------- ------------ -----------
FTVIPT MUTUAL SHARES SECURITIES, CLASS 2
(436)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FTVIPT TEMPLETON FOREIGN SECURITIES, CLASS 2
(439)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
FTVIPT TEMPLETON GROWTH SECURITIES, CLASS 2
(437)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
P51-73
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST BALANCED (476)
Unit value at beginning of period $12.61 $11.99 $11.08 $9.24 - - -
Unit value at end of period $13.79 $12.61 $11.99 $11.08 $9.24
Number of units outstanding at end of period 136,024 134,194 172,707 143,674 61,716
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST BARON SMALL CAP VALUE (431)
Unit value at beginning of period $26.86 $25.28 $20.05 $15.23 - - -
Unit value at end of period $31.33 $26.86 $25.28 $20.05 $15.23
Number of units outstanding at end of period 133,758 185,632 185,980 203,229 236,032
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST CORE BOND (466)
Unit value at beginning of period $10.93 $10.90 $10.70 $10.48 - - -
Unit value at end of period $11.22 $10.93 $10.90 $10.70 $10.48
Number of units outstanding at end of period 83,827 109,727 109,117 163,286 184,869
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST EAGLE CAPITAL APPRECIATION
(450)
Unit value at beginning of period $19.24 $19.48 $17.19 $13.17 $19.21 $27.02 $35.32
Unit value at end of period $22.17 $19.24 $19.48 $17.19 $13.17 $19.21 $27.02
Number of units outstanding at end of period 344,995 440,850 604,193 725,005 813,251 1,023,394 1,230,280
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST ENHANCED DIVIDEND 30 (465)
Unit value at beginning of period $10.56 $11.04 $10.64 $8.18 - - -
Unit value at end of period $13.18 $10.56 $11.04 $10.64
Number of units outstanding at end of period 634,670 1,078,127 1,355,134 1,681,322
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST GROWTH & INCOME (475)
Unit value at beginning of period $11.81 $11.76 $10.82 $8.26 - - -
Unit value at end of period $13.25 $11.81 $11.76 $10.82 $8.26
Number of units outstanding at end of period 31,667 41,579 56,631 58,552 24,042
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST HIGH YIELD (463)
Unit value at beginning of period $13.12 $12.88 $11.92 $9.75 - - -
Unit value at end of period $13.97 $13.12 $12.88 $11.92 $9.75
Number of units outstanding at end of period 246,607 426,79 534,408 1,048,075 723,541
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST MID CAP GROWTH (462)
Unit value at beginning of period $14.02 $12.32 $11.15 $7.67 - - -
Unit value at end of period $16.07 $14.02 $12.32 $11.15 $7.67
Number of units outstanding at end of period 57,079 73,516 98,578 85,135 39,566
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
- --------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- --------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST BALANCED (476)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST BARON SMALL CAP VALUE (431)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST CORE BOND (466)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST EAGLE CAPITAL APPRECIATION
(450)
Unit value at beginning of period $26.42 $19.74 $14.85 $10.00
Unit value at end of period $35.32 $26.42 $19.74
Number of units outstanding at end of period 1,214,898 1,345,118 1,295,185
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST ENHANCED DIVIDEND 30 (465)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST GROWTH & INCOME (475)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST HIGH YIELD (463)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST MID CAP GROWTH (462)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
P51-74
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
TOUCHSTONE VST MONEY MARKET, INITIAL CLASS
(469)
Unit value at beginning of period $10.14 $9.97 $9.97 $10.00 - - -
Unit value at end of period $10.50 $10.14 $9.97 $9.97
Number of units outstanding at end of period 1,108,687 1,224,340 741,819 1,202,155
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST THIRD AVENUE VALUE (420)
Unit value at beginning of period $47.99 $41.43 $33.35 $24.11 $29.62 $26.06 $23.76
Unit value at end of period $54.86 $47.99 $41.43 $33.35 $24.11 $29.62 $26.06
Number of units outstanding at end of period 407,462 571,704 656,051 741,076 780,658 934,887 620,186
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST VALUE PLUS (464)
Unit value at beginning of period $10.97 $10.89 $9.98 $7.80 - - -
Unit value at end of period $12.96 $10.97 $10.89 $9.98 $7.80
Number of units outstanding at end of period 253,343 359,771 464,320 541,792 6,205
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST AGGRESSIVE ETF, INITIAL CLASS
(498)
Unit value at beginning of period $10.60 $10.27 -
Unit value at end of period $11.87 $10.60 $10.27 - - - -
Number of units outstanding at end of period 51,120 64,045 23,909
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST CONSERVATIVE ETF, INITIAL
CLASS (400)
Unit value at beginning of period $10.36 $10.16 -
Unit value at end of period $11.05 $10.36 $10.16 - - - -
Number of units outstanding at end of period 124,949 16,880 -
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST ENHANCED ETF, INITIAL CLASS
(499)
Unit value at beginning of period $10.98 $10.50 -
Unit value at end of period $12.50 $10.98 $10.50 - - - -
Number of units outstanding at end of period 446,813 268,034 193
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
TOUCHSTONE VST MODERATE ETF, INITIAL CLASS
(497)
Unit value at beginning of period $10.51 $10.25 -
Unit value at end of period $11.51 $10.51 $10.25 - - - -
Number of units outstanding at end of period 149,406 145,411 2,011
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
- --------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- --------------------------------------------- ----------- ----------- ------------ ------------
TOUCHSTONE VST MONEY MARKET, INITIAL CLASS
(469)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST THIRD AVENUE VALUE (420)
Unit value at beginning of period $27.42 $23.47 $18.24 $10.00
Unit value at end of period $23.76 $27.42 $23.47
Number of units outstanding at end of period 930,696 1,385,723 1,278,296
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST VALUE PLUS (464)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST AGGRESSIVE ETF, INITIAL CLASS
(498)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST CONSERVATIVE ETF, INITIAL
CLASS (400)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST ENHANCED ETF, INITIAL CLASS
(499)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
TOUCHSTONE VST MODERATE ETF, INITIAL CLASS
(497)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
P51-75
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
2006 2005 2004 2003 2002 2001 2000
- ---------------------------------------------- ----------- ------------ ----------- ------------ ----------- ----------- -----------
VAN KAMPEN LIT COMSTOCK, CLASS II (429)
Unit value at beginning of period $14.58 $14.20 $12.25 $10.00 - - -
Unit value at end of period $16.69 $14.58 $14.20 $12.25
Number of units outstanding at end of period 63,602 89,197 62,173 32,215
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
VAN KAMPEN LIT STRATEGIC GROWTH, CLASS II
(459)
Unit value at beginning of period
Unit value at end of period $13.34 $12.56 $11.93 $10.00 - - -
Number of units outstanding at end of period $13.51 $13.34 $12.56 $11.93
10,001 10,651 18,299 7,394
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
VAN KAMPEN UIF EMERGING MARKETS DEBT,
CLASS I (449)
Unit value at beginning of period $16.23 $14.65 $13.50 $10.70 $9.93 $9.14 $8.32
Unit value at end of period $17.74 $16.23 $14.65 $13.50 $10.70 $9.93 $9.14
Number of units outstanding at end of period 79,903 124,599 147,431 199,349 201,513 150,281 192,477
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
VAN KAMPEN UIF EMERGING MARKETS EQUITY,
CLASS II (494)
Unit value at beginning of period $23.04 $17.46 $14.39 $10.00 - - -
Unit value at end of period $31.17 $23.04 $17.46 $14.39
Number of units outstanding at end of period 39,141 40,938 19,454 14,038
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
VAN KAMPEN UIF U.S. REAL ESTATE, CLASS I
(458)
Unit value at beginning of period
Unit value at end of period $24.73 $21.42 $15.92 $11.73 $11.99 $11.07 $8.68
Number of units outstanding at end of period $33.68 $24.73 $21.42 $15.92 $11.73 $11.99 $11.07
189,675 247,351 322,320 331,092 376,700 339,600 238,338
- --------------------------------------------- ------------ ----------- ------------ ----------- ------------ ----------- -----------
- --------------------------------------------- ----------- ----------- ------------ ------------
1999 1998 1997 INCEPTION
DATE AND
VALUE
- --------------------------------------------- ----------- ----------- ------------ ------------
VAN KAMPEN LIT COMSTOCK, CLASS II (429)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
VAN KAMPEN LIT STRATEGIC GROWTH, CLASS II
(459)
Unit value at beginning of period
Unit value at end of period - - - $10.00
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
VAN KAMPEN UIF EMERGING MARKETS DEBT,
CLASS I (449)
Unit value at beginning of period $6.52 $9.23 $10.00
Unit value at end of period $8.32 $6.52 $9.23
Number of units outstanding at end of period 310,684 607,509 653,365
- --------------------------------------------- ------------ ----------- ------------ -----------
VAN KAMPEN UIF EMERGING MARKETS EQUITY,
CLASS II (494)
Unit value at beginning of period - - - $10.00
Unit value at end of period
Number of units outstanding at end of period
- --------------------------------------------- ------------ ----------- ------------ -----------
VAN KAMPEN UIF U.S. REAL ESTATE, CLASS I
(458)
Unit value at beginning of period
Unit value at end of period $8.93 $10.15 $10.00
Number of units outstanding at end of period $8.68 $8.93 $10.15
234,609 252,794 67,357
- --------------------------------------------- ------------ ----------- ------------ -----------
P51-76
APPENDIX B
ILLUSTRATION OF A MARKET VALUE ADJUSTMENT
The following examples illustrate how the MVA and the withdrawal charge may
affect the value of a GRO upon a withdrawal.
Assumptions:
o Contribution to a GRO - $50,000
o Guarantee Period - 7 Years
o Withdrawal - at the end of year three of the 7 year Guarantee Period o
No prior partial withdrawals or transfers
o Guaranteed Interest Rate - 5% Annual Effective Rate
The GRO Value for this $50,000 contribution would be $70,355.02 at the end of
the Guarantee Period. After three years, the GRO value is $57,881.25.
The MVA will be based on the current rate we are offering (at the time of the
withdrawal) on new contributions to GROs for the Guarantee Period equal to the
time remaining in your Guarantee Period, rounded to the next lower number of
complete months. If we don't declare a current rate for the exact time
remaining, we'll use a formula to find a rate using Guarantee Periods closest to
(next higher and next lower) the remaining period described above. Three years
after the initial contribution, there would have been four years remaining in
your GRO Guarantee Period. These examples also show the withdrawal charge, which
would be calculated separately.
EXAMPLE OF A DOWNWARD MARKET VALUE ADJUSTMENT:
A downward MVA results from a full or partial withdrawal that occurs when
interest rates have increased. Assume interest rates have increased and at the
time of the withdrawal, the current rate for four-year Guarantee Period is
6.25%. Upon a full withdrawal, the MVA would be:
-0.0551589 = [(1 + .05)48/12 / (1 + .0625 + .0025)48/12] - 1
The MVA is a reduction of $3,192.67 from the GRO Value:
-$3,192.67 = -0.0551589 X $57,881.25
The Market Adjusted Value would be:
$54,688.58 = $57,881.25 - $3,192.67
A withdrawal charge of 6% would be assessed against the $50,000 original
contribution:
$3,000.00 = $50,000.00 X .06
Thus, the amount payable on a full withdrawal would be:
$51,688.58 = $57,881.25 - $3,192.67 - $3,000.00
P51-77
If instead of a full withdrawal, $20,000 was requested, we would first determine
the Free Withdrawal Amount:
$5,788.13= $57,881.25 X 0.10
Free Amount = $5,788.13
The amount subject to a withdrawal change (non-free amount) would be:
$14,211.88 = $20,000.00 - $5,788.13
The MVA, which is only applicable to the non-free amount, would be
($783.91) = -0.0551589 X $14,211.88
The withdrawal charge would be:
$957.18 = [($14,211.88+ $783.91)/(1 - 0.06)] - ($14,211.88+ 783.91)
Thus, the total amount needed to provide $20,000 after the MVA and withdrawal
charge would be:
$21,741.09 = $20,000.00 + $783.91+ $957.18
The value remaining in the GRO after the withdrawal would be:
$36,140.16 = $57,881.25 - $21,741.09
EXAMPLE OF AN UPWARD MARKET VALUE ADJUSTMENT:
An upward MVA results from a full or partial withdrawal that occurs when
interest rates have decreased. Assume interest rates have increased and at the
time of the withdrawal, the current rate for four-year Guarantee Period is 4%.
Upon a full withdrawal, the MVA would be:
.0290890 = [(1 + .05)48/12 / (1 + .04 + .0025)48/12] - 1
The MVA is an increase of $1,683.71 to the value in the GRO:
$1,683.71 = .0290890 X $57,881.25
The Market Adjusted Value would be:
$59,564.96 = $57,881.25 + $1,683.71
A withdrawal charge of 6% would be assessed against the $50,000 original
contribution:
$3,000.00 = $50,000.00 X .06
Thus, the amount payable on a full withdrawal would be:
$56,564.96 = $57,881.25 + $1,683.71 - $3,000.00
If instead of a full withdrawal, $20,000 was requested, the Free Withdrawal
Amount and non-free amount would first be determined as above:
Free Amount = $ 5,788.13
P51-78
Non-Free Amount = $14,211.88
The MVA would be: $413.41 = 0.0290890 X $14,211.88
The withdrawal charge would be:
$880.75 = [($14,211.88 - $413.41)/(1 - 0.06)] - ($14,211.88 -
$413.41)
Thus, the total amount needed to provide $20,000 after the MVA and
withdrawal charge would be:
$20,467.34 = $20,000.00 - $413.41 + $880.75
The value remaining in the GRO after the withdrawal would be:
$37,413.91 = $57,881.25 - $20,467.34
Actual MVAs will have a greater or lesser impact than shown in the examples,
depending on the actual change in current interest rate and the timing of the
withdrawal in relation to the time remaining in the Guarantee Period.
The MVA operates in a similar manner for transfers, except withdrawal charges
don't apply to transfers.
THE MVA CALCULATIONS WILL BE ADJUSTED TO COMPLY WITH APPLICABLE STATE REGULATION
REQUIREMENTS FOR CONTRACTS ISSUED IN CERTAIN STATES.
P51-79
APPENDIX C
GUARANTEED MINIMUM WITHDRAWAL BENEFIT EXAMPLES
The following examples demonstrate how the Rider works, based on the stated
assumptions. These examples are for illustration only, and do not predict future
investment results.
EXAMPLE #1
This example illustrates withdrawals equal to the GAWA, Bonuses, calculation of
the LPA different from the GAWA, and the dollar-for-dollar reduction to the GWB
each time there is a withdrawal not greater than the GAWA. It also illustrates
payments for the life of the Primary Annuitant even though the GWB has been
reduced to zero.
ASSUMPTIONS:
Annuitants age on Contract Date = 60
Initial contribution = $100,000; no additional contributions
Withdrawals equal to GAWA in Contract Years 2, 3 and 5; withdrawals equal to LPA
in years 6+
Hypothetical Account Values (for illustrative purposes only) are less than GWB
on each Annual Processing Date (APD) The Rider remains in effect during the
period covered in this example.
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
Contract Annuitant's Contributions GAWA LPA Annual Bonus Hypothetical Account GWB at end
Year Age (B) Withdrawal Value (A) of the ADP
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
1 60 $100,000 $5,000 N/A 0 $5,000 $102,000 $105,000
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
2 61 $5,250 N/A $5,250 0 $ 98,790 $ 99,750
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
3 62 $5,250 N/A $5,250 0 $ 88,601 $ 94,500
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
4 63 $5,250 N/A 0 4,475 $ 86,829 $ 98,975
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
5 64 $5,250 N/A $5,250 0 $ 79,842 $ 93,725
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
6 65 $5,250 $4,686 (D) $4,686 0 $ 75,156 $ 89,039
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
7 66 $5,250 $4,686 $4,686 0 $ 67,464 $ 84,353
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
8 67 $5,250 $4,686 $4,686 0 $ 64,127 $ 79,667
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
9 68 $5,250 $4,686 $4,686 0 $ 59,441 $ 74,981
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
10 69 $5,250 $4,686 $4,686 0 $ 53,566 $ 70,295
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
11 70 $5,250 $4,686 $4,686 0 $ 49,416 $ 65,609
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
12 71 $5,250 $4,686 $4,686 0 $ 42,753 $ 60,923 (E)
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
13 72 $5,250 $4,686 $4,686 0 $ 38,922 $ 56,237
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
14 73 $5,250 $4,686 $4,686 0 $ 34,625 $ 51,551
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
15 74 $5,250 $4,686 $4,686 0 $ 30,285 $ 46,865
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
16 75 $5,250 $4,686 $4,686 0 $ 26,810 $ 42,179
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
17 76 $5,250 $4,686 $4,686 0 $ 22,392 $ 37,493
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
18 77 $5,250 $4,686 $4,686 0 $ 17,258 $ 32,807
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
19 78 $5,250 $4,686 $4,686 0 $ 11,709 $ 28,121
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
20 79 $5,250 $4,686 $4,686 0 $ 7,491 $ 23,435
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
21 80 $5,250 $4,686 $4,686 0 $ 2,730 $ 18,749
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
22 81 $5,250 $4,686 $4,686 0 0 $ 14,063
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
23 82 $5,250 $4,686 $4,686 0 0 $ 9,377
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
24 83 $5,250 $4,686 $4,686 0 0 $ 4,691
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
25 84 $4,691 $4,686 $4,686 0 0 $ 5
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
P51-80
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
Contract Annuitant's Contributions GAWA LPA Annual Bonus Hypothetical Account GWB at end
Year Age (B) Withdrawal Value (A) of the ADP
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
26 85 $5 $4,686 $4,686 0 0 0
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
27 86 0 $4,686 $4,686 0 0 0
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
28 87 0 $4,686 $4,686 0 0 0
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
29 88 0 $4,686 $4,686 0 0 0
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
30 89 0 $4,686 $4,686 0 0 0
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
31+ 90 0 $4,686 $4,686 0 0 0
- ------------ ------------ ------------- ----------- ------------- ------------- ----------- ---------------------- -----------------
A) The hypothetical Account Value includes deduction of all fees, except
Withdrawal Charges. Rounding of amounts less than $1.00 is used in
this example.
B) The initial GWB is set equal to the initial contribution of $100,000.
The initial GAWA equals 5% of the initial GWB (5% x $100,000 =
$5,000).
C) A Bonus was added to the GWB in Contract Years 1 and 4 because no
withdrawals were taken during those Contract Years. This Bonus was
calculated as 5% of the total of all contributions minus 5% of the
total of all withdrawals. For example, the Bonus in Contract Year 6 is
calculated as (5% x $100,000) - (5% x $10,500) = $4,475. The GWB after
the Bonus is then $94,500 + $4,475 = $98,975.
D) The LPA is available on the Contract Anniversary on or after the
Primary Annuitant attains age 65. It is calculated as 5% of the GWB at
that time (5% x $93,725 = $4,686).
E) Because annual withdrawals are not greater than the GAWA, the GWB
reduces dollar for dollar by the amount of the withdrawal. For
example, the GWB in Contract Year 12 is calculated as $65,609 - $4,686
= $60,923.
F) Because the ending GWB in Contract Year 24 is less than the GAWA, the
GAWA in Contract Year 25 is reduced to equal the remaining GWB.
EXAMPLE #2
This example illustrates an additional Contribution, Bonuses and Step-Ups.
ASSUMPTIONS:
Annuitants age on Contract Date = 65
Initial contribution = $100,000
Additional contribution = $50,000 at the beginning of the Contract Year 4
No withdrawals Hypothetical Account Values are provided for illustrative
purposes only The Rider remains in effect during the period covered in this
example.
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
Contract Annuitant's Contributions GAWA/ Bonus GWB after Account Value GWB after
Year Age LPA Bonus before on APD (A) Step-Up on
Step-Up the APD
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
1 65 $100,000 $ 5,000 (B) $5,000 $105,000 $103,465 $105,000
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
2 66 $ 5,250 $5,000 $110,000 $129,763 $129,763 (C)
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
3 67 $ 6,488 (D) $5,000 $134,763 $132,528 $134,763
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
4 68 $ 50,000 $ 9,238 $7,500 (E) $192,263 $191,881 $192,263
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
5 69 $ 9,613 $7,500 $199,763 $210,315 $210,315 (C)
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
6 70 $10,516 $7,500 $217,815 $214,214 $217,815
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
7 71 $10,891 $7,500 $225,315 $223,007 $225,315
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
8 72 $11,266 $7,500 $232,815 $236,964 $236,964 (C)
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
9 73 $11,848 $7,500 $244,464 $241,093 $244,464
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
10 74 $12,223 $7,500 $251,964 $248,661 $251,964
- ------------ ------------- ------------- -------------- --------------- ----------------- --------------------- --------------------
A) The hypothetical Account Value includes deduction of all fees.
Rounding of amounts less than $1.00 is used in this example.
P51-81
B) The initial GWB is set equal to the initial contribution of $100,000.
The initial GAWA equals 5% of the initial GWB (5% x $100,000 = $5,000)
C) In Contract Years 2, 5, and 8, the GWB steps up to the Account Value
on the Annual Processing Date. This is because the Account Value is
more than the GWB after any Bonus. In Contract Year two, the Account
Value is $129,763 while the GWB after the Bonus is $110,000 ($105,000
+ $5,000).
D) There is a $50,000 additional contribution at the beginning of year 4.
Before this contribution, the GAWA and LPA are equal to $6,738 (5% x
$134,763). After the $50,000 contribution, the GAWA and LPA are
recalculated as the lesser of
o 5% of the GWB immediately after the premium [5% x ($134,763 +
$50,000) = $9,238]; and
o the GAWA/LPA before the contribution plus 5% of the additional
contribution ($6,738 + 5% x $50,000 = $9,238)
E) A Bonus is added to the GWB on each APD because no withdrawals were
taken during the Contract Year. This Bonus was calculated as 5% of the
total of all contributions minus 5% of the total of all withdrawals.
For example, the Bonus in Contract Year 4 is calculated as (5% x
$150,000) - (5% x $0) = $7,500. The GWB after the Bonus is then
$184,763 (the GWB after the additional contribution) + $7,500 =
$192,263.
EXAMPLE 3
This example illustrates withdrawals in excess of the GAWA and the resulting
Reset.
ASSUMPTIONS:
Annuitants age on Contract Date = 65
Initial contribution = $100,000; no additional contributions
Withdrawals of LPA amount in years 1, 2, 4, and 5 Withdrawal of $20,000 in Year
3
Single withdrawal of $20,000 in Contract Year 3; single withdrawal of $3,500
in Contract Year 7
Hypothetical Account Values are provided for illustrative purposes only
The Rider remains in effect during the period covered in this example.
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
Contract Annuitant's Contributions GAWA/ Annual GWB before Account Value after GWB after
Year Age LPA Withdrawal withdrawal withdrawal (A) Withdrawal and any
Reset
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
1 65 $100,000 $5,000 (B) $ 5,000 $100,000 $94,250 $95,000
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
2 66 $5,000 $ 5,000 $ 95,000 $83,175 $90,000
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
3 67 $5,000 $20,000 (C) $ 90,000 $64,500 $64,500
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
4 68 $3,225 $ 3,225 $ 64,500 $57,164 $61,275
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
5 69 $3,225 $ 3,225 $ 61,275 $56,995 $58,050
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
6 70 $3,225 $ 3,225 $ 58,050 $51,240 $54,825
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
7 71 $3,225 $ 3,500 (D) $ 54,825 $45,189 $45,189
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
8 72 $2,259 $ 2,259 $ 45,189 $42,212 $42,930
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
9 73 $2,259 $ 2,259 $ 42,930 $39,057 $40,671
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
10 74 $2,259 $ 2,259 $ 40,671 $36,338 $38,412
- ------------ ------------- ------------- ------------- ----------------- -------------- --------------------- ---------------------
A) The hypothetical Account Value includes deduction of all fees, except
Withdrawal Charges. Rounding of amounts less than $1.00 is used in
this example.
P51-82
B) The initial GWB is set equal to the initial contribution of $100,000.
The initial GAWA/LPA equals 5% of the initial GWB (5% x $100,000 =
$5,000)
C) In year 3, the $20,000 withdrawal exceeds the GAWA/LPA. At this time
the GWB is Reset to be the lesser of
o the GWB before the withdrawal minus the withdrawal amount
($90,000 - $20,000 = $70,000)
o the Account Value after the withdrawal ($64,500)
The GAWA and LPA are then recalculated as the lesser of
o 5% of the Account Value after the withdrawal ($64,500); or
o the GAWA before the withdrawal ($5,000)
Thus, the GAWA and LPA are equal to $3,225 (5% x $64,500), which is less than
the GAWA before the Withdrawal.
D) In year 7, the $3,500 withdrawal exceeds the GAWA/LPA. At this time
the GWB is Reset to be the lesser of
o the GWB before the withdrawal minus the withdrawal amount
($54,825 - $3,500 = $51,325)
o the Account Value after the withdrawal ($45,189).
The GAWA and LPA are then recalculated as the lesser of
o 5% of the Account Value after the withdrawal ($45,189); or
o the GAWA before the withdrawal ($3,225).
Thus, the GAWA and LPA are equal to $2,259 (5% x $45,189), which is
less than the GAWA before the withdrawal.
EXAMPLE #4
This example illustrates withdrawals, additional contribution and the Rider fee
ASSUMPTIONS:
Annuitants age on Contract Date = 65
Initial contribution = $100,000
One additional contributions = $50,000 at the beginning of the Contract Years 4
and 9
Take LPA withdrawal in all years illustrated
Hypothetical Account Values are provided for illustrative purposes only
The Rider remains in effect during the period covered in this example.
- ------------------------------------------------------------------------------------------------------------------------------------
Contract Annuitants Contributions GAWA/ LPA Annual Adjusted GWB Rider Fee (C) Account Value on GWB at end of
Year Age Withdrawal Annual Annual Processing
Processing Date Date (A)
after all fees
- ------------------------------------------------------------------------------------------------------------------------------------
1 65 $100,000 $5,000 (B) $5,000 $100,000 $600 $ 94,756 $ 95,000
- ------------------------------------------------------------------------------------------------------------------------------------
2 66 $5,000 $5,000 $ 95,000 $570 $ 87,213 $ 90,000
- ------------------------------------------------------------------------------------------------------------------------------------
3 67 $5,000 $5,000 $ 10,000 $540 $ 82,997 $ 85,000
- ------------------------------------------------------------------------------------------------------------------------------------
4 68 $ 50,000 $6,750 $6,750 $135,000 $810 $127,102 $128,250
- ------------------------------------------------------------------------------------------------------------------------------------
5 69 $6,750 $6,750 $128,250 $770 $120,890 $121,500
- ------------------------------------------------------------------------------------------------------------------------------------
6 70 $6,750 $6,750 $121,500 $729 $114,044 $114,750
- ------------------------------------------------------------------------------------------------------------------------------------
7 71 $6,750 $6,750 $114,750 $689 $106,551 $108,000
- ------------------------------------------------------------------------------------------------------------------------------------
8 72 $6,750 $6,750 $108,000 $648 $100,016 $101,250
- ------------------------------------------------------------------------------------------------------------------------------------
9 73 $ 50,000 $6,750 $6,750 $101,250 $608 $ 92,683 $ 94,500
- ------------------------------------------------------------------------------------------------------------------------------------
10 74 $6,750 $6,750 $94,500 $567 $ 85,004 $ 87,750
- ------------------------------------------------------------------------------------------------------------------------------------
A) The hypothetical Account Value includes deduction of all fees, except
Withdrawal Charges. Rounding of amounts less than $1.00 is used in
this example.
P51-83
B) The initial GWB is set equal to the initial contribution of $100,000.
The initial GAWA/LPA equals 5% of the initial GWB (5% x $100,000 =
$5,000)
C) The rider charge is calculated as 0.60% multiplied by the Adjusted
GWB. The Adjusted GWB is defined as the GWB at the end of the previous
Annual Processing Date plus any additional contributions since the
last Annual Processing Date. In year 4, the Adjusted GWB is $135,000
($85,000 + $50,000). Thus, the Rider fee charged in year 4 equals $810
(0.60% X $135,000).
P51-84
APPENDIX D
ENHANCED EARNINGS BENEFIT CALCULATION EXAMPLE
EXAMPLE 1 - The following is a hypothetical example of how the EEB works:
Assumptions:
o Annuitant was age 60 on the Contract Date (40% benefit)
o Initial contribution = $100,000
o No additional contributions
o No withdrawals
o Hypothetical Account Value at the time the Death Benefit is calculated
= $125,000
Based on these assumptions stated above:
>> The gain in the contract is = $25,000 ($125,000-$100,000 =$25,000)
>> Benefit paid would be $10,000 ($25,000 x 40%)
EXAMPLE 2 - The following is an example of how the EEB will be calculated and
paid in conjunction with the standard Death Benefit under this contract.
Assumptions:
o Annuitant was age 60 on the Contract Date (40% benefit)
o Initial contribution = $50,000
o No additional contributions
o No withdrawals
o Hypothetical Account Value at the time the Death Benefit is calculated
= $60,000
o highest anniversary Account Value = $70,000
Based on these assumptions:
>> the gain in the contract is $10,000 ($60,000 - $50,000);
>> the EEB is $4,000 (40% x $10,000); and thus
>> the total payment to the beneficiaries is $74,000 ($70,000 + $4,000)
P51-85
PART C - OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements included in Part A:
Condensed Financial Information for the Portfolios
Financial Statements included in Part B*:
Integrity Life Insurance Company Separate Account II:
Report of Independent Registered Public Accounting Firm
Statements of Assets and Liabilities as of December 31, 2006
Statements of Operations for the Year Ended December 31, 2006
Statements of Changes in Net Assets for the Years Ended December 31,
2006 and 2005
Notes to Financial Statements
Integrity Life Insurance Company (Depositor):
Report of Independent Registered Public Accounting Firm
Balance Sheets (Statutory-Basis) as of December 31, 2006 and 2005
Statements of Operations (Statutory-Basis) for the Years Ended December
31, 2006 and 2005
Statements of Changes in Capital and Surplus (Statutory-Basis) for the
Years Ended December 31, 2006 and 2005
Statements of Cash Flow (Statutory-Basis) for the Years Ended December
31, 2006 and 2005
Notes to Financial Statements (Statutory-Basis)
The Western and Southern Life Insurance Company (Guarantor):
Report of Independent Registered Public Accounting Firm
Balance Sheets (Statutory-Basis) as of December 31, 2006 and 2005
Statements of Operations (Statutory-Basis) for the Years Ended December
31, 2006 and 2005
Statements of Changes in Capital and Surplus (Statutory-Basis) for the
Years Ended December 31, 2006 and 2005
Statements of Cash Flow (Statutory-Basis) for the Years Ended December
31, 2006 and 2005
Notes to Financial Statements (Statutory-Basis)
* The financial statements listed in this item will be included in a 485(b)
filing in April 2007.
(b) Exhibits:
The following exhibits are filed herewith or incorporated by reference as
indicated:
1. Resolutions of the Board of Directors of Integrity Life Insurance Company
(Integrity) authorizing the establishment of Separate Account II, the
Registrant. Incorporated by reference to Registrant's Post-Effective
Amendment No.11 to registration statement on Form N-4 (File No. 33-44876)
filed on July 19, 2006.
2. Not applicable.
3.
a. Form of Selling/General Agent Agreement between Integrity and broker
dealers. Incorporated by reference to Registrant's Post-Effective
Amendment No.11 to registration statement on Form N-4 (File No.
33-44876) filed on July 19, 2006.
b. Form of Variable Contract Principal Underwriter Agreement with
Touchstone Securities Corporation dated January 1, 2006, filed
herewith.
4.
a. Form of variable annuity contract. Incorporated by reference to
Registrant's Post-Effective Amendment No.11 to registration statement
on Form N-4 (File No. 33-44876) filed on July 19, 2006.
b. Form of Guaranteed Minimum Accumulation Benefit Rider, incorporated by
reference from post-effective amendment 25 to Registrant's form N-4
registration statement (File No. 33-51268), filed February 17, 2006.
1
c. Form of Guaranteed Minimum Withdrawal Benefit and Schedule Page, filed
herewith.
5. Form of application. Incorporated by reference to Registrant's
Post-Effective Amendment No.11 to registration statement on Form N-4 (File
No. 33-44876) filed on July 19, 2006.
6.
a. Certificate of Incorporation of Integrity. Incorporated by reference
to Registrant's Post-Effective Amendment No.11 to registration
statement on Form N-4 (File No. 33-44876) filed on July 19, 2006.
b. By-Laws of Integrity. Incorporated by reference to Registrant's
Post-Effective Amendment No.11 to registration statement on Form N-4
(File No. 33-44876) filed on July 19, 2006.
7. Reinsurance Agreement between Integrity and Connecticut General Life
Insurance Company (CIGNA) effective January 1, 1995. Incorporated by
reference from Registrant's Form N-4 registration statement (File No.
33-56654), filed on May 1, 1996.
8.
a. Form of Participation Agreement among Variable Insurance Products
Fund, FDC and Integrity, dated February 1, 1997. Incorporated by
reference from Form N-4 registration statement of Separate Account I
of Integrity (File No. 33-56658), filed on May 1, 1997.
b. Form of Participation Agreement among Franklin Templeton Variable
Insurance Products Trust, Franklin Templeton Distributor, Inc.,
Touchstone Securities, Inc. and Integrity dated January 6, 2003,
incorporated by reference from post-effective amendment 25 to
Registrant's form N-4 registration statement (File No. 33-51268),
filed February 17, 2006.
c. Form of Participation Agreement between JPM Series Trust II and
Integrity. Incorporated by reference to Registrant's Form N-4
registration statement (File No. 33-51268) filed on April 28, 1999.
d. Form of Participation Agreement between MFS Variable Insurance Trust,
Massachusetts Financial Services Company and Integrity, incorporated
by reference to Registrant's registration statement on Form N-4 (File
No. 33-51268) filed April 28, 2000.
e. Form of Participation Agreement among Putnam Variable Trust, Putnam
Retail Management, Inc. and Integrity dated January 1, 2001
incorporated by reference from post-effective amendment 25 to
Registrant's form N-4 registration statement (File No. 33-51268),
filed February 17, 2006.
f. Form of Participation Agreement among Touchstone Variable Series Trust
and Integrity dated April 30, 2001 incorporated by reference to
Registrant's registration statement on Form N-4 (File No. 033-56654)
filed October 15, 2001.
g. Form of Participation Agreement among Deutsche Asset Management VIT
Funds, Deutsche Asset Management, Inc. and Integrity dated October 2,
1997, amended May 1, 2001 and May 1, 2002, incorporated by reference
from post-effective amendment 25 to Registrant's form N-4 registration
statement (File No. 33-51268), filed February 17, 2006.
h. Form of Participation Agreement among The Universal Institutional
Funds, Inc., Morgan Stanley & Co., Inc., Morgan Stanley Investment
Management, Inc. and Integrity, dated January 2, 2003, incorporated by
reference from post-effective amendment 25 to Registrant's form N-4
registration statement (File No. 33-51268), filed February 17, 2006.
i. Form of Participation Agreement among Van Kampen Investments Trust,
Van Kampen Funds, Inc., Van Kampen Asset Management, Inc. and
Integrity dated January 2, 2003, incorporated by reference from
post-effective amendment 25 to Registrant's form N-4 registration
statement (File No. 33-51268), filed February 17, 2006.
9.
a. Opinion and Consent of Rhonda S. Malone, Esq. as to the legality of
the securities being registered, filed herewith.
b. Opinion and Consent of Rhonda S. Malone, Esq. as to the legality of
the guarantee of securities being registered, filed herewith.
10. Not applicable.
11. Not applicable.
12. Not applicable.
13. Powers of Attorney of the Board of Directors of The Western and Southern
Life Insurance Company (WSLIC), filed herewith.
14. Guarantee from WSLIC to the policy holders of Integrity, filed herewith.
15. Cover letter.
16. Statement regarding updated financial statements of the Registrant,
Depositor and Guarantor filed herewith.
2
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The names and principal business addresses* of the directors and officers of,
and their positions with, the Depositor are as follows:
Directors:
John F. Barrett Director, Chairman of the Board
Edward J. Babbitt Director, Secretary
Jill T. McGruder(1) Director, President and CEO
John R. Lindholm(2) Director
Robert L. Walker Director
William J. Williams Director
Donald J. Wuebbling Director
Officers:
John F. Barrett Director, Chairman of the Board
Jill T. McGruder Director, President and CEO
James G. Kaiser(3) Executive Vice President
Nicholas P. Sargen(1) Senior Vice President and Chief Investment Officer
Edward J. Haines(1) Senior Vice President
Kevin L. Howard Senior Vice President, General Counsel
Constance M. Maccarone Senior Vice President
Nora E. Moushey Senior Vice President
Maureen M. Firestone Vice President
Michael F. Furgiuele(3) Vice President
Bradley J. Hunkler Vice President and Comptroller
Phillip E. King Vice President
Paul M. Kruth(1) Vice President
Gerald Rusnak Vice President
Denise L. Sparks Vice President
Richard K. Taulbee Vice President
James J. Vance Vice President, Treasurer
Patty J. Wilson(1) Vice President, Compliance
M. Lisa Cooper Product Compliance Officer
David L. DiMartino Managing Actuary
Michael W. Collier Manager, New Business
Donna M. South Administrative Officer
Edward J. Babbitt Secretary
Thomas M. Barth Assistant Treasurer
Timothy D. Speed Assistant Treasurer
Sharon A. Cummings(1) Licensing Officer
Brenda L. Feige(1) Manager, Licensing
*The principal business address for the above is 400 Broadway, Cincinnati, Ohio
45202, unless otherwise noted.
(1) Principal Business Address: 303 Broadway, Cincinnati, Ohio 45202
(2) Principal Business Address: 3600 Chamberlain Lane, Suite 736, Louisville,
KY 40241
(3) Principal Business Address: 333 Ludlow Street, Stamford, Connecticut 06902
ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH INTEGRITY OR
REGISTRANT
1. 303 Broadway QCS, LLC; Ohio Limited Liability Company; 100% owned by The
Western and Southern Life Insurance Company (WSLIC); ownership and
operation of real estate
2. Airport Exchange Hotel Partners; Kentucky General Partnership; 74% owned by
WS Airport Exchange Group, LLC; 1% owned by Eagle Realty Investments, Inc.
(ERI); ownership and operation of real estate
3. AM Concepts Inc.; Delaware Corporation; 100% owned by WSLIC; venture
capital investment in companies engaged in alternative marketing of
financial services
4. AMLIWS Deerfield L.P.; Texas Limited Partnership; 73.75% owned by WSLIC;
1.25% owned by ERI; ownership and operation of real estate
3
5. AMLIWS Parkway Limited Partnership; Texas Limited Partnership; 73.75% owned
by WSLIC, 1.25% owned by ERI; ownership and operation of real estate.
6. AMLIWS Summit Ridge, LLC; Missouri Limited Liability Company; 74% owned by
WSLIC, 1% owned by Eagle; ownership and operation of real estate
7. Buckeye Venture Partners, LLC; Ohio Limited Liability Company; 60% owned by
Fort Washington Investment Advisors, Inc. (FWIA) and 40% owned by unrelated
third party
8. CAI Holding Company, Inc.; Ohio Corporation; 100% owned by Columbus Life
Insurance Company (CLIC); holding company
9. Capital Analysts Agency, Inc.; Ohio Corporation; 99% owned by Capital
Analysts Incorporated; general insurance agency
10. Capital Analysts Agency, Inc.; Texas Corporation; 100% owned by an
individual who is a resident of Texas, but under contractual association
with Capital Analysts Incorporated; general insurance agency
11. Capital Analysts Incorporated; Delaware Corporation; 100% owned by CAI
Holding Company, Inc.; securities broker-dealer and registered investment
advisor
12. Capital Analysts Insurance Agency, Inc.; Massachusetts Corporation; 100%
owned by Capital Analysts Incorporated; general insurance agency
13. Capital Analysts Insurance Agency, Inc.; Alabama Corporation; 100% owned by
Capital Analysts Incorporated; general insurance agency
14. Carthage Senior Housing, Ltd.; Ohio Limited Liability Company; 98% owned by
WSLIC; 1% owned by ERI; ownership and operation of real estate
15. Centreport Hotels LLC; Texas Limited Liability Company; 75% owned by ERI;
ownership and operation of real estate
16. Centreport Hotel Partners; Texas limited partnership; 74.25% owned by
WSLIC; ownership and operation of real estate
17. Cleveland East Hotel, LLC; Ohio Limited Liability Company; 74% owned by
WSLIC; 1% owned by ERI; ownership and operation of real estate
18. Columbus Hotel Partners; Ohio General Partnership; 74% owned by WS Columbus
Homewood GP, LLC; 1% owned by ERI; ownership and operation of real estate
19. Columbus Life Insurance Company; Ohio Corporation; 100% owned by WSLIC;
insurance
20. Country Place Associates; Ohio General Partnership; 90% owned by WS Country
Place GP, LLC; 10% owned by ERI; ownership and operation of real estate
21. Courtyard Nursing Care, LLC; Ohio Limited Liability Company; 100% owned by
WSLAC; ownership and operation of real estate.
22. Dublin Hotel LLC; Ohio Limited Liability Company; 74% owned by WSLIC, 1%
owned by ERI; ownership and operation of real estate
23. Eagle Realty Group, LLC; Ohio Limited Liability Company; 100% owned by
WSLIC
24. Eagle Realty Investments, Inc. (ERI); Ohio Corporation; 100% owned by Eagle
Realty Group, LLC
25. Fort Washington Capital Partners, LLC; Delaware Limited Liability Company;
100% owned by FWIA
26. Fort Washington Investment Advisors, Inc. (FWIA); Ohio Corporation; 100%
owned by WSLIC; registered investment adviser
27. Fort Washington Savings Company; Ohio Corporation; 100% owned by WSLIC
28. FWPEI GP LLC; Delaware LLC; 100% owned by FWIA
29. IFS Agency, Inc.; Texas Corporation; 100% owned by IFS Financial Services,
Inc.; general insurance agency
30. IFS Agency Services, Inc.; Pennsylvania Corporation; 100% owned by IFS
Financial Services, Inc.; general insurance agency
31. IFS General Agency, Inc.; Pennsylvania Corporation; 100% owned by IFS
Financial Services, Inc.; general insurance agency.
32. IFS Financial Services, Inc. ("IFS"); Ohio Corporation; 100% owned by
Western-Southern Life Assurance Company (WSLAC); development and marketing
of financial products for distribution through financial institutions
33. IFS Fund Distributors, Inc.; Delaware Corporation; 100% owned by IFS;
registered broker dealer
34. IFS Insurance Agency, Inc.; Ohio Corporation; 99% owned by IFS; general
insurance agency
35. IFS Systems, Inc.; Delaware Corporation; 100% owned by IFS; development,
marketing and support of software systems
4
36. Insurance Profillment Services, LLC; Ohio Limited Liability Company; 100%
owned by WSLIC; insurance marketing services
37. Integrated Investment Services, Inc.; Ohio Corporation; 100% owned by IFS;
registered transfer agent
38. Integrity Life Insurance Company ("ILIC"); Ohio Corporation; 100% owned by
WSLIC
39. IR Mall Associates, Ltd.; Florida limited partnership; 49.50% owned by
WSLIC; ownership and operation of real estate
40. IR Mall Company, L.C.; Florida Limited Liability Company; 50% owned by ERI;
ownership and operation of real estate
41. The Lafayette Life Insurance Company; Indiana Corporation; 100% owned by
Western & Southern Financial Group, Inc. (WSFG)
42. LaFrontera Hotel LLC; Texas Limited Liability Company; 75% owned by ERI;
ownership and operation of real estate
43. LaFrontera Lodging Partners LP; Texas limited Partnership; 74.25% owned by
WSLIC; ownership and operation of real estate
44. Lookout Corporate Center, Ohio Joint Venture; 50% owned by WS Lookout GP,
LLC; ownership and operation of real estate
45. Mission Club Apartments General Partnership; Florida General Partnership;
95.5% owned by WSLIC, 4.5% owned by ERI; ownership and operation of real
estate
46. National Integrity Life Insurance Company; New York corporation; 100% owned
by ILIC
47. North Pittsburgh Hotel LLC; Pennsylvania Limited Liability Company; 74%
owned by WSALD NPH, LLC; 1% owned by ERI; ownership and operation of real
estate
48. Northeast Cincinnati Hotel LLC; Ohio Limited Liability Company; 74% owned
by WSLIC, 1% owned by ERI; ownership and operation of real estate.
49. OTR Housing Associates, L.P.; Ohio Limited Partnership; 98% owned by WSLIC;
1% owned by ERI; ownership and operation of real estate
50. OTR Redevelopment Group, LLC; Ohio Limited Liability Company; 100% owned by
OTR Walnut Housing, Ltd.
51. OTR Transitional Housing, L.P.; Ohio Limited Partnership; 99% owned by
WSLIC; ownership and operation of real estate
52. OTR-Walnut Housing, Ltd.; Ohio Limited Liability Company; 100% owned by
ERI; ownership and operation of real estate
53. Queen City Development I, LLC; Ohio Limited Liability Company; 100% owned
by Eagle Realty Group, LLC; operation of real estate
54. Race Street Development, Ltd.; Ohio Limited Liability Company; 100% owned
by WSLIC; ownership and operation of real estate
55. Seasons Health Care Limited Partnership; Ohio Limited Partnership; 90%
owned by WSLAC, 10% owned by Courtyard Nursing Care, LLC; ownership and
operation of real estate
56. ServerVault Corp.; Delaware Corporation; 50% owned by WSLIC
57. Sixth and Race Development, LLC; Ohio Limited Liability Company; 71% owned
by Race Street Development, Ltd., 25% owned by ERI; ownership and operation
of real estate
58. Skyport Hotel LLC; Kentucky limited liability company; 74% owned by WSLIC,
1% owned by ERI; ownership and operation of real estate
59. Todd Investment Advisors, Inc.; Kentucky Corporation; 100% owned by FWIA;
registered investment adviser
60. Touchstone Advisors, Inc.; Ohio Corporation; 100% owned by IFS; registered
investment adviser
61. Touchstone Securities, Inc.; Nebraska Corporation; 100% owned by WSLAC;
securities broker-dealer
62. Tri-State Ventures, LLC; Delaware Limited Liability Company; 100% owned by
FWIA
63. Tri-State Ventures II, LLC; Delaware Limited Liability Company; 100% owned
by FWIA
64. Union Centre Hotel LLC; Ohio Limited Liability Company; 74% owned by WSLIC,
1% owned by ERI; ownership and operation of real estate
65. Vinings Trace LLC; Indiana Limited Liability Company; 99% owned by WSLIC,
1% owned by ERI; ownership and operation of real estate
66. Vulcan Hotel LLC; Alabama Limited Liability Company; 74% owned by WSLIC, 1%
owned by ERI; ownership and operation of real estate
67. W&S Brokerage Services, Inc.; Ohio Corporation; 100% owned by WSLAC;
investment advisor and broker dealer
5
68. W&S Financial Group Distributors Inc.; Ohio Corporation; 100% owned by IFS;
general insurance agency
69. W&S Operating Holdings, LLC; Ohio Limited Liability Company; 100% owned by
WSLIC; ownership of operating entities
70. W&S Real Estate Holdings, LLC; Ohio Limited Liability Company; 100% owned
by WSLIC; ownership of real estate entities
71. WestAd Inc.; Ohio corporation; 100% owned by WSLIC, general advertising,
book selling and publishing
72. West-Whi Columbus NW Partners; Ohio General Partnership; 74% owned by WS
Columbus Northwest GP, LLC; 1% owned by ERI; ownership and operation of
real estate
73. Western & Southern Agency, Inc.; Ohio corporation; 100% owned by WSLIC;
general insurance agency
74. Western & Southern Agency Services, Inc.; Pennsylvania Corporation; 100%
owned by WSLIC; general insurance agency.
75. Western-Southern Life Assurance Company (WSLAC); Ohio Corporation; 100%
owned by WSLIC
76. The Western and Southern Life Insurance Company (WSLIC); Ohio Corporation;
100% owned by WSFG
77. Western & Southern Financial Group, Inc. (WSFG); Ohio Corporation; 100%
owned by WSMHC
78. Western & Southern Mutual Holding Company (WSMHC); Ohio Mutual Insurance
Holding Company
79. Windsor Hotel LLC; Connecticut Limited Liability Company; 74% owned by
WSLIC, 1% owned by ERI; ownership and operation of real estate
80. Wright Executive Hotel Limited Partners; Ohio Limited Partnership; 60.50%
owned by WSLIC; 0.61% owned by WS Wright Hotel GP, LLC; ownership and
operation of real estate
81. WSA Commons, LLC; Georgia Limited Liability Company; 50% owned by WSLIC;
ownership and operation of real estate
82. WS Airport Exchange GP, LLC; Ohio Limited Liability Company; 100% owned by
WSLIC; ownership and operation of real estate
83. WS Columbus Homewood GP, LLC; Ohio Limited Liability Company; 100% owned by
WSLIC; ownership and operation of real estate
84. WS Columbus Northwest GP, LLC; Ohio Limited Liability Company; 100% owned
by WSLIC; ownership and operation of real estate
85. WS Country Place GP, LLC; Ohio Limited Liability Company; 100% owned by
WSLIC; ownership and operation of real estate
86. WS Lookout JV, LLC; Ohio Limited Liability Company; 100% owned by WSLIC;
ownership and operation of real estate
87. WS Wright Hotel GP, LLC; Ohio Limited Liability Company; 100% owned by
WSLIC; ownership and operation of real estate
88. WSALD NPH, LLC; Ohio Limited Liability Company; 50% owned by WSLIC; 1%
owned by Eagle; ownership and operation of real estate
89. WSALD CEH, LLC; Ohio Limited Liability Company; 50% owned by WSLIC;
ownership and operation of real estate.
ITEM 27. NUMBER OF CONTRACT OWNERS
As of November 30, 2006, there were 6,590 contract owners of Separate Account II
of Integrity, including qualified and non-qualified contracts.
ITEM 28. INDEMNIFICATION
Integrity's By-Laws provide, in Article V, Section 5.1 provides:
To the extent permitted by the laws of the State of Ohio, subject to all
applicable requirements thereof:
(a) The Corporation shall indemnify or agree to indemnify any person who was or
is a party or is threatened to be made a party, to any threatened, pending, or
completed action, suit, or proceeding, whether civil, criminal, administrative,
or investigative, other than an action by or in the right of the Corporation, by
reason of the fact that he is or was a Director, officer, employee, or agent of
the Corporation or is or was serving at the request of the Corporation as a
Director, trustee, officer, employee, or agent of another corporation, domestic
or foreign, non-profit or for profit, partnership, joint venture, trust, or
other enterprise, against expenses, including attorney's fees, judgments, fines,
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit, or proceeding if he acted in good faith and
in
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a manner he reasonably believed to be in or not opposed to the best interests of
the Corporation, and with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit, or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
Corporation and, with respect to any criminal action or proceeding, he had
reasonable cause to believe that his conduct was unlawful.
(b) The Corporation shall indemnify or agree to indemnify any person who was or
is a party or is threatened to be made a party to any threatened, pending, or
completed action or suit by or in the right of the Corporation to procure a
judgment in its favor by reason of the fact that he is or was a Director,
officer, employee, or agent of the Corporation, or is or was serving at the
request of the Corporation as a Director, trustee, officer, employee, or agent
of another corporation, domestic or foreign, non-profit or for profit,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorney's fees, actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interests of the Corporation, except that no indemnification shall be made in
respect to any of the following:
(1) Any claim, issue, or matter as to which such person is adjudged to be
liable for negligence or misconduct in the performance of his duty to the
Corporation unless, and only to the extent the court of common pleas or the
court in which such action or suit was brought determines upon application
that, despite the adjudication of liability, but in view of all
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court of common pleas or such other
court shall deem proper;
(2) Any action of suit in which the only liability asserted against a
Director is pursuant to Section 1701.95 of the Ohio Revised Code.
(c) To the extent that a Director, trustee, officer, employee, or agent has been
successful in the merits or otherwise in defense of any action, suit, or
proceeding referred to in division (a) and (b) of this Article, or in defense of
any claim, issue or matter therein, he shall be indemnified against expenses,
including attorney's fees, actually and reasonably incurred by him in connection
with the action, suit, or proceeding.
(d) Any indemnification under divisions (a) and (b) of this Article, unless
ordered by a court, shall be made by the Corporation only as authorized in the
specific case upon the determination that indemnification of the Director,
officer, employee, or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in divisions (a) and (b) of this
Article. Such determination shall be made as follows:
(1) By a majority vote of a quorum consisting of Directors of the
Corporation who were not and are not parties to or threatened with any such
action, suit, or proceeding;
(2) If the quorum described in division (d)(1) of this Article is not
obtainable or if a majority vote of a quorum of disinterested Directors so
directs, in a written opinion by independent legal counsel other than an
attorney, or a firm having associated with it an attorney, who has been
retained by or who has performed services for the Corporation or any person
to be indemnified within the past five years;
(3) By the Shareholders; or
(4) By the court of common pleas or the court in which such action, suit or
proceeding was brought. Any determination made by the disinterested
Directors under Article (d)(1) or by independent legal counsel under
Article (d)(2) shall be promptly communicated to the person who threatened
or brought the action or suit by in the right of the Corporation under (b)
of this Article, and within ten days after receipt of such notification,
such person shall have the right to petition the court of common pleas or
the court in which such action or suit was brought to review the
reasonableness of such determination.
(e) (1) Expenses, including attorney's fees, incurred by a Director in defending
the action, suit, or proceeding shall be paid by the Corporation as they are
incurred, in advance of the final disposition of the action, suit, or proceeding
upon receipt of an undertaking by or on behalf of the Director in which he
agrees to do both of the following:
(i) Repay such amount if it is proved by clear and convincing evidence
in a court of competent jurisdiction that his action or failure to act
involved an act or omission undertaken with deliberate intent to cause
injury to the Corporation or undertaken with reckless disregard for
the best interests of the Corporation;
(ii) Reasonably cooperate with the Corporation concerning the action,
suit or proceeding.
(2) Expenses, including attorney's fees, incurred by a Director, officer,
employee, or agent in defending any action, suit, or proceeding referred to
in divisions (a) and (b) of this Article, may be paid by the Corporation as
they are incurred, in advance of the final disposition of the action, suit,
or proceeding as authorized by the Directors in the specific case upon
receipt of an undertaking by or on behalf of the Director, officer,
employee, or agent to repay such amount, if it ultimately is determined
that he is not entitled to be indemnified by the Corporation.
(f) The indemnification authorized by this section shall not be exclusive of,
and shall be in addition to, any other rights granted to those seeking
indemnification under the Articles or the Regulations for any agreement, vote of
Shareholders or
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disinterested Directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office, and
shall continue as to a person who has ceased to be a Director, officer,
employee, or agent and shall inure to the benefit of the heirs, executors, and
administrators of such a person.
(g) The Corporation may purchase and maintain insurance or furnish similar
protection, including but not limited to trust funds, letters of credit, or self
insurance, on behalf of or for any person who is or was a Director, officer,
employee, or agent of the Corporation, or is or was serving at the request of
the Corporation as a Director, officer, employee, or agent of another
corporation, domestic or foreign, non-profit or for profit, partnership, joint
venture, trust, or other enterprise, against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the Corporation would have the power to indemnify him against
such liability under this section. Insurance may be purchased from or maintained
with a person in whom the Corporation has a financial interest.
Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Touchstone Securities, Inc. (Touchstone Securities) is the principal
underwriter for Integrity Life Insurance Company Separate Account II. Touchstone
Securities also serves as an underwriter for Integrity Life Insurance Company
Separate Account I and VUL, National Integrity Life Insurance Company Separate
Accounts I and II, contracts issued under Western-Southern Life Assurance
Company's Separate Accounts 1 and 2, and for the shares of several series
(Funds) of Touchstone Variable Series Trust, Touchstone Strategic Trust,
Touchstone Investment Trust, Touchstone Tax-Free Trust, Constellation Funds and
Constellation Institutional Portfolios, each of which is affiliated with the
Depositor.
(b) The names and principal business addresses* of the officers and directors
of, and their positions with, Touchstone Securities, Inc. are as follows:
Directors:
James N. Clark(1) Director
Jill T. McGruder Director
Donald J. Wuebbling(1) Director
Officers:
James H. Grifo President
Richard K. Taulbee(1) Vice President
Patricia J. Wilson Chief Compliance Officer
James J. Vance Vice President and Treasurer
Terrie A. Wiedenheft Chief Financial Officer
Douglas B. Perry Assistant Treasurer
Timothy D. Speed(1) Assistant Treasurer
Cheryl J. Stotts Assistant Treasurer
Rhonda S. Malone(1) Secretary
*The principal business address for the above is 303 Broadway, Cincinnati, Ohio
45202, unless otherwise noted.
(1) Principal Business Address: 400 Broadway, Cincinnati, Ohio 45202
(c) Not applicable.
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ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The records required to be maintained by Section 31(a) of the Investment Company
Act of 1940 and Rules 31a-1 to 31a-3 promulgated thereunder, are maintained by
Integrity at 400 Broadway, Cincinnati, Ohio 45202
ITEM 31. MANAGEMENT SERVICES
There are currently no management-related services provided to the Registrant.
ITEM 32. UNDERTAKINGS
The Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial statements
of the Registrant, Depositor and Guarantor in the registration statement
are never more than 16 months old for so long as payments under the
variable annuity contracts may be accepted;
(b) to 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; and
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form, including the
WSLIC financial statements, promptly upon written or oral request.
(d) to update the registration statement if WSLIC terminated it guarantee to
Integrity policy holders.
During any time there are insurance obligations outstanding and covered by the
Guarantee issued by WSLIC (WSLIC Guarantee Period), filed as an exhibit to this
registration statement, Integrity hereby undertakes to provide notice to
contract owners promptly after the happening of significant events related to
the Guarantee. These significant events include: (i) termination of the
Guarantee that has a material adverse effect on the contract owner's rights
under the Guarantee; (ii) a default under the Guarantee that has a material
adverse effect on the contract owner's rights under the Guarantee; or (iii) the
insolvency of WSLIC.
Integrity represents that the aggregate charges under variable annuity contracts
described in this Registration Statement are reasonable in relation to the
services rendered, the expenses expected to be incurred, and the risks assumed
by Integrity.
Integrity represents that it recognizes the requirements of Section 17(h) of the
Investment Company Act of 1940, specifically that it shall not protect or
purport to protect any director or officer of the Registrant or Depositor
against any liability to them or to their security holders to which he would
otherwise be subject by reason or willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of his
office.
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