-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HEtBdabkvf60b4MDXklCA2puAlbmyk0uAdqbWscWfvQWnNsipB2b4s6I4NSc53xI wWtu+eD/+bHTcaZrSd5mBw== /in/edgar/work/20000829/0000950137-00-003908/0000950137-00-003908.txt : 20000922 0000950137-00-003908.hdr.sgml : 20000922 ACCESSION NUMBER: 0000950137-00-003908 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000829 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KILICO VARIABLE SEPARATE ACCOUNT/IL CENTRAL INDEX KEY: 0000810369 STANDARD INDUSTRIAL CLASSIFICATION: [ ] IRS NUMBER: 363050975 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: SEC FILE NUMBER: 811-05025 FILM NUMBER: 712107 BUSINESS ADDRESS: STREET 1: 1 KEMPER DRIVE CITY: LONG GROVE STATE: IL ZIP: 60049-0001 BUSINESS PHONE: 8479693507 MAIL ADDRESS: STREET 1: C/O KEMPER LIFE INSURANCE COMPANIES STREET 2: 1 KEMPER DRIVE CITY: LONG GROVE STATE: IL ZIP: 60049-0001 N-30D 1 n-30d.txt SEMI-ANNUAL REPORT 1 2000 SEMI-ANNUAL REPORT ---------- KEMPER SELECT A Variable Life Insurance Policy ------ KILICO Variable Separate Account PERIOD ENDED JUNE 30, 2000 ZURICH KEMPER LOGO 2 Combined FINANCIAL STATEMENTS (unaudited) KILICO VARIABLE SEPARATE ACCOUNT COMBINED STATEMENT OF ASSETS AND LIABILITIES AND POLICY OWNERS' EQUITY June 30, 2000 (unaudited) (IN THOUSANDS)
KEMPER KEMPER KEMPER KEMPER MONEY TOTAL HIGH KEMPER GOVERNMENT MARKET RETURN YIELD GROWTH SECURITIES COMBINED SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT ASSETS Investment, at current value $13,417 1,583 3,129 663 3,731 4,311 - ------------------------------------------------------------------------------------------------------------------- Dividend and other receivables 19 6 13 -- -- -- - ------------------------------------------------------------------------------------------------------------------- TOTAL ASSETS 13,436 1,589 3,142 663 3,731 4,311 - ------------------------------------------------------------------------------------------------------------------- LIABILITIES AND POLICY OWNERS' EQUITY Liabilities: Mortality and expense risk charges 10 -- 3 -- 4 3 - ------------------------------------------------------------------------------------------------------------------- Other 68 60 1 -- 7 -- - ------------------------------------------------------------------------------------------------------------------- TOTAL LIABILITIES 78 60 4 -- 11 3 - ------------------------------------------------------------------------------------------------------------------- Policy owners' equity $13,358 1,529 3,138 663 3,720 4,308 - ------------------------------------------------------------------------------------------------------------------- ANALYSIS OF POLICY OWNERS' EQUITY Excess (deficiency) of proceeds from units sold over payments for units redeemed $ 2,457 849 (43) (342) 334 1,659 - ------------------------------------------------------------------------------------------------------------------- Accumulated net investment income 8,077 680 2,250 1,124 1,706 2,317 - ------------------------------------------------------------------------------------------------------------------- Accumulated net realized gain (loss) on sales of investments 3,107 -- 1,037 (32) 1,528 574 - ------------------------------------------------------------------------------------------------------------------- Unrealized appreciation (depreciation) of investments (283) -- (106) (87) 152 (242) - ------------------------------------------------------------------------------------------------------------------- Policy owners' equity $13,358 1,529 3,138 663 3,720 4,308 - -------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined financial statements. 2 3 Combined FINANCIAL STATEMENTS (unaudited) KILICO VARIABLE SEPARATE ACCOUNT COMBINED STATEMENT OF OPERATIONS For the six months ended June 30, 2000 (unaudited) (IN THOUSANDS)
KEMPER KEMPER KEMPER KEMPER MONEY TOTAL HIGH KEMPER GOVERNMENT MARKET RETURN YIELD GROWTH SECURITIES COMBINED SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT SUBACCOUNT Dividend and capital gain distributions $ 1,054 38 257 111 356 292 - ------------------------------------------------------------------------------------------------------------------------- Mortality and expense risk charges 67 13 5 3 27 19 - ------------------------------------------------------------------------------------------------------------------------- Net investment income 987 25 252 108 329 273 - ------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized loss on investments: Net realized gain (loss) on sales of investments 513 -- 26 (57) 548 (4) - ------------------------------------------------------------------------------------------------------------------------- Change in unrealized depreciation of investments (1,274) -- (307) (74) (770) (123) - ------------------------------------------------------------------------------------------------------------------------- Net realized and unrealized loss on investments (761) -- (281) (131) (222) (127) - ------------------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN POLICY OWNERS' EQUITY RESULTING FROM OPERATIONS $ 226 25 (29) (23) 107 146 - -------------------------------------------------------------------------------------------------------------------------
See accompanying notes to combined financial statements. 3 4 Combined FINANCIAL STATEMENTS (unaudited) KILICO VARIABLE SEPARATE ACCOUNT COMBINED STATEMENTS OF CHANGES IN POLICY OWNERS' EQUITY For the six months ended June 30, 2000 (unaudited) and the year ended December 31, 1999 (IN THOUSANDS)
KEMPER MONEY MARKET COMBINED SUBACCOUNT ---------------------------- ---------------------------- SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2000 1999 2000 1999 OPERATIONS Net investment income (loss) $ 987 601 25 39 Net realized gain (loss) on sales of investments 513 817 -- -- Change in unrealized appreciation (depreciation) of investments (1,274) 258 -- -- - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) in policy owners' equity resulting from operations 226 1,676 25 39 - ------------------------------------------------------------------------------------------------------------ ACCOUNT UNIT TRANSACTIONS Proceeds from units sold 2,714 6,213 2,376 5,456 Net transfers (to) from affiliate or subaccounts (1,004) (2,491) (1,080) (1,180) Payments for units redeemed (3,374) (4,443) (1,723) (3,350) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) in policy owners' equity from account unit transactions (1,664) (721) (427) 926 - ------------------------------------------------------------------------------------------------------------ Total increase (decrease) in policy owners' equity (1,438) 955 (402) 965 - ------------------------------------------------------------------------------------------------------------ POLICY OWNERS' EQUITY Beginning of period 14,796 13,841 1,931 966 - ------------------------------------------------------------------------------------------------------------ End of period $13,358 14,796 1,529 1,931 - ------------------------------------------------------------------------------------------------------------
See accompanying notes to combined financial statements. 4 5 Combined FINANCIAL STATEMENTS (unaudited)
KEMPER KEMPER KEMPER KEMPER TOTAL RETURN HIGH YIELD GROWTH GOVERNMENT SUBACCOUNT SUBACCOUNT SUBACCOUNT SECURITIES SUBACCOUNT - ------------------------- ------------------------- ------------------------- ------------------------- SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, JUNE 30, DECEMBER 31, 2000 1999 2000 1999 2000 1999 2000 1999 252 300 108 112 329 (29) 273 179 26 196 (57) (41) 548 662 (4) -- ) (307 (16) (74) (58) (770) 521 (123) (189) - ------------------------------------------------------------------------------------------------------------- ) (29 480 (23) 13 107 1,154 146 (10) - ------------------------------------------------------------------------------------------------------------- 44 97 61 121 222 506 11 33 81 (358) (54) (341) 45 (568) 4 (44) (423) (433) (293) (153) (778) (439) (157) (68) - ------------------------------------------------------------------------------------------------------------- ) (298 (694) (286) (373) (511) (501) (142) (79) - ------------------------------------------------------------------------------------------------------------- ) (327 (214) (309) (360) (404) 653 4 (89) - ------------------------------------------------------------------------------------------------------------- 3,465 3,679 972 1,332 4,124 3,471 4,304 4,393 - ------------------------------------------------------------------------------------------------------------- 3,138 3,465 663 972 3,720 4,124 4,308 4,304 - -------------------------------------------------------------------------------------------------------------
5 6 Notes to COMBINED FINANCIAL STATEMENTS (unaudited) KILICO VARIABLE SEPARATE ACCOUNT - -------------------------------------------------------------------------------- 1 GENERAL INFORMATION AND SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION. KILICO Variable Separate Account (the "Separate Account") is a unit investment trust registered under the Investment Company Act of 1940, as amended, established by Kemper Investors Life Insurance Company ("KILICO"). KILICO is a wholly-owned subsidiary of Kemper Corporation, a nonoperating holding company. KILICO and Kemper Corporation are wholly-owned subsidiaries of Zurich Financial Services ("ZFS"). ZFS is owned by Zurich Allied A.G. and Allied Zurich p.l.c., fifty-seven percent and forty-three percent, respectively. Zurich Allied A.G. is listed on the Swiss Market Index (SMI). Allied Zurich p.l.c. is included in the FTSE-100 Share Index in London. The Separate Account is used to fund policies ("Policy") for the Kemper Select variable life policies ("Kemper Select"), the Power V flexible premium variable universal life policies ("Power V"), the Farmers Variable Universal Life I flexible premium variable universal life policies ("Farmers Variable Universal Life I"), the Kemper Destinations Life modified single premium variable universal life policies ("Kemper Destinations Life") and as of February 1, 2000, Zurich Kemper LifeINVESTOR flexible premium variable universal life policies ("Zurich Kemper LifeINVESTOR"). The Separate Account is divided into seventy-six subaccount options available to Policy Owners depending upon their respective Policy. The Kemper Select policies have five subaccounts which are available to Policy Owners and each subaccount invests exclusively in the shares of a corresponding portfolio of the Kemper Variable Series (formerly Investors Fund Series), an open-end diversified management investment company. The Power V policies have twenty-three subaccounts which are available to Policy Owners and each subaccount invests exclusively in the shares of a corresponding portfolio of the Kemper Variable Series, the American Skandia Trust, the Fidelity Variable Insurance Products Fund (Initial Class Shares), the Fidelity Variable Insurance Products Fund II (Initial Class Shares), the Fidelity Variable Insurance Products Fund III (Initial Class Shares) and the Scudder Variable Life Investment Fund (Class B Shares), all of which are open-end diversified management investment companies. The Farmers Variable Universal Life I policies have twelve subaccounts which are available to Policy Owners and each subaccount invests exclusively in the shares of a corresponding portfolio of the Kemper Variable Series, the Janus Aspen Series, the PIMCO Variable Insurance Trust, the Franklin Templeton Variable Insurance Products Trust (Class 2 Shares) and the Scudder Variable Life Investment Fund (Class A Shares), all of which are open-end diversified management investment companies. The Kemper Destinations Life policies have thirty-seven subaccounts which are available to Policy Owners and each subaccount invests exclusively in the shares of a corresponding portfolio of the Kemper Variable Series, the Scudder Variable Life Investment Fund (Class A Shares), The Alger American Fund, The Dreyfus Socially Responsible Growth Fund, Inc., the Dreyfus Investment Portfolios and the Warburg Pincus Trust, all of which are open-end diversified management investment companies. Zurich Kemper LifeINVESTOR policies have thirty-one subaccounts which are available to Policy Owners and each subaccount invests exclusively in the shares of a corresponding portfolio of The Alger American Fund, The Dreyfus Socially Responsible Growth Fund, Inc., the Dreyfus Life & Annuity Index Fund d/b/a Dreyfus Stock Index Fund, the Dreyfus Variable Investment Fund, the Franklin Templeton Variable Insurance Products Trust 6 7 Notes to COMBINED FINANCIAL STATEMENTS (unaudited) (Class 2 Shares), the Fidelity Variable Insurance Products Fund (Initial Class Shares), the Janus Aspen Series, the Scudder Variable Life Investment Fund (Class A Shares) and the Kemper Variable Series, all of which are open-end diversified management investment companies. ESTIMATES. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that could affect the reported amounts of assets and liabilities as well as the disclosure of contingent amounts at the date of the financial statements. As a result, actual results reported as income and expenses could differ from the estimates reported in the accompanying financial statements. SECURITY VALUATION. The investments are stated at current value which is based on the closing bid price, net asset value, at June 30, 2000. SECURITY TRANSACTIONS AND INVESTMENT INCOME. Security transactions are generally accounted for on the trade date (the date when KILICO accepts risk of providing insurance coverage to the insured). Dividends and capital gains distributions are recorded as income on the ex-dividend date. Realized gains and losses from security transactions are generally reported on a first in, first out ("FIFO") cost basis. ACCUMULATION UNIT VALUATION. On each day the New York Stock Exchange (the "Exchange") is open for trading, the accumulation unit value is determined as of the earlier of 3:00 p.m. (central time) or the close of the Exchange by dividing the total value of each subaccount's investments and other assets, less liabilities, by the number of accumulation units outstanding in the respective subaccount. FEDERAL INCOME TAXES. The operations of the Separate Account are included in the federal income tax return of KILICO. Under existing federal income tax law, investment income and realized capital gains and losses of the Separate Account increase liabilities under the policy and are, therefore, not taxed. Thus the Separate Account may realize net investment income and capital gains and losses without federal income tax consequences. - -------------------------------------------------------------------------------- 2 SUMMARY OF INVESTMENTS Investments, at cost, at June 30, 2000, are as follows (in thousands, differences are due to rounding):
SHARES OWNED COST --------------------------------------------------------------------------- KEMPER VARIABLE SERIES*: Kemper Money Market Subaccount 955 $ 1,583 Kemper Total Return Subaccount 1,090 3,235 Kemper High Yield Subaccount 468 750 Kemper Growth Subaccount 619 3,579 Kemper Government Securities Subaccount 3,805 4,553 --------------------------------------------------------------------------- TOTAL INVESTMENTS $13,700 ---------------------------------------------------------------------------
* Formerly Investors Fund Series. The underlying investments are summarized below. KEMPER MONEY MARKET SUBACCOUNT: This subaccount invests in the Kemper Money Market Portfolio of the Kemper Variable Series. The Portfolio seeks maximum current income to the extent consistent with stability of principal. The Portfolio seeks to maintain a net asset value of $1.00 per share. 7 8 Notes to COMBINED FINANCIAL STATEMENTS (unaudited) KEMPER TOTAL RETURN SUBACCOUNT: This subaccount invests in the Kemper Total Return Portfolio of the Kemper Variable Series. The Portfolio seeks a high total return, a combination of income and capital appreciation. KEMPER HIGH YIELD SUBACCOUNT: This subaccount invests in the Kemper High Yield Portfolio of the Kemper Variable Series. The Portfolio seeks to provide a high level of current income. KEMPER GROWTH SUBACCOUNT: This subaccount invests in the Kemper Growth Portfolio of the Kemper Variable Series. The Portfolio seeks maximum appreciation of capital. KEMPER GOVERNMENT SECURITIES SUBACCOUNT: This subaccount invests in the Kemper Government Securities Portfolio of the Kemper Variable Series. The Portfolio seeks high current return consistent with preservation of capital. - -------------------------------------------------------------------------------- 3 TRANSACTIONS WITH AFFILIATES KILICO provides a death benefit payment upon the death of the Policy Owner under the terms of the death benefit option selected by the Policy Owner as further described in the Policy. KILICO assesses a monthly charge to the subaccounts for the cost of providing this insurance protection to the Policy Owner. These cost of insurance charges vary with the issue age, sex and rate class of the Policy Owner, and are allocated among the subaccounts in the proportion of each subaccount to the Separate Account value. Cost of insurance charges totaled approximately $49,701, $1,746,209, $115,535 and $3,168 for the Kemper Select, Power V, Farmers Variable Universal Life I and Zurich Kemper LifeINVESTOR policies, respectively, for the six months ended June 30, 2000. Additionally, KILICO assesses a daily charge to the subaccounts for mortality and expense risk assumed by KILICO at an annual rate of 0.90% of assets except for Zurich Kemper LifeINVESTOR, which assesses a daily charge at a current annual rate of 0.60% for the first ten policy years, 0.40% for policy years eleven through twenty and 0.20% for policy years twenty-one and thereafter. Proceeds payable on the surrender of a Policy are reduced by the amount of any applicable contingent deferred sales charge. A state and local premium tax charge of 2.5% is deducted from each premium payment under the Power V, Farmers Variable Universal Life I and Zurich Kemper LifeINVESTOR policies prior to allocation of the net premium. This charge is to reimburse KILICO for the payment of state premium taxes. KILICO expects to pay an average state premium tax rate of approximately 2.5% but the actual premium tax attributable to a Policy may be more or less. Under Section 848 of the Internal Revenue Code (the "Code"), the receipt of premium income by a life insurance company requires the deferral of a portion of the acquisition cost over a maximum of a 120 month period. The effect of Section 848 for KILICO is an acceleration of income recognition over a deferral of the associated deductions for tax purposes; this is referred to as deferred acquisition cost or, the "DAC tax". As compensation for this accelerated liability, a DAC tax charge of 1.00% of each premium dollar is deducted from the premium by KILICO under the Power V, Farmers Variable Universal Life I and Zurich Kemper LifeINVESTOR policies before investment of a Policy Owner's funds into the Separate Account. Under the Kemper Destinations Life policies, for the first ten policy years, a tax charge equal to an annual rate of 0.40% of 8 9 Notes to COMBINED FINANCIAL STATEMENTS (unaudited) the average monthly cash value is assessed against the Policy. The tax charge covers a portion of KILICO'S state premium tax expense and a certain Federal income tax liability incurred as a result of the receipt of premium. Policy loans are also provided for under the terms of the Policy. The minimum amount of the loan under the Power V, Farmers Variable Universal Life I and Zurich Kemper LifeINVESTOR policies is $500 and is limited to 90% of the surrender value, less applicable surrender charges. The minimum amount of the loan under the Kemper Destinations Life policies is $1,000 and is limited to 90% of the surrender value, less applicable surrender charges. Interest is assessed against a policy loan under the terms of the Policy. Policy loans are carried in KILICO's general account. Scudder Kemper Investments, Inc., an affiliated company, is the investment manager of the Kemper Variable Series. Investors Brokerage Services, Inc., a wholly-owned subsidiary of KILICO, is the principal underwriter for the Separate Account. - -------------------------------------------------------------------------------- 4 NET TRANSFERS (TO) FROM AFFILIATE OR SUBACCOUNTS Net transfers (to) from affiliate or subaccounts include transfers of all or part of the Policy Owner's interest to or from another eligible subaccount or to the general account of KILICO. - -------------------------------------------------------------------------------- 5 POLICY OWNERS' EQUITY Policy owners' equity at June 30, 2000, is as follows (in thousands, except unit value; differences are due to rounding):
POLICY NUMBER UNIT OWNERS' KEMPER SELECT POLICIES OF UNITS VALUE EQUITY ---------------------- -------- ----- ------- Kemper Money Market Subaccount 527 $1.813 $ 957 ---------------------------------------------------------------------------- Kemper Total Return Subaccount 905 3.236 2,929 ---------------------------------------------------------------------------- Kemper High Yield Subaccount 190 2.432 461 ---------------------------------------------------------------------------- Kemper Growth Subaccount 444 5.399 2,398 ---------------------------------------------------------------------------- Kemper Government Securities Subaccount 1,933 2.205 4,261 ---------------------------------------------------------------------------- TOTAL KEMPER SELECT POLICY OWNERS' EQUITY $11,006 ----------------------------------------------------------------------------
POLICY NUMBER UNIT OWNERS' POWER V POLICIES OF UNITS VALUE EQUITY ---------------- -------- ------ ------- Kemper Money Market Subaccount 182 $1.169 $ 213 ---------------------------------------------------------------------------- Kemper Total Return Subaccount 48 4.343 209 ---------------------------------------------------------------------------- Kemper High Yield Subaccount 139 1.405 197 ---------------------------------------------------------------------------- Kemper Growth Subaccount 203 6.512 1,322 ---------------------------------------------------------------------------- Kemper Government Securities Subaccount 25 1.424 36 ---------------------------------------------------------------------------- TOTAL POWER V POLICY OWNERS' EQUITY $1,977 ----------------------------------------------------------------------------
9 10 Notes to COMBINED FINANCIAL STATEMENTS (unaudited) - -------------------------------------------------------------------------------- 5 POLICY OWNERS' EQUITY (CONTINUED)
POLICY NUMBER UNIT OWNERS' FARMER'S VARIABLE UNIVERSAL LIFE I POLICIES OF UNITS VALUE EQUITY ------------------------------------------- -------- ------ ------- Kemper High Yield Subaccount 4 $1.216 $ 5 ----------------------------------------------------------------------------- Kemper Government Securities Subaccount 9 1.249 11 ----------------------------------------------------------------------------- TOTAL FARMERS VARIABLE UNIVERSAL LIFE I POLICY OWNERS' EQUITY $16 -----------------------------------------------------------------------------
POLICY NUMBER UNIT OWNERS' KEMPER DESTINATIONS LIFE POLICIES OF UNITS VALUE EQUITY --------------------------------- -------- ------- ------- Kemper Money Market Subaccount 29 $10.335 $294 ---------------------------------------------------------------------------- TOTAL KEMPER DESTINATIONS LIFE POLICY OWNERS' EQUITY $294 ----------------------------------------------------------------------------
POLICY NUMBER UNIT OWNERS' ZURICH KEMPER LIFEINVESTOR POLICIES OF UNITS VALUE EQUITY ----------------------------------- -------- ------ ------- Kemper Money Market Subaccount 64 $1.020 $65 ---------------------------------------------------------------------------- TOTAL ZURICH KEMPER LIFEINVESTOR POLICY OWNERS' EQUITY $65 ----------------------------------------------------------------------------
10 11 NOTES 11 12 Distributed by Investors Brokerage Services, Inc. Kemper Investors Life Insurance Company 1 Kemper Drive [ZURICH KEMPER LOGO] Long Grove, IL 60049
Individual Policy Form Series L-8001 [RECYCLE LOGO] PRINTED ON RECYCLED PAPER. L-8071S (8/00) -----END PRIVACY-ENHANCED MESSAGE-----