-----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, M6U5TT8IJpiUsAOOWaz7d34gmOGhgDKccAR2mLvCgnzTEgKLFRV86CSO/I6lqpoV ymkPkLGw2jv8am2s42zFYw== 0000945094-01-000135.txt : 20010418 0000945094-01-000135.hdr.sgml : 20010418 ACCESSION NUMBER: 0000945094-01-000135 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20010417 EFFECTIVENESS DATE: 20010417 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHBROOK VARIABLE ANNUITY ACCOUNT II CENTRAL INDEX KEY: 0000864922 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 333-93871 FILM NUMBER: 1604691 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: SEC FILE NUMBER: 811-06116 FILM NUMBER: 1604692 BUSINESS ADDRESS: STREET 1: 3100 SANDERS RD STREET 2: C/O NORTHBROOK LIFE INSURANCE CO CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 8474022400 MAIL ADDRESS: STREET 1: 3100 SANDERS RD CITY: NORTHBROOK STATE: IL ZIP: 60062 485BPOS 1 0001.txt NLIC PREFERRED CLIENT VA AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 17, 2001 -------------------------------------------------------------------------- FILE NOS. 333-93871 811-6116 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 POST-EFFECTIVE AMENDMENT NO. 4 AND/OR REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 40 NORTHBROOK VARIABLE ANNUITY ACCOUNT II (Exact Name of Registrant) NORTHBROOK LIFE INSURANCE COMPANY (Name of Depositor) NORTHBROOK LIFE INSURANCE COMPANY 3100 SANDERS ROAD NORTHBROOK, ILLINOIS 60062 847/402-2400 (Address and Telephone Number of Depositor's Principal Offices) MICHAEL J. VELOTTA VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL NORTHBROOK LIFE INSURANCE COMPANY 3100 SANDERS ROAD NORTHBROOK, ILLINOIS 60062 847/402-2400 (Name, Complete Address and Telephone Number of Agent for Service) COPIES TO: CHARLES M. SMITH, ESQUIRE DANIEL J. FITZPATRICK, ESQUIRE ALLSTATE LIFE INSURANCE MORGAN STANLEY DW INC. COMPANY TWO WORLD TRADE CENTER 3100 SANDERS ROAD NEW YORK, NEW YORK 10048 NORTHBROOK, ILLINOIS 60062 Approximate date of proposed public offering: Continuous. / / immediately upon filing pursuant to paragraph (b) of Rule 485 /X/ on May 1, 2001 pursuant to paragraph (b) of Rule 485 / / 60 days after filing pursuant to paragraph (a)(1) of Rule 485 / / on (date) pursuant to paragraph (a)(1) of Rule 485 Title of Securities Being Registered: Units of interest in the Northbrook Variable Annuity Account II under deferred variable annuity contracts. PREFERRED CLIENT VARIABLE ANNUITY Northbrook Life Insurance Company Statement of Additional Information Northbrook Variable Annuity Account II Dated May 1, 2001 Post Office Box 94040 Palatine, IL 60094-4040 1 (800) 654 - 2397 This Statement of Additional Information supplements the information in the prospectus for the Preferred Client Variable Annuity Contracts that we offer. This Statement of Additional Information is not a prospectus. You should read it with the prospectus, dated May 1, 2001, for the Contract. You may obtain a prospectus by calling or writing us at the address or telephone number listed above, or by calling or writing your Morgan Stanley Dean Witter Financial Advisor. Except as otherwise noted, this Statement of Additional Information uses the same defined terms as the prospectus for the Morgan Stanley Dean Witter Preferred Client Variable Annuity Contracts. TABLE OF CONTENTS Description - ----------- ---- Additions, Deletions or Substitutions of Investments The Contract Purchase of Contracts Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers) Performance Information Calculation of Accumulation Unit Values Calculation of Variable Income Payments General Matters Incontestability Settlements Safekeeping of the Variable Account's Assets Premium Taxes Tax Reserves Federal Tax Matters Experts Financial Statements ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS We may add, delete, or substitute the Portfolio shares held by any Variable Sub-Account to the extent the law permits. We may substitute shares of any Portfolio with those of another Portfolio of the same or different mutual Portfolio if the shares of the Portfolio are no longer available for investment or if we believe investment in any Portfolio would become inappropriate in view of the purposes of the Variable Account. We will not substitute shares attributable to a Contract owner's interest in a Variable Sub-Account until we have notified the Contract owner of the change, and until the Securities and Exchange Commission has approved the change, to the extent such notification and approval are required by law. Nothing contained in this Statement of Additional Information shall prevent the Variable Account from purchasing other securities for other series or classes of contracts or from effecting a conversion between series or classes of contracts on the basis of requests made by Contract owners. We also may establish additional Variable Sub-Accounts or series of Variable Sub-Accounts. Each additional Variable Sub-Account would purchase shares in a new Portfolio of the same or different mutual fund. We may establish new Variable Sub-Accounts when we believe marketing needs or investment conditions warrant. We determine the basis on which we will offer any new Variable Sub-Accounts in conjunction with the Contract to existing Contract owners. We may eliminate one or more Variable Sub-Accounts if, in our sole discretion, marketing, tax or investment conditions so warrant. We may, by appropriate endorsement, change the Contract as we believe necessary or appropriate to reflect any substitution or change in the Portfolios. If we believe the best interests of persons having voting rights under the Contracts would be served, we may operate the Variable Account as a management company under the Investment Company Act of 1940 or we may withdraw its registration under such Act if such registration is no longer required. THE CONTRACT The Contract is primarily designed to aid individuals in long-term financial planning. You can use it for retirement planning regardless of whether the retirement plan qualifies for special federal income tax treatment. PURCHASE OF CONTRACTS Morgan Stanley DW Inc. , is the principal underwriter and distributor of the Contracts. The offering of the Contracts is continuous. We do not anticipate discontinuing the offering of the Contracts but we reserve the right to do so at any time. TAX-FREE EXCHANGES (1035 EXCHANGES, ROLLOVERS AND TRANSFERS) We accept purchase payments that are the proceeds of a Contract in a transaction qualifying for a tax-free exchange under Section 1035 of the Internal Revenue Code ("Code"). Except as required by federal law in calculating the basis of the Contract, we do not differentiate between Section 1035 purchase payments and non-Section 1035 purchase payments. We also accept "rollovers" and transfers from Contracts qualifying as tax-sheltered annuities ("TSAs"), individual retirement annuities or accounts ("IRAs"), or any other Qualified Contract that is eligible to "rollover" into an IRA. We differentiate among non-Qualified Contracts, TSAs, IRAs and other Qualified Contracts to the extent necessary to comply with federal tax laws. For example, we restrict the assignment, transfer, or pledge of TSAs and IRAs so the Contracts will continue to qualify for special tax treatment. A Contract owner contemplating any such exchange, rollover or transfer of a Contract should contact a competent tax adviser with respect to the potential effects of such a transaction. PERFORMANCE INFORMATION From time to time we may advertise the "standardized," "non-standardized," and "adjusted historical" total returns of the Variable Sub-Accounts, as described below. Please remember that past performance is not an estimate or guarantee of future performance and does not necessarily represent the actual experience of amounts invested by a particular Contract owner. Also, please note that the performance figures do not reflect any applicable taxes. STANDARDIZED TOTAL RETURNS A Variable Sub-Account's standardized total return represents the average annual total return of that Sub-Account over a particular period. We compute standardized total return by finding the annual percentage rate that, when compounded annually, will accumulate a hypothetical $1,000 purchase payment to the redeemable value at the end of the one, five or ten year period, or for a period from the date of commencement of the Variable Sub-Account's operations, if shorter than any of the foregoing. We use the following formula prescribed by the SEC for computing standardized total return: 1000 (1+T)n = ERV where: T = average annual total return ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of 1, 5, or 10 year periods or shorter period n = number of years in the period $1000 = hypothetical $1,000 investment The standardized total returns for the Variable Sub-Accounts available under the Contract for the periods ended December 31, 2000 are set out below. The Preferred Client Variable Annuity Contracts were first offered to the public on January 31, 2000. Accordingly, performance figures for Variable Sub-Accounts prior to that date reflect the historical performance of the Variable Sub-Accounts, adjusted to reflect the current level of charges that apply to the Variable Sub- Accounts under the Preferred Client Contracts. Variable Sub-Account Inception Dates: MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES: Variable Sub-Account Date - -------------------- ---- Quality Income Plus October 25, 1990 High Yield October 25, 1990 Utilities October 25, 1990 Dividend Growth October 25, 1990 Equity October 25, 1990 Strategist October 25, 1990 Capital Growth March 1, 1991 European Growth March 1, 1991 Global Dividend Growth February 23, 1994 Pacific Growth February 23, 1994 Income Builder January 21, 1997 Money Market October 25, 1990 Short-Term Bond May 3, 1999 Aggressive Equity May 3, 1999 S&P 500 Index May 18, 1998 Competitive Edge ("Best Ideas") May 18, 1998 THE UNIVERSAL INSTITUTIONAL FUNDS, INC.: Variable Sub-Account Date - -------------------- ---- Equity Growth March 16, 1998 International Magnum March 16, 1998 Emerging Markets Equity March 16, 1998 U.S. Real Estate May 18, 1998 Mid-Cap Value January 31, 2000 VAN KAMPEN LIFE INVESTMENT TRUST: Variable Sub-Account Date - -------------------- ---- Emerging Growth March 16, 1998 AIM VARIABLE INSURANCE FUNDS: Variable Sub-Account Date - -------------------- ---- Capital Appreciation January 31, 2000 Growth January 31, 2000 Value January 31, 2000 ALLIANCE VARIABLE PRODUCTS SERIES FUND (CLASS B SHARES): Variable Sub-Account Date - -------------------- ---- Growth January 31, 2000 Growth and Income January 31, 2000 Premier Growth January 31, 2000 PUTNAM VARIABLE TRUST (CLASS IB SHARES): Variable Sub-Account Date - -------------------- ---- Growth and Income January 31, 2000 International Growth January 31, 2000 Voyager January 31, 2000 (WITHOUT AN OPTIONAL DEATH BENEFIT PROVISION OR PERFORMANCE INCOME BENEFIT OPTION)
Ten Years or Variable Sub-Account One Year 5 Year Inception - -------------------- -------- ---------- ------------------- Aggressive Equity -2.43% N/A 23.47% Capital Growth 0.58% 16.72% 13.04% Competitive Edge "Best Ideas" -17.96% N/A 0.13% Dividend Growth 4.57% 12.05% 13.52% Equity -12.96% 22.01% 21.04% European Growth -5.60% 17.04% 15.86% Global Dividend Growth -3.17% 9.86% 10.10% High Yield -32.69% -5.37% 6.73% Income Builder -0.53% N/A 7.26% Money Market 5.32% 4.54% 4.04% Pacific Growth -33.92% -9.15% -7.13% Quality Income Plus 10.32% 4.71% 7.42% S&P 500 Index -10.01% N/A 7.04% Short-Term Bond 5.11% N/A 3.72% Strategist 0.94% 13.78% 12.26% Utilities 2.32% 13.91% 13.04% AIM V.I. Capital Appreciation N/A N/A -10.84% AIM V.I. Growth N/A N/A -19.27% AIM V.I. Value N/A N/A -14.23% Alliance Growth and Income N/A N/A 19.24% Alliance Growth N/A N/A -15.73% Alliance Premier Growth N/A N/A -14.07% Emerging Markets Equity -39.33% N/A -6.33% Equity Growth -12.36% N/A 7.79% International Magnum -13.04% N/A 2.11% Mid Cap Value N/A N/A 17.32% U.S. Real Estate 28.37% N/A 4.29% Putnam VT Growth and Income N/A N/A 12.00% Putnam VT International Growth N/A N/A -6.17% Putnam VT Voyager N/A N/A -15.88% Van Kampen LIT Emerging Growth -10.78% N/A 32.31% (WITH PERFORMANCE DEATH BENEFIT OPTION OR PERFORMANCE INCOME BENEFIT OPTION) Ten Years or Variable Sub-Accont One Year 5 Year Inception - ------------------- -------- ------ ------------- Aggressive Equity -2.55% N/A 23.31% Capital Growth 0.45% 16.57% 12.89% Competitive Edge "Best Ideas" -18.07% N/A 0.00% Dividend Growth 4.43% 11.90% 13.37% Equity -13.07% 21.85% 20.88% European Growth -5.70% 17.11% 15.96% Global Dividend Growth -3.30% 9.72% 9.96% High Yield -32.78% -5.49% 6.59% Income Builder -0.66% N/A 7.12% Money Market 5.18% 4.40% 3.91% Pacific Growth -34.01% -9.27% -7.25% Quality Income Plus 10.18% 4.57% 7.28% S&P 500 Index -10.13% N/A 6.90% Short-Term Bond 4.98% N/A 3.59% Strategist 0.81% 13.63% 12.11% Utilities 2.19% 13.76% 12.89% AIM V.I. Capital Appreciation N/A N/A -10.95% AIM V.I. Growth N/A N/A -19.37% AIM V.I. Value N/A N/A -14.34% Alliance Growth and Income N/A N/A 19.09% Alliance Growth N/A N/A -15.84% Alliance Premier Growth N/A N/A -14.18% Emerging Markets Equity -39.41% N/A -6.46% Equity Growth -12.47% N/A 7.65% International Magnum -13.15% N/A 1.98% Mid Cap Value N/A N/A 17.17% Morgan Stanley UIF U.S. Real Estate 28.21% N/A 4.15% Putnam VT Growth and Income N/A N/A 11.86% Putnam VT International Growth N/A N/A -6.30% Putnam VT Voyager N/A N/A -15.99% Van Kampen LIT Emerging Growth -10.89% N/A 32.13% (WITH PERFORMANCE BENEFIT COMBINATION OPTION OR DEATH BENEFIT COMBINATION OPTION) Ten Years or Variable Sub-Account One Year 5 Year Inception - -------------------- -------- ------ ------------ Aggressive Equity -2.66% N/A 23.17% Capital Growth 0.34% 16.44% 12.77% Competitive Edge "Best Ideas" -18.16% N/A -0.11% Dividend Growth 4.32% 11.78% 13.25% Equity -13.17% 21.72% 20.75% European Growth -5.80% 16.98% 15.83% Global Dividend Growth -3.40% 9.60% 9.84% High Yield -32.86% -5.60% 6.47% Income Builder -0.76% N/A 7.00% Money Market 5.07% 4.29% 3.79% Pacific Growth -34.08% -9.37% -7.35% Quality Income Plus 10.05% 4.46% 7.16% S&P 500 Index -10.23% N/A 6.78% Short-Term Bond 4.86% N/A 3.47% Strategist 0.70% 23.64% 16.89% Utilities 2.08% 13.64% 12.77% AIM V.I. Capital Appreciation -11.74% 13.71% 15.84% AIM V.I. Growth -21.23% 13.96% 14.01% AIM V.I. Value -15.44% 13.66% 15.49% Alliance Growth and Income N/A N/A 14.48% Alliance Growth N/A N/A 20.52% Alliance Premier Growth N/A N/A -4.77% Emerging Markets Equity -39.47% N/A -3.87% Equity Growth -12.57% N/A 17.17% International Magnum -13.25% N/A 5.33% Mid Cap Value 9.72% N/A 19.66% U.S. Real Estate 28.07% N/A 6.28% Putnam VT Growth and Income 6.92% 12.69% 13.43% Putnam VT International Growth -10.41% N/A 17.69% Putnam VT Voyager -17.32% 17.36% 19.09% Van Kampen LIT Emerging Growth -10.99% 27.62% 28.40%
NON-STANDARDIZED TOTAL RETURNS From time to time, we may advertise the total return over different periods of time by means of aggregate, average, year-by-year or other types of total return figures. The formula for computing such total return quotations involves a per unit change calculation. This calculation is based on the Accumulation Unit Value at the end of the defined period divided by the Accumulation Unit Value at the beginning of such period, minus 1. The periods included in such advertisements are "year-to-date" (prior calendar year end to the day of the advertisement); "year to most recent quarter" (prior calendar year end to the end of the most recent quarter); "the prior calendar year"; " 'n' most recent Calendar Years"; and "Inception (commencement of the Variable Sub-Account's operation) to date" (day of the advertisement). ADJUSTED HISTORICAL TOTAL RETURNS We may advertise the total return for periods prior to the date that the Variable Sub-Accounts commenced operations. We will calculate such "adjusted historical total returns" using the historical performance of the underlying Portfolios and adjusting such performance to reflect the current level of charges that apply to the Variable Sub-Accounts under the Contract. The adjusted historical total returns for the Variable Sub-Accounts for the periods ended December 31, 2000 are set out below. No adjusted historical total returns are shown for the Money Market Variable Sub-Account. The following list provides the inception date for the Portfolio corresponding to each of the Variable Sub-Accounts included in the tables. Inception Date of Variable Sub-Account Corresponding Portfolio - -------------------- ----------------------- High Yield March 9, 1984 Equity March 9, 1984 Quality Income Plus March 1, 1987 Strategist March 1, 1987 Dividend Growth March 1, 1990 Utilities March 1, 1990 European Growth March 1, 1991 Capital Growth March 1, 1991 Pacific Growth February 24, 1994 Global Dividend Growth February 24, 1994 Income Builder January 21, 1997 Equity Growth January 2, 1997 International Magnum January 2, 1997 Emerging Markets Equity October 1,1996 Mid-Cap Value January 2, 1997 U.S. Real Estate March 4, 1997 Competitive Edge ("Best May 18, 1998 Ideas") S&P 500 Index May 18, 1998 Short-Term Bond May 2, 1999 Aggressive Equity May 2, 1999 Van Kampen Emerging Growth July 3, 1995 AIM V.I. Capital Appreciation May 5, 1993 AIM V.I. Growth May 5, 1993 AIM V.I. Value May 5, 1993 Alliance Growth* September 15, 1994 Alliance Growth and Income* January 14, 1991 Alliance Premier Growth* July 14, 1999 Putnam VT Growth and Income** February 1, 1988 Putnam VT International Growth** January 2, 1997 Putnam VT Voyager** February 1, 1988 * The Portfolios' Class B shares ("12b-1 class") corresponding to the Alliance Growth and Alliance Growth and Income Variable Sub-Accounts were first offered on June 1, 1999. For periods prior to these dates, the performance shown is based on the historical performance of the Portfolios' Class A shares ("non-12b-1 class"), adjusted to reflect the current expenses of the Portfolios' 12b-1 class. The inception dates for the Portfolios are as shown above. ** The Portfolios' Class B shares ("12b-1 class") corresponding to the Putnam VT Growth and Income, International Growth, and Voyager Variable Sub-Accounts were first offered on April 6, 1998, April 30, 1998, and April 30, 1998, respectively. For periods prior to these dates, the performance shown is based on the historical performance of the Portfolios' Class IA shares ("non-12b-1 class"), adjusted to reflect the current expenses of the Portfolios' 12b-1 class. The inception dates for the Portfolios are as shown above. (WITHOUT AN OPTIONAL DEATH BENEFIT PROVISION OR PERFORMANCE INCOME BENEFIT OPTION )
Ten Years or Variable Sub-Account One Year 5 Year Inception+ - -------------------- ---------- -------- ---------- Aggressive Equity -2.43% N/A 23.47% Capital Growth 0.58% 16.72% 13.04% Competitive Edge "Best Ideas" -17.96% N/A 0.13% Dividend Growth 4.57% 12.05% 13.52% Equity -12.96% 22.01% 21.04% European Growth -5.60% 17.04% 15.86% Global Dividend Growth -3.17% 9.86% 10.10% High Yield -32.69% -5.37% 6.73% Income Builder -0.53% N/A 7.26% Money Market 5.32% 4.54% 4.04% Pacific Growth -33.92% -9.15% -7.13% Quality Income Plus 10.32% 4.71% 7.42% S&P 500 Index -10.01% N/A 7.04% Short-Term Bond 5.11% N/A 3.72% Strategist 0.94% 13.78% 12.26% Utilities 2.32% 13.91% 13.04% AIM V.I. Capital Appreciation -11.53% 13.98% 16.12% AIM V.I. Growth -21.04% 14.24% 14.28% AIM V.I. Value -15.24% 13.93% 15.77% Alliance Growth and Income* -18.31% 18.09% 20.56% Alliance Growth* 12.87% 18.75% 14.50% Alliance Premier Growth* -17.23% N/A -4.62% Emerging Markets Equity -39.33% N/A -3.64% Equity Growth -12.36% N/A 17.45% International Magnum -13.04% N/A 5.59% Mid Cap Value 9.98% N/A 19.94% U.S. Real Estate 28.37% N/A 6.53% Putnam VT Growth and Income* 7.17% 12.97% 13.70% Putnam VT International Growth* -10.19% N/A 17.97% Putnam VT Voyager* -17.12% 17.65% 19.37% Van Kampen LIT Emerging Growth -10.78% 27.93% 28.70% + Please refer to the table at the beginning of this section for the inception dates of the portfolios. * The performance shown for the Portfolios' 12b-1 class is based on the performance of the non-12b-1 class, as described in the table at the beginning of this section. (WITH PERFORMANCE DEATH BENEFIT OPTION OR PERFORMANCE INCOME BENEFIT OPTION) Ten Years or Variable Sub-Account One Year 5 Year Inception+ - -------------------- -------- ------ -------------- Aggressive Equity -2.55% N/A 23.31% Capital Growth 0.45% 16.57% 12.89% Competitive Edge "Best Ideas" -18.07% N/A 0.00% Dividend Growth 4.43% 11.90% 13.37% Equity -13.07% 21.85% 20.88% European Growth -5.70% 17.11% 15.96% Global Dividend Growth -3.30% 9.72% 9.96% High Yield -32.78% -5.49% 6.59% Income Builder -0.66% N/A 7.12% Money Market 5.18% 4.40% 3.91% Pacific Growth -34.01% -9.27% -7.25% Quality Income Plus 10.18% 4.57% 7.28% S&P 500 Index -10.13% N/A 6.90% Short-Term Bond 4.98% N/A 3.59% Strategist 0.81% 13.63% 12.11% Utilities 2.19% 13.76% 12.89% AIM V.I. Capital Appreciation -11.64% 13.83% 15.97% AIM V.I. Growth -21.14% 14.09% 14.13% AIM V.I. Value -15.35% 13.78% 15.62% Alliance Growth and Income* N/A N/A 14.49% Alliance Growth* N/A N/A 20.54% Alliance Premier Growth* N/A N/A -4.70% Emerging Markets Equity -39.41% N/A -3.76% Equity Growth -12.47% N/A 17.30% International Magnum -13.15% N/A 5.45% Mid Cap Value 9.84% N/A 19.79% U.S. Real Estate 28.21% N/A 6.40% Putnam VT Growth and Income* 7.04% 12.82% 13.55% Putnam VT International Growth* -10.31% N/A 17.82% Putnam VT Voyager* -17.22% 17.49% 19.22% Van Kampen LIT Emerging Growth -10.89% 27.76% 28.54% + Please refer to the table at the beginning of this section for the inception dates of the portfolios. * The performance shown for the Portfolios' 12b-1 class is based on the performance of the non-12b-1 class, as described in the table at the beginning of this section. (WITH PERFORMANCE BENEFIT COMBINATION OPTION OR DEATH BENEFIT COMBINATION OPTION) Ten Years or Variable Sub-Account One Year 5 Year Inception+ - -------------------- -------- ------ ------------- Aggressive Equity -2.66% N/A 23.17% Capital Growth 0.34% 16.44% 12.77% Competitive Edge "Best Ideas" -18.16% N/A -0.11% Dividend Growth 4.32% 11.78% 13.25% Equity -13.17% 21.72% 20.75% European Growth -5.80% 16.98% 15.83% Global Dividend Growth -3.40% 9.60% 9.84% High Yield -32.86% -5.60% 6.47% Income Builder -0.76% N/A 7.00% Money Market 5.07% 4.29% 3.79% Pacific Growth -34.08% -9.37% -7.35% Quality Income Plus 10.05% 4.46% 7.16% S&P 500 Index -10.23% N/A 6.78% Short-Term Bond 4.86% N/A 3.47% Strategist 0.70% 23.64% 16.89% Utilities 2.08% 13.64% 12.77% AIM V.I. Capital Appreciation -11.74% 13.71% 15.84% AIM V.I. Growth -21.23% 13.96% 14.01% AIM V.I. Value -15.44% 13.66% 15.49% Alliance Growth and Income* N/A N/A 14.48% Alliance Growth* N/A N/A 20.52% Alliance Premier Growth* N/A N/A -4.77% Emerging Markets Equity -39.47% N/A -3.87% Equity Growth -12.57% N/A 17.17% International Magnum -13.25% N/A 5.33% Mid Cap Value 9.72% N/A 19.66% U.S. Real Estate 28.07% N/A 6.28% Putnam VT Growth and Income* 6.92% 12.69% 13.43% Putnam VT International Growth* -10.41% N/A 17.69% Putnam VT Voyager* -17.32% 17.36% 19.09% Van Kampen LIT Emerging Growth -10.99% 27.62% 28.40%
+ Please refer to the table at the beginning of this section for the inception dates of the portfolios. * The performance shown for the Portfolios' 12b-1 class is based on the performance of the non-12b-1 class, as described in the table at the beginning of this section. CALCULATION OF ACCUMULATION UNIT VALUES The value of Accumulation Units will change each Valuation Period according to the investment performance of the Portfolio shares purchased by each Variable Sub-Account and the deduction of certain expenses and charges. A "Valuation Period" is the period from the end of one Valuation Date and continues to the end of the next Valuation Date. A Valuation Date ends at the close of regular trading on the New York Stock Exchange (currently 3:00 p.m. Central Time). The Accumulation Unit Value of a Variable Sub-Account for any Valuation Period equals the Accumulation Unit Value as of the immediately preceding Valuation Period, multiplied by the Net Investment Factor (described below) for that Variable Sub-Account for the current Valuation Period. NET INVESTMENT FACTOR The Net Investment Factor for a Valuation Period is a number representing the change, since the last Valuation Period, in the value of Variable Sub-Account assets per Accumulation Unit due to investment income, realized or unrealized capital gain or loss, deductions for taxes, if any, and deductions for the mortality and expense risk charge and administrative expense charge. We determine the Net Investment Factor for each Variable Sub-Account for any Valuation Period by dividing (A) by (B) and subtracting (C) from the result, where: (A) is the sum of: (1) the net asset value per share of the Portfolio underlying the Variable Sub-Account determined at the end of the current Valuation Period; plus, (2) the per share amount of any dividend or capital gain distributions made by the Portfolio underlying the Variable Sub-Account during the current Valuation Period; (B) is the net asset value per share of the Portfolio underlying the Variable Sub-Account determined as of the end of the immediately preceding Valuation Period; and (C) is the annualized mortality and expense risk and administrative expense charges divided by the number of days in the current calendar year and then multiplied by the number of calendar days in the current Valuation Period. CALCULATION OF VARIABLE INCOME PAYMENTS We calculate the amount of the first variable income payment under an Income Plan by applying the Contract Value allocated to each Variable Sub-Account less any applicable premium tax charge deducted at the time, to the income payment tables in the Contract. We divide the amount of the first variable annuity income payment by the Variable Sub-Account's then current Annuity Unit value to determine the number of annuity units ("Annuity Units") upon which later income payments will be based. To determine income payments after the first, we simply multiply the number of Annuity Units determined in this manner for each Variable Sub-Account by the then current Annuity Unit value ("Annuity Unit Value") for that Variable Sub-Account. CALCULATION OF ANNUITY UNIT VALUES Annuity Units in each Variable Sub-Account are valued separately and Annuity Unit Values will depend upon the investment experience of the particular Portfolio in which the Variable Sub-Account invests. We calculate the Annuity Unit Value for each Variable Sub-Account at the end of any Valuation Period by: o multiplying the Annuity Unit Value at the end of the immediately preceding Valuation Period by the Variable Sub-Account's Net Investment Factor (described in the preceding section) for the Period; and then o dividing the product by the sum of 1.0 plus the assumed investment rate for the Valuation Period. The assumed investment rate adjusts for the interest rate assumed in the income payment tables used to determine the dollar amount of the first variable income payment, and is at an effective annual rate which is disclosed in the Contract. We determine the amount of the first variable income payment paid under an Income Plan using the income payment tables set out in the Contracts. The Contracts include tables that differentiate on the basis of sex, except in states that require the use of unisex tables. GENERAL MATTERS INCONTESTABILITY We will not contest the Contract after we issue it. SETTLEMENTS The Contract must be returned to us prior to any settlement. We must receive due proof of the Contract owner(s) death (or Annuitant's death if there is a non-natural Contract owner) before we will settle a death claim. SAFEKEEPING OF THE VARIABLE ACCOUNT'S ASSETS We hold title to the assets of the Variable Account. We keep the assets physically segregated and separate and apart from our general corporate assets. We maintain records of all purchases and redemptions of the Portfolio shares held by each of the Variable Sub-Accounts. The Portfolios do not issue stock certificates. Therefore, we hold the Variable Account's assets in open account in lieu of stock certificates. See the Portfolios' prospectuses for a more complete description of the custodian of the Portfolios. PREMIUM TAXES Applicable premium tax rates depend on the Contract owner's state of residency and the insurance laws and our status in those states where premium taxes are incurred. Premium tax rates may be changed by legislation, administrative interpretations, or judicial acts. TAX RESERVES We do not establish capital gains tax reserves for any Variable Sub-Account nor do we deduct charges for tax reserves because we believe that capital gains attributable to the Variable Account will not be taxable. However, we reserve the right to deduct charges to establish tax reserves for potential taxes on realized or unrealized capital gains. FEDERAL TAX MATTERS THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. WE MAKE NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR TRANSACTION INVOLVING A CONTRACT. Federal, state, local and other tax consequences of ownership or receipt of distributions under an annuity contract depend on the individual circumstances of each person. If you are concerned about any tax consequences with regard to your individual circumstances, you should consult a competent tax adviser. TAXATION OF NORTHBROOK LIFE INSURANCE COMPANY Northbrook is taxed as a life insurance company under Part I of Subchapter L of the Internal Revenue Code. Since the Variable Account is not an entity separate from Northbrook, and its operations form a part of Northbrook, it will not be taxed separately as a "Regulated Investment Company" under Subchapter M of the Code. Investment income and realized capital gains of the Variable Account are automatically applied to increase reserves under the contract. Under existing federal income tax law, Northbrook believes that the Variable Account investment income and capital gains will not be taxed to the extent that such income and gains are applied to increase the reserves under the contract. Accordingly, Northbrook does not anticipate that it will incur any federal income tax liability attributable to the Variable Account, and therefore Northbrook does not intend to make provisions for any such taxes. If Northbrook is taxed on investment income or capital gains of the Variable Account, then Northbrook may impose a charge against the Variable Account in order to make provision for such taxes. EXCEPTIONS TO THE NON-NATURAL OWNER RULE There are several exceptions to the general rule that annuity contracts held by a non-natural owner are not treated as annuity contracts for federal income tax purposes. Contracts will generally be treated as held by a natural person if the nominal owner is a trust or other entity which holds the Contract as agent for a natural person. However, this special exception will not apply in the case of an employer who is the nominal owner of an annuity contract under a non-qualified deferred compensation arrangement for its employees. Other exceptions to the non-natural owner rule are: (1) contracts acquired by an estate of a decedent by reason of the death of the decedent; (2) certain qualified contracts; (3) contracts purchased by employers upon the termination of certain qualified plans; (4) certain contracts used in connection with structured settlement agreements, and (5) contracts purchased with a single premium when the annuity starting date is no later than a year from purchase of the annuity and substantially equal periodic payments are made, not less frequently than annually, during the annuity period. IRS REQUIRED DISTRIBUTION AT DEATH RULES In order to be considered an annuity contract for federal income tax purposes, an annuity contract must provide: (1) if any owner dies on or after the annuity start date but before the entire interest in the contract has been distributed, the remaining portion of such interest must be distributed at least as rapidly as under the method of distribution being used as of the date of the owner's death; (2) if any owner dies prior to the annuity start date, the entire interest in the contract will be distributed within five years after the date of the owner's death. These requirements are satisfied if any portion of the owner's interest which is payable to (or for the benefit of) a designated beneficiary is distributed over the life of such beneficiary (or over a period not extending beyond the life expectancy of the beneficiary) and the distributions begin within one year of the owner's death. If the owner's designated beneficiary is the surviving spouse of the owner, the contract may be continued with the surviving spouse as the new owner. If the owner of the contract is a non-natural person, then the annuitant will be treated as the owner for purposes of applying the distribution at death rules. In addition, a change in the annuitant on a contract owned by a non-natural person will be treated as the death of the owner. QUALIFIED PLANS The Contract may be used with several types of qualified plans. Northbrook reserves the right to limit the availability of the contract for use with any of the qualified plans listed below. The tax rules applicable to participants in such qualified plans vary according to the type of plan and the terms and conditions of the plan itself. Adverse tax consequences may result from excess contributions, premature distributions, distributions that do not conform to specified commencement and minimum distribution rules, excess distributions and in other circumstances. Contract owners and participants under the plan and annuitants and beneficiaries under the Contract may be subject to the terms and conditions of the plan regardless of the terms of the Contract. IRAs Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an IRA. IRAs are subject to limitations on the amount that can be contributed and on the time when distributions may commence. Certain distributions from other types of qualified plans may be "rolled over" on a tax-deferred basis into an IRA. An IRA generally may not provide life insurance, but it may provide a death benefit that equals the greater of the premiums paid and the Contract's Cash Value. The Contract provides a death benefit that in certain circumstances may exceed the greater of the payments and the Contract Value. It is possible that the death benefit could be viewed as violating the prohibition on investment in life insurance contracts with the result that the Contract would not be viewed as satisfying the requirements of an IRA. ROTH IRAs Section 408A of the Code permits eligible individuals to make nondeductible contributions to an individual retirement program known as a Roth IRA. Roth IRAs are subject to limitations on the amount that can be contributed and on the time when distributions may commence. "Qualified distributions" from Roth IRAs are not includible in gross income. "Qualified distributions" are any distributions made more than five taxable years after the taxable year of the first contribution to the Roth IRA, and which are made on or after the date the individual attains age 59 1/2, made to a beneficiary after the owner's death, attributable to the owner being disabled or for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000). "Nonqualified distributions" are treated as made from contributions first and are includible in gross income to the extent such distributions exceed the contributions made to the Roth IRA. The taxable portion of a "nonqualified distribution" may be subject to the 10% penalty tax on premature distributions. Subject to certain limitations, a traditional Individual Retirement Account or Annuity may be converted or "rolled over" to a Roth IRA. The taxable portion of a conversion or rollover distribution is includible in gross income, but is exempted from the 10% penalty tax on premature distributions. SIMPLIFIED EMPLOYEE PENSION PLANS Section 408(k) of the Code allows employers to establish simplified employee pension plans for their employees using the employees' IRAs if certain criteria are met. Under these plans the employer may, within specified limits, make deductible contributions on behalf of the employees to their individual retirement annuities. Employers intending to use the Contract in connection with such plans should seek competent advice. In particular, employers should consider that an IRA generally may not provide life insurance, but it may provide a death benefit that equals the greater of the premiums paid and the contract's cash value. The Contract provides a death benefit that in certain circumstances may exceed the greater of the payments and the Contract Value. SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE PLANS) Sections 408(p) and 401(k) of the Code allow employers with 100 or fewer employees to establish SIMPLE retirement plans for their employees. SIMPLE plans may be structured as a SIMPLE retirement account using an employee's IRA to hold the assets or as a Section 401(k) qualified cash or deferred arrangement. In general, a SIMPLE plan consists of a salary deferral program for eligible employees and matching or nonelective contributions made by employers. Employers intending to use the Contract in conjunction with SIMPLE plans should seek competent tax and legal advice. TAX SHELTERED ANNUITIES Section 403(b) of the Code permits public school employees and employees of certain types of tax-exempt organizations (specified in Section 501(c)(3) of the Code) to have their employers purchase annuity contracts for them, and subject to certain limitations, to exclude the purchase payments from the employees' gross income. An annuity contract used for a Section 403(b) plan must provide that distributions attributable to salary reduction contributions made after 12/31/88, and all earnings on salary reduction contributions, may be made only on or after the date the employee attains age 59 1/2, separates from service, dies, becomes disabled or on the account of hardship (earnings on salary reduction contributions may not be distributed for hardship). These limitations do not apply to withdrawals where Northbrook is directed to transfer some or all of the Contract Value to another 403(b) plan. CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS Sections 401(a) and 403(a) of the Code permit corporate employers to establish various types of tax favored retirement plans for employees. The Self-Employed Individuals Retirement Act of 1962, as amended, (commonly referred to as "H.R. 10" or "Keogh") permits self-employed individuals to establish tax favored retirement plans for themselves and their employees. Such retirement plans may permit the purchase of annuity contracts in order to provide benefits under the plans. STATE AND LOCAL GOVERNMENT AND TAX-EXEMPT ORGANIZATION DEFERRED COMPENSATION PLANS Section 457 of the Code permits employees of state and local governments and tax-exempt organizations to defer a portion of their compensation without paying current taxes. The employees must be participants in an eligible deferred compensation plan. To the extent the Contracts are used in connection with an eligible plan, employees are considered general creditors of the employer and the employer as owner of the contract has the sole right to the proceeds of the contract. Generally, under the non-natural owner rules, such Contracts are not treated as annuity contracts for federal income tax purposes. Under these plans, contributions made for the benefit of the employees will not be includible in the employees' gross income until distributed from the plan. However, under a Section 457 plan all the compensation deferred under the plan must remain solely the property of the employer, subject only to the claims of the employer's general creditors, until such time as made available to the employee or a beneficiary. EXPERTS The financial statements of Northbrook as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000 and the related financial statement schedule that appear in this Statement of Additional Information have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. The financial statements of the Variable Account as of December 31, 2000 and for each of the periods in the two years then ended that appear in this Statement of Additional Information have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. FINANCIAL STATEMENTS The financial statements of the Variable Account as of December 31, 2000 and for each of the periods in the two years then ended, the financial statements of Northbrook as of December 31, 2000 and 1999 and for each of the three years in the period ended December 31, 2000 and related financial statement schedule and the accompanying Independent Auditors' Reports appear in the pages that follow. The financial statements and related financial statement schedule of Northbrook included herein should be considered only as bearing upon the ability of Northbrook to meet its obligations under the Contracts. Financial Statements Index ----- Page ---- Independent Auditors' Report............................................... F-1 Financial Statements: Statements of Operations and Comprehensive Income for the Years Ended December 31, 2000, 1999 and 1998..................................... F-2 Statements of Financial Position December 31, 2000 and 1999........................................... F-3 Statements of Shareholder's Equity for the Years Ended December 31, 2000, 1999 and 1998..................................... F-4 Statements of Cash Flows for the Years Ended December 31, 2000, 1999 and 1998..................................... F-5 Notes to Financial Statements......................................... F-6 Schedule IV - Reinsurance for the Years Ended December 31, 2000, 1999 and 1998..................................... F-18 INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholder of Northbrook Life Insurance Company: - -------------------------------------------------------------------------------- We have audited the accompanying Statements of Financial Position of Northbrook Life Insurance Company (the "Company", an affiliate of The Allstate Corporation) as of December 31, 2000 and 1999, and the related Statements of Operations and Comprehensive Income, Shareholder's Equity and Cash Flows for each of the three years in the period ended December 31, 2000. Our audits also included Schedule IV--Reinsurance. These financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2000 and 1999, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, Schedule IV--Reinsurance, when considered in relation to the basic financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein. /s/ Deloitte & Touche LLP Chicago, Illinois February 23, 2001 F-1 NORTHBROOK LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEAR ENDED DECEMBER 31, ------------------------------ 2000 1999 1998 -------- -------- -------- ($ IN THOUSANDS) REVENUES Net investment income..................................... $6,802 $6,010 $5,691 Realized capital gains and losses......................... (230) 510 2 ------ ------ ------ INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE............ 6,572 6,520 5,693 INCOME TAX EXPENSE.......................................... 2,293 2,264 1,995 ------ ------ ------ NET INCOME.................................................. 4,279 4,256 3,698 ------ ------ ------ OTHER COMPREHENSIVE INCOME (LOSS), AFTER-TAX Change in unrealized net capital gains and losses......... 2,663 (4,802) 825 ------ ------ ------ COMPREHENSIVE INCOME (LOSS)................................. $6,942 $ (546) $4,523 ====== ====== ======
See notes to financial statements. F-2 NORTHBROOK LIFE INSURANCE COMPANY STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, ---------------------------- 2000 1999 ------------ ------------- ($ IN THOUSANDS, EXCEPT PAR VALUE DATA) ASSETS Investments Fixed income securities, at fair value (amortized cost $91,141 and $89,205)..................................... $ 93,030 $ 86,998 Short-term................................................ 3,859 3,170 ---------- ----------- Total investments......................................... 96,889 90,168 Cash........................................................ -- 21 Reinsurance recoverable from Allstate Life Insurance Company................................................... 1,975,150 2,022,502 Other assets................................................ 4,817 5,997 Separate Accounts........................................... 7,614,673 8,211,996 ---------- ----------- TOTAL ASSETS.......................................... $9,691,529 $10,330,684 ========== =========== LIABILITIES Reserve for life-contingent contract benefits............... $ 149,111 $ 150,587 Contractholder funds........................................ 1,826,062 1,871,933 Current income taxes payable................................ 2,078 2,171 Deferred income taxes....................................... 2,279 746 Payable to affiliates, net.................................. 7,123 5,990 Separate Accounts........................................... 7,614,673 8,211,996 ---------- ----------- TOTAL LIABILITIES..................................... 9,601,326 10,243,423 ---------- ----------- COMMITMENTS AND CONTINGENT LIABILITIES (NOTE 8) SHAREHOLDER'S EQUITY Common stock, $100 par value, 25,000 shares authorized, issued and outstanding.................................... 2,500 2,500 Additional capital paid-in.................................. 56,600 56,600 Retained income............................................. 29,875 29,596 Accumulated other comprehensive income (loss): Unrealized net capital gains and losses................... 1,228 (1,435) ---------- ----------- Total accumulated other comprehensive income (loss)... 1,228 (1,435) ---------- ----------- TOTAL SHAREHOLDER'S EQUITY............................ 90,203 87,261 ---------- ----------- TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY............ $9,691,529 $10,330,684 ========== ===========
See notes to financial statements. F-3 NORTHBROOK LIFE INSURANCE COMPANY STATEMENTS OF SHAREHOLDER'S EQUITY
DECEMBER 31, ------------------------------ 2000 1999 1998 -------- -------- -------- ($ IN THOUSANDS) COMMON STOCK................................................ $ 2,500 $ 2,500 $ 2,500 ------- ------- ------- ADDITIONAL CAPITAL PAID-IN.................................. 56,600 56,600 56,600 ------- ------- ------- RETAINED INCOME Balance, beginning of year.................................. 29,596 25,340 21,642 Net income.................................................. 4,279 4,256 3,698 Dividends................................................... (4,000) -- -- ------- ------- ------- Balance, end of year........................................ 29,875 29,596 25,340 ------- ------- ------- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Balance, beginning of year.................................. (1,435) 3,367 2,542 Change in unrealized net capital gains and losses........... 2,663 (4,802) 825 ------- ------- ------- Balance, end of year........................................ 1,228 (1,435) 3,367 ------- ------- ------- Total Shareholder's Equity.............................. $90,203 $87,261 $87,807 ======= ======= =======
See notes to financial statements. F-4 NORTHBROOK LIFE INSURANCE COMPANY STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, ------------------------------ 2000 1999 1998 -------- -------- -------- ($ IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES Net income.................................................. $ 4,279 $ 4,256 $ 3,698 Adjustments to reconcile net income to net cash provided by operating activities Amortization and other non-cash items................... 295 559 518 Realized capital gains and losses....................... 230 (510) (2) Changes in: Life-contingent contract benefits and contractholder funds................................................ 5 (68) 273 Income taxes payable.................................. 7 355 1,866 Other operating assets and liabilities................ 1,563 924 4,126 -------- -------- -------- Net cash provided by operating activities............... 6,379 5,516 10,479 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Fixed income securities Proceeds from sales....................................... 6,780 17,992 1,922 Investment collections.................................... 2,933 6,555 10,253 Investment purchases...................................... (11,561) (32,050) (20,690) Change in short-term investments, net..................... (552) 2,008 (1,964) -------- -------- -------- Net cash used in investing activities................... (2,400) (5,495) (10,479) -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid.............................................. (4,000) -- -- -------- -------- -------- Net cash used in financing activities................... (4,000) -- -- -------- -------- -------- NET INCREASE (DECREASE) IN CASH............................. (21) 21 -- CASH AT THE BEGINNING OF YEAR............................... 21 -- -- -------- -------- -------- CASH AT END OF YEAR......................................... $ -- $ 21 $ -- ======== ======== ========
See notes to financial statements. F-5 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS ($ IN THOUSANDS) - ------------------------------------------------------------------- 1. GENERAL BASIS OF PRESENTATION The accompanying financial statements include the accounts of Northbrook Life Insurance Company (the "Company"), a wholly owned subsidiary of Allstate Life Insurance Company ("ALIC"), which is wholly owned by Allstate Insurance Company ("AIC"), a wholly owned subsidiary of The Allstate Corporation (the "Corporation"). These financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. NATURE OF OPERATIONS The Company markets investment and life insurance products exclusively through Dean Witter Reynolds, Inc. ("Dean Witter") (see Note 4), a wholly owned subsidiary of Morgan Stanley Dean Witter & Co. Investment products include deferred annuities and immediate annuities without life contingencies. Deferred annuities include fixed rate, market value adjusted, and variable annuities. Life insurance products consist of interest-sensitive life, immediate annuities with life contingencies, and variable life insurance. In 2000, substantially all of the Company's statutory premiums and deposits were from annuities. Annuity contracts and life insurance policies issued by the Company are subject to discretionary surrender or withdrawal by customers, subject to applicable surrender charges. These policies and contracts are reinsured primarily with ALIC (see Note 3), which invests premiums and deposits to provide cash flows that will be used to fund future benefits and expenses. The Company monitors economic and regulatory developments that have the potential to impact its business. Federal legislation has allowed for banks and other financial organizations to have greater participation in the securities and insurance businesses. This legislation may present an increased level of competition for sales of the Company's products. Furthermore, the market for deferred annuities and interest-sensitive life insurance is enhanced by the tax incentives available under current law. Any legislative changes that lessen these incentives are likely to negatively impact the demand for these products. The demand for life insurance products that are used to address a customer's estate planning needs may be impacted to the extent any legislative changes occur to the current estate tax laws. Additionally, traditional demutualizations of mutual insurance companies and enacted and pending state legislation to permit mutual insurance companies to convert to a hybrid structure known as a mutual holding company could have a number of significant effects on the Company by (1) increasing industry competition through consolidation caused by mergers and acquisitions related to the new corporate form of business; and (2) increasing competition in the capital markets. The Company is authorized to sell life and investment products in all states except New York, as well as in the District of Columbia and Puerto Rico. The top geographic locations for statutory premiums and deposits for the Company were California, Florida, and Texas for the year ended December 31, 2000. No other jurisdiction accounted for more than 5% of statutory premiums and deposits. F-6 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENTS Fixed income securities include bonds and mortgage-backed securities. All fixed income securities are carried at fair value and may be sold prior to their contractual maturity ("available for sale"). The difference between amortized cost and fair value, net of deferred income taxes, is reflected as a component of shareholder's equity. Provisions are recognized for declines in the value of fixed income securities that are other than temporary. Such write-downs are included in realized capital gains and losses. Short-term investments are carried at cost or amortized cost, which approximates fair value. Investment income consists primarily of interest. Interest is recognized on an accrual basis. Interest income on mortgage-backed securities is determined on the effective yield method, based on the estimated principal repayments. Accrual of income is suspended for fixed income securities that are in default or when the receipt of interest payments is in doubt. Realized capital gains and losses are determined on a specific identification basis. REINSURANCE RECOVERABLE The Company has reinsurance agreements whereby substantially all premiums, contract charges, credited interest, policy benefits and certain expenses are ceded to ALIC (See Note 3). Such amounts are reflected net of such reinsurance in the statements of operations and comprehensive income. Reinsurance recoverable and the related reserve for life-contingent contract benefits and contractholder funds are reported separately in the statements of financial position. The Company continues to have primary liability as the direct insurer for risks reinsured. RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS AND INTEREST CREDITED Interest-sensitive life contracts are insurance contracts whose terms are not fixed and guaranteed. The terms that may be changed include premiums paid by the contractholder, interest credited to the contractholder account balance and one or more amounts assessed against the contractholder. Premiums from these contracts are reported as deposits to contractholder funds. Contract charge revenue consists of fees assessed against the contractholder account balance for the cost of insurance (mortality risk), contract administration and surrender charges. Contract benefits include interest credited to contracts and claims incurred in excess of the related contractholder account balance. Contracts that do not subject the Company to significant risk arising from mortality or morbidity are referred to as investment contracts. Fixed rate annuities, market value adjusted annuities and immediate annuities without life contingencies are considered investment contracts. Deposits received for such contracts are reported as deposits to contractholder funds. Contract charge revenue for investment contracts consists of charges assessed against the contractholder account balance for contract administration and surrender charges. Contract benefits include interest credited and claims incurred in excess of the related contractholder account balance. F-7 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS Crediting rates for fixed rate annuities and interest-sensitive life contracts are adjusted periodically by the Company to reflect current market conditions. Variable annuity and variable life contracts are sold as Separate Accounts products. The assets supporting these products are legally segregated and available only to settle Separate Accounts contract obligations. Deposits received are reported as Separate Accounts liabilities. The Company's contract charge revenue for these contracts consists of charges assessed against the Separate Accounts fund balances for contract maintenance, administration, mortality, expense and surrenders. All premiums, contract charges, contract benefits and interest credited are reinsured. INCOME TAXES The income tax provision is calculated under the liability method and presented net of reinsurance. Deferred tax assets and liabilities are recorded based on the difference between the financial statement and tax bases of assets and liabilities at the enacted tax rates. Deferred income taxes arise primarily from unrealized capital gains and losses on fixed income securities carried at fair value and differences in the tax bases of investments. SEPARATE ACCOUNTS The Company issues deferred variable annuity and variable life contracts, the assets and liabilities of which are legally segregated and recorded as assets and liabilities of the Separate Accounts. Absent any contract provision wherein the Company guarantees either a minimum return or account value upon death or annuitization, variable annuity and variable life contractholders bear the investment risk that the Separate Accounts' funds may not meet their stated investment objectives. The assets of the Separate Accounts are carried at fair value. Separate Accounts liabilities represent the contractholders' claim to the related assets and are carried at the fair value of the assets. In the event that the asset value of certain contractholder accounts are projected to be below the value guaranteed by the Company, a liability is established through a charge to earnings. Investment income and realized capital gains and losses of the Separate Accounts accrue directly to the contractholders and therefore, are not included in the Company's statements of operations and comprehensive income. As discussed earlier, revenues to the Company from the Separate Accounts are recorded as contract charges. RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS The reserve for life-contingent contract benefits, which relates to immediate annuities with life contingencies and certain variable annuity contract guarantees, is computed on the basis of assumptions as to future investment yields, mortality, morbidity, terminations and expenses at the time the policy is issued. These assumptions include provisions for adverse deviation and generally vary by such characteristics as type of coverage, year of issue and policy duration. Detailed reserve assumptions and reserve interest rates are outlined in Note 7. CONTRACTHOLDER FUNDS Contractholder funds arise from the issuance of contracts that include an investment component, including most fixed annuities, interest-sensitive life policies and certain investment contracts. Deposits received are recorded as interest-bearing liabilities. Contractholder funds are equal to deposits received and interest credited to the benefit of the contractholder less withdrawals, mortality charges and administrative expenses. Detailed information on crediting rates and surrender and withdrawal protection on contractholder funds are outlined in Note 7. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. F-8 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS 3. RELATED PARTY TRANSACTIONS REINSURANCE The Company has reinsurance agreements whereby substantially all premiums, contract charges, credited interest, policy benefits and certain expenses are ceded to ALIC and reflected net of such reinsurance in the statements of operations and comprehensive income. Reinsurance recoverable and the related reserve for life-contingent contract benefits and contracholder funds are reported separately in the statements of financial position. The Company continues to have primary liability as the direct insurer for risks reinsured. Investment income earned on the assets which support contractholder funds and the reserve for life-contingent contract benefits is not included in the Company's financial statements as those assets are owned and managed under the terms of the reinsurance agreements. The following table summarizes amounts that were ceded to ALIC under reinsurance agreements.
YEAR ENDED DECEMBER 31, 2000 1999 1998 -------- -------- -------- Premiums $ 289 $ 2,966 $ 2,528 Contract charges 124,250 118,290 102,218 Credited interest, policy benefits, and certain expenses 224,265 222,513 217,428
BUSINESS OPERATIONS The Company utilizes services provided by AIC and ALIC and business facilities owned or leased, and operated by AIC in conducting its business activities. The Company reimburses AIC and ALIC for the operating expenses incurred on behalf of the Company. The Company is charged for the cost of these operating expenses based on the level of services provided. Operating expenses, including compensation and retirement and other benefit programs, allocated to the Company were $22,026, $33,892 and $26,230 in 2000, 1999 and 1998, respectively. Of these costs, the Company retains investment related expenses. All other costs are ceded to ALIC under reinsurance agreements. 4. EXCLUSIVE DISTRIBUTION AGREEMENT The Company has a strategic alliance with Dean Witter to develop, market and distribute proprietary savings and life insurance products through Morgan Stanley Dean Witter Financial Advisors. Affiliates of Dean Witter are the investment managers for the Morgan Stanley Dean Witter Variable Investment Series and the Universal Institutional Funds, Inc., the funds in which certain assets of the Separate Accounts products are invested. Under the terms of the alliance, the Company has agreed to use Dean Witter as an exclusive distribution channel for the Company's products. In addition to the Company's products, Dean Witter markets other products that compete with those of the Company. Pursuant to the alliance agreement, Dean Witter provides approximately half of the statutory capital necessary to maintain these products on the Company's books through loans to a subsidiary of AIC. AIC unconditionally guarantees the repayment of these loans. The Company shares approximately half the net profits with Dean Witter on contracts written under the alliance. The strategic alliance is cancelable for new business by either party by giving 30 days written notice, however, the Company believes the benefits derived by Dean Witter will preserve the alliance. F-9 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS 5. INVESTMENTS FAIR VALUES The amortized cost, gross unrealized gains and losses, and fair value for fixed income securities are as follows:
GROSS UNREALIZED AT DECEMBER 31, AMORTIZED ------------------- FAIR 2000 COST GAINS LOSSES VALUE ---- --------- -------- -------- -------- U.S. government and agencies $10,778 $1,193 $ -- $11,971 Municipal 1,501 26 (38) 1,489 Corporate 59,449 656 (720) 59,385 Mortgage-backed securities 19,413 958 (186) 20,185 ------- ------ ------- ------- Total fixed income securities $91,141 $2,833 $ (944) $93,030 ======= ====== ======= ======= At December 31, 1999 U.S. government and agencies $ 8,660 $ 131 $ (57) $ 8,734 Municipal 1,155 6 (108) 1,053 Corporate 61,049 26 (2,541) 58,534 Mortgage-backed securities 18,341 822 (486) 18,677 ------- ------ ------- ------- Total fixed income securities $89,205 $ 985 $(3,192) $86,998 ======= ====== ======= =======
SCHEDULED MATURITIES The scheduled maturities for fixed income securities are as follows at December 31, 2000:
AMORTIZED FAIR COST VALUE --------- -------- Due in one year or less $ 454 $ 456 Due after one year through five years 31,914 32,461 Due after five years through ten years 31,618 31,119 Due after ten years 7,742 8,809 ------- ------- 71,728 72,845 Mortgage-backed securities 19,413 20,185 ------- ------- Total $91,141 $93,030 ======= =======
Actual maturities may differ from those scheduled as a result of prepayments by the issuers. NET INVESTMENT INCOME
YEAR ENDED DECEMBER 31, 2000 1999 1998 ----------------------- -------- -------- -------- Fixed income securities $6,635 $5,881 $5,616 Short-term investments 249 261 190 ------ ------ ------ Investment income, before expense 6,884 6,142 5,806 Investment expense 82 132 115 ------ ------ ------ Net investment income $6,802 $6,010 $5,691 ====== ====== ======
F-10 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS REALIZED CAPITAL GAINS AND LOSSES, AFTER TAX
YEAR ENDED DECEMBER 31, 2000 1999 1998 ----------------------- -------- -------- -------- Fixed income securities $(230) $ 510 $ 2 ----- ----- --- Realized capital gains and losses (230) 510 2 Income taxes 80 (178) (1) ----- ----- --- Realized capital gains and losses, after tax $(150) $ 332 $ 1 ===== ===== ===
Excluding calls and prepayments, gross gains of $78 and $629 were realized on sales of fixed income securities during 2000 and 1999, respectively and gross losses of $308, $119 and $9 were realized on sales of fixed income securities during 2000, 1999 and 1998, respectively. There were no gross gains realized on sales of fixed income securities during 1998. UNREALIZED NET CAPITAL GAINS Unrealized net capital gains on fixed income securities included in shareholder's equity at December 31, 2000 are as follows:
GROSS COST/ UNREALIZED UNREALIZED AMORTIZED FAIR ------------------- NET COST VALUE GAINS LOSSES GAINS --------- -------- -------- -------- ---------- Fixed income securities $91,141 $93,030 $ 2,833 $ (944) $1,889 ======= ======= ======= ======= Deferred income taxes (661) ------ Unrealized net capital gains $1,228 ======
CHANGE IN UNREALIZED NET CAPITAL GAINS AND LOSSES
YEAR ENDED DECEMBER 31, 2000 1999 1998 ----------------------- -------- -------- -------- Fixed income securities $ 4,096 $(7,387) $ 1,269 Deferred income taxes (1,433) 2,585 (444) ------- ------- ------- Increase (decrease) in unrealized net capital gains and losses $ 2,663 $(4,802) $ 825 ======= ======= =======
SECURITIES ON DEPOSIT At December 31, 2000, fixed income securities with a carrying value of $8,939 were on deposit with regulatory authorities as required by law. F-11 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS 6. FINANCIAL INSTRUMENTS In the normal course of business, the Company invests in various financial assets and incurs various financial liabilities. The fair value estimates of financial instruments presented below are not necessarily indicative of the amounts the Company might pay or receive in actual market transactions. Potential taxes and other transaction costs have not been considered in estimating fair value. The disclosures that follow do not reflect the fair value of the Company as a whole since a number of the Company's significant assets (including reinsurance recoverable) and liabilities (including interest-sensitive life insurance reserves and deferred income taxes) are not considered financial instruments and are not carried at fair value. Other assets and liabilities considered financial instruments, such as accrued investment income and cash are generally of a short-term nature. Their carrying values approximate fair value. FINANCIAL ASSETS The carrying value and fair value of financial assets at December 31, are as follows:
2000 1999 ----------------------- ----------------------- CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE ---------- ---------- ---------- ---------- Fixed income securities $ 93,030 $ 93,030 $ 86,998 $ 86,998 Short-term 3,859 3,859 3,170 3,170 Separate Accounts 7,614,673 7,614,673 8,211,996 8,211,996
Fair values for fixed income securities are based on quoted market prices where available. Non-quoted securities are valued based on discounted cash flows using current interest rates for similar securities. Short-term investments are highly liquid investments with maturities of less than one year whose carrying value are deemed to approximate fair value. Separate Accounts assets are carried in the statements of financial position at fair value based on quoted market prices. FINANCIAL LIABILITIES The carrying value and fair value of financial liabilities at December 31, are as follows:
2000 1999 ----------------------- ----------------------- CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE ---------- ---------- ---------- ---------- Contractholder funds on investment contracts $1,652,039 $1,644,231 $1,735,843 $1,675,910 Separate Accounts 7,614,673 7,614,673 8,211,996 8,211,996
The fair value of contractholder funds on investment contracts is based on the terms of the underlying contracts. Investment contracts with no stated maturities (single premium and flexible premium deferred annuities) are valued at the account balance less surrender charges. The fair value of immediate annuities and annuities without life contingencies with fixed terms is estimated using discounted cash flow calculations based on interest rates currently offered for contracts with similar terms and durations. Separate Accounts liabilities are carried at the fair value of the underlying assets. F-12 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS 7. RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS AND CONTRACTHOLDER FUNDS At December 31, the Reserve for life-contingent contract benefits consists of the following:
2000 1999 -------- -------- Immediate annuities: Structured settlement annuities $108,441 $109,907 Other immediate annuities 40,670 40,680 -------- -------- Total Reserve for life-contingent contract benefits $149,111 $150,587 ======== ========
The assumptions for mortality generally utilized in calculating reserves include, the U.S. population with projected calendar year improvements and age setbacks for impaired lives for structured settlement annuities; and the 1983 group annuity mortality table for other immediate annuities. Interest rate assumptions vary from 3.5% to 10.0% for immediate annuities. Other estimation methods used include the present value of contractually fixed future benefits for structured settlement annuities and other immediate annuities. Premium deficiency reserves are established, if necessary, for the structured settlement annuity business, to the extent the unrealized gains on fixed income securities would result in a premium deficiency had those gains actually been realized. The Company did not have a premium deficiency reserve at December 31, 2000 and 1999. At December 31, Contractholder funds consists of the following:
2000 1999 ---------- ---------- Interest-sensitive life $ 171,192 $ 173,867 Fixed annuities: Immediate annuities 66,051 78,197 Deferred annuities 1,588,819 1,619,869 ---------- ---------- Total Contractholder funds $1,826,062 $1,871,933 ========== ==========
Contractholder funds are equal to deposits received and interest credited to the benefit of the contractholder less withdrawals, mortality charges and administrative expenses. Interest rates credited range from 5.8% to 6.5% for interest-sensitive life contracts; 3.5% to 10.2% for immediate annuities and 4.3% to 7.3% for deferred annuities. Withdrawal and surrender charge protection includes: i) for interest-sensitive life, either a percentage of account balance or dollar amount grading off generally over 20 years; and, ii) for deferred annuities not subject to a market value adjustment, either a declining or a level percentage charge generally over nine years or less. Approximately 44.4% of deferred annuities are subject to a market value adjustment. 8. COMMITMENTS AND CONTINGENT LIABILITIES REGULATION AND LEGAL PROCEEDINGS The Company's business is subject to the effects of a changing social, economic and regulatory environment. Recent public and regulatory initiatives have varied and have included employee benefit regulations, removal of barriers preventing banks from engaging in the securities and insurance business, tax law changes affecting the taxation of insurance companies, the tax treatment of insurance products and its impact on the relative desirability of various personal investment vehicles, and proposed legislation to prohibit the use of gender in determining insurance rates and benefits. The ultimate changes and eventual effects, if any, of these initiatives are uncertain. In the normal course of its business, the Company is involved in pending and threatened litigation and regulatory actions in which claims for monetary damages are asserted. At this time, based on their present status, it is in the opinion of management, that the ultimate liability, if any, in one or more of these actions in excess of amounts currently reserved is not expected to have a material effect on the results of operations, liquidity or financial position of the Company. F-13 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS GUARANTY FUNDS Under state insurance guaranty fund laws, insurers doing business in a state can be assessed, up to prescribed limits, for certain obligations of insolvent insurance companies to policyholders and claimants. The Company's expenses related to these funds are immaterial and are ceded to ALIC under reinsurance agreements. MARKETING AND COMPLIANCE ISSUES Companies operating in the insurance and financial services markets have come under the scrutiny of regulators with respect to market conduct and compliance issues. Under certain circumstances, companies have been held responsible for providing incomplete or misleading sales materials and for replacing existing policies with policies that were less advantageous to the policyholder. The Company monitors its sales materials and enforces compliance procedures to mitigate exposure to potential litigation. The Company is a member of the Insurance Marketplace Standards Association, an organization that advocates ethical market conduct. 9. INCOME TAXES The Company joins the Corporation and its other eligible domestic subsidiaries (the "Allstate Group") in the filing of a consolidated federal income tax return and is party to a federal income tax allocation agreement (the "Allstate Tax Sharing Agreement"). Under the Allstate Tax Sharing Agreement, the Company pays to or receives from the Corporation the amount, if any, by which the Allstate Group's federal income tax liability is affected by virtue of inclusion of the Company in the consolidated federal income tax return. The Company has also entered into a supplemental tax sharing agreement with respect to reinsurance ceded to ALIC to allocate to ALIC the tax consequences of such reinsurance. Effectively, these agreements result in the Company's annual income tax provision being computed as if the Company filed a separate return, as adjusted for the reinsurance ceded to ALIC. F-14 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS Prior to June 30, 1995, the Corporation was a subsidiary of Sears Roebuck & Co. ("Sears") and, with its eligible domestic subsidiaries, was included in the Sears consolidated federal income tax return and federal income tax allocation agreement. Effective June 30, 1995, the Corporation and Sears entered into a new tax sharing agreement, which governs their respective rights and obligations with respect to federal income taxes for all periods during which the Corporation was a subsidiary of Sears, including the treatment of audits of tax returns for such periods. The Internal Revenue Service ("IRS") has completed its review of the Allstate Group's federal income tax returns through the 1993 tax year. Any adjustments that may result from IRS examinations of tax returns are not expected to have a material impact on the financial position, liquidity or results of operations of the Company. The components of the deferred income tax assets and liabilities at December 31, are as follows:
2000 1999 -------- -------- DEFERRED ASSETS Unrealized net capital losses $ -- $ 772 ------- ------- Total deferred assets -- 772 DEFERRED LIABILITIES Difference in tax bases of investments (1,618) (1,518) Unrealized net capital gains (661) -- ------- ------- Total deferred liabilities (2,279) (1,518) ------- ------- Net deferred liability $(2,279) $ (746) ======= =======
The components of income tax expense for the year ended December 31, are as follows:
2000 1999 1998 -------- -------- -------- Current $2,193 $2,249 $1,797 Deferred 100 15 198 ------ ------ ------ Total income tax expense $2,293 $2,264 $1,995 ====== ====== ======
The Company paid income taxes of $2,286, $1,908 and $129 in 2000, 1999 and 1998, respectively. A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations for the year ended December 31, is as follows:
2000 1999 1998 -------- -------- -------- Statutory federal income tax rate 35.0% 35.0% 35.0% Tax-exempt income (0.1) (0.1) (0.2) Other -- (0.2) 0.2 ---- ---- ---- Effective income tax rate 34.9% 34.7% 35.0% ==== ==== ====
F-15 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS Prior to January 1, 1984, the Company was entitled to exclude certain amounts from taxable income and accumulate such amounts in a "policyholder surplus" account. The balance in this account at December 31, 2000, approximately $16, will result in federal income taxes payable of $6 if distributed by the Company. No provision for taxes has been made as the Company has no plan to distribute amounts from this account. No further additions to the account have been permitted since 1983. 10. STATUTORY FINANCIAL INFORMATION The Company's statutory capital and surplus was $84,335 and $83,746 at December 31, 2000 and 1999, respectively. The Company's statutory net income was $4,893, $4,840 and $3,518 for the years ended December 31, 2000, 1999 and 1998, respectively. PERMITTED STATUTORY ACCOUNTING PRACTICES The Company prepares its statutory financial statements in accordance with accounting practices prescribed or permitted by the Arizona Department of Insurance. Prescribed statutory accounting practices include a variety of publications of the National Association of Insurance Commissioners ("NAIC"), as well as state laws, regulations and general administrative rules. Permitted statutory accounting practices encompass all accounting practices not so prescribed. The Company does not follow any permitted statutory accounting practices that have a significant impact on statutory surplus or statutory net income. The NAIC has approved a January 1, 2001 implementation date for newly developed statutory accounting principles ("codification"). The Company's state of domicile, Arizona, has passed legislation revising various statutory accounting requirements to conform to codification. These requirements will not have a material impact on the statutory surplus of the Company. The NAIC has installed a formal maintenance process to develop and propose new guidance, as well as on- going clarification and interpretation of issues. The impact of any future changes will be recorded as they are approved by the NAIC. DIVIDENDS The ability of the Company to pay dividends is dependent on business conditions, income, cash requirements of the Company and other relevant factors. The payment of shareholder dividends by the Company without the prior approval of the state insurance regulator is limited to formula amounts based on net income and capital and surplus, determined in accordance with statutory accounting practices, as well as the timing and amount of dividends paid in the preceding twelve months. On December 28, 2000, the Company paid a cash dividend of $4.0 million to ALIC. The maximum amount of dividends that the Company can distribute during 2001 without prior approval of the Arizona Department of Insurance is $4,893. F-16 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS RISKED-BASED CAPITAL The NAIC has a standard for assessing the solvency of insurance companies, which is referred to as risk-based capital ("RBC"). The requirement consists of a formula for determining each insurer's RBC and a model law specifying regulatory actions if an insurer's RBC falls below specified levels. The RBC formula for life insurance companies establishes capital requirements relating to insurance, business, asset and interest rate risks. At December 31, 2000, RBC for the Company was significantly above levels that would require regulatory action. 11. OTHER COMPREHENSIVE INCOME The components of other comprehensive income on a pretax and after-tax basis for the year ended December 31, are as follows:
2000 1999 1998 ------------------------------- ------------------------------- ------------------------------- PRETAX TAX AFTER-TAX PRETAX TAX AFTER-TAX PRETAX TAX AFTER-TAX -------- -------- --------- -------- -------- --------- -------- -------- --------- UNREALIZED CAPITAL GAINS AND LOSSES: - ---------------------------- Unrealized holding gains (losses) arising during the period $3,843 $(1,344) $2,499 $(6,877) $2,407 $(4,470) $1,271 $(445) $826 Less: reclassification adjustments (253) 89 (164) 510 (178) 332 2 (1) 1 ------ ------- ------ ------- ------ ------- ------ ----- ---- Unrealized net capital gains (losses) 4,096 (1,433) 2,663 (7,387) 2,585 (4,802) 1,269 (444) 825 ------ ------- ------ ------- ------ ------- ------ ----- ---- Other comprehensive income (loss) $4,096 $(1,433) $2,663 $(7,387) $2,585 $(4,802) $1,269 $(444) $825 ====== ======= ====== ======= ====== ======= ====== ===== ====
F-17 NORTHBROOK LIFE INSURANCE COMPANY SCHEDULE IV--REINSURANCE ($ IN THOUSANDS)
GROSS NET AMOUNT CEDED AMOUNT -------- -------- -------- YEAR ENDED DECEMBER 31, 2000 Life insurance in force..................................... $441,073 $441,073 $ -- ======== ======== ======== Premiums and contract charges: Life and annuities........................................ $124,621 $124,621 $ -- ======== ======== ========
GROSS NET AMOUNT CEDED AMOUNT -------- -------- -------- YEAR ENDED DECEMBER 31, 1999 Life insurance in force..................................... $474,824 $474,824 $ -- ======== ======== ======== Premiums and contract charges: Life and annuities........................................ $121,351 $121,351 $ -- ======== ======== ========
GROSS NET AMOUNT CEDED AMOUNT -------- -------- -------- YEAR ENDED DECEMBER 31, 1998 Life insurance in force..................................... $494,256 $494,256 $ -- ======== ======== ======== Premiums and contract charges: Life and annuities........................................ $104,746 $104,746 $ -- ======== ======== ========
F-18 ------------------------------------------------------------------- NORTHBROOK VARIABLE ANNUITY ACCOUNT II FINANCIAL STATEMENTS AS OF DECEMBER 31, 2000 AND FOR THE PERIODS ENDED DECEMBER 31, 2000 AND DECEMBER 31, 1999, AND INDEPENDENT AUDITORS' REPORT INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholder of Northbrook Life Insurance Company: We have audited the accompanying statement of net assets of Northbrook Variable Annuity Account II (the "Account") as of December 31, 2000 (including the assets of each of the individual sub-accounts which comprise the Account as disclosed in Note 1), the related statements of operations for the period then ended and the statements of changes in net assets for each of the periods in the two year period then ended for each of the individual sub-accounts which comprise the Account. These financial statements are the responsibility of management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at December 31, 2000 by correspondence with the Account's custodians. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Northbrook Variable Annuity Account II as of December 31, 2000 (including the assets of each of the individual sub-accounts which comprise the Account), the results of operations for each of the individual sub-accounts for the period then ended and the changes in their net assets for each of the periods in the two year period then ended in conformity with accounting principles generally accepted in the United States of America. /s/ Deloitte & Touche LLP Chicago, Illinois March 16, 2001 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENT OF NET ASSETS DECEMBER 31, 2000 - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Allocation to Sub-Accounts investing in the Morgan Stanley Dean Witter Variable Investment Series: Aggressive Equity, 9,324,197 shares (cost $137,973,999) $ 133,429,256 Capital Growth, 8,376,439 shares (cost $154,649,655) 168,031,371 Competitive Edge, "Best Ideas", 6,501,703 shares (cost $69,126,775) 66,187,323 Dividend Growth, 99,725,922 shares (cost $2,021,362,239) 1,446,025,885 Equity, 42,297,703 shares (cost $1,498,425,486) 1,677,949,912 European Growth, 18,555,920 shares (cost $457,882,241) 470,763,685 Global Dividend Growth, 27,475,948 shares (cost $347,817,219) 349,768,829 High Yield, 48,733,748 shares (cost $252,940,759) 118,423,004 Income Builder, 5,232,788 shares (cost $59,586,492) 56,828,070 Information, 270,570 shares (cost $2,679,453) 2,519,002 Money Market, 329,076,061 shares (cost $329,076,061) 329,076,061 Pacific Growth, 10,506,071 shares (cost $68,708,789) 58,413,757 Quality Income Plus, 36,118,616 shares (cost $380,339,700) 369,132,239 S&P 500 Index, 16,583,164 shares (cost $198,782,618) 199,827,129 Short-Term Bond, 634,713 shares (cost $6,296,134) 6,321,744 Strategist, 38,001,657 shares (cost $565,791,144) 633,107,612 Utilities, 23,361,628 shares (cost $391,212,111) 506,480,064 Allocation to Sub-Accounts investing in The Universal Institutional Funds, Inc. (a): Emerging Markets Equity, 2,583,089 shares (cost $27,026,493) 18,314,101 Equity Growth, 6,498,999 shares (cost $121,248,987) 108,923,229 International Magnum, 1,740,292 shares (cost $21,659,380) 20,500,642 Mid Cap Value, 529,126 shares (cost $8,657,831) 7,963,341 U.S. Real Estate, 1,417,626 shares (cost $15,219,889) 16,316,872 Allocation to Sub-Accounts investing in the Van Kampen Life Investment Trust: LIT Emerging Growth, 6,758,613 shares (cost $305,440,259) 280,076,934 Allocation to Sub-Accounts investing in the AIM Variable Insurance Funds: AIM V.I. Capital Appreciation, 460,280 shares (cost $17,187,336) 14,195,037 AIM V.I. Growth, 359,847 shares (cost $11,189,259) 8,931,397 AIM V.I. Value, 1,109,110 shares (cost $35,005,920) 30,289,801 Allocation to Sub-Accounts investing in the Alliance Variable Product Series Fund: Alliance Growth, 381,478 shares (cost $10,970,733) 9,533,140 Alliance Growth & Income, 1,155,922 shares (cost $25,976,933) 26,655,557 Alliance Premier Growth, 1,152,794 shares (cost $44,487,129) 36,808,714
(a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. See notes to financial statements. 2 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENT OF NET ASSETS (CONTINUED) DECEMBER 31, 2000 - ----------------------------------------------------------------------------------------------------------------------------------- ASSETS Allocation to Sub-Accounts investing in the Putnam Variable Trust: Growth & Income, 389,078 shares (cost $9,662,848) $ 10,022,645 International Growth, 1,379,868 shares (cost $25,129,280) 24,382,273 Voyager, 530,373 shares (cost $30,071,462) 25,797,343 Allocation to Sub-Accounts investing in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares): Aggressive Equity, 934,261 shares (cost $14,251,780) 13,350,585 Capital Growth, 176,088 shares (cost $3,665,836) 3,527,050 Competitive Edge, "Best Ideas", 459,255 shares (cost $5,233,332) 4,666,032 Dividend Growth, 1,317,242 shares (cost $18,070,467) 19,086,840 Equity, 803,447 shares (cost $34,586,978) 31,864,714 European Growth, 417,351 shares (cost $10,818,291) 10,571,497 Global Dividend Growth, 173,972 shares (cost $2,137,828) 2,211,184 High Yield, 799,540 shares (cost $2,680,762) 1,942,883 Income Builder, 88,914 shares (cost $962,058) 964,721 Information, 205,693 shares (cost $2,024,764) 1,915,004 Money Market, 13,812,844 shares (cost $13,812,844) 13,812,844 Pacific Growth, 131,096 shares (cost $925,987) 728,895 Quality Income Plus, 506,767 shares (cost $5,081,703) 5,174,088 S&P 500 Index, 1,057,247 shares (cost $13,823,841) 12,729,255 Short-Term Bond, 143,718 shares (cost $1,428,531) 1,429,993 Strategist, 1,402,350 shares (cost $24,122,392) 23,349,119 Utilities, 879,210 shares (cost $19,263,900) 19,061,271 ----------------- Total Assets 7,397,381,944 LIABILITIES Payable to Northbrook Life Insurance Company: Accrued contract maintenance charges 1,601,225 ----------------- Net Assets $ 7,395,780,719 =================
See notes to financial statements. 3 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ------------------------------------------------------------------------------ Competitive Aggressive Capital Edge, Dividend Equity Growth "Best Ideas" Growth Equity -------------- ------------- -------------- -------------- --------------- NET INVESTMENT INCOME (LOSS) Dividends $ 47,575 $ 29,086,812 $ 299,232 $362,534,374 $ 297,648,729 Charges from Northbrook Life Insurance Company: Mortality and expense risk (1,517,851) (2,241,359) (976,358) (19,528,740) (24,911,486) Administrative expense (111,337) (171,290) (71,998) (1,491,480) (1,885,727) ------------- ------------ ----------- ------------ ------------- Net investment income (loss) (1,581,613) 26,674,163 (749,124) 341,514,154 270,851,516 -------------- ------------ ----------- ------------ ------------- REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 23,121,158 28,138,618 11,603,729 529,947,039 191,449,587 Cost of investments sold 22,734,007 22,751,087 10,814,175 321,944,807 142,485,156 -------------- ------------ ----------- ------------ ------------- Net realized gains (losses) 387,151 5,387,531 789,554 208,002,232 48,964,431 -------------- ------------ ----------- ------------ ------------- Change in unrealized gains (losses) (11,134,118) (32,870,081) (14,724,894) (532,890,671) (594,936,907) -------------- ------------ ----------- ------------ ------------- Net gains (losses) on investments (10,746,967) (27,482,550) (13,935,340) (324,888,439) (545,972,476) -------------- ------------ ----------- ------------ ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $(12,328,580) $ (808,387) $(14,684,464) $ 16,625,715 $(275,120,960) ============== ============ ============ ============ =============
See notes to financial statements. 4 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ------------------------------------------------------------------------------- Global European Dividend High Income Growth Growth Yield Builder Information (d) -------------- -------------- -------------- -------------- --------------- NET INVESTMENT INCOME (LOSS) Dividends $ 81,559,286 $ 38,418,888 $ 34,828,332 $ 3,300,354 $ - Charges from Northbrook Life Insurance Company: Mortality and expense risk (6,752,112) (5,057,987) (2,631,531) (843,085) (3,058) Administrative expense (514,410) (387,407) (200,584) (63,198) (218) ------------ ------------ ------------ ------------ ------------ Net investment income (loss) 74,292,764 32,973,494 31,996,217 2,394,071 (3,276) ------------ ------------ ------------ ------------ ------------- REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 269,468,966 126,228,317 97,696,615 25,465,332 121,973 Cost of investments sold 226,110,015 124,018,182 146,727,240 26,747,744 136,773 ------------ ------------ ------------ ------------ ------------ Net realized gains (losses) 43,358,951 2,210,135 (49,030,625) (1,282,412) (14,800) ------------ ------------ ------------ ------------ ------------ Change in unrealized gains (losses) (149,231,476) (57,816,199) (47,984,362) (2,694,441) (160,451) ------------ ------------ ------------ ------------ ------------ Net gains (losses) on investments (105,872,525) (55,606,064) (97,014,987) (3,976,853) (175,251) ------------ ------------ ------------ ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $(31,579,761) $(22,632,570) $(65,018,770) $ (1,582,782) $ (178,527) ============ ============ ============== ============ ============
(d) For the Period Beginning November 6, 2000 and Ended December 31, 2000 See notes to financial statements. 5 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ------------------------------------------------------------------------------- Quality Money Pacific Income S&P 500 Short-Term Market Growth Plus Index Bond -------------- --------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) Dividends $ 20,547,459 $ 1,406,029 $ 25,901,025 $ 2,124,368 $ 251,924 Charges from Northbrook Life Insurance Company: Mortality and expense risk (4,612,431) (1,224,475) (4,829,415) (2,793,746) (67,831) Administrative expense (351,214) (92,705) (373,780) (204,891) (5,015) ------------ ------------- ------------ ------------ ------------ Net investment income (loss) 15,583,814 88,849 20,697,830 (874,269) 179,078 ------------ ------------- ------------ ------------ ------------ REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 924,460,138 367,859,674 119,060,101 24,211,104 3,986,498 Cost of investments sold 924,460,138 372,581,665 127,836,141 22,349,734 3,984,090 ------------ ------------- ------------ ------------ ------------ Net realized gains (losses) - (4,721,991) (8,776,040) 1,861,370 2,408 ------------ ------------- ------------ ------------ ------------ Change in unrealized gains (losses) - (25,754,810) 21,690,015 (23,889,850) 44,678 ------------ ------------- ------------ ------------ ------------ Net gains (losses) on investments - (30,476,801) 12,913,975 (22,028,480) 47,086 ------------ ------------- ------------ ------------ ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 15,583,814 $ (30,387,952) $ 33,611,805 $(22,902,749) $ 226,164 ============ ============= ============ ============ ============
See notes to financial statements. 6 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment The Universal Institutional Series Sub-Accounts Funds, Inc. Sub-Accounts (a) ------------------------------- ---------------------------------------------- Emerging Markets Equity International Strategist Utilities Equity Growth Magnum -------------- --------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) Dividends $ 94,362,198 $ 42,191,530 $ 3,202,487 $ 7,112,755 $ 630,686 Charges from Northbrook Life Insurance Company: Mortality and expense risk (8,546,307) (6,756,708) (381,217) (1,418,665) (243,948) Administrative expense (652,796) (521,802) (27,571) (104,200) (17,678) ------------ ------------- ------------ ------------ ----------- Net investment income (loss) 85,163,095 34,913,020 2,793,699 5,589,890 369,060 ------------ ------------- ------------ ------------ ----------- REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 88,870,638 85,288,040 114,529,084 22,570,885 37,961,558 Cost of investments sold 70,820,948 58,514,330 115,643,105 20,646,110 38,203,383 ------------ ------------- ------------ ------------ ----------- Net realized gains (losses) 18,049,690 26,773,710 (1,114,021) 1,924,775 (241,825) ------------ ------------- ------------ ------------ ----------- Change in unrealized gains (losses) (101,361,897) (53,017,599) (13,971,580) (26,639,061) (2,386,683) ------------ ------------- ------------ ------------ ----------- Net gains (losses) on investments (83,312,207) (26,243,889) (15,085,601) (24,714,286) (2,628,508) ------------ ------------- ------------ ------------ ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,850,888 $ 8,669,131 $(12,291,902) $(19,124,396) $(2,259,448) ============ ============= ============ ============ ===========
(a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. See notes to financial statements. 7 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Van Kampen The Universal Institutional Life Investment AIM Variable Insurance Funds, Inc. Sub-Accounts (a) Trust Sub-Account Funds Sub-Accounts ---------------------------- ----------------- ------------------------------- Mid Cap U.S. Real LIT Emerging AIM V.I. Capital AIM V.I. Value (e) Estate Growth Appreciation (e) Growth (e) ------------- ------------- ----------------- ---------------- ------------- NET INVESTMENT INCOME (LOSS) Dividends $ 880,361 $ 362,555 $ 620,288 $ 381,821 $ 272,516 Charges from Northbrook Life Insurance Company: Mortality and expense risk (31,192) (139,563) (3,589,992) (75,582) (46,586) Administrative expense (2,197) (10,133) (261,949) (5,440) (3,421) ----------- ----------- --------------- -------------- ----------- Net investment income (loss) 846,972 212,859 (3,231,653) 300,799 222,509 ----------- ----------- --------------- -------------- ----------- REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 11,462,434 25,388,488 60,523,851 8,462,728 4,935,760 Cost of investments sold 11,489,190 24,789,389 53,406,221 9,246,474 5,261,069 ----------- ----------- --------------- -------------- ----------- Net realized gains (losses) (26,756) 599,099 7,117,630 (783,746) (325,309) ----------- ----------- --------------- -------------- ----------- Change in unrealized gains (losses) (694,490) 1,473,607 (73,283,344) (2,992,299) (2,257,862) ----------- ----------- --------------- -------------- ----------- Net gains (losses) on investments (721,246) 2,072,706 (66,165,714) (3,776,045) (2,583,171) ----------- ----------- --------------- -------------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 125,726 $ 2,285,565 $ (69,397,367) $ (3,475,246) $(2,360,662) =========== =========== =============== ============== ===========
(a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. (e) For the Period Beginning January 31, 2000 and Ended December 31, 2000 See notes to financial statements. 8 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ AIM Variable Insurance Putnam Funds Variable Trust Sub-Accounts Alliance Variable Product Series Fund Sub-Accounts Sub-Accounts ------------ -------------------------------------------------- -------------- Alliance AIM V.I. Alliance Growth & Alliance Premier Growth & Value (e) Growth (e) Income (e) Growth (e) Income (e) ------------ ------------- ---------------- ----------------- -------------- NET INVESTMENT INCOME (LOSS) Dividends $ 1,304,111 $ 90,083 $ 103,200 $ 155,667 $ 293 Charges from Northbrook Life Insurance Company: Mortality and expense risk (158,818) (49,440) (97,725) (196,503) (31,299) Administrative expense (11,487) (3,615) (7,114) (14,244) (2,285) ----------- ----------- -------------- --------------- ------------ Net investment income (loss) 1,133,806 37,028 (1,639) (55,080) (33,291) ----------- ----------- -------------- --------------- ------------ REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 10,601,342 2,072,364 8,524,970 2,572,763 10,522,766 Cost of investments sold 11,141,220 2,317,782 8,486,425 2,669,150 10,484,701 ----------- ----------- -------------- --------------- ------------ Net realized gains (losses) (539,878) (245,418) 38,545 (96,387) 38,065 ----------- ----------- -------------- --------------- ------------ Change in unrealized gains (losses) (4,716,119) (1,437,593) 678,624 (7,678,415) 359,797 ----------- ----------- -------------- --------------- ------------ Net gains (losses) on investments (5,255,997) (1,683,011) 717,169 (7,774,802) 397,862 ----------- ----------- -------------- --------------- ------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $(4,122,191) $(1,645,983) $ 715,530 $ (7,829,882) $ 364,571 =========== =========== ============== =============== ============
(e) For the Period Beginning January 31, 2000 and Ended December 31, 2000 See notes to financial statements. 9 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Putnam Variable Morgan Stanley Dean Witter Variable Investment Trust Sub-Accounts Series (Class Y Shares) Sub-Accounts ---------------------------- -------------------------------------------------- Competitive International Aggressive Capital Edge, Growth (e) Voyager (e) Equity (f) Growth (f) "Best Ideas" (f) ------------- ------------- --------------- --------------- ---------------- NET INVESTMENT INCOME (LOSS) Dividends $ 15,742 $ 7,042 $ 496 $ 99,461 $ 2,321 Charges from Northbrook Life Insurance Company: Mortality and expense risk (118,902) (140,678) (58,560) (59,229) (21,589) Administrative expense (8,768) (10,126) (3,903) (3,552) (1,442) ----------- ----------- ------------- ------------- -------------- Net investment income (loss) (111,928) (143,762) (61,967) 36,680 (20,710) ----------- ----------- ------------- ------------- -------------- REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 33,741,385 5,601,893 691,604 226,527 505,600 Cost of investments sold 34,091,072 5,798,454 688,205 245,073 514,368 ----------- ----------- ------------- ------------- -------------- Net realized gains (losses) (349,687) (196,561) 3,399 (18,546) (8,768) ----------- ----------- ------------- ------------- -------------- Change in unrealized gains (losses) (747,007) (4,274,119) (901,195) (138,786) (567,300) ----------- ----------- ------------- ------------- -------------- Net gains (losses) on investments (1,096,694) (4,470,680) (897,796) (157,332) (576,068) ----------- ----------- ------------- ------------- -------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $(1,208,622) $(4,614,442) $ (959,763) $ (120,652) $ (596,778) =========== =========== ============= ============= ==============
(e) For the Period Beginning January 31, 2000 and Ended December 31, 2000 (f) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements. 10 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts ----------------------------------------------------------------------------------- Global Dividend European Dividend High Growth (f) Equity (f) Growth (f) Growth (f) Yield (f) -------------- --------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) Dividends $ 481,819 $ 637,506 $ 218,617 $ 20,557 $ 181,215 Charges from Northbrook Life Insurance Company: Mortality and expense risk (59,906) (133,322) (49,286) (8,893) (10,953) Administrative expense (3,972) (9,156) (3,296) (601) (738) ------------ ------------- -------------- -------------- ----------- Net investment income (loss) 417,941 495,028 166,035 11,063 169,524 ------------ ------------- -------------- -------------- ----------- REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 589,481 951,176 1,205,945 119,306 301,713 Cost of investments sold 647,369 1,023,310 1,327,683 120,355 342,327 ------------ ------------- -------------- -------------- ----------- Net realized gains (losses) (57,888) (72,134) (121,738) (1,049) (40,614) ------------ ------------- -------------- -------------- ----------- Change in unrealized gains (losses) 1,016,373 (2,722,264) (246,794) 73,356 (737,879) ------------ --------------- -------------- -------------- ----------- Net gains (losses) on investments 958,485 (2,794,398) (368,532) 72,307 (778,493) ------------ --------------- -------------- -------------- ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,376,426 $ (2,299,370) $ (202,497) $ 83,370 $ (608,969) ============ =============== ============== ============== ===========
(f) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements. 11 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts ----------------------------------------------------------------------------------- Quality Income Money Pacific Income Builder (f) Information (f) Market (f) Growth (f) Plus (f) -------------- --------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) Dividends $ 17,787 $ - $ 179,443 $ 877 $ 80,813 Charges from Northbrook Life Insurance Company: Mortality and expense risk (2,728) (2,669) (44,098) (4,429) (14,130) Administrative expense (193) (172) (3,065) (282) (1,006) ------------ ------------- ------------ ------------ ----------- Net investment income (loss) 14,866 (2,841) 132,280 (3,834) 65,677 ------------ ------------- ------------ ------------ ----------- REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 88,029 29,381 6,375,457 77,163 201,333 Cost of investments sold 88,966 29,373 6,375,457 82,326 199,314 ------------ ------------- ------------ ------------ ----------- Net realized gains (losses) (937) 8 - (5,163) 2,019 ------------ ------------- ------------ ------------ ----------- Change in unrealized gains (losses) 2,663 (109,760) - (197,092) 92,385 ------------ ------------- ------------ ------------ ----------- Net gains (losses) on investments 1,726 (109,752) - (202,255) 94,404 ------------ ------------- ------------ ------------ ----------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 16,592 $ (112,593) $ 132,280 $ (206,089) $ 160,081 ============ ============= ============ ============ ============
(f) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements. 12 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2000 - ------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts ----------------------------------------------------------------------------------- S&P 500 Short-Term Index (f) Bond (f) Strategist (f) Utilities (f) -------------- -------------- ---------------- --------------- NET INVESTMENT INCOME (LOSS) Dividends $ 16,188 $ 18,008 $ 454,862 $ 195,463 Charges from Northbrook Life Insurance Company: Mortality and expense risk (58,073) (4,286) (83,435) (61,586) Administrative expense (3,954) (282) (5,604) (4,069) ------------ ------------ -------------- ------------- Net investment income (loss) (45,839) 13,440 365,823 129,808 ------------ ------------ -------------- ------------- REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 920,532 99,101 1,079,619 617,486 Cost of investments sold 933,408 98,867 1,117,985 628,231 ------------ ------------ -------------- ------------- Net realized gains (losses) (12,876) 234 (38,366) (10,745) ------------ ------------ -------------- ------------- Change in unrealized gains (losses) (1,094,586) 1,462 (773,273) (202,629) ------------ ------------ -------------- ------------- Net gains (losses) on investments (1,107,462) 1,696 (811,639) (213,374) ------------ ------------ -------------- ------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ (1,153,301) $ 15,136 $ (445,816) $ (83,566) ============ ============ ============== =============
(f) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements. 13 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ----------------------------------------------------------------------------------- Capital Aggressive Equity Appreciation (c) Capital Growth ------------------------------- ---------------- -------------------------------- 2000 1999 (b) 1999 2000 1999 --------------- -------------- ---------------- --------------- --------------- FROM OPERATIONS Net investment income (loss) $ (1,581,613) $ (89,491) $ 331,100 $ 26,674,163 $ 14,629,948 Net realized gains (losses) 387,151 562,424 45,003 5,387,531 5,021,860 Change in unrealized gains (losses) (11,134,118) 6,589,375 1,824,853 (32,870,081) 18,225,024 ------------- ------------ -------------- ------------- ------------- Change in net assets resulting from operations (12,328,580) 7,062,308 2,200,956 (808,387) 37,876,832 ------------- ------------ -------------- ------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 37,028,311 12,119,932 1,292,309 13,443,564 9,505,220 Benefit payments (900,845) (8,280) (57,970) (1,969,294) (1,116,070) Payments on termination (6,715,026) (180,619) (647,504) (18,795,015) (12,938,058) Contract maintenance charge (56,112) (8,488) 3,365 (65,736) (54,380) Transfers among the sub-accounts and with the Fixed Account - net 78,737,903 18,649,870 (34,073,925) 18,365,722 (3,891,813) ------------- ------------ -------------- ------------- ------------- Change in net assets resulting from capital transactions 108,094,231 30,572,415 (33,483,725) 10,979,241 (8,495,101) ------------- ------------ -------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS 95,765,651 37,634,723 (31,282,769) 10,170,854 29,381,731 NET ASSETS AT BEGINNING OF PERIOD 37,634,723 - 31,282,769 157,824,145 128,442,414 ------------- ------------ -------------- ------------- ------------- NET ASSETS AT END OF PERIOD $ 133,400,374 $ 37,634,723 $ - $ 167,994,999 $ 157,824,145 ============= ============ ============== ============= =============
(b) For the Period Beginning May 3, 1999 and Ended December 31, 1999 (c) As of the close of Business on March 19, 1999, the Capital Appreciation Sub-Account merged with and into the Equity Sub-Account. See notes to financial statements 14 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts -------------------------------------------------------------------- Competitive Edge, "Best Ideas" Dividend Growth -------------------------------- ---------------------------------- 2000 1999 2000 1999 --------------- --------------- ---------------- ---------------- FROM OPERATIONS Net investment income (loss) $ (749,124) $ (357,963) $ 341,514,154 $ 314,959,411 Net realized gains (losses) 789,554 668,887 208,002,232 128,696,734 Change in unrealized gains (losses) (14,724,894) 10,507,911 (532,890,671) (523,069,735) ------------- ------------- -------------- -------------- Change in net assets resulting from operations (14,684,464) 10,818,835 16,625,715 (79,413,590) ------------- ------------- -------------- -------------- FROM CAPITAL TRANSACTIONS Deposits 12,414,281 14,308,748 39,845,901 188,251,624 Benefit payments (532,011) (385,715) (22,382,755) (22,608,692) Payments on termination (4,806,290) (3,208,126) (175,477,715) (178,336,682) Contract maintenance charge (28,565) (20,818) (630,181) (827,903) Transfers among the sub-accounts and with the Fixed Account - net 14,339,473 2,656,267 (305,079,362) (100,954,098) ------------- ------------- -------------- -------------- Change in net assets resulting from capital transactions 21,386,888 13,350,356 (463,724,112) (114,475,751) ------------- ------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS 6,702,424 24,169,191 (447,098,397) (193,889,341) NET ASSETS AT BEGINNING OF PERIOD 59,470,572 35,301,381 1,892,811,278 2,086,700,619 ------------- ------------- -------------- -------------- NET ASSETS AT END OF PERIOD $ 66,172,996 $ 59,470,572 $1,445,712,881 $1,892,811,278 ============= ============= ============== ============== Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ---------------------------------------------------------------------- Equity ---------------------------------- 2000 1999 (c) ---------------- ---------------- FROM OPERATIONS Net investment income (loss) $ 270,851,516 $ 143,182,457 Net realized gains (losses) 48,964,431 20,788,533 Change in unrealized gains (losses) (594,936,907) 497,325,723 -------------- -------------- Change in net assets resulting from operations (275,120,960) 661,296,713 -------------- -------------- FROM CAPITAL TRANSACTIONS Deposits 100,705,202 167,149,976 Benefit payments (18,537,524) (11,678,201) Payments on termination (168,025,629) (109,621,629) Contract maintenance charge (661,389) (626,104) Transfers among the sub-accounts and with the Fixed Account - net 121,184,474 173,235,007 -------------- -------------- Change in net assets resulting from capital transactions 34,665,134 218,459,049 -------------- -------------- INCREASE (DECREASE) IN NET ASSETS (240,455,826) 879,755,762 NET ASSETS AT BEGINNING OF PERIOD 1,918,042,532 1,038,286,770 -------------- -------------- NET ASSETS AT END OF PERIOD $1,677,586,706 $1,918,042,532 ============== ==============
(c) As of the close of Business on March 19, 1999, the Capital Appreciation Sub-Account merged with and into the Equity Sub-Account. See notes to financial statements 15 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ------------------------------------------------------------------ European Growth Global Dividend Growth -------------------------------- -------------------------------- 2000 1999 2000 1999 --------------- --------------- --------------- --------------- FROM OPERATIONS Net investment income (loss) $ 74,292,764 $ 40,243,082 $ 32,973,494 $ 35,854,179 Net realized gains (losses) 43,358,951 32,543,061 2,210,135 9,001,583 Change in unrealized gains (losses) (149,231,476) 43,557,813 (57,816,199) 11,267,752 ------------- ------------- ------------- ------------- Change in net assets resulting from operations (31,579,761) 116,343,956 (22,632,570) 56,123,514 ------------- ------------- ------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 24,846,114 33,605,981 6,820,575 24,612,447 Benefit payments (5,830,479) (3,672,213) (4,968,693) (5,520,386) Payments on termination (54,836,408) (44,372,248) (42,189,879) (36,599,848) Contract maintenance charge (190,290) (186,281) (153,681) (198,686) Transfers among the sub-accounts and with the Fixed Account - net 2,444,524 (38,047,377) (62,748,030) (16,822,685) ------------- ------------- ------------- ------------- Change in net assets resulting from capital transactions (33,566,539) (52,672,138) (103,239,708) (34,529,158) ------------- ------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS (65,146,300) 63,671,818 (125,872,278) 21,594,356 NET ASSETS AT BEGINNING OF PERIOD 535,808,084 472,136,266 475,565,397 453,971,041 ------------- ------------- ------------- ------------- NET ASSETS AT END OF PERIOD $ 470,661,784 $ 535,808,084 $ 349,693,119 $ 475,565,397 ============= ============= ============= ============= Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ------------------------------------------------------------------ High Yield -------------------------------- 2000 1999 --------------- --------------- FROM OPERATIONS Net investment income (loss) $ 31,996,217 $ 38,967,620 Net realized gains (losses) (49,030,625) (31,301,303) Change in unrealized gains (losses) (47,984,362) (15,834,237) ------------- ------------- Change in net assets resulting from operations (65,018,770) (8,167,920) ------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 5,088,118 26,101,041 Benefit payments (4,283,015) (4,009,045) Payments on termination (30,396,806) (35,111,312) Contract maintenance charge (63,055) (104,889) Transfers among the sub-accounts and with the Fixed Account - net (45,613,045) (57,088,792) ------------- ------------- Change in net assets resulting from capital transactions (75,267,803) (70,212,997) ------------- ------------- INCREASE (DECREASE) IN NET ASSETS (140,286,573) (78,380,917) NET ASSETS AT BEGINNING OF PERIOD 258,683,943 337,064,860 ------------- ------------- NET ASSETS AT END OF PERIOD $ 118,397,370 $ 258,683,943 ============= =============
See notes to financial statements 16 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ----------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ------------------------------------------------------------------------------- Income Builder Information Money Market ------------------------------ ------------- -------------------------------- 2000 1999 2000 (d) 2000 1999 -------------- -------------- ------------- --------------- --------------- FROM OPERATIONS Net investment income (loss) $ 2,394,071 $ 4,500,919 $ (3,276) $ 15,583,814 $ 13,220,816 Net realized gains (losses) (1,282,412) 112,097 (14,800) - - Change in unrealized gains (losses) (2,694,441) (428,270) (160,451) - - ------------ ------------ ----------- ------------- ------------- Change in net assets resulting from operations (1,582,782) 4,184,746 (178,527) 15,583,814 13,220,816 ------------ ------------ ----------- ------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 1,613,246 7,989,151 1,097,092 47,872,330 75,959,488 Benefit payments (968,748) (1,104,145) - (15,333,949) (12,372,372) Payments on termination (5,576,539) (5,408,027) (125) (100,926,101) (112,272,629) Contract maintenance charge (24,523) (31,269) (595) (109,981) (128,006) Transfers among the sub-accounts and with the Fixed Account - net (14,824,705) (11,305,739) 1,600,612 (17,688,547) 34,266,127 ------------ ------------ ----------- ------------- ------------- Change in net assets resulting from capital transactions (19,781,269) (9,860,029) 2,696,984 (86,186,248) (14,547,392) ------------ ------------ ----------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS (21,364,051) (5,675,283) 2,518,457 (70,602,434) (1,326,576) NET ASSETS AT BEGINNING OF PERIOD 78,179,820 83,855,103 - 399,607,264 400,933,840 ------------ ------------ ----------- ------------- ------------- NET ASSETS AT END OF PERIOD $ 56,815,769 $ 78,179,820 $ 2,518,457 $ 329,004,830 $ 399,607,264 ============ ============ =========== ============= =============
(d) For the Period Beginning November 6, 2000 and Ended December 31, 2000 See notes to financial statements 17 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ----------------------------------------------------------------------------------------------------------------------- Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ------------------------------------------------------------------ Pacific Growth Quality Income Plus ------------------------------- -------------------------------- 2000 1999 2000 1999 -------------- --------------- --------------- --------------- FROM OPERATIONS Net investment income (loss) $ 88,849 $ (306,851) $ 20,697,830 $ 23,233,331 Net realized gains (losses) (4,721,991) 5,666,501 (8,776,040) (2,450,149) Change in unrealized gains (losses) (25,754,810) 34,854,630 21,690,015 (47,274,110) ------------ ------------- ------------- ------------- Change in net assets resulting from operations (30,387,952) 40,214,280 33,611,805 (26,490,928) ------------ ------------- ------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 6,138,915 12,935,903 7,876,912 29,984,131 Benefit payments (779,687) (522,120) (9,709,897) (7,891,742) Payments on termination (8,242,631) (5,927,181) (50,375,262) (52,572,327) Contract maintenance charge (28,669) (41,208) (154,638) (161,057) Transfers among the sub-accounts and with the Fixed Account - net (14,475,423) 12,162,641 (26,207,240) (24,709,758) ------------ ------------- ------------- ------------- Change in net assets resulting from capital transactions (17,387,495) 18,608,035 (78,570,125) (55,350,753) ------------ ------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS (47,775,447) 58,822,315 (44,958,320) (81,841,681) NET ASSETS AT BEGINNING OF PERIOD 106,176,560 47,354,245 414,010,657 495,852,338 ------------ ------------- ------------- ------------- NET ASSETS AT END OF PERIOD $ 58,401,113 $ 106,176,560 $ 369,052,337 $ 414,010,657 ============ ============= ============= ============= Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ------------------------------------------------------------------ S&P 500 Index -------------------------------- 2000 1999 --------------- --------------- FROM OPERATIONS Net investment income (loss) $ (874,269) $ (1,085,100) Net realized gains (losses) 1,861,370 965,551 Change in unrealized gains (losses) (23,889,850) 20,320,510 ------------- ------------- Change in net assets resulting from operations (22,902,749) 20,200,961 ------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 29,138,284 62,363,357 Benefit payments (2,917,283) (364,932) Payments on termination (17,084,143) (6,958,805) Contract maintenance charge (79,072) (52,042) Transfers among the sub-accounts and with the Fixed Account - net 36,340,948 55,622,169 ------------- ------------- Change in net assets resulting from capital transactions 45,398,734 110,609,747 ------------- ------------- INCREASE (DECREASE) IN NET ASSETS 22,495,985 130,810,708 NET ASSETS AT BEGINNING OF PERIOD 177,287,890 46,477,182 ------------- ------------- NET ASSETS AT END OF PERIOD $ 199,783,875 $ 177,287,890 ============= =============
See notes to financial statements 18 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ----------------------------------------------------------------------------------------------------------------------- Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ------------------------------------------------------------------ Short-Term Bond Strategist ----------------------------- -------------------------------- 2000 1999 (b) 2000 1999 ------------- -------------- --------------- --------------- FROM OPERATIONS Net investment income (loss) $ 179,078 $ 40,073 $ 85,163,095 $ 5,099,380 Net realized gains (losses) 2,408 (781) 18,049,690 15,031,460 Change in unrealized gains (losses) 44,678 (19,068) (101,361,897) 68,404,657 ----------- ------------ ------------- ------------- Change in net assets resulting from operations 226,164 20,224 1,850,888 88,535,497 ----------- ------------ ------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 1,300,140 930,037 27,377,665 53,336,082 Benefit payments (168,784) - (9,554,700) (7,657,772) Payments on termination (448,343) (114,564) (67,256,375) (54,083,482) Contract maintenance charge (2,476) (754) (250,462) (236,109) Transfers among the sub-accounts and with the Fixed Account - net 2,278,206 2,300,526 28,655,668 15,905,456 ----------- ------------ ------------- ------------- Change in net assets resulting from capital transactions 2,958,743 3,115,245 (21,028,204) 7,264,175 ----------- ------------ ------------- ------------- INCREASE (DECREASE) IN NET ASSETS 3,184,907 3,135,469 (19,177,316) 95,799,672 NET ASSETS AT BEGINNING OF PERIOD 3,135,469 - 652,147,887 556,348,215 ----------- ------------ ------------- ------------- NET ASSETS AT END OF PERIOD $ 6,320,376 $ 3,135,469 $ 632,970,571 $ 652,147,887 =========== ============ ============= ============= Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts ------------------------------------------------------------------ Utilities -------------------------------- 2000 1999 --------------- --------------- FROM OPERATIONS Net investment income (loss) $ 34,913,020 $ 15,985,982 Net realized gains (losses) 26,773,710 23,911,415 Change in unrealized gains (losses) (53,017,599) 14,087,560 ------------- ------------- Change in net assets resulting from operations 8,669,131 53,984,957 ------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 18,520,186 39,072,264 Benefit payments (8,048,701) (8,484,832) Payments on termination (55,510,014) (50,808,054) Contract maintenance charge (212,176) (201,221) Transfers among the sub-accounts and with the Fixed Account - net 11,594,071 (10,204,178) ------------- ------------- Change in net assets resulting from capital transactions (33,656,634) (30,626,021) ------------- ------------- INCREASE (DECREASE) IN NET ASSETS (24,987,503) 23,358,936 NET ASSETS AT BEGINNING OF PERIOD 531,357,935 507,998,999 ------------- ------------- NET ASSETS AT END OF PERIOD $ 506,370,432 $ 531,357,935 ============= =============
(b) For the Period Beginning May 3, 1999 and Ended December 31, 1999 See notes to financial statements 19 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------- The Universal Institutional Funds, Inc. Sub-Accounts (a) --------------------------------------------------------------- Emerging Markets Equity Equity Growth ------------------------------ ------------------------------- 2000 1999 2000 1999 -------------- -------------- --------------- -------------- FROM OPERATIONS Net investment income (loss) $ 2,793,699 $ (123,674) $ 5,589,890 $ 1,708,417 Net realized gains (losses) (1,114,021) 2,301,737 1,924,775 638,483 Change in unrealized gains (losses) (13,971,580) 5,429,367 (26,639,061) 12,913,775 ------------ ------------ ------------- ------------ Change in net assets resulting from operations (12,291,902) 7,607,430 (19,124,396) 15,260,675 ------------ ------------ ------------- ------------ FROM CAPITAL TRANSACTIONS Deposits 10,687,977 5,860,089 26,800,090 18,427,169 Benefit payments (264,494) (4,713) (1,101,811) (284,465) Payments on termination (1,504,909) (593,151) (7,282,991) (3,119,435) Contract maintenance charge (7,488) (6,183) (41,500) (21,923) Transfers among the sub-accounts and with the Fixed Account - net (59,472) 7,427,993 36,549,584 17,161,540 ------------ ------------ ------------- ------------ Change in net assets resulting from capital transactions 8,851,614 12,684,035 54,923,372 32,162,886 ------------ ------------ ------------- ------------ INCREASE (DECREASE) IN NET ASSETS (3,440,288) 20,291,465 35,798,976 47,423,561 NET ASSETS AT BEGINNING OF PERIOD 21,750,425 1,458,960 73,100,676 25,677,115 ------------ ------------ ------------- ------------ NET ASSETS AT END OF PERIOD $ 18,310,137 $ 21,750,425 $ 108,899,652 $ 73,100,676 ============ ============ ============= ============ The Universal Institutional Funds, Inc. Sub-Accounts (a) --------------------------------------------------------------- International Magnum ------------------------------ 2000 1999 -------------- -------------- FROM OPERATIONS Net investment income (loss) $ 369,060 $ 12,977 Net realized gains (losses) (241,825) 245,853 Change in unrealized gains (losses) (2,386,683) 1,391,382 ------------ ------------ Change in net assets resulting from operations (2,259,448) 1,650,212 ------------ ------------ FROM CAPITAL TRANSACTIONS Deposits 6,888,652 4,195,250 Benefit payments (218,924) (11,957) Payments on termination (1,086,218) (236,057) Contract maintenance charge (7,789) (3,349) Transfers among the sub-accounts and with the Fixed Account - net 5,829,986 2,293,294 ------------ ------------ Change in net assets resulting from capital transactions 11,405,707 6,237,181 ------------ ------------- INCREASE (DECREASE) IN NET ASSETS 9,146,259 7,887,393 NET ASSETS AT BEGINNING OF PERIOD 11,349,945 3,462,552 ------------ ------------- NET ASSETS AT END OF PERIOD $ 20,496,204 $ 11,349,945 ============ =============
(a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. See notes to financial statements 20 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------- The Universal Institutional Funds, Inc. Sub-Accounts (a) ---------------------------------------------------------- Mid Cap Value U.S. Real Estate ------------------- ------------------------------------- 2000 (e) 2000 1999 ------------------- ------------------ ----------------- FROM OPERATIONS Net investment income (loss) $ 846,972 $ 212,859 $ 209,474 Net realized gains (losses) (26,756) 599,099 (80,917) Change in unrealized gains (losses) (694,490) 1,473,607 (365,102) ----------------- ---------------- --------------- Change in net assets resulting from operations 125,726 2,285,565 (236,545) ----------------- ---------------- --------------- FROM CAPITAL TRANSACTIONS Deposits 5,225,576 2,199,419 2,256,539 Benefit payments (4,831) (83,181) (18,349) Payments on termination (142,447) (829,831) (219,432) Contract maintenance charge (1,966) (5,703) (1,904) Transfers among the sub-accounts and with the Fixed Account - net 2,759,559 7,508,547 1,478,675 ----------------- ---------------- --------------- Change in net assets resulting from capital transactions 7,835,891 8,789,251 3,495,529 ----------------- ---------------- --------------- INCREASE (DECREASE) IN NET ASSETS 7,961,617 11,074,816 3,258,984 NET ASSETS AT BEGINNING OF PERIOD - 5,238,524 1,979,540 ----------------- ---------------- --------------- NET ASSETS AT END OF PERIOD $ 7,961,617 $ 16,313,340 $ 5,238,524 ================= ================ =============== Van Kampen Life Investment Trust Sub-Account -------------------------------- LIT Emerging Growth -------------------------------- 2000 1999 --------------- --------------- FROM OPERATIONS Net investment income (loss) $ (3,231,653) $ (643,933) Net realized gains (losses) 7,117,630 1,246,818 Change in unrealized gains (losses) (73,283,344) 46,420,306 ------------- ------------- Change in net assets resulting from operations (69,397,367) 47,023,191 ------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 98,979,814 27,759,585 Benefit payments (1,770,332) (201,304) Payments on termination (16,299,682) (3,202,433) Contract maintenance charge (113,455) (35,203) Transfers among the sub-accounts and with the Fixed Account - net 138,452,923 49,182,955 ------------- ------------- Change in net assets resulting from capital transactions 219,249,268 73,503,600 ------------- ------------- INCREASE (DECREASE) IN NET ASSETS 149,851,901 120,526,791 NET ASSETS AT BEGINNING OF PERIOD 130,164,408 9,637,617 ------------- ------------- NET ASSETS AT END OF PERIOD $ 280,016,309 $ 130,164,408 ============= =============
(a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. (e) For the Period Beginning January 31, 2000 and Ended December 31, 2000 See notes to financial statements 21 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------- AIM Variable Insurance Funds Sub-Accounts ----------------------------------------------- AIM V.I. Capital AIM V.I. AIM V.I. Appreciation Growth Value ---------------- ------------- -------------- 2000 (e) 2000 (e) 2000 (e) ---------------- ------------- -------------- FROM OPERATIONS Net investment income (loss) $ 300,799 $ 222,509 $ 1,133,806 Net realized gains (losses) (783,746) (325,309) (539,878) Change in unrealized gains (losses) (2,992,299) (2,257,862) (4,716,119) -------------- ----------- ------------ Change in net assets resulting from operations (3,475,246) (2,360,662) (4,122,191) -------------- ----------- ------------ FROM CAPITAL TRANSACTIONS Deposits 8,831,089 6,951,807 19,428,320 Benefit payments (104,263) (70,239) (110,067) Payments on termination (277,657) (100,901) (527,967) Contract maintenance charge (4,181) (2,311) (8,468) Transfers among the sub-accounts and with the Fixed Account - net 9,222,222 4,511,770 15,623,618 -------------- ----------- ------------ Change in net assets resulting from capital transactions 17,667,210 11,290,126 34,405,436 -------------- ----------- ------------ INCREASE (DECREASE) IN NET ASSETS 14,191,964 8,929,464 30,283,245 NET ASSETS AT BEGINNING OF PERIOD - - - -------------- ----------- ------------ NET ASSETS AT END OF PERIOD $ 14,191,964 $ 8,929,464 $ 30,283,245 ============== =========== ============ Alliance Variable Product Series Fund Sub-Accounts -------------------------------------------------- Alliance Alliance Growth Alliance Growth & Income Premier Growth --------------- ---------------- --------------- 2000 (e) 2000 (e) 2000 (e) --------------- ---------------- --------------- FROM OPERATIONS Net investment income (loss) $ 37,028 $ (1,639) $ (55,080) Net realized gains (losses) (245,418) 38,545 (96,387) Change in unrealized gains (losses) (1,437,593) 678,624 (7,678,415) ------------- -------------- ------------- Change in net assets resulting from operations (1,645,983) 715,530 (7,829,882) ------------- -------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 6,020,329 8,503,685 19,474,950 Benefit payments (80,917) (126,654) (97,170) Payments on termination (234,818) (302,659) (766,535) Contract maintenance charge (2,835) (7,260) (11,185) Transfers among the sub-accounts and with the Fixed Account - net 5,475,300 17,867,145 26,030,568 ------------- -------------- ------------- Change in net assets resulting from capital transactions 11,177,059 25,934,257 44,630,628 ------------- -------------- ------------- INCREASE (DECREASE) IN NET ASSETS 9,531,076 26,649,787 36,800,746 NET ASSETS AT BEGINNING OF PERIOD - - - ------------- -------------- ------------- NET ASSETS AT END OF PERIOD $ 9,531,076 $ 26,649,787 $ 36,800,746 ============= ============== =============
(e) For the Period Beginning January 31, 2000 and Ended December 31, 2000 See notes to financial statements 22 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------- Putnam Variable Trust Sub-Accounts ---------------------------------------------- Growth & International Income Growth Voyager -------------- -------------- -------------- 2000 (e) 2000 (e) 2000 (e) -------------- -------------- -------------- FROM OPERATIONS Net investment income (loss) $ (33,291) $ (111,928) $ (143,762) Net realized gains (losses) 38,065 (349,687) (196,561) Change in unrealized gains (losses) 359,797 (747,007) (4,274,119) ------------ ------------ ------------ Change in net assets resulting from operations 364,571 (1,208,622) (4,614,442) ------------ ------------ ------------ FROM CAPITAL TRANSACTIONS Deposits 4,011,399 12,932,128 15,917,834 Benefit payments - (66,733) - Payments on termination (197,399) (422,871) (633,137) Contract maintenance charge (2,605) (6,887) (7,325) Transfers among the sub-accounts and with the Fixed Account - net 5,844,510 13,149,980 15,128,829 ------------ ------------ ------------ Change in net assets resulting from capital transactions 9,655,905 25,585,617 30,406,201 ------------ ------------ ------------ INCREASE (DECREASE) IN NET ASSETS 10,020,476 24,376,995 25,791,759 NET ASSETS AT BEGINNING OF PERIOD - - - ------------ ------------ ------------ NET ASSETS AT END OF PERIOD $ 10,020,476 $ 24,376,995 $ 25,791,759 ============ ============ ============ Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts ------------------------------------------------- Competitive Aggressive Capital Edge, Equity Growth "Best Ideas" ---------------- -------------- --------------- 2000 (f) 2000 (f) 2000 (f) ---------------- -------------- --------------- FROM OPERATIONS Net investment income (loss) $ (61,967) $ 36,680 $ (20,710) Net realized gains (losses) 3,399 (18,546) (8,768) Change in unrealized gains (losses) (901,195) (138,786) (567,300) -------------- ------------ ------------- Change in net assets resulting from operations (959,763) (120,652) (596,778) -------------- ------------ ------------- FROM CAPITAL TRANSACTIONS Deposits 13,046,167 1,840,288 5,131,055 Benefit payments (51,889) (7,387) (11,615) Payments on termination (57,611) (35,472) (10,508) Contract maintenance charge (2,890) (763) (1,010) Transfers among the sub-accounts and with the Fixed Account - net 1,373,681 1,850,273 153,878 -------------- ------------ ------------- Change in net assets resulting from capital transactions 14,307,458 3,646,939 5,261,800 -------------- ------------ ------------- INCREASE (DECREASE) IN NET ASSETS 13,347,695 3,526,287 4,665,022 NET ASSETS AT BEGINNING OF PERIOD - - - -------------- ------------ ------------- NET ASSETS AT END OF PERIOD $ 13,347,695 $ 3,526,287 $ 4,665,022 ============== ============ =============
(e) For the Period Beginning January 31, 2000 and Ended December 31, 2000 (f) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements 23 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts ----------------------------------------------------------------------------------- Global Dividend European Dividend High Income Growth Equity Growth Growth Yield Builder -------------- ------------- -------------- ------------- ------------- ----------- 2000 (f) 2000 (f) 2000 (f) 2000 (f) 2000 (f) 2000 (f) -------------- ------------- -------------- ------------- ------------- ----------- FROM OPERATIONS Net investment income (loss) $ 417,941 $ 495,028 $ 166,035 $ 11,063 $ 169,524 $ 14,866 Net realized gains (losses) (57,888) (72,134) (121,738) (1,049) (40,614) (937) Change in unrealized gains (losses) 1,016,373 (2,722,264) (246,794) 73,356 (737,879) 2,663 ------------ ----------- ------------ ----------- ----------- --------- Change in net assets resulting from operations 1,376,426 (2,299,370) (202,497) 83,370 (608,969) 16,592 ------------ ----------- ------------ ----------- ----------- --------- FROM CAPITAL TRANSACTIONS Deposits 17,370,177 31,964,349 10,744,322 2,118,591 2,468,796 914,037 Benefit payments (11,393) (37,877) (68,776) - - - Payments on termination (110,205) (193,229) (74,892) (27,365) (9,079) (2,112) Contract maintenance charge (4,132) (6,897) (2,288) (479) (421) (209) Transfers among the sub-accounts and with the Fixed Account - net 461,836 2,430,841 173,340 36,588 92,135 36,204 ------------ ----------- ------------ ----------- ----------- --------- Change in net assets resulting from capital transactions 17,706,283 34,157,187 10,771,706 2,127,335 2,551,431 947,920 ------------ ----------- ------------ ----------- ----------- --------- INCREASE (DECREASE) IN NET ASSETS 19,082,709 31,857,817 10,569,209 2,210,705 1,942,462 964,512 NET ASSETS AT BEGINNING OF PERIOD - - - - - - ------------ ----------- ------------ ----------- ----------- --------- NET ASSETS AT END OF PERIOD $ 19,082,709 $31,857,817 $ 10,569,209 $ 2,210,705 $ 1,942,462 $ 964,512 ============ =========== ============ =========== =========== =========
(f) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements 24 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts ----------------------------------------------------------------------------------- Quality Money Pacific Income S&P 500 Short-Term Information Market Growth Plus Index Bond ------------- -------------- ----------- ------------- -------------- ------------- 2000 (f) 2000 (f) 2000 (f) 2000 (f) 2000 (f) 2000 (f) ------------- -------------- ----------- ------------- -------------- ------------- FROM OPERATIONS Net investment income (loss) $ (2,841) $ 132,280 $ (3,834) $ 65,677 $ (45,839) $ 13,440 Net realized gains (losses) 8 - (5,163) 2,019 (12,876) 234 Change in unrealized gains (losses) (109,760) - (197,092) 92,385 (1,094,586) 1,462 ----------- ------------ --------- ----------- ------------ ----------- Change in net assets resulting from operations (112,593) 132,280 (206,089) 160,081 (1,153,301) 15,136 ----------- ------------ --------- ----------- ------------ ----------- FROM CAPITAL TRANSACTIONS Deposits 2,037,542 20,255,548 921,823 4,616,633 13,059,493 1,236,517 Benefit payments - - - - (72,473) - Payments on termination (1,735) (225,866) (359) (18,951) (76,724) (3,902) Contract maintenance charge (415) (2,990) (158) (1,120) (2,755) (310) Transfers among the sub-accounts and with the Fixed Account - net (8,210) (6,349,118) 13,520 416,325 972,260 182,242 ----------- ------------ --------- ----------- ------------ ----------- Change in net assets resulting from capital transactions 2,027,182 13,677,574 934,826 5,012,887 13,879,801 1,414,547 ----------- ------------ --------- ----------- ------------ ----------- INCREASE (DECREASE) IN NET ASSETS 1,914,589 13,809,854 728,737 5,172,968 12,726,500 1,429,683 NET ASSETS AT BEGINNING OF PERIOD - - - - - - ----------- ------------ --------- ----------- ------------ ----------- NET ASSETS AT END OF PERIOD $ 1,914,589 $ 13,809,854 $ 728,737 $ 5,172,968 $ 12,726,500 $ 1,429,683 =========== ============ ========= =========== ============ ===========
(f) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements 25 NORTHBROOK VARIABLE ANNUITY ACCOUNT II
STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - ------------------------------------------------------------------------------- Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts ------------------------------- Strategist Utilities -------------- -------------- 2000 (f) 2000 (f) -------------- -------------- FROM OPERATIONS Net investment income (loss) $ 365,823 $ 129,808 Net realized gains (losses) (38,366) (10,745) Change in unrealized gains (losses) (773,273) (202,629) ------------ ------------ Change in net assets resulting from operations (445,816) (83,566) ------------ ------------ FROM CAPITAL TRANSACTIONS Deposits 22,556,091 18,280,101 Benefit payments (7,531) (7,416) Payments on termination (87,319) (88,324) Contract maintenance charge (5,054) (4,126) Transfers among the sub-accounts and with the Fixed Account - net 1,333,694 960,476 ------------ ------------ Change in net assets resulting from capital transactions 23,789,881 19,140,711 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS 23,344,065 19,057,145 NET ASSETS AT BEGINNING OF PERIOD - - ------------ ------------ NET ASSETS AT END OF PERIOD $ 23,344,065 $ 19,057,145 ============ ============
(f) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements 26 NORTHBROOK VARIABLE ANNUITY ACCOUNT II NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. ORGANIZATION Northbrook Variable Annuity Account II (the "Account"), a unit investment trust registered with the Securities and Exchange Commission under the Investment Company Act of 1940, is a Separate Account of Northbrook Life Insurance Company ("Northbrook Life"). The assets of the Account are legally segregated from those of Northbrook Life. Northbrook Life is wholly owned by Allstate Life Insurance Company, a wholly owned subsidiary of Allstate Insurance Company, which is wholly owned by The Allstate Corporation. Northbrook Life issues five variable annuity contracts: the Morgan Stanley Dean Witter Variable Annuity II, the Morgan Stanley Dean Witter Variable Annuity II AssetManager, the Preferred Client Variable Annuity, the Morgan Stanley Dean Witter Variable Annuity 3, and the Morgan Stanley Dean Witter Variable Annuity 3 AssetManager (collectively the "Contracts"). The deposits of the Contracts are invested at the direction of the contractholders in the sub-accounts that comprise the Account. Absent any contract provisions wherein Northbrook Life contractually guarantees either a minimum return or account value upon death or annuitization, variable annuity contractholders bear the investment risk that the sub-accounts may not meet their stated investment objectives. The sub-accounts invest in the following underlying mutual fund portfolios (collectively the "Funds"): MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES Aggressive Equity Information Capital Growth Money Market Competitive Edge, "Best Ideas" Pacific Growth Dividend Growth Quality Income Plus Equity S&P 500 Index European Growth Short-Term Bond Global Dividend Growth Strategist High Yield Utilities Income Builder THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (PREVIOUSLY KNOWN AS MORGAN STANLEY DEAN WITTER UNIVERSAL FUNDS, INC.) Emerging Markets Equity Mid Cap Value Equity Growth U.S. Real Estate International Magnum VAN KAMPEN LIFE INVESTMENT TRUST LIT Emerging Growth AIM VARIABLE INSURANCE FUNDS AIM V.I. Capital Appreciation AIM V.I. Value AIM V.I. Growth ALLIANCE VARIABLE PRODUCT SERIES FUND Alliance Growth Alliance Premier Growth Alliance Growth & Income PUTNAM VARIABLE TRUST Growth & Income Voyager International Growth 27 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 1. ORGANIZATION (CONTINUED) MORGAN STANLEY DEAN WITTER VARIABLE INVESTMENT SERIES (CLASS Y SHARES) Aggressive Equity Information Capital Growth Money Market Competitive Edge, "Best Ideas" Pacific Growth Dividend Growth Quality Income Plus Equity S&P 500 Index European Growth Short-Term Bond Global Dividend Growth Strategist High Yield Utilities Income Builder Northbrook Life provides insurance and administrative services to the contractholders for a fee. Northbrook Life also maintains a fixed account ("Fixed Account"), to which contractholders may direct their deposits and receive a fixed rate of return. Northbrook Life has sole discretion to invest the assets of the Fixed Account, subject to applicable law. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES VALUATION OF INVESTMENTS - Investments consist of shares of the Funds and are stated at fair value based on quoted market prices. INVESTMENT INCOME - Investment income consists of dividends declared by the Funds and is recognized on the ex-dividend date. REALIZED GAINS AND LOSSES - Realized gains and losses represent the difference between the proceeds from sales of shares of the Funds by the Account and the cost of such shares, which is determined on a weighted average basis. Transactions are recorded on a trade date basis. FEDERAL INCOME TAXES - The Account intends to qualify as a segregated asset account as defined in the Internal Revenue Code ("Code"). As such, the operations of the Account are included in the tax return of Northbrook Life. Northbrook Life is taxed as a life insurance company under the Code. No federal income taxes are allocable to the Account as the Account did not generate taxable income. USE OF ESTIMATES - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 28 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 3. EXPENSES MORTALITY AND EXPENSE RISK CHARGE - Northbrook Life assumes mortality and expense risks related to the operations of the Account and deducts charges daily based on the average daily net assets of the Account. The mortality and expense risk charge covers insurance benefits available with the contract and certain expenses of the contract. It also covers the risk that the current charges will not be sufficient in the future to cover the cost of administering the contract. Northbrook Life guarantees that the amount of this charge will not increase over the life of the contract. At the contractholder's discretion, additional options may be purchased for an additional charge. ADMINISTRATIVE EXPENSE CHARGE - Northbrook Life deducts an administrative expense charge daily at a rate equal to .10% per annum of the average daily net assets of the Contracts. CONTRACT MAINTENANCE CHARGE - Northbrook Life deducts an annual contract maintenance charge of $30 on each Morgan Stanley Dean Witter Variable Annuity II and $35 on each Morgan Stanley Dean Witter Variable Annuity II AssetManager, Morgan Stanley Dean Witter Variable Annuity 3, and Morgan Stanley Dean Witter Variable Annuity 3 AssetManager contract anniversary and guarantees that this charge will not increase over the life of the contract. If certain conditions are met, this charge will be waived for Morgan Stanley Dean Witter Variable Annuity II AssetManager, Morgan Stanley Dean Witter Variable Annuity 3, and Morgan Stanley Dean Witter Variable Annuity 3 AssetManager contracts. 29 4. UNITS ISSUED AND REDEEMED (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II --------------------------------------------------------------------- Unit activity during 2000: -------------------------------------------- Units Outstanding Units Units Units Outstanding December 31, 1999 Issued Redeemed December 31, 2000 ------------------- ------------ ------------ ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 924,675 6,341,267 (4,164,785) 3,101,157 Capital Growth 3,251,167 1,049,440 (1,279,525) 3,021,082 Competitive Edge, "Best Ideas" 1,766,647 1,564,045 (924,813) 2,405,879 Dividend Growth 31,771,950 2,953,392 (12,277,622) 22,447,720 Equity 13,033,466 2,612,030 (3,382,699) 12,262,797 European Growth 7,442,535 4,593,090 (5,728,147) 6,307,478 Global Dividend Growth 15,377,323 1,179,563 (5,492,334) 11,064,552 High Yield 6,186,696 1,271,037 (3,345,585) 4,112,148 Income Builder 2,557,977 700,855 (1,390,310) 1,868,522 Information - 91,116 (27,576) 63,540 Money Market 17,541,394 77,631,812 (82,072,695) 13,100,511 Pacific Growth 7,412,176 31,249,411 (32,944,342) 5,717,245 Quality Income Plus 16,872,144 2,640,795 (6,588,948) 12,923,991 S&P 500 Index 4,729,418 3,252,229 (2,296,188) 5,685,459 Short-Term Bond 127,159 372,957 (252,926) 247,190 Strategist 13,273,409 1,527,664 (3,280,494) 11,520,579 Utilities 11,688,649 1,316,557 (3,115,661) 9,889,545 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 609,573 16,737,934 (16,850,589) 496,918 Equity Growth 1,653,843 2,769,272 (1,838,283) 2,584,832 International Magnum 281,569 5,407,715 (5,167,722) 521,562 Mid Cap Value - 1,743,809 (1,613,795) 130,014 U.S. Real Estate 230,000 4,268,590 (3,989,429) 509,161 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 1,761,875 5,314,069 (3,678,654) 3,397,290 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 1,741,481 (1,410,724) 330,757 AIM V.I. Growth - 1,133,808 (934,691) 199,117 AIM V.I. Value - 2,296,760 (1,638,647) 658,113 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 736,739 (479,977) 256,762 Alliance Growth & Income - 1,890,009 (1,179,222) 710,787 Alliance Premier Growth - 1,564,834 (474,431) 1,090,403 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 2,025,969 (1,731,711) 294,258 International Growth - 4,794,979 (4,217,824) 577,155 Voyager - 1,159,172 (564,466) 594,706 Accumulated Unit Value December 31, 2000 ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity $ 14.04 Capital Growth 31.30 Competitive Edge, "Best Ideas" 9.93 Dividend Growth 36.76 Equity 67.70 European Growth 40.73 Global Dividend Growth 18.49 High Yield 16.06 Income Builder 12.85 Information 9.29 Money Market 14.08 Pacific Growth 5.76 Quality Income Plus 19.95 S&P 500 Index 11.80 Short-Term Bond 10.51 Strategist 31.23 Utilities 33.42 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 8.22 Equity Growth 12.11 International Magnum 10.45 Mid Cap Value 10.24 U.S. Real Estate 11.23 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 21.45 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 8.32 AIM V.I. Growth 7.34 AIM V.I. Value 8.00 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 8.14 Alliance Growth & Income 10.76 Alliance Premier Growth 7.86 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 10.80 International Growth 9.08 Voyager 8.13
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 30 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II with Longevity Reward Rider -------------------------------------------------------------------------- Unit activity during 2000: ---------------------------------------- Units Outstanding Units Units Units Outstanding December 31, 1999 Issued Redeemed December 31, 2000 ------------------ -------- ---------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity - 92,041 (19,621) 72,420 Capital Growth - 153,394 (13,781) 139,613 Competitive Edge, "Best Ideas" - 37,003 (110) 36,893 Dividend Growth - 1,089,897 (93,278) 996,619 Equity - 1,328,473 (39,392) 1,289,081 European Growth - 456,654 (22,360) 434,294 Global Dividend Growth - 267,973 (47,593) 220,380 High Yield - 105,732 (11,417) 94,315 Income Builder - 12,953 (3,403) 9,550 Money Market - 275,657 (90,315) 185,342 Pacific Growth - 64,420 (21,942) 42,478 Quality Income Plus - 391,866 (17,793) 374,073 S&P 500 Index - 73,288 (2,662) 70,626 Strategist - 1,094,172 (84,319) 1,009,853 Utilities - 810,548 (29,532) 781,016 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 4,827 - 4,827 Equity Growth - 19,684 (3,668) 16,016 International Magnum - 1,690 - 1,690 Mid Cap Value - 2,770 (35) 2,735 U.S. Real Estate - 10,052 (711) 9,341 Investments in the Van Kampen Life Investment Trust Sub--Account: LIT Emerging Growth - 115,897 (20,193) 95,704 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 18,081 (5) 18,076 AIM V.I. Growth - 37,734 (4,285) 33,449 AIM V.I. Value - 36,117 (2,925) 33,192 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 18,304 (33) 18,271 Alliance Growth & Income - 6,267 - 6,267 Alliance Premier Growth - 14,145 (7) 14,138 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 84 (5) 79 International Growth - 24,612 - 24,612 Voyager - 27,825 (2,363) 25,462 Accumulated Unit Value December 31, 2000 ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity $ 9.69 Capital Growth 9.72 Competitive Edge, "Best Ideas" 8.43 Dividend Growth 10.70 Equity 9.54 European Growth 9.21 Global Dividend Growth 9.95 High Yield 6.96 Income Builder 10.05 Money Market 10.28 Pacific Growth 7.28 Quality Income Plus 10.77 S&P 500 Index 8.97 Strategist 9.94 Utilities 10.14 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 6.39 Equity Growth 8.34 International Magnum 9.06 Mid Cap Value 10.24 U.S. Real Estate 11.51 Investments in the Van Kampen Life Investment Trust Sub--Account: LIT Emerging Growth 8.13 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 8.29 AIM V.I. Growth 7.40 AIM V.I. Value 8.32 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 8.00 Alliance Growth & Income 10.25 Alliance Premier Growth 7.98 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 10.57 International Growth 9.02 Voyager 8.12
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 31 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II with Longevity Reward Rider and Enhanced Death Benefit Option, Performance Death Benefit Option or Performance Income Benefit Option ------------------------------------------------------------------------------------------- Unit activity during 2000: ------------------------------------- Units Outstanding Units Units Units Outstanding December 31, 1999 Issued Redeemed December 31, 2000 ------------------- -------- ---------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity - 45,427 (13,089) 32,338 Capital Growth - 24,368 - 24,368 Competitive Edge, "Best Ideas" - 5,747 (1) 5,746 Dividend Growth - 291,638 (17,484) 274,154 Equity - 355,627 (32,484) 323,143 European Growth - 121,384 (3,045) 118,339 Global Dividend Growth - 101,777 (5,960) 95,817 High Yield - 29,698 (5,190) 24,508 Income Builder - 1,972 (6) 1,966 Money Market - 95,063 (87,020) 8,043 Pacific Growth - 9,443 (366) 9,077 Quality Income Plus - 115,005 (6,506) 108,499 S&P 500 Index - 41,078 (21) 41,057 Strategist - 331,663 (5,009) 326,654 Utilities - 228,033 (1,722) 226,311 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 12 - 12 Equity Growth - 29,047 (11,559) 17,488 International Magnum - 5,300 (1,628) 3,672 U.S. Real Estate - 458 (6) 452 Investments in the Van Kampen Life Investment Trust Sub--Account: LIT Emerging Growth - 56,049 (6,526) 49,523 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 4,938 (1) 4,937 AIM V.I. Growth - 5,870 (1) 5,869 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 6,858 (1) 6,857 Alliance Growth & Income - 10,486 - 10,486 Alliance Premier Growth - 5,141 (2) 5,139 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 5,419 - 5,419 International Growth - 3,997 - 3,997 Voyager - 3,406 (2) 3,404 Accumulated Unit Value December 31, 2000 ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity $ 9.69 Capital Growth 9.71 Competitive Edge, "Best Ideas" 8.43 Dividend Growth 10.69 Equity 9.54 European Growth 9.20 Global Dividend Growth 9.94 High Yield 6.95 Income Builder 10.04 Money Market 10.27 Pacific Growth 7.27 Quality Income Plus 10.77 S&P 500 Index 8.96 Strategist 9.93 Utilities 10.13 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 6.38 Equity Growth 8.33 International Magnum 9.05 U.S. Real Estate 11.50 Investments in the Van Kampen Life Investment Trust Sub--Account: LIT Emerging Growth 8.13 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 8.28 AIM V.I. Growth 7.40 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 8.00 Alliance Growth & Income 10.24 Alliance Premier Growth 7.98 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 10.56 International Growth 9.01 Voyager 8.11
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 32 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II with Enhanced Death Benefit Option, Performance Death Benefit Option or Performance Income Benefit Option ----------------------------------------------------------------------------------- Unit activity during 2000: -------------------------------------------- Units Outstanding Units Units Units Outstanding December 31, 1999 Issued Redeemed December 31, 2000 ------------------- ----------- ------------ ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 1,122,012 3,803,892 (912,137) 4,013,767 Capital Growth 1,636,053 694,543 (448,216) 1,882,380 Competitive Edge, "Best Ideas" 2,481,411 1,139,678 (642,496) 2,978,593 Dividend Growth 20,053,835 1,948,755 (7,371,661) 14,630,929 Equity 10,374,793 2,343,359 (2,142,932) 10,575,220 European Growth 4,444,148 2,794,872 (2,937,427) 4,301,593 Global Dividend Growth 8,775,455 723,111 (2,588,881) 6,909,685 High Yield 4,203,079 586,990 (1,940,134) 2,849,935 Income Builder 3,113,231 150,686 (1,034,507) 2,229,410 Information - 120,446 (8,160) 112,286 Money Market 10,276,270 36,502,067 (38,497,409) 8,280,928 Pacific Growth 4,058,485 27,612,644 (28,279,905) 3,391,224 Quality Income Plus 5,167,349 869,181 (1,594,859) 4,441,671 S&P 500 Index 6,209,831 3,140,780 (1,814,805) 7,535,806 Short--Term Bond 121,549 310,081 (187,647) 243,983 Strategist 6,559,093 1,350,609 (1,189,912) 6,719,790 Utilities 4,016,659 939,883 (780,555) 4,175,987 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 689,216 1,362,196 (1,166,683) 884,729 Equity Growth 2,952,648 2,752,957 (1,503,676) 4,201,929 International Magnum 416,818 491,043 (194,122) 713,739 Mid Cap Value - 133,783 (14,692) 119,091 U.S. Real Estate 194,964 474,767 (142,836) 526,895 Investments in the Van Kampen Life Investment Trust Sub--Account: LIT Emerging Growth 2,522,689 5,349,894 (2,468,519) 5,404,064 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 530,729 (127,710) 403,019 AIM V.I. Growth - 262,938 (40,849) 222,089 AIM V.I. Value - 984,704 (116,938) 867,766 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 291,472 (38,453) 253,019 Alliance Growth & Income - 915,704 (159,048) 756,656 Alliance Premier Growth - 1,468,491 (98,297) 1,370,194 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 220,718 - 220,718 International Growth - 620,887 (58,420) 562,467 Voyager - 912,659 (125,900) 786,759 Accumulated Unit Value December 31, 2000 ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity $ 14.01 Capital Growth 31.09 Competitive Edge, "Best Ideas" 9.89 Dividend Growth 36.52 Equity 67.25 European Growth 40.46 Global Dividend Growth 18.37 High Yield 15.95 Income Builder 12.78 Information 9.29 Money Market 13.99 Pacific Growth 5.72 Quality Income Plus 19.82 S&P 500 Index 11.76 Short--Term Bond 10.49 Strategist 31.02 Utilities 33.19 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 8.19 Equity Growth 12.06 International Magnum 10.41 Mid Cap Value 10.23 U.S. Real Estate 11.20 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 21.37 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 8.32 AIM V.I. Growth 7.34 AIM V.I. Value 7.99 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 8.14 Alliance Growth & Income 10.75 Alliance Premier Growth 7.85 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 10.79 International Growth 9.08 Voyager 8.12
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 33 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II with Longevity Reward Rider and Performance Benefit Combination Option or Death Benefit Combination Option ------------------------------------------------------------------------------ Unit activity during 2000: -------------------------------------- Units Outstanding Units Units Units Outstanding December 31, 1999 Issued Redeemed December 31, 2000 ------------------- ------- -------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity - 3,933 (143) 3,790 Capital Growth - 1,919 (345) 1,574 Dividend Growth - 52,339 (2,086) 50,253 Equity - 56,197 (684) 55,513 European Growth - 25,192 (1,738) 23,454 Global Dividend Growth - 16,360 (2,411) 13,949 High Yield - 4,694 (15) 4,679 Money Market - 2,561 (439) 2,122 Pacific Growth - 1,279 (628) 651 Quality Income Plus - 9,270 (201) 9,069 S&P 500 Index - 9,550 (5) 9,545 Strategist - 55,837 (3,590) 52,247 Utilities - 30,894 (368) 30,526 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Equity Growth - 12,028 (92) 11,936 International Magnum - 1,098 - 1,098 Mid Cap Value - 361 - 361 Investments in the Van Kampen Life Investment Trust Sub--Account: LIT Emerging Growth - 14,769 (100) 14,669 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Value - 101 - 101 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Premier Growth - 1,955 (1) 1,954 Investments in the Putnam Variable Trust Sub-Accounts: Voyager - 482 - 482 Accumulated Unit Value December 31, 2000 ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity $ 9.68 Capital Growth 9.71 Dividend Growth 10.69 Equity 9.53 European Growth 9.20 Global Dividend Growth 9.94 High Yield 6.95 Money Market 10.27 Pacific Growth 7.27 Quality Income Plus 10.76 S&P 500 Index 8.96 Strategist 9.93 Utilities 10.13 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Equity Growth 8.33 International Magnum 9.04 Mid Cap Value 10.22 Investments in the Van Kampen Life Investment Trust Sub--Account: LIT Emerging Growth 8.12 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Value 8.31 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Premier Growth 7.97 Investments in the Putnam Variable Trust Sub-Accounts: Voyager 8.11
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 34 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II with Death Benefit Combination Option or Performance Benefit Combination Option --------------------------------------------------------------------------------------- Unit activity during 2000: -------------------------------------------- Units Outstanding Units Units Units Outstanding December 31, 1999 Issued Redeemed December 31, 2000 ----------------- ---------- --------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 458,487 1,621,998 (329,064) 1,751,421 Capital Growth 128,657 234,510 (50,275) 312,892 Competitive Edge, "Best Ideas" 489,657 446,713 (125,833) 810,537 Dividend Growth 1,434,477 736,620 (682,198) 1,488,899 Equity 950,293 715,671 (269,166) 1,396,798 European Growth 392,050 373,168 (130,075) 635,143 Global Dividend Growth 488,336 303,250 (180,211) 611,375 High Yield 290,136 144,534 (163,230) 271,440 Income Builder 270,771 87,029 (129,242) 228,558 Information - 36,992 (21) 36,971 Money Market 1,263,421 3,903,594 (4,081,597) 1,085,418 Pacific Growth 390,608 716,997 (533,639) 573,966 Quality Income Plus 328,139 198,858 (138,552) 388,445 S&P 500 Index 1,877,442 1,367,163 (623,521) 2,621,084 Short--Term Bond 34,942 67,468 (33,811) 68,599 Strategist 1,004,838 577,758 (247,702) 1,334,894 Utilities 340,744 322,154 (104,032) 558,866 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 210,592 439,572 (200,659) 449,505 Equity Growth 495,861 578,929 (158,881) 915,909 International Magnum 172,588 241,300 (54,679) 359,209 Mid Cap Value - 70,125 (2,321) 67,804 U.S. Real Estate 93,827 100,877 (29,697) 165,007 Investments in the Van Kampen Life Investment Trust Sub--Account: LIT Emerging Growth 818,855 1,726,136 (386,499) 2,158,492 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 267,819 (15,096) 252,723 AIM V.I. Growth - 117,145 (4,520) 112,625 AIM V.I. Value - 543,811 (33,365) 510,446 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 152,519 (7,384) 145,135 Alliance Growth & Income - 282,835 - 282,835 Alliance Premier Growth - 528,775 (23,450) 505,325 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 86,919 - 86,919 International Growth - 446,227 (16,182) 430,045 Voyager - 403,670 (42,449) 361,221 Accumulated Unit Value December 31, 2000 ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity $ 13.98 Capital Growth 30.57 Competitive Edge, "Best Ideas" 9.86 Dividend Growth 35.88 Equity 66.07 European Growth 39.79 Global Dividend Growth 18.19 High Yield 15.66 Income Builder 12.72 Information 9.29 Money Market 13.74 Pacific Growth 5.67 Quality Income Plus 19.47 S&P 500 Index 11.73 Short--Term Bond 10.47 Strategist 30.47 Utilities 32.61 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 8.17 Equity Growth 12.02 International Magnum 10.38 Mid Cap Value 10.23 U.S. Real Estate 11.16 Investments in the Van Kampen Life Investment Trust Sub--Account: LIT Emerging Growth 21.30 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 8.31 AIM V.I. Growth 7.33 AIM V.I. Value 7.99 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 8.13 Alliance Growth & Income 10.75 Alliance Premier Growth 7.85 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 10.78 International Growth 9.07 Voyager 8.11
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 35 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II with Longevity Reward Rider, Enhanced Earnings Death Benefit and Enhanced Death Benefit Option, Performance Income Benefit Option or Performance Death Benefit Option --------------------------------------------------------------------------- Unit activity during 2000: ----------------------------------------- Units Outstanding Units Units Units Outstanding December 31, 1999 Issued Redeemed December 31, 2000 ------------------- ------- ---------- ------------------ Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Dividend Growth - 18,163 (4) 18,159 Equity - 31,703 - 31,703 European Growth - 23,608 - 23,608 Global Dividend Growth - 11,559 - 11,559 High Yield - 5,111 (1) 5,110 Strategist - 20,036 (5) 20,031 Accumulated Unit Value December 31, 2000 ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Dividend Growth $ 10.50 Equity 10.13 European Growth 10.40 Global Dividend Growth 10.32 High Yield 9.54 Strategist 10.07
Units relating to accrued contract maintenance charges are included in units redeemed. 36 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II with Enhanced Earnings Death Benefit and Enhanced Death Benefit Option, Performance Income Benefit Option or Performance Death Benefit Option ------------------------------------------------------------------------------------------------ Unit activity during 2000: --------------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Dividend Growth - 24,796 (19,608) Equity - 36,047 (31,693) Global Dividend Growth - 12,606 (11,546) High Yield - 7,164 (5,111) Income Builder - 9,383 (10) Quality Income Plus - 14,091 (7) Strategist - 31,311 (20,039) Utilities - 6,967 (2) Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Equity Growth - 1,183 - U.S. Real Estate - 5,552 (47) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 463 - Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Dividend Growth 5,188 $ 10.50 Equity 4,354 10.13 Global Dividend Growth 1,060 10.32 High Yield 2,053 9.54 Income Builder 9,373 10.28 Quality Income Plus 14,084 10.02 Strategist 11,272 10.07 Utilities 6,965 10.14 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Equity Growth 1,183 9.83 U.S. Real Estate 5,505 10.03 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 463 9.84
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 37 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II with Longevity Reward Rider, Enhanced Earnings Death Benefit, and Income and Death Benefit Combination Rider II, Death Benefit Combination Option, or Performance Combination Benefit Option ----------------------------------------------------------------------------- Unit activity during 2000: -------------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Dividend Growth - 11,927 (3) Equity - 3,680 - European Growth - 9,466 - Global Dividend Growth - 8,932 - High Yield - 3,187 - Income Builder - 3,463 (3) Pacific Growth - 348 - Strategist - 1,637 (1) Utilities - 1,819 (1) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 3,527 - Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Premier Growth - 576 - Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Dividend Growth 11,924 $ 10.49 Equity 3,680 10.13 European Growth 9,466 10.40 Global Dividend Growth 8,932 10.32 High Yield 3,187 9.54 Income Builder 3,460 10.28 Pacific Growth 348 9.50 Strategist 1,636 10.07 Utilities 1,818 10.14 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 3,527 9.84 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Premier Growth 576 9.81
Units relating to accrued contract maintenance charges are included in units redeemed. 38 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II with Income and Death Benefit Combination Rider II ------------------------------------------------------------------------------------------------- Unit activity during 2000: -------------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity - 2,136 (1) Capital Growth - 280 - Dividend Growth - 17,415 (4) Equity - 45,152 (309) European Growth - 8,533 - Global Dividend Growth - 5,147 - High Yield - 3,235 (1) Money Market - 4,301 (112) Quality Income Plus - 6,006 (3) S&P 500 Index - 19,737 (9) Strategist - 314 - Utilities - 1,268 - Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Equity Growth - 721 - Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 6,591 - Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Premier Growth - 661 - Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 2,135 $ 9.21 Capital Growth 280 9.87 Dividend Growth 17,411 10.42 Equity 44,843 9.27 European Growth 8,533 10.33 Global Dividend Growth 5,147 10.28 High Yield 3,234 8.36 Money Market 4,189 10.07 Quality Income Plus 6,003 10.40 S&P 500 Index 19,728 9.21 Strategist 314 9.57 Utilities 1,268 10.02 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Equity Growth 721 8.58 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 6,591 8.11 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Premier Growth 661 8.83
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 39 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II with Enhanced Earnings Death Benefit and Income and Death Benefit Combination Rider II ----------------------------------------------------------------------------------- Unit activity during 2000: ------------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Dividend Growth - 3,475 - High Yield - 98 - Quality Income Plus - 2,757 (2) Strategist - 3,348 (1) Utilities - 6,317 (2) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Dividend Growth 3,475 $ 10.49 High Yield 98 9.54 Quality Income Plus 2,755 10.02 Strategist 3,347 10.07 Utilities 6,315 10.14
Units relating to accrued contract maintenance charges are included in units redeemed. 40 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II AssetManager ----------------------------------------------------------- Unit activity during 2000: --------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 11,455 103,217 (16,122) Capital Growth 27,471 47,495 (10,495) Competitive Edge, "Best Ideas" 59,367 110,705 (32,272) Dividend Growth 441,792 330,306 (185,441) Equity 277,235 344,474 (86,840) European Growth 84,846 107,925 (30,211) Global Dividend Growth 80,482 30,782 (31,269) High Yield 183,538 78,174 (136,802) Income Builder 38,046 17,953 (9,138) Information - 54,117 (12) Money Market 326,539 430,710 (489,481) Pacific Growth 16,849 18,340 (9,205) Quality Income Plus 353,126 179,209 (99,929) S&P 500 Index 167,065 211,991 (51,034) Short-Term Bond 11,170 11,617 (14,019) Strategist 198,638 176,730 (50,650) Utilities 137,439 140,984 (41,304) Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 8,933 27,024 (7,572) Equity Growth 48,641 82,939 (8,543) International Magnum 25,209 50,764 (7,809) U.S. Real Estate 13,344 19,112 (4,669) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 90,139 181,308 (26,098) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 98,550 $ 13.98 Capital Growth 64,471 12.70 Competitive Edge, "Best Ideas" 137,800 9.72 Dividend Growth 586,657 10.06 Equity 534,869 13.83 European Growth 162,560 10.72 Global Dividend Growth 79,995 10.71 High Yield 124,910 5.74 Income Builder 46,861 10.06 Information 54,105 9.29 Money Market 267,768 10.93 Pacific Growth 25,984 11.77 Quality Income Plus 432,406 10.67 S&P 500 Index 328,022 10.96 Short-Term Bond 8,768 10.47 Strategist 324,718 11.95 Utilities 237,119 12.27 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 28,385 9.36 Equity Growth 123,037 11.78 International Magnum 68,164 9.31 U.S. Real Estate 27,787 11.25 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 245,349 18.70
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 41 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II AssetManager with Enhanced Death Benefit Option, Performance Death Benefit Option or Performance Income Benefit Option ----------------------------------------------------------------------------------------------- Unit activity during 2000: ---------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 40,515 160,807 (31,530) Capital Growth 30,798 63,396 (22,568) Competitive Edge, Best Ideas 72,820 141,468 (27,304) Dividend Growth 662,841 283,180 (269,991) Equity 471,331 374,551 (126,474) European Growth 194,903 1,330,291 (1,213,378) Global Dividend Growth 128,434 53,084 (29,521) High Yield 123,235 72,395 (98,477) Income Builder 52,500 19,066 (27,211) Money Market 436,501 5,219,455 (5,148,551) Pacific Growth 38,449 2,310,180 (2,295,476) Quality Income Plus 249,824 104,021 (112,968) S&P 500 Index 349,707 226,980 (115,013) Short-Term Bond 11,485 9,657 (3,780) Strategist 162,824 147,664 (54,697) Utilities 165,102 90,031 (36,026) Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 16,698 14,266 (7,719) Equity Growth 104,259 98,166 (42,010) International Magnum 30,807 38,686 (14,106) U.S. Real Estate 33,042 14,335 (10,774) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 108,684 421,544 (314,354) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ------------------ ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 169,792 $ 13.95 Capital Growth 71,626 12.66 Competitive Edge, Best Ideas 186,984 9.69 Dividend Growth 676,030 10.03 Equity 719,408 13.79 European Growth 311,816 10.69 Global Dividend Growth 151,997 10.67 High Yield 97,153 5.73 Income Builder 44,355 10.03 Money Market 507,405 10.90 Pacific Growth 53,153 11.73 Quality Income Plus 240,877 10.63 S&P 500 Index 461,674 10.92 Short-Term Bond 17,362 10.45 Strategist 255,791 11.91 Utilities 219,107 12.23 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 23,245 9.33 Equity Growth 160,415 11.75 International Magnum 55,387 9.28 U.S. Real Estate 36,603 11.21 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 215,874 18.64
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 42 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity II AssetManager with Performance Benefit Combination Option or Death Benefit Combination Option -------------------------------------------------------------------------- Unit activity during 2000: ---------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------ ------------ ------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 44,292 261,031 (36,377) Capital Growth 27,483 112,149 (11,989) Competitive Edge, Best Ideas 23,894 121,152 (13,304) Dividend Growth 256,374 398,660 (136,020) Equity 323,544 438,050 (112,197) European Growth 75,890 234,683 (20,639) Global Dividend Growth 62,965 43,352 (12,494) High Yield 38,054 47,583 (17,645) Income Builder 20,223 7,260 (2,601) Information - 4,195 - Money Market 123,921 732,371 (575,394) Pacific Growth 73,243 65,992 (19,835) Quality Income Plus 172,419 156,062 (52,245) S&P 500 Index 168,103 168,225 (42,689) Short-Term Bond 5,436 12,633 (4,707) Strategist 68,969 158,771 (9,697) Utilities 100,464 143,131 (26,144) Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 51,240 92,115 (30,324) Equity Growth 16,474 129,432 (16,593) International Magnum 21,796 43,414 (9,856) U.S. Real Estate 30,211 55,211 (18,081) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 129,629 337,238 (78,670) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ------------------ ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 268,946 $ 13.92 Capital Growth 127,643 12.62 Competitive Edge, Best Ideas 131,742 9.66 Dividend Growth 519,014 10.00 Equity 649,397 13.75 European Growth 289,934 10.66 Global Dividend Growth 93,823 10.64 High Yield 67,992 5.71 Income Builder 24,882 10.00 Information 4,195 9.29 Money Market 280,898 10.87 Pacific Growth 119,400 11.70 Quality Income Plus 276,236 10.60 S&P 500 Index 293,639 10.89 Short-Term Bond 13,362 10.43 Strategist 218,043 11.88 Utilities 217,451 12.20 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 113,031 9.30 Equity Growth 129,313 11.71 International Magnum 55,354 9.25 U.S. Real Estate 67,341 11.18 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 388,197 18.59
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 43 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity 3 -------------------------------------------------------------- Unit activity during 2000: -------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 70,355 (9,045) Equity Growth - 195,008 (12,835) International Magnum - 41,655 - Mid Cap Value - 57,281 (3,230) U.S. Real Estate - 21,807 (906) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 495,445 (23,341) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 99,637 (8,820) AIM V.I. Growth - 112,909 (1,985) AIM V.I. Value - 312,033 - Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 122,226 (2,250) Alliance Growth & Income - 109,440 (6,732) Alliance Premier Growth - 312,880 (8,302) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 73,374 - International Growth - 194,668 (7,102) Voyager - 216,014 (4,578) Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity - 215,518 (17,167) Capital Growth - 65,559 (1,210) Competitive Edge, "Best Ideas" - 85,892 (2,859) Dividend Growth - 256,863 (5,012) Equity - 681,963 (6,684) European Growth - 235,980 (11,289) Global Dividend Growth - 37,669 (3,745) High Yield - 36,379 (2,566) Income Builder - 31,077 (3,644) Information - 27,658 (77) Money Market - 478,735 (206,566) Pacific Growth - 8,832 (1,305) Quality Income Plus - 177,762 (1,338) S&P 500 Index - 312,738 (11,108) Short-Term Bond - 22,751 (143) Strategist - 437,224 (11,156) Utilities - 342,061 (4,308) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 61,310 $ 6.39 Equity Growth 182,173 8.34 International Magnum 41,655 9.05 Mid Cap Value 54,051 10.23 U.S. Real Estate 20,901 11.50 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 472,104 8.13 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 90,817 8.28 AIM V.I. Growth 110,924 7.40 AIM V.I. Value 312,033 8.32 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 119,976 8.00 Alliance Growth & Income 102,708 10.24 Alliance Premier Growth 304,578 7.98 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 73,374 10.56 International Growth 187,566 9.02 Voyager 211,436 8.12 Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 198,351 9.68 Capital Growth 64,349 9.70 Competitive Edge, "Best Ideas" 83,033 8.41 Dividend Growth 251,851 10.68 Equity 675,279 9.53 European Growth 224,691 9.19 Global Dividend Growth 33,924 9.93 High Yield 33,813 6.94 Income Builder 27,433 10.03 Information 27,581 9.29 Money Market 272,169 10.26 Pacific Growth 7,527 7.27 Quality Income Plus 176,424 10.75 S&P 500 Index 301,630 8.96 Short-Term Bond 22,608 10.30 Strategist 426,068 9.92 Utilities 337,753 10.13
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 44 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity 3 with Performance Death Benefit Option ----------------------------------------------------------------------------------- Unit activity during 2000: ---------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------ ------------ ------------ Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 45,452 (13,690) Equity Growth - 451,234 (9,863) International Magnum - 43,773 (5,658) Mid Cap Value - 89,498 (680) U.S. Real Estate - 30,053 (4,529) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 821,294 (32,513) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 262,592 (7,022) AIM V.I. Growth - 216,997 (3,809) AIM V.I. Value - 482,717 (8,921) Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 134,618 (1,737) Alliance Growth & Income - 172,651 (25,831) Alliance Premier Growth - 424,668 (20,885) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 73,293 - International Growth - 271,699 (4,540) Voyager - 318,320 (10,628) Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity - 396,938 (13,525) Capital Growth - 122,872 (8,800) Competitive Edge, "Best Ideas" - 185,390 (4,358) Dividend Growth - 451,170 (12,452) Equity - 1,099,472 (64,331) European Growth - 303,478 (18,650) Global Dividend Growth - 76,151 (2,225) High Yield - 51,886 (11,493) Income Builder - 19,855 (2,760) Information - 57,590 (12) Money Market - 616,365 (283,068) Pacific Growth - 13,136 (509) Quality Income Plus - 116,117 (9,488) S&P 500 Index - 441,133 (16,668) Short-Term Bond - 33,699 (1,359) Strategist - 483,829 (9,393) Utilities - 396,056 (18,081) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 31,762 $ 6.38 Equity Growth 441,371 8.33 International Magnum 38,115 9.05 Mid Cap Value 88,818 10.22 U.S. Real Estate 25,524 11.49 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 788,781 8.12 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 255,570 8.28 AIM V.I. Growth 213,188 7.39 AIM V.I. Value 473,796 8.32 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 132,881 7.99 Alliance Growth & Income 146,820 10.23 Alliance Premier Growth 403,783 7.97 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 73,293 10.56 International Growth 267,159 9.01 Voyager 307,692 8.11 Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 383,413 9.67 Capital Growth 114,072 9.69 Competitive Edge, "Best Ideas" 181,032 8.41 Dividend Growth 438,718 10.68 Equity 1,035,141 9.52 European Growth 284,828 9.18 Global Dividend Growth 73,926 9.92 High Yield 40,393 6.94 Income Builder 17,095 10.02 Information 57,578 9.29 Money Market 333,297 10.25 Pacific Growth 12,627 7.27 Quality Income Plus 106,629 10.74 S&P 500 Index 424,465 8.95 Short-Term Bond 32,340 10.30 Strategist 474,436 9.91 Utilities 377,975 10.12
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 45 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity 3 with Death Benefit Combination Option ----------------------------------------------------------------------------------- Unit activity during 2000: ---------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 83,855 (5,727) Equity Growth - 332,911 (31,363) International Magnum - 73,831 - Mid Cap Value - 98,553 (82) U.S. Real Estate - 23,928 (210) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 683,232 (19,532) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 154,655 (8,419) AIM V.I. Growth - 132,495 (1,504) AIM V.I. Value - 358,488 (13,283) Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 134,032 (7,812) Alliance Growth & Income - 139,161 - Alliance Premier Growth - 388,853 (15,658) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 60,394 (547) International Growth - 182,723 (2,071) Voyager - 299,575 (6,777) Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity - 265,175 (8,734) Capital Growth - 56,059 (1,575) Competitive Edge, "Best Ideas" - 112,649 (1,764) Dividend Growth - 304,912 (25,422) Equity - 711,536 (18,636) European Growth - 286,818 (64,597) Global Dividend Growth - 37,805 (3,680) High Yield - 149,310 (9,490) Income Builder - 36,830 (116) Information - 26,114 (6) Money Market - 443,522 (120,832) Pacific Growth - 29,046 (624) Quality Income Plus - 84,408 (433) S&P 500 Index - 295,044 (11,591) Short-Term Bond - 21,845 (26) Strategist - 481,319 (24,794) Utilities - 361,745 (4,011) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 78,128 $ 6.38 Equity Growth 301,548 8.32 International Magnum 73,831 9.04 Mid Cap Value 98,471 10.22 U.S. Real Estate 23,718 11.49 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 663,700 8.12 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 146,236 8.27 AIM V.I. Growth 130,991 7.39 AIM V.I. Value 345,205 8.31 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 126,220 7.99 Alliance Growth & Income 139,161 10.23 Alliance Premier Growth 373,195 7.97 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 59,847 10.55 International Growth 180,652 9.00 Voyager 292,798 8.11 Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 256,441 9.66 Capital Growth 54,484 9.69 Competitive Edge, "Best Ideas" 110,885 8.40 Dividend Growth 279,490 10.67 Equity 692,900 9.52 European Growth 222,221 9.18 Global Dividend Growth 34,125 9.92 High Yield 139,820 6.94 Income Builder 36,714 10.02 Information 26,108 9.29 Money Market 322,690 10.25 Pacific Growth 28,422 7.26 Quality Income Plus 83,975 10.73 S&P 500 Index 283,453 8.95 Short-Term Bond 21,819 10.29 Strategist 456,525 9.91 Utilities 357,734 10.12
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 46 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity 3 with Income Benefit Combination Option ------------------------------------------------------------------------------------ Unit activity during 2000: ------------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ----------------- ------------ ------------ Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 14,060 (4,931) Equity Growth - 29,299 (1,274) International Magnum - 7,192 (455) Mid Cap Value - 13,264 (111) U.S. Real Estate - 5,630 (1,155) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 205,879 (9,622) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 6,586 (375) AIM V.I. Growth - 9,431 (122) AIM V.I. Value - 84,006 (2,911) Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 9,111 (355) Alliance Growth & Income - 7,310 - Alliance Premier Growth - 30,846 (291) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 10,484 - International Growth - 25,658 (2,589) Voyager - 99,425 (4,881) Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity - 44,816 (2,062) Capital Growth - 6,320 (439) Competitive Edge, "Best Ideas" - 29,532 (118) Dividend Growth - 22,635 (942) Equity - 90,809 (4,897) European Growth - 36,834 (3,204) Global Dividend Growth - 1,774 (1,049) High Yield - 6,402 (2) Information - 3,567 (1,572) Money Market - 100,189 (57,564) Pacific Growth - 2,612 (211) Quality Income Plus - 11,912 (2) S&P 500 Index - 19,876 (1,313) Short-Term Bond - 4,834 (2) Strategist - 19,619 (1,103) Utilities - 17,781 (3,709) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 9,129 $ 6.38 Equity Growth 28,025 8.32 International Magnum 6,737 9.04 Mid Cap Value 13,153 10.21 U.S. Real Estate 4,475 11.48 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 196,257 8.12 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 6,211 8.27 AIM V.I. Growth 9,309 7.39 AIM V.I. Value 81,095 8.31 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 8,756 7.99 Alliance Growth & Income 7,310 10.22 Alliance Premier Growth 30,555 7.96 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 10,484 10.55 International Growth 23,069 9.00 Voyager 94,544 8.10 Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 42,754 9.66 Capital Growth 5,881 9.68 Competitive Edge, "Best Ideas" 29,414 8.40 Dividend Growth 21,693 10.67 Equity 85,912 9.51 European Growth 33,630 9.17 Global Dividend Growth 725 9.91 High Yield 6,400 6.93 Information 1,995 9.29 Money Market 42,625 10.24 Pacific Growth 2,401 7.26 Quality Income Plus 11,910 10.73 S&P 500 Index 18,563 8.94 Short-Term Bond 4,832 10.29 Strategist 18,516 9.91 Utilities 14,072 10.11
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 47 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity 3 with Income and Death Benefit Combination Option ---------------------------------------------------------------------------------------------- Unit activity during 2000: -------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 101,725 (18,362) Equity Growth - 299,598 (9,849) International Magnum - 67,972 (3,606) Mid Cap Value - 179,679 (9,870) U.S. Real Estate - 24,723 (416) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 1,160,768 (35,343) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 159,468 (10,146) AIM V.I. Growth - 157,297 (14,706) AIM V.I. Value - 346,373 (19,193) Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 97,138 (1,878) Alliance Growth & Income - 291,984 (7,159) Alliance Premier Growth - 458,139 (19,918) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 87,345 - International Growth - 294,114 (2,530) Voyager - 421,342 (12,310) Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity - 488,918 (19,431) Capital Growth - 110,628 (2,162) Competitive Edge, "Best Ideas" - 149,237 (11,060) Dividend Growth - 296,303 (24,393) Equity - 793,423 (18,936) European Growth - 374,889 (7,893) Global Dividend Growth - 77,812 (1,401) High Yield - 60,034 (5,844) Income Builder - 12,117 (1,549) Information - 91,709 (1,341) Money Market - 584,722 (253,586) Pacific Growth - 44,613 (167) Quality Income Plus - 74,075 (2,438) S&P 500 Index - 385,096 (35,357) Short-Term Bond - 45,611 (1,470) Strategist - 951,045 (23,405) Utilities - 270,764 (7,944) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 83,363 $ 6.37 Equity Growth 289,749 8.31 International Magnum 64,366 9.03 Mid Cap Value 169,809 10.20 U.S. Real Estate 24,307 11.47 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 1,125,425 8.11 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 149,322 8.26 AIM V.I. Growth 142,591 7.38 AIM V.I. Value 327,180 8.30 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 95,260 7.98 Alliance Growth & Income 284,825 10.21 Alliance Premier Growth 438,221 7.96 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 87,345 10.53 International Growth 291,584 8.99 Voyager 409,032 8.09 Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 469,487 9.65 Capital Growth 108,466 9.67 Competitive Edge, "Best Ideas" 138,177 8.39 Dividend Growth 271,910 10.65 Equity 774,487 9.50 European Growth 366,996 9.16 Global Dividend Growth 76,411 9.90 High Yield 54,190 6.92 Income Builder 10,568 10.00 Information 90,368 9.29 Money Market 331,136 10.23 Pacific Growth 44,446 7.25 Quality Income Plus 71,637 10.72 S&P 500 Index 349,739 8.93 Short-Term Bond 44,141 10.27 Strategist 927,640 9.89 Utilities 262,820 10.10
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 48 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity 3 AssetManager ---------------------------------------------------------- Unit activity during 2000: -------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 697 - Equity Growth - 7,709 (768) International Magnum - 1,848 (739) Mid Cap Value - 11,438 (153) U.S. Real Estate - 5,280 (44) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 27,426 (2,923) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 8,464 (1) AIM V.I. Growth - 5,182 (1) AIM V.I. Value - 32,287 (5,338) Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 4,858 (1) Alliance Growth & Income - 23,886 (5,547) Alliance Premier Growth - 21,107 (9) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 5,756 - International Growth - 17,699 (627) Voyager - 31,848 (5,556) Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity - 14,524 (945) Capital Growth - 7,609 (19) Competitive Edge, "Best Ideas" - 1,875 (1) Dividend Growth - 14,103 (3) Equity - 21,974 (70) European Growth - 5,902 (6) Global Dividend Growth - 1,196 - High Yield - 203 - Information - 1,812 - Money Market - 40,553 (20,929) Quality Income Plus - 16,337 (3) S&P 500 Index - 31,386 (6,110) Short-Term Bond - 3,045 - Strategist - 30,734 (805) Utilities - 11,854 (7) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 697 $ 7.22 Equity Growth 6,941 8.25 International Magnum 1,109 9.68 Mid Cap Value 11,285 9.58 U.S. Real Estate 5,236 10.18 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 24,503 7.72 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 8,463 7.68 AIM V.I. Growth 5,181 7.61 AIM V.I. Value 26,949 8.50 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 4,857 8.23 Alliance Growth & Income 18,339 9.93 Alliance Premier Growth 21,098 8.01 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 5,756 10.26 International Growth 17,072 9.51 Voyager 26,292 8.24 Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 13,579 8.97 Capital Growth 7,590 9.41 Competitive Edge, "Best Ideas" 1,874 8.51 Dividend Growth 14,100 10.68 Equity 21,904 8.91 European Growth 5,896 10.04 Global Dividend Growth 1,196 10.44 High Yield 203 7.31 Information 1,812 9.29 Money Market 19,624 10.13 Quality Income Plus 16,334 10.46 S&P 500 Index 25,276 8.89 Short-Term Bond 3,045 10.15 Strategist 29,929 9.45 Utilities 11,847 9.33
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 49 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity 3 AssetManager with Performance Death Benefit Option ---------------------------------------------------------- Unit activity during 2000: --------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 1,849 - Equity Growth - 11,596 (3) International Magnum - 1,976 - Mid Cap Value - 6,402 (2) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 31,293 (700) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Growth - 3,651 (1) AIM V.I. Value - 12,015 - Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 5,172 (1) Alliance Growth & Income - 3,262 - Alliance Premier Growth - 8,550 (3) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 1,806 - International Growth - 3,681 - Voyager - 12,002 (7) Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity - 9,125 (20) Capital Growth - 2,875 (825) Competitive Edge, "Best Ideas" - 1,689 - Dividend Growth - 8,706 (2) Equity - 43,821 (885) European Growth - 6,366 (854) High Yield - 1,730 - Information - 625 (1) Money Market - 8,736 - Pacific Growth - 1,338 - S&P 500 Index - 9,951 (918) Short-Term Bond - 2,119 - Strategist - 6,603 (825) Utilities - 10,539 (838) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 1,849 $ 7.22 Equity Growth 11,593 8.25 International Magnum 1,976 9.67 Mid Cap Value 6,400 9.57 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 30,593 7.72 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Growth 3,650 7.61 AIM V.I. Value 12,015 8.50 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 5,171 8.22 Alliance Growth & Income 3,262 9.93 Alliance Premier Growth 8,547 8.01 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 1,806 10.26 International Growth 3,681 9.50 Voyager 11,995 8.23 Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 9,105 8.97 Capital Growth 2,050 9.40 Competitive Edge, "Best Ideas" 1,689 8.51 Dividend Growth 8,704 10.68 Equity 42,936 8.91 European Growth 5,512 10.03 High Yield 1,730 7.30 Information 624 9.29 Money Market 8,736 10.13 Pacific Growth 1,338 7.87 S&P 500 Index 9,033 8.89 Short-Term Bond 2,119 10.14 Strategist 5,778 9.45 Utilities 9,701 9.33
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 50 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity 3 AssetManager with Death Benefit Combination Option ----------------------------------------------------------- Unit activity during 2000: ------------------------------ Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 849 - Equity Growth - 3,318 (361) International Magnum - 807 - Mid Cap Value - 824 (1) U.S. Real Estate - 916 (8) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 18,589 (1,765) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 31,897 (7) AIM V.I. Growth - 1,381 - AIM V.I. Value - 10,781 (3,867) Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 296 - Alliance Growth & Income - 7,060 - Alliance Premier Growth - 35,707 (14) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 10,733 - International Growth - 31,510 - Voyager - 3,191 (2) Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity - 3,633 (1,686) Capital Growth - 6,555 (64) Competitive Edge, "Best Ideas" - 1,095 - Dividend Growth - 1,400 (8) Equity - 22,921 (5,791) European Growth - 5,026 (1,637) Global Dividend Growth - 2,431 (1) High Yield - 1,725 (10) Income Builder - 1,548 - Money Market - 16,713 (2,333) Pacific Growth - 389 - Quality Income Plus - 2,839 (138) S&P 500 Index - 4,323 (9) Strategist - 16,598 (2,665) Utilities - 10,051 (2,925) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 849 $ 7.22 Equity Growth 2,957 8.24 International Magnum 807 9.67 Mid Cap Value 823 9.57 U.S. Real Estate 908 10.17 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 16,824 7.71 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 31,890 7.67 AIM V.I. Growth 1,381 7.60 AIM V.I. Value 6,914 8.50 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 296 8.22 Alliance Growth & Income 7,060 9.92 Alliance Premier Growth 35,693 8.01 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 10,733 10.25 International Growth 31,510 9.50 Voyager 3,189 8.23 Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 1,947 8.97 Capital Growth 6,491 9.40 Competitive Edge, "Best Ideas" 1,095 8.50 Dividend Growth 1,392 10.67 Equity 17,130 8.90 European Growth 3,389 10.03 Global Dividend Growth 2,430 10.43 High Yield 1,715 7.30 Income Builder 1,548 10.01 Money Market 14,380 10.13 Pacific Growth 389 7.87 Quality Income Plus 2,701 10.45 S&P 500 Index 4,314 8.89 Strategist 13,933 9.45 Utilities 7,126 9.32
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 51 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity 3 AssetManager with Income Benefit Combination Option ----------------------------------------------------------- Unit activity during 2000: --------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 1,500 - Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 8,701 - Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Growth - 1,410 (1) AIM V.I. Value - 2,074 - Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 2,441 - Alliance Growth & Income - 636 - Alliance Premier Growth - 4,401 (1) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 2,256 - International Growth - 2,085 - Voyager - 1,932 (1) Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity - 856 (2) Dividend Growth - 1,300 - Equity - 1,291 (1) European Growth - 102 - High Yield - 143 - Pacific Growth - 1,879 (1) Quality Income Plus - 2,958 - S&P 500 Index - 636 - Strategist - 2,007 (1) Utilities - 3,126 (2) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 1,500 $ 7.22 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 8,701 7.71 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Growth 1,409 7.60 AIM V.I. Value 2,074 8.50 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 2,441 8.22 Alliance Growth & Income 636 9.92 Alliance Premier Growth 4,400 8.01 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 2,256 10.25 International Growth 2,085 9.50 Voyager 1,931 8.23 Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 854 8.96 Dividend Growth 1,300 10.67 Equity 1,290 8.90 European Growth 102 10.03 High Yield 143 7.30 Pacific Growth 1,878 7.87 Quality Income Plus 2,958 10.45 S&P 500 Index 636 8.89 Strategist 2,006 9.45 Utilities 3,124 9.32
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 52 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Variable Annuity 3 AssetManager with Income and Death Benefit Combination Option ------------------------------------------------------------ Unit activity during 2000: -------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 957 - Equity Growth - 6,591 (2) International Magnum - 4,040 - Mid Cap Value - 14,053 (7,657) U.S. Real Estate - 857 (7) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 40,969 (6,575) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 13,794 (6,930) AIM V.I. Value - 12,582 (3,582) Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth & Income - 4,299 (1,435) Alliance Premier Growth - 16,389 (7,064) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 4,928 (2,356) International Growth - 5,835 (959) Voyager - 1,886 (1) Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity - 8,774 (959) Capital Growth - 1,105 - Competitive Edge, "Best Ideas" - 17,289 (9,433) Dividend Growth - 501,004 (1,575) Equity - 6,508 (3) European Growth - 5,366 (2,585) High Yield - 4,882 (3,460) Income Builder - 2,912 (1) Information - 73 - Money Market - 3,380 (8) Pacific Growth - 2,017 (1,033) Quality Income Plus - 10,005 (12) S&P 500 Index - 5,537 (1) Short-Term Bond - 8,300 (34) Strategist - 4,200 (1) Utilities - 550,775 (3,613) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 957 $ 7.21 Equity Growth 6,589 8.24 International Magnum 4,040 9.66 Mid Cap Value 6,396 9.56 U.S. Real Estate 850 10.16 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 34,394 7.71 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 6,864 7.67 AIM V.I. Value 9,000 8.49 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth & Income 2,864 9.92 Alliance Premier Growth 9,325 8.00 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 2,572 10.24 International Growth 4,876 9.49 Voyager 1,885 8.23 Investments in the Morgan Stanley Dean Witter Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 7,815 8.96 Capital Growth 1,105 9.39 Competitive Edge, "Best Ideas" 7,856 8.50 Dividend Growth 499,429 10.67 Equity 6,505 8.90 European Growth 2,781 10.02 High Yield 1,422 7.30 Income Builder 2,911 10.00 Information 73 9.28 Money Market 3,372 10.12 Pacific Growth 984 7.86 Quality Income Plus 9,993 10.45 S&P 500 Index 5,536 8.88 Short-Term Bond 8,266 10.13 Strategist 4,199 9.44 Utilities 547,162 9.32
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 53 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Preferred Client Variable Annuity ------------------------------------------------------------ Unit activity during 2000: --------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity - 10,449 (26) Capital Growth - 31,812 (1,259) Competitive Edge, "Best Ideas" - 2,666 (1) Dividend Growth - 29,130 (26,851) Equity - 52,752 (1,980) European Growth - 22,291 (112) Global Dividend Growth - 2,768 - High Yield - 3,974 - Money Market - 40,082 (22,477) Pacific Growth - 3,042 - Quality Income Plus - 1,057 (1) S&P 500 Index - 1,369 - Short-term Bond - 3,068 (1) Strategist - 18,492 (213) Utilities - 6,093 (2) Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Equity Growth - 6,580 (26) Mid Cap Value - 5,849 (2) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 72,443 (27,337) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 4,661 (1) AIM V.I. Growth - 1,324 (1) AIM V.I. Value - 19,411 (564) Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth & Income - 18,108 - Alliance Premier Growth - 14,992 (424) Investments in the Putnam Variable Trust Sub-Accounts: International Growth - 52,946 - Voyager - 23,494 (665) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 10,423 $ 10.08 Capital Growth 30,553 10.64 Competitive Edge, "Best Ideas" 2,665 8.62 Dividend Growth 2,279 11.13 Equity 50,772 9.09 European Growth 22,179 9.93 Global Dividend Growth 2,768 10.65 High Yield 3,974 6.69 Money Market 17,605 10.49 Pacific Growth 3,042 6.80 Quality Income Plus 1,056 11.06 S&P 500 Index 1,369 9.48 Short-term Bond 3,067 10.51 Strategist 18,279 10.41 Utilities 6,091 10.00 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Equity Growth 6,554 8.98 Mid Cap Value 5,847 11.57 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 45,106 8.92 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 4,660 9.01 AIM V.I. Growth 1,323 8.23 AIM V.I. Value 18,847 8.69 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth & Income 18,108 11.74 Alliance Premier Growth 14,568 8.71 Investments in the Putnam Variable Trust Sub-Accounts: International Growth 52,946 9.44 Voyager 22,829 8.54
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 54 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Preferred Client Variable Annuity with Performance Death Benefit Option or Performance Income Benefit Option --------------------------------------------------------------------- Unit activity during 2000: -------------------------------- Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity - 53,707 (21,986) Capital Growth - 1,598 - Competitive Edge, "Best Ideas" - 25 - Dividend Growth - 16,096 (6,477) Equity - 299,409 (269,460) European Growth - 31,757 (16,809) Global Dividend Growth - 9,711 (8,739) Pacific Growth - 6,961 (632) Quality Income Plus - 395 - S&P 500 Index - 976 (1) Strategist - 11,768 (4) Utilities - 3,118 (1) Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 27 - Equity Growth - 3,143 (1) International Magnum - 3,440 - Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 97,688 (52,975) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 104 - AIM V.I. Growth - 5,968 (4,923) AIM V.I. Value - 12,128 - Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth & Income - 375 - Alliance Premier Growth - 7,285 (3) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 1,093 - International Growth - 15,806 (11,415) Voyager - 11,544 (7) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 31,721 $ 10.07 Capital Growth 1,598 10.62 Competitive Edge, "Best Ideas" 25 8.61 Dividend Growth 9,619 11.12 Equity 29,949 9.08 European Growth 14,948 9.92 Global Dividend Growth 972 10.63 Pacific Growth 6,329 6.80 Quality Income Plus 395 11.05 S&P 500 Index 975 9.47 Strategist 11,764 10.39 Utilities 3,117 9.99 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 27 6.17 Equity Growth 3,142 8.97 International Magnum 3,440 9.33 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 44,713 8.91 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 104 9.00 AIM V.I. Growth 1,045 8.22 AIM V.I. Value 12,128 8.68 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth & Income 375 11.73 Alliance Premier Growth 7,282 8.70 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 1,093 11.08 International Growth 4,391 9.42 Voyager 11,537 8.53
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 55 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Morgan Stanley Dean Witter Preferred Client Variable Annuity with Performance Benefit Combination Option or Death Benefit Combination Option ----------------------------------------------------------------------------- Unit activity during 2000: ------------------------------ Units Outstanding Units Units December 31, 1999 Issued Redeemed ------------------- ------------ ------------ Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity - 19,602 (746) Capital Growth - 6,749 - Competitive Edge, "Best Ideas" - 2,908 - Dividend Growth - 15,278 (7,431) Equity - 32,395 - European Growth - 15,791 - Global Dividend Growth - 1,561 - Pacific Growth - 2,566 - Quality Income Plus - 1,309 (1) S&P 500 Index - 25,914 (4,143) Strategist - 13,694 (2,702) Utilities - 6,335 (2,866) Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity - 2,212 - Equity Growth - 609 - International Magnum - 6,184 (2,953) Mid Cap Value - 3,997 (1) Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth - 54,739 (3,614) Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation - 3,020 - AIM V.I. Growth - 15,519 (4) AIM V.I. Value - 20,724 - Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth - 4,003 (1) Alliance Growth & Income - 16,648 (3,666) Alliance Premier Growth - 16,648 (6) Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income - 4,699 (4,212) International Growth - 22,787 - Voyager - 13,026 (4,144) Unit activity during 2000: -------------------------- Accumulated Units Outstanding Unit Value December 31, 2000 December 31, 2000 ----------------- ----------------- Investments in the Morgan Stanley Dean Witter Variable Investment Series Sub-Accounts: Aggressive Equity 18,856 $ 10.06 Capital Growth 6,749 10.61 Competitive Edge, "Best Ideas" 2,908 8.60 Dividend Growth 7,847 11.11 Equity 32,395 9.07 European Growth 15,791 9.91 Global Dividend Growth 1,561 10.62 Pacific Growth 2,566 6.79 Quality Income Plus 1,308 11.04 S&P 500 Index 21,771 9.46 Strategist 10,992 10.38 Utilities 3,469 9.98 Investments in The Universal Institutional Funds, Inc. (a) Sub-Accounts: Emerging Markets Equity 2,212 6.16 Equity Growth 609 8.96 International Magnum 3,231 9.32 Mid Cap Value 3,996 11.54 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 51,125 8.90 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V.I. Capital Appreciation 3,020 8.99 AIM V.I. Growth 15,515 8.21 AIM V.I. Value 20,724 8.67 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 4,002 8.54 Alliance Growth & Income 12,982 11.72 Alliance Premier Growth 16,642 8.69 Investments in the Putnam Variable Trust Sub-Accounts: Growth & Income 487 11.06 International Growth 22,787 9.41 Voyager 8,882 8.52
Units relating to accrued contract maintenance charges are included in units redeemed. (a) Previously known as Morgan Stanley Dean Witter Universal Funds, Inc. 56 PART C OTHER INFORMATION 24. FINANCIAL STATEMENTS AND EXHIBITS (a) FINANCIAL STATEMENTS Northbrook Life Insurance Company Financial Statements and Financial Schedule and Northbrook Variable Annuity Account II Financial Statements are included in Part B of this Registration Statement. (b) EXHIBITS (1) Resolution of the Board of Directors of Northbrook Life Insurance Company authorizing establishment of the Variable Annuity Account II (Incorporated herein by reference to Post-Effective Amendment No. 13 to Registrant's Registration Statement (File No. 033-35412) dated December 31, 1996). (2) Not applicable. (3)(a) Form of Underwriting Agreement (Incorporated herein by reference to Post-Effective Amendment No. 13 to Registrant's Registration Statement (File No. 033-35412) dated December 31, 1996). (b) Form of General Agency Agreement (Incorporated herein by reference to Post-Effective Amendment No. 13 to Registrant's Registration Statement (File No. 033-35412) dated December 31, 1996). (4)(a) Form of Contract and Certificate Amendments for the Preferred Client Variable Annuity (Incorporated herein by reference to Post-Effective Amendment No. 22 to Registrant's Registration Statement (File No. 033-35412) dated November 12, 1999). (b) Income Benefit Combination Rider 2 and Income and Death Benefit Combination Rider 2 (Previously filed in Post-Effective Amendment No. 2 to this Registration Statement (File No. 333-93871) dated March 2, 2000). (5) Form of Application for the Morgan Stanley Dean Witter Preferred Client Variable Annuity (Incorporated herein by reference to Post-Effective Amendment No. 22 to Registrant's Registration Statement (File No. 033-35412) dated November 12, 1999). (6)(a) Amended and Restated Articles of Incorporation and Articles of Redomestication of Northbrook Life Insurance Company (Incorporated herein by reference to Depositor's Form 10-K dated March 30, 1999). (b) Amended and Restated By-laws of Northbrook Life Insurance Company (Incorporated herein by reference to Depositor's Form 10-K dated March 30, 1999). (7) Not applicable. (8) Forms of Participation Agreements: (a) Morgan Stanley Dean Witter Variable Investment Series (Previously filed in Post-Effective Amendment No. 1 to this Registration Statement (File No. 333-93871) dated January 28, 2000). (b) Universal Institutional Funds, Inc. (Previously filed in Post-Effective Amendment No. 1 to this Registration Statement (File No. 333-93871) dated January 28, 2000). (c) AIM Variable Insurance Funds (Previously filed in Post-Effective Amendment No. 1 to this Registration Statement (File No. 333-93871) dated January 28, 2000). (d) Alliance Variable Products Series Fund (Previously filed in Post-Effective Amendment No. 1 to this Registration Statement (File No. 333-93871) dated January 28, 2000). (e) Putnam Variable Trust (Previously filed in Post-Effective Amendment No. 1 to this Registration Statement (File No. 333-93871) dated January 28, 2000). (f) Van Kampen Life Investment Trust (Previously filed in Post-Effective Amendment No. 1 to this Registration Statement (File No. 333-93871) dated January 28, 2000). (9) Opinion and Consent of Michael J. Velotta, Vice President, Secretary and General Counsel of Northbrook Life Insurance Company (Previously filed in Post- Effective Amendment No. 1 to this Registration Statement (File No. 333-93871) dated January 28, 2000). (10)(a) Independent Auditors' Consent. (b) Consent of Foley & Lardner. (11) Not applicable. (12) Not applicable. (13)(a) Performance Data Calculations (Incorporated herein by reference to Post-Effective Amendment No. 22 to Registrant's Registration Statement (File No. 033-35412) dated November 12, 1999). (b) Performance Data Calculations (Previously filed in Post-Effective Amendment No. 1 to this Registration Statement (File No. 333-93871) dated January 28, 2000). (14) Not applicable. (99) (a) Powers of Attorney for Thomas J. Wilson II, Michael J. Velotta and Samuel H. Pilch (Previously filed in Registrant's Post-effective Amendment No. 3 to Form N-4 Registration Statement (File No. 333-93871) dated May 1, 2000). (b) Powers of Attorney for Margaret G. Dyer, Marla G.Friedman, John C. Lounds, J. Kevin McCarthy, and Steven C. Verney filed herewith. 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR, NORTHBROOK LIFE INSURANCE COMPANY
NAME AND PRINCIPAL POSITION AND OFFICE WITH BUSINESS ADDRESS DEPOSITOR OF THE ACCOUNT Thomas J. Wilson, II Director, President and Chief Executive Officer (Principal Executive Officer) Michael J. Velotta Director, Vice President, Secretary and General Counsel Margaret G. Dyer Director John C. Lounds Director J. Kevin McCarthy Director Steven C. Verney Director and Vice President (Principal Financial Officer) John R. Hunter Vice President Kevin R. Slawin Vice President Timothy N. Vander Pas Assistant Vice President Sarah R. Donahue Assistant Vice President Casey J. Sylla Chief Investment Officer Marla G. Friedman Director and Vice President Karen C. Gardner Vice President Samuel H. Pilch Vice Presidnet and Controller (Principal Accounting Officer) James P. Zils Treasurer Ronald A. Johnson Assistant Vice President Barry S. Paul Assistant Vice President and Assistant Treasurer Patricia W. Wilson Assistant Vice President, Assistant Secretary and Assistant Treasurer Joanne M. Derrig Assistant Secretary, Assistant General Counsel and Chief Compliance Officer Susan L. Lees Assistant Secretary Carol S. Watson Assistant Secretary Paul N. Kierig Assistant Secretary Mary J. McGinn Assistant Secretary Errol Cramer Corporate Actuary
The principal business address of Ms. Watson is 2940 South 84th Street, Lincoln, Nebraska, 68506. The principal address of the other foregoing officers and directors is 3100 Sanders Road, Northbrook, Illinois 60062. 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR REGISTRANT Incorporated herein by reference to Annual Report on Form 10-K, filed by the Allstate Corporation on March 26, 2001 (File No. 1-11840). 27. NUMBER OF CONTRACT OWNERS As of January 31, 2001 , there were 94 nonqualified contracts and 41 qualified contracts. 28. INDEMNIFICATION The General Agency Agreement (Exhibit 3(b)) contains a provision in which Northbrook Life agrees to indemnify Dean Witter Reynolds as Underwriter for certain damages and expenses that may be caused by actions, statements or omissions by Northbrook Life. The Agreement to Purchase Shares contains a similar provision in paragraph 16 of Exhibit 12. Insofar as indemnification for liability arising out of 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 payment by the registrant of expenses incurred 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 is 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. 29. PRINCIPAL UNDERWRITERS (a) Registrant's principal underwriter, Dean Witter Reynolds Inc., is the principal underwriter for the following affiliated investment companies: Northbrook Variable Annuity Account Northbrook Life Variable Life Separate Account A Allstate Life of New York Variable Annuity Account Allstate Life of New York Variable Annuity Account II (b) The directors and officers of the principal underwriter are:
Name and Principal Business Positions and Offices Address* of Each Such Person with Underwriter Bruce F. Alonso Director, Executive Vice President John H. Schaefer President, Director, Chief Operating Officer Donald G. Kempf, Jr. Director John J. Mack Director Stephen S. Crawford Director Robert G. Scott Director Philip J. Purcell Director, Chairman and Chief Executive Officer James F. Higgins Director Stephen R. Miller Director, Executive Vice President Mitchell M. Merin Director Michael H. Stone Executive Vice President, General Counsel and Secretary Lee Horwitz Senior Vice President and Controller Joseph G. Siniscalchi Director, Executive Vice President Thomas O'Connell Executive Vice President Frederick J. Frohne Executive Vice President Ronald T. Carman Senior Vice President, Associate General Counsel and Assistant Secretary Joyce L. Kramer Senior Vice President, Deputy General Counsel and Assistant Secretary Alexander C. Frank Senior Vice President and Treasurer Charles F. Vadala, Jr. Senior Vice President and Chief Financial Officer Michael T. Cunningham Senior Vice President Lorena J. Kern Senior Vice President Debra M. Aaron Vice President Darlene R. Lockhart Vice President Harvey B. Mogenson Vice President Kevin Mooney Vice President Saul Rosen Vice President Frank G. Skubic Vice President Eileen S. Wallace Vice President Sabrina Hurley Assistant Secretary
* The principal business address of Dean Witter Reynolds Inc. is Two World Trade Center, New York, New York 10048. (c) Compensation of Dean Witter Reynolds Inc. The following commissions and other compensation were received by each principal underwriter, directly or indirectly, from the Registrant during the Registrant's last fiscal year.
(1) (2) (3) (4) (5) Net Underwriting Name of Principal Discounts and Compensation on Brokerage Underwriter Commissions Redemption Commissions Compensation - ------------------------------------------------------------------------------------ Dean Witter Reynolds Inc. N/A N/A $37,298,111.57 N/A
30. LOCATION OF ACCOUNTS AND RECORDS The Depositor, Northbrook Life Insurance Company, is located at 3100 Sanders Road, Northbrook, Illinois 60062. The Distributor, Dean Witter Reynolds Inc., is located at Two World Trade Center, New York, New York 10048. Each company maintains those accounts and records required to be maintained pursuant to Section 31(a) of the Investment Company Act and the rules promulgated thereunder. 31. MANAGEMENT SERVICES None 32. UNDERTAKINGS The Registrant undertakes to file a post-effective amendment to the Registration Statement as frequently as is necessary to ensure that the audited financial statements in the Registration Statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted. Registrant furthermore agrees to include either, as part of any prospectus or application to purchase a contract offered by the prospectus, a toll-free number that an applicant can call to request a Statement of Additional Information or a post card or similar written communication that the applicant can remove to send for a Statement of Additional Information. Finally, the Registrant agrees to deliver any Statement of Additional Information and any Financial Statements required to be made available under this Form N-4 promptly upon written or oral request. REPRESENTATIONS PURSUANT TO SECTION 403(B) OF THE INTERNAL REVENUE CODE The Company represents that it is relying upon a November 28, 1988 Securities and Exchange Commission no-action letter issued to the American Council of Life Insurance and that the provisions of paragraphs 1-4 of the no-action letter have been complied with. REPRESENTATION REGARDING CONTRACT EXPENSES Northbrook represents that the fees and charges deducted under the Contracts described in this Registration Statement, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by Northbrook under the Contracts. Northbrook bases its representation on its assessment of all of the facts and circumstances, including such relevant factors as: the nature and extent of such services, expenses and risks; the need for Northbrook to earn a profit; the degree to which the Contracts include innovative features; and the regulatory standards for exemptive relief under the Investment Company Act of 1940 used prior to October 1996, including the range of industry practice. This representation applies to all Contracts sold pursuant to this Registration Statement, including those sold on the terms specifically described in the prospectus(es) contained herein, or any variations therein, based on supplements, endorsements, or riders to any Contracts or prospectus(es), or otherwise. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Northbrook Variable Annuity Account II, certifies that it meets the requirements of Securities Act Rule 485(b) for effectiveness of this amended Registration Statement and has caused this amended Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, all in the Township of Northfield, State of Illinois, on the 17th day of April, 2001. NORTHBROOK VARIABLE ANNUITY ACCOUNT II (REGISTRANT) BY: NORTHBROOK LIFE INSURANCE COMPANY (DEPOSITOR) By: /s/MICHAEL J. VELOTTA ------------------------------ Michael J. Velotta Vice President, Secretary and General Counsel As required by the Securities Act of 1933, this amended Registration Statement has been duly signed below by the following Directors and Officers of Northbrook Life Insurance Company, on the 17th day of April, 2001. */THOMAS J. WILSON, II President, Chief Executive Officer Thomas J. Wilson, II and Director, (Principal Executive Officer) /s/MICHAEL J. VELOTTA Vice President, Secretary, Michael J. Velotta General Counsel and Director */MARGARET G. DYER Director Margaret C. Dyer */MARLA G. FRIEDMAN Director and Vice President Marla G. Friedman */JOHN C. LOUNDS Director John C. Lounds */J. KEVIN MCCARTHY Director J. Kevin McCarthy */STEVEN C. VERNEY Director and Vice President Steven C. Verney (Principal Financial Officer) */SAMUEL H. PILCH Vice President and Controller Samuel H. Pilch (Principal Accounting Officer) */ By Michael J. Velotta, pursuant to Powers of Attorney filed previously or herewith. EXHIBIT INDEX EXHIBIT DESCRIPTION - ------------ ------------------------- 10(a) Independent Auditor's Consent 10(b) Consent of Foley & Lardner 99(b) Powers of Attorney for Margaret G. Dyer, Marla G. Friedman, John C. Lounds, J. Kevin McCarthy, and Steven C. Verney EX-10 2 0002.txt CONSENTS (10)(a) Independent Auditors' Consent INDEPENDENT AUDITORS' CONSENT We consent to the use in this Post-Effective Amendment No. 4 to Registration Statement No. 333-93871 of Northbrook Variable Annuity Account II of Northbrook Life Insurance Company on Form N-4 of our report dated February 23, 2001 relating to the financial statements and the related financial statement schedule of Northbrook Life Insurance Company, and our report dated March 16, 2001 relating to the financial statements of Northbrook Variable Annuity Account II, appearing in the Statement of Additional Information (which is incorporated by reference in the Prospectus of Northbrook Variable Annuity Account II), which is part of such Registration Statement, and to the references to us under the heading "Experts" in such Statement of Additional Information. /s/ Deloitte & Touche LLP Chicago, Illinois April 13, 2001 (10)(b) Consent of Foley & Lardner CONSENT OF FOLEY & LARDNER We hereby consent to the reference to our firm under the caption "Legal Matters" in the prospectus contained in Post-Effective Amendment No. 4 to the Form N-4 Registration Statement of Northbrook Variable Annuity Account II (File No. 333-93871). /s/ FOLEY & LARDNER FOLEY & LARDNER Washington, D.C. April 12, 2001 EX-99 3 0003.txt POWERS OF ATTORNEY (99)(b) Powers of Attorney for Margaret G. Dyer, Marla G.Friedman, John C. Lounds, Kevin McCarthy, and Steven C. Verney POWER OF ATTORNEY WITH RESPECT TO NORTHBROOK VARIABLE ANNUITY ACCOUNT II (REGISTRANT) AND NORTHBROOK LIFE INSURANCE COMPANY (DEPOSITOR) Know all men by these presents that the undersigned director of Northbrook Life Insurance Company constitutes and appoints Thomas J. Wilson, II, and Michael J. Velotta, and each of them (with full power to each of them to act alone) as his true and lawful attorney-in-fact and agent, with full power of substitution, for him in any and all capacities, to sign any registration statements of Northbrook Life Insurance Company and its Northbrook Variable Annuity Account II and any amendments thereto, and to file the same, with exhibits and other documents in connection therewith, with the Securities and Exchange Commission or any other regulatory authority as may be necessary or desirable, hereby ratifying and confirming all that each of said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. April 5, 2001 /s/ STEVEN C. VERNEY - ---------------------------------- Steven C. Verney Director & Vice President (Principal Financial Officer) POWER OF ATTORNEY WITH RESPECT TO NORTHBROOK VARIABLE ANNUITY ACCOUNT II (REGISTRANT) AND NORTHBROOK LIFE INSURANCE COMPANY (DEPOSITOR) Know all men by these presents that the undersigned director of Northbrook Life Insurance Company constitutes and appoints Thomas J. Wilson, II, and Michael J. Velotta, and each of them (with full power to each of them to act alone) as his true and lawful attorney-in-fact and agent, with full power of substitution, for him in any and all capacities, to sign any registration statements of Northbrook Life Insurance Company and its Northbrook Variable Annuity Account II and any amendments thereto, and to file the same, with exhibits and other documents in connection therewith, with the Securities and Exchange Commission or any other regulatory authority as may be necessary or desirable, hereby ratifying and confirming all that each of said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. April 5, 2001 /s/ J. KEVIN MCCARTHY - ----------------------------------- J. Kevin McCarthy Director POWER OF ATTORNEY WITH RESPECT TO NORTHBROOK VARIABLE ANNUITY ACCOUNT II (REGISTRANT) AND NORTHBROOK LIFE INSURANCE COMPANY (DEPOSITOR) Know all men by these presents that the undersigned director of Northbrook Life Insurance Company constitutes and appoints Thomas J. Wilson, II, and Michael J. Velotta, and each of them (with full power to each of them to act alone) as his true and lawful attorney-in-fact and agent, with full power of substitution, for him in any and all capacities, to sign any registration statements of Northbrook Life Insurance Company and its Northbrook Variable Annuity Account II and any amendments thereto, and to file the same, with exhibits and other documents in connection therewith, with the Securities and Exchange Commission or any other regulatory authority as may be necessary or desirable, hereby ratifying and confirming all that each of said attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. April 5, 2001 /s/ JOHN C. LOUNDS - ------------------------------ John C. Lounds Director POWER OF ATTORNEY WITH RESPECT TO NORTHBROOK VARIABLE ANNUITY ACCOUNT II (REGISTRANT) AND NORTHBROOK LIFE INSURANCE COMPANY (DEPOSITOR) Know all men by these presents that the undersigned director of Northbrook Life Insurance Company constitutes and appoints Thomas J. Wilson, II, and Michael J. Velotta, and each of them (with full power to each of them to act alone) as her true and lawful attorney-in-fact and agent, with full power of substitution, for her in any and all capacities, to sign any registration statements of Northbrook Life Insurance Company and its Northbrook Variable Annuity Account II and any amendments thereto, and to file the same, with exhibits and other documents in connection therewith, with the Securities and Exchange Commission or any other regulatory authority as may be necessary or desirable, hereby ratifying and confirming all that each of said attorney-in-fact and agent, or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. April 5, 2001 /s/ MARLA G. FRIEDMAN - ------------------------------------- Marla G. Friedman Director and Vice President POWER OF ATTORNEY WITH RESPECT TO NORTHBROOK VARIABLE ANNUITY ACCOUNT II (REGISTRANT) AND NORTHBROOK LIFE INSURANCE COMPANY (DEPOSITOR) Know all men by these presents that the undersigned director of Northbrook Life Insurance Company constitutes and appoints Thomas J. Wilson, II, and Michael J. Velotta, and each of them (with full power to each of them to act alone) as her true and lawful attorney-in-fact and agent, with full power of substitution, for her in any and all capacities, to sign any registration statements of Northbrook Life Insurance Company and its Northbrook Variable Annuity Account II and any amendments thereto, and to file the same, with exhibits and other documents in connection therewith, with the Securities and Exchange Commission or any other regulatory authority as may be necessary or desirable, hereby ratifying and confirming all that each of said attorney-in-fact and agent, or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof. April 5, 2001 /s/ MARGARET G. DYER - ---------------------------------- Margaret G. Dyer Director -----END PRIVACY-ENHANCED MESSAGE-----