-----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, F/d5VVq8J53JVNxlfSgkaQR53rkV+Euy0srJ7fnU8OTE31FB9vXHU4rzHAYZleCq fznGkSEwZiA3yh+TXFNkAQ== 0000945094-02-000277.txt : 20020430 0000945094-02-000277.hdr.sgml : 20020430 ACCESSION NUMBER: 0000945094-02-000277 CONFORMED SUBMISSION TYPE: 485BPOS PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20020429 EFFECTIVENESS DATE: 20020501 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHBROOK VARIABLE ANNUITY ACCOUNT II CENTRAL INDEX KEY: 0000864922 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1933 Act SEC FILE NUMBER: 033-35412 FILM NUMBER: 02624588 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 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTHBROOK VARIABLE ANNUITY ACCOUNT II CENTRAL INDEX KEY: 0000864922 STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 485BPOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-06116 FILM NUMBER: 02624589 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 va2file5102.txt NLIC VA2, VA2AM, VA3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 29, 2002 ------------------------------------------------------------------ FILE NOS. 033-35412 811-06116 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 POST-EFFECTIVE AMENDMENT NO. 36 /X/ AND/OR REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 AMENDMENT NO. 44 /X/ NORTHBROOK VARIABLE ANNUITY ACCOUNT II (Exact Name of Registrant) NORTHBROOK LIFE INSURANCE COMPANY (Name of Depositor) 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, JR. DANIEL J. FITZPATRICK NORTHBROOK LIFE INSURANCE COMPANY MORGAN STANLEY DW INC. 3100 SANDERS ROAD, J5B 1585 BROADWAY NORTHBROOK, ILLINOIS 60062 NEW YORK, NEW YORK 10036 Approximate date of proposed public offering: Continuous It is proposed that this filing will become effective (check appropriate box): / / immediately upon filing pursuant to paragraph (b) of Rule 485 /X/ on May 1, 2002 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 If appropriate, check the following box / / this post-effective amendment designates a new effective date for a previously filed post-effective amendment. Title of Securities Being Registered: Units of interest in the Northbrook Variable Annuity Account II under deferred variable annuity contracts. MORGAN STANLEY VARIABLE ANNUITY II NORTHBROOK LIFE INSURANCE COMPANY 300 N. MILWAUKEE AVE. VERNON HILLS, IL 60061 TELEPHONE NUMBER: 1-800-654-2397 PROSPECTUS DATED MAY 1, 2002
- -------------------------------------------------------------------------------- Northbrook Life Insurance Company ("NORTHBROOK") is offering the Morgan Stanley Variable Annuity II, an individual and group flexible premium deferred variable annuity contract ("CONTRACT"). This prospectus contains information about the Contract that you should know before investing. Please keep it for future reference. Northbrook no longer offers this Contract in most states. Please contact your Morgan Stanley Financial Advisor for current availability. If you have already purchased the Contract you may continue to make purchase payments according to the Contract. The Contract offers 38 investment alternatives ("INVESTMENT ALTERNATIVES"). The investment alternatives include 2 fixed account options ("FIXED ACCOUNT OPTIONS") and 36 variable sub-accounts ("VARIABLE SUB-ACCOUNTS") of the Northbrook Variable Annuity Account II ("VARIABLE ACCOUNT"). Each Variable Sub-Account invests exclusively in shares of portfolios ("PORTFOLIOS") of the following mutual funds ("FUNDS"): MORGAN STANLEY VARIABLE INVESTMENT ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. SERIES (CLASS X SHARES) (CLASS B SHARES) THE UNIVERSAL INSTITUTIONAL FUNDS, INC. LSA VARIABLE SERIES TRUST VAN KAMPEN LIFE INVESTMENT TRUST PUTNAM VARIABLE TRUST (CLASS IB SHARES) AIM VARIABLE INSURANCE FUNDS (SERIES I)
WE (Northbrook) have filed a Statement of Additional Information, dated May 1, 2002, with the Securities and Exchange Commission ("SEC"). It contains more information about the Contract and is incorporated herein by reference, which means that it is legally a part of this prospectus. Its table of contents appears on page 56 of this prospectus. For a free copy, please write or call us at the address or telephone number above, or go to the SEC's Web site (http://www.sec.gov). You can find other information and documents about us, including documents that are legally a part of this prospectus, at the SEC's Web site. - -------------------------------------------------------------------------------- THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR IMPORTANT DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS, NOR NOTICES HAS IT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A FEDERAL CRIME. INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS 1 TABLE OF CONTENTS - -------------------------------------------------------------------
PAGE - ----------------------------------------------------- OVERVIEW - ----------------------------------------------------- Important Terms 3 - ----------------------------------------------------- The Contract at a Glance 4 - ----------------------------------------------------- How the Contract Works 7 - ----------------------------------------------------- Expense Table 8 - ----------------------------------------------------- Financial Information 14 - ----------------------------------------------------- CONTRACT FEATURES - ----------------------------------------------------- The Contract 15 - ----------------------------------------------------- Purchases 16 - ----------------------------------------------------- Contract Value 17 - ----------------------------------------------------- INVESTMENT ALTERNATIVES - ----------------------------------------------------- The Variable Sub-Accounts 18 - ----------------------------------------------------- The Fixed Account Options 20 - ----------------------------------------------------- Transfers 21 - ----------------------------------------------------- Expenses 23 - ----------------------------------------------------- Access To Your Money 24 - ----------------------------------------------------- Income Payments 25 - -----------------------------------------------------
- -----------------------------------------------------
PAGE Death Benefits 29 - ----------------------------------------------------- Longevity Reward Rider 33 - ----------------------------------------------------- OTHER INFORMATION - ----------------------------------------------------- More Information: 34 - ----------------------------------------------------- Northbrook 34 - ----------------------------------------------------- The Variable Account 35 - ----------------------------------------------------- The Portfolios 35 - ----------------------------------------------------- The Contract 36 - ----------------------------------------------------- Qualified Plans 36 - ----------------------------------------------------- Legal Matters 36 - ----------------------------------------------------- Taxes 36 - ----------------------------------------------------- Performance Information 42 - ----------------------------------------------------- APPENDIX A -- ACCUMULATION UNIT VALUES 43 - ----------------------------------------------------- APPENDIX B -- CALCULATION OF ENHANCED EARNINGS DEATH BENEFIT 55 - ----------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS 56 - -----------------------------------------------------
2 PROSPECTUS IMPORTANT TERMS - ------------------------------------------------------------------- This prospectus uses a number of important terms with which you may not be familiar. The index below identifies the page that describes each term. The first use of each term in this prospectus appears in highlighted text.
PAGE - ----------------------------------------------------- Accumulation Phase - ----------------------------------------------------- Accumulation Unit - ----------------------------------------------------- Accumulation Unit Value - ----------------------------------------------------- Annuitant - ----------------------------------------------------- Automatic Portfolio Rebalancing Program - ----------------------------------------------------- Automatic Additions Program - ----------------------------------------------------- Beneficiary - ----------------------------------------------------- Cancellation Period - ----------------------------------------------------- Contract* - ----------------------------------------------------- Contract Anniversary - ----------------------------------------------------- Contract Owner ("You") - ----------------------------------------------------- Contract Value - ----------------------------------------------------- Contract Year - ----------------------------------------------------- Death Benefit Anniversary - ----------------------------------------------------- Death Benefit Combination Option - ----------------------------------------------------- Dollar Cost Averaging Program - ----------------------------------------------------- Dollar Cost Averaging Fixed Account Options - ----------------------------------------------------- Due Proof of Death - ----------------------------------------------------- Enhanced Death Benefit Option - ----------------------------------------------------- Enhanced Earnings Death Benefit Option - ----------------------------------------------------- Fixed Account Options - ----------------------------------------------------- Free Withdrawal Amount - ----------------------------------------------------- Funds - -----------------------------------------------------
- ----------------------------------------------------- Guarantee Periods
PAGE - ----------------------------------------------------- Income Benefit Combination Option 2 - ----------------------------------------------------- Income and Death Benefit Combination Option 2 - ----------------------------------------------------- Income Plan - ----------------------------------------------------- Investment Alternatives - ----------------------------------------------------- Issue Date - ----------------------------------------------------- Longevity Reward Rider - ----------------------------------------------------- Northbrook ("We") - ----------------------------------------------------- Payout Phase - ----------------------------------------------------- Payout Start Date - ----------------------------------------------------- Performance Benefit Combination Option - ----------------------------------------------------- Performance Death Benefit Option - ----------------------------------------------------- Performance Income Benefit Option - ----------------------------------------------------- Portfolios - ----------------------------------------------------- Qualified Contracts - ----------------------------------------------------- Right to Cancel - ----------------------------------------------------- SEC - ----------------------------------------------------- Settlement Value - ----------------------------------------------------- Systematic Withdrawal Program - ----------------------------------------------------- Valuation Date - ----------------------------------------------------- Variable Account - ----------------------------------------------------- Variable Sub-Account - -----------------------------------------------------
*In certain states the Contract is available only as a group Contract. In these states, we will issue you a certificate that represents your ownership and that summarizes the provisions of the group Contract. References to "Contract" in this prospectus include certificates unless the context requires otherwise. 3 PROSPECTUS THE CONTRACT AT A GLANCE - ------------------------------------------------------------------- The following is a snapshot of the Contract. Please read the remainder of this prospectus for more information. FLEXIBLE PAYMENTS You can purchase a Contract with an initial purchase payment as little as $1,000 (we may increase this minimum to as much as to $4,000). You can add to your Contract as often and as much as you like. Each payment must be at least $25. You must maintain a minimum account size of $500. - -------------------------------------------------------------------------------------------------------- RIGHT TO CANCEL You may cancel your Contract within 20 days of receipt or any longer period as your state may require ("CANCELLATION PERIOD"). Upon cancellation, we will return your purchase payments adjusted, to the extent applicable law permits, to reflect the investment experience of any amounts allocated to the Variable Account including the deduction of mortality and expense risk charges and administrative expense charges. - -------------------------------------------------------------------------------------------------------- EXPENSES You will bear the following expenses: - Total Variable Account annual fees (mortality and expense risk charge and administrative expense charge) equal the following (as a % of average daily net assets): Base Contract 1.35% w/Enhanced Death Benefit Option 1.48% w/Performance Death Benefit Option 1.48% w/Performance Income Benefit Option 1.48% w/Performance Benefit Combination Option 1.59% w/Death Benefit Combination Option 1.59% w/Income Benefit Combination Option 2 1.65% w/Income and Death Benefit Combination Option 2 1.85% - If you select the Enhanced Earnings Death Benefit Option, you would pay an additional mortality and expense risk charge of 0.20%. - If you qualify for and elect the Longevity Reward Rider, your mortality and expense risk charge would be lower by 0.07% (see the description of each option and the Longevity Reward Rider for the availability of each.) - Annual contract maintenance charge of $30 (waived in certain cases) - Withdrawal charges ranging from 0% to 6% of purchase payment(s) withdrawn (with certain exceptions) - Transfer fee of $25 after 12th transfer in any CONTRACT YEAR (fee currently waived) - State premium tax (if your state imposes one) In addition, each Portfolio pays expenses that you will bear indirectly if you invest in a Variable Sub-Account. - --------------------------------------------------------------------------------------------------------
PROSPECTUS 4 INVESTMENT ALTERNATIVES The Contract offers 38 investment alternatives including: - 2 Fixed Account Options (which credit interest at rates we guarantee) - 36 Variable Sub-Accounts investing in Portfolios offering professional money management by these investment advisers: - Morgan Stanley Investment Advisors Inc. - Morgan Stanley Investment Management Inc. - Morgan Stanley Investments, LP. - Van Kampen Asset Management Inc. - A I M Advisors, Inc. - Alliance Capital Management, L.P. - LSA Asset Management LLC - Putnam Investment Management, LLC To find out current rates being paid on the Fixed Account Options, or to find out how the Variable Sub-Accounts have performed, call us at 1-800-654-2397. - -------------------------------------------------------------------------------------------------------- SPECIAL SERVICES For your convenience, we offer these special services: - AUTOMATIC ADDITIONS PROGRAM - AUTOMATIC PORTFOLIO REBALANCING PROGRAM - DOLLAR COST AVERAGING PROGRAM - SYSTEMATIC WITHDRAWAL PROGRAM - -------------------------------------------------------------------------------------------------------- INCOME PAYMENTS You can choose fixed income payments, variable income payments, or a combination of the two. You can receive your income payments in one of the following ways: - life income with payments guaranteed for 10 years - joint and survivor life income payments - guaranteed payments for a specified period - -------------------------------------------------------------------------------------------------------- DEATH BENEFITS If you or the ANNUITANT dies before the PAYOUT START DATE, we will pay the death benefit described in the Contract. We also offer 4 death benefit options. - --------------------------------------------------------------------------------------------------------
PROSPECTUS 5 TRANSFERS Before the Payout Start Date, you may transfer your Contract value ("CONTRACT VALUE") among the investment alternatives, with certain restrictions. Transfers must be at least $100 or the entire amount in the investment alternative, whichever is less. We do not currently impose a fee upon transfers. However, we reserve the right to charge $25 per transfer after the 12th transfer in each "Contract Year," which we measure from the date we issue your Contract or a Contract anniversary ("CONTRACT ANNIVERSARY"). - -------------------------------------------------------------------------------------------------------- WITHDRAWALS You may withdraw some or all of your Contract Value at anytime during the Accumulation Phase. In general, you must withdraw at least $100 at a time or the total amount in the investment alternative, if less. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. A withdrawal charge also may apply.
6 PROSPECTUS HOW THE CONTRACT WORKS - ------------------------------------------------------------------- The Contract basically works in two ways. First, the Contract can help you (we assume you are the "CONTRACT OWNER") save for retirement because you can invest in up to 38 investment alternatives and pay no federal income taxes on any earnings until you withdraw them. You do this during what we call the "ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on the date we issue your Contract (we call that date the "ISSUE DATE") and continues until the Payout Start Date, which is the date we apply your money to provide income payments. During the Accumulation Phase, you may allocate your purchase payments to any combination of the Variable Sub-Accounts and/or the Fixed Account Options. If you invest in the Fixed Account Options, you will earn a fixed rate of interest that we declare periodically. If you invest in any of the Variable Sub-Accounts, your investment return will vary up or down depending on the performance of the corresponding Portfolios. Second, the Contract can help you plan for retirement because you can use it to receive retirement income for life and/or for a pre-set number of years, by selecting one of the income payment options (we call these "INCOME PLANS") described on page . You receive income payments during what we call the "PAYOUT PHASE" of the Contract, which begins on the Payout Start Date and continues until we make the last payment required by the Income Plan you select. During the Payout Phase, if you select a fixed income payment option, we guarantee the amount of your payments, which will remain fixed. If you select a variable income payment option, based on one or more of the Variable Sub-Accounts, the amount of your payments will vary up or down depending on the performance of the corresponding Portfolios. The amount of money you accumulate under your Contract during the Accumulation Phase and apply to an Income Plan will determine the amount of your income payments during the Payout Phase. The timeline below illustrates how you might use your Contract.
ISSUE ACCUMULATION PHASE PAYOUT PAYOUT DATE START PHASE DATE ------------------------------------------------------------------------------------------------------ You buy You save for retirement You elect to You can receive Or you can a receive income payments receive income Contract income for a set payments for life payments or period receive a lump sum payment
As the Contract owner, you exercise all of the rights and privileges provided by the Contract. If you die, any surviving Contract owner or, if there is none, the BENEFICIARY will exercise the rights and privileges provided by the Contract. SEE "The Contract." In addition, if you die before the Payout Start Date, we will pay a death benefit to any surviving Contract owner, or if there is none, to your Beneficiary. SEE "Death Benefits." Please call us at 1-800-654-2397 if you have any question about how the Contract works. 7 PROSPECTUS EXPENSE TABLE - ------------------------------------------------------------------- The table below lists the expenses that you will bear directly or indirectly when you buy a Contract. The table and the examples that follow do not reflect premium taxes that may be imposed by the state where you reside. For more information about Variable Account expenses, see "Expenses", below. For more information about Portfolio expenses, please refer to the accompanying prospectuses for the Funds. CONTRACT OWNER TRANSACTION EXPENSES Withdrawal Charge (as a percentage of purchase payments withdrawn)* (Without the Longevity Reward Rider)
Number of Complete Years Since We Received the Purchase Payment Being Withdrawn**: 0 1 2 3 - ------------------------------------------------------------------------------------------------------------------------------- Applicable Charge 6% 5% 4% 3% - ------------------------------------------------------------------------------------------------------------------------------- Annual Contract Maintenance Charge $30.00*** - ------------------------------------------------------------------------------------------------------------------------------- Transfer Fee $25.00**** - ------------------------------------------------------------------------------------------------------------------------------- Number of Complete Years Since We Received the Purchase Payment Being Withdrawn**: 4 5 6+ - ------------------------------------------------------------------------------------ Applicable Charge 2% 1% 0% - ------------------------------------------------------------------------------------ Annual Contract Maintenance Charge - ------------------------------------------------------------------------------------ Transfer Fee - ------------------------------------------------------------------------------------
*During each Contract Year, you may withdraw up to 15% of the aggregate amount of your purchase payments as of the beginning of the Contract Year without incurring a withdrawal charge. **If you qualify for and elect the Longevity Reward Rider, a withdrawal charge of up to 3% will apply to purchase payments received before or after the Rider date. See "Longevity Reward Rider" on page for details. ***If you qualify for and elect the Longevity Reward Rider, we will waive the contract maintenance charge for the life of the Contract provided your total Contract Value is $40,000 or more on or after the date we issue the Rider (Rider Date). ****Applies solely to the thirteenth and subsequent transfers within a Contract Year excluding transfers due to dollar cost averaging and automatic portfolio rebalancing. We are currently waiving the transfer fee. VARIABLE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF DAILY NET ASSET VALUE DEDUCTED FROM EACH VARIABLE SUB-ACCOUNT)
With the Enhanced Death Benefit,* With the the Performance Performance Income Benefit With the Benefit,* Combination* With the Income or the or the Death Income and Death Performance Benefit Benefit Benefit Base Death Benefit Combination Combination Combination Contract Option Option Option 2** Option 2**+ - ------------------------------------------------------------------------------------------------------------------------------ Mortality and Expense Risk Charge*** 1.25% 1.38% 1.49% 1.55% 1.75% - ------------------------------------------------------------------------------------------------------------------------------ Administrative Expense Charge 0.10% 0.10% 0.10% 0.10% 0.10% - ------------------------------------------------------------------------------------------------------------------------------ Total Variable Account Annual Expense*** 1.35% 1.48% 1.59% 1.65% 1.85% - ------------------------------------------------------------------------------------------------------------------------------ If the Enhanced Earnings Death Benefit Option is elected with the Base Contract or with one of the Options listed above - ------------------------------------------------------------------------------------------------------------------------------ Mortality and Expense Risk Charge*** 1.45% 1.58% 1.69% 1.75% 1.95% - ------------------------------------------------------------------------------------------------------------------------------ Administrative Expense Charge 0.10% 0.10% 0.10% 0.10% 0.10% - ------------------------------------------------------------------------------------------------------------------------------ Total Variable Account Annual Expense*** 1.55% 1.68% 1.79% 1.85% 2.05% - ------------------------------------------------------------------------------------------------------------------------------
* The Enhanced Death Benefit Option, Performance Income Benefit Option, and the Performance Benefit Combination Option ("Old Options") were only available for Contracts issued on or before October 30, 2000 and only if added to such Contracts on or before January 31, 2001. ** The Income Benefit Combination Option 2 and the Income and Death Benefit Combination Option 2 ("New Options") are available with Contracts issued on or after October 30, 2000. The New Options are also available with Contracts issued before October 30, 2000 subject to certain limitations. See the description of these Options on pages and for details. *** If you qualify for and elect the Longevity Reward Rider, the mortality and expense risk charge is reduced by 0.07% under the basic policy or any Option described above. + For Contracts issued in the state of Washington this Rider is replaced by the Income and Performance Death Benefit Option. This Option is available on or about July 1, 2002 and carries a mortality and expense risk charge of 1.68%. 8 PROSPECTUS PORTFOLIO ANNUAL EXPENSES (after Voluntary Reductions and Reimbursements for certain Portfolios) (as a percentage of Portfolio average daily net assets)(1)
Rule Total Management 12b-1 Other Portfolio Portfolio Fees Fees Expenses Annual Expenses - ----------------------------------------------------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X SHARES) - ----------------------------------------------------------------------------------------------------------------------------- Aggressive Equity Portfolio 0.75% N/A 0.09% 0.84% - ----------------------------------------------------------------------------------------------------------------------------- Capital Growth Portfolio 0.65% N/A 0.05% 0.70% - ----------------------------------------------------------------------------------------------------------------------------- Competitive Edge Portfolio 0.65% N/A 0.10% 0.75% - ----------------------------------------------------------------------------------------------------------------------------- Dividend Growth Portfolio 0.54% N/A 0.01% 0.55% - ----------------------------------------------------------------------------------------------------------------------------- Equity Portfolio 0.49% N/A 0.02% 0.51% - ----------------------------------------------------------------------------------------------------------------------------- European Growth Portfolio 0.95% N/A 0.07% 1.02% - ----------------------------------------------------------------------------------------------------------------------------- Global Dividend Growth Portfolio 0.75% N/A 0.05% 0.80% - ----------------------------------------------------------------------------------------------------------------------------- High Yield Portfolio 0.50% N/A 0.09% 0.59% - ----------------------------------------------------------------------------------------------------------------------------- Income Builder Portfolio 0.75% N/A 0.06% 0.81% - ----------------------------------------------------------------------------------------------------------------------------- Information Portfolio (2) 0.75% N/A 0.87% 1.62% - ----------------------------------------------------------------------------------------------------------------------------- Limited Duration Portfolio (3) 0.45% N/A 0.20% 0.65% - ----------------------------------------------------------------------------------------------------------------------------- Money Market Portfolio 0.50% N/A 0.01% 0.51% - ----------------------------------------------------------------------------------------------------------------------------- Pacific Growth Portfolio 0.95% N/A 0.78% 1.73% - ----------------------------------------------------------------------------------------------------------------------------- Quality Income Plus Portfolio 0.50% N/A 0.03% 0.53% - ----------------------------------------------------------------------------------------------------------------------------- S&P 500 Index Portfolio 0.40% N/A 0.06% 0.46% - ----------------------------------------------------------------------------------------------------------------------------- Strategist Portfolio 0.50% N/A 0.02% 0.52% - ----------------------------------------------------------------------------------------------------------------------------- Utilities Portfolio 0.65% N/A 0.02% 0.67% - ----------------------------------------------------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - ----------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Emerging Markets Equity Portfolio (4) 1.25% N/A 0.87% 2.12% - ----------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Equity Growth Portfolio (4) 0.55% N/A 0.36% 0.91% - ----------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF International Magnum Portfolio (4) 0.80% N/A 0.54% 1.34% - ----------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Mid Cap Growth Portfolio (4) 0.75% N/A 0.64% 1.39% - ----------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Mid Cap Value Portfolio (4) 0.75% N/A 0.35% 1.10% - ----------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF U.S. Real Estate Portfolio (4) 0.80% N/A 0.35% 1.15% - ----------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I) - ----------------------------------------------------------------------------------------------------------------------------- Van Kampen LIT Comstock Portfolio 0.60% N/A 0.21% 0.81% - ----------------------------------------------------------------------------------------------------------------------------- Van Kampen LIT Emerging Growth Portfolio 0.70% N/A 0.06% 0.76% - ----------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund 0.61% N/A 0.24% 0.85% - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Growth Fund 0.62% N/A 0.26% 0.88% - ----------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund (5) 0.60% N/A 0.25% 0.85% - ----------------------------------------------------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (CLASS B SHARES) - ----------------------------------------------------------------------------------------------------------------------------- Alliance Growth Portfolio 0.75% 0.25% 0.11% 1.11% - ----------------------------------------------------------------------------------------------------------------------------- Alliance Growth and Income Portfolio 0.63% 0.25% 0.04% 0.92% - ----------------------------------------------------------------------------------------------------------------------------- Alliance Premier Growth Portfolio 1.00% 0.25% 0.04% 1.29% - -----------------------------------------------------------------------------------------------------------------------------
PROSPECTUS 9
Rule Total Management 12b-1 Other Portfolio Portfolio Fees Fees Expenses Annual Expenses - ----------------------------------------------------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST - ----------------------------------------------------------------------------------------------------------------------------- LSA Aggressive Growth Fund (6) 0.95% N/A 0.30% 1.25% - ----------------------------------------------------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST (CLASS IB SHARES) - ----------------------------------------------------------------------------------------------------------------------------- Putnam VT Growth and Income Fund (7) 0.46% 0.25% 0.05% 0.76% - ----------------------------------------------------------------------------------------------------------------------------- Putnam VT International Growth Fund (7) 0.76% 0.25% 0.18% 1.19% - ----------------------------------------------------------------------------------------------------------------------------- Putnam VT Small Cap Value Fund (7) 0.80% 0.25% 0.14% 1.19% - ----------------------------------------------------------------------------------------------------------------------------- Putnam VT Voyager Fund (7) 0.53% 0.25% 0.04% 0.82% - -----------------------------------------------------------------------------------------------------------------------------
(1) Figures shown in the Table are for the year ended December 31, 2001 (except as otherwise noted). (2) The investment manager had agreed to assume all operating expenses and to waive the compensation provided for in its Investment Management Agreement until such time as the Portfolio had $50 million of net assets or December 31, 2001, whichever occurred first. With these assumptions and expense waivers in effect, "Management Fees", "Rule 12b-1 Fees", "Other Expenses" and "Total Portfolio Annual Expenses" were 0.00%, N/A, 0.00% and 0.00%, respectively. The Investment Manager will not continue these expense waivers in 2002. Therefore, expenses in the above Table are estimated for 2002. (3) Effective May 1, 2002, the Short-Term Bond Portfolio changed its name to the Limited Duration Portfolio. For the period June 1, 2001 through December 31, 2001, the Investment Manager had agreed to waive its fee and reimburse operating expenses to the extent they exceeded 0.50% of daily net assets. With these expense waivers and reimbursements in effect, "Management Fees", "Rule 12b-1 Fees", "Other Expenses" and "Total Portfolio Annual Expenses" were 0.41%, N/A, 0.20% and 0.61%, respectively. "Other Expenses" do not include the effect of an expense offset of 0.06%. The Investment Manager will not continue these expense waivers in 2002. Therefore, expenses in the above Table are estimated for 2002. (4) "Total Portfolio Annual Expenses" listed in the table above reflect gross ratios prior to any voluntary waivers/reimbursements of expenses by the adviser. For the year ended December 31, 2001, the management fee was reduced to reflect the voluntary waiver of a portion or all of the management fee and the reimbursement by the Portfolios' adviser to the extent "Total Portfolio Annual Expenses" exceed the following percentages: Emerging Markets Equity Portfolio 1.75%; Equity Growth Portfolio 0.85%; International Magnum Portfolio 1.15%; Mid Cap Growth Portfolio 1.05%; Mid Cap Value Portfolio 1.05%; U.S. Real Estate Portfolio 1.10%. The adviser may terminate this voluntary waiver at any time at its sole discretion. After such reductions, the "Management Fees", "Rule 12b-1 Fees", "Other Expenses" and "Total Portfolio Annual Expenses" were as follows:
Rule Total Portfolio Management 12b-1 Other Annual Portfolio Fees Fees Expenses Expenses - -------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Emerging Markets Equity Portfolio 0.98% N/A 0.87% 1.85% - -------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Equity Growth Portfolio 0.49% N/A 0.36% 0.85% - -------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF International Magnum Portfolio 0.62% N/A 0.54% 1.16% - -------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Mid Cap Growth Portfolio 0.41% N/A 0.64% 1.05% - -------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Mid Cap Value Portfolio 0.70% N/A 0.35% 1.05% - -------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF U.S. Real Estate Portfolio 0.75% N/A 0.35% 1.10% - --------------------------------------------------------------------------------------------------------------------------------
Additionally, in determining the actual amount of voluntary management fee waiver and/or expense reimbursement for a Portfolio, if any, the adviser excludes from total annual operating expenses certain investment related expenses, such as foreign country tax expense and interest expense on borrowing. Included in "Other Expenses" of the Emerging Markets Equity Portfolio and International Magnum Portfolio are 0.10% and 0.01% of such investment related expenses, respectively. (5) Effective May 1, 2002, the AIM V.I. Value Fund changed its name to the AIM V.I. Premier Equity Fund. (6) Figures shown are based on estimates for the current fiscal year. Under an expense limitation agreement ("Agreement"), the manager has agreed to reduce its fees or reimburse the Portfolio for expenses incurred above certain limits. Currently, this limit is set so that the Portfolio will not incur expenses (including interest, taxes, brokerage commissions and extraordinary expenses) that exceed the amount of its management fee plus 0.30% of its average daily net assets. Without these fee reductions or expense reimbursements, "Other Expenses" and "Total Portfolio Annual Expenses" for 2002 are expected to be 7.65% and 8.60%. These reductions and reimbursements will remain in effect until at least April 30, 2003. Under certain circumstances, the Agreement provides that, commencing June 1, 2002 and continuing for three years thereafter, the manager may recoup a certain amount of its fee reductions and reimbursements. The total amount of reimbursement, if any, paid in any year to the manager may not, however, cause "Total Portfolio Annual Expenses" to exceed the percentages listed in the table. (7) "Rule 12b-1 Fees" are restated to reflect an increase in Rule 12b-1 Fees effective April 30, 2001. Actual Rule 12b-1 Fees during the most recent fiscal year were 0.22%. See the Funds' prospectus for more information about Rule 12b-1 Fees payable under the Funds' distribution plan. 10 PROSPECTUS EXAMPLE 1 The example below shows the dollar amount of expenses that you would bear directly or indirectly if you: - - invested $1,000 in a Variable Sub-Account, - - earned a 5% annual return on your investment, - - surrendered your Contract, or you began receiving income payments for a specified period of less than 120 months, at the end of each time period, - - elected the Income and Death Benefit Combination Option 2, and - - elected the Enhanced Earnings Death Benefit Option. The examples are based on the expenses shown in the Portfolio Annual Expenses table, which reflects certain waiver and reimbursement arrangements as explained in the footnotes to the table. The examples assume those arrangements remain in effect for the periods presented. THE EXAMPLE DOES NOT INCLUDE ANY TAXES OR TAX PENALTIES YOU MAY BE REQUIRED TO PAY IF YOU SURRENDER YOUR CONTRACT.
Variable Sub-Account 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Aggressive Equity $73 $118 $165 $329 - ------------------------------------------------------------------------------------------------------------------------------ Capital Growth $71 $113 $158 $316 - ------------------------------------------------------------------------------------------------------------------------------ Competitive Edge $72 $115 $161 $321 - ------------------------------------------------------------------------------------------------------------------------------ Dividend Growth $70 $109 $151 $301 - ------------------------------------------------------------------------------------------------------------------------------ Equity $69 $108 $149 $297 - ------------------------------------------------------------------------------------------------------------------------------ European Growth $74 $123 $174 $347 - ------------------------------------------------------------------------------------------------------------------------------ Global Dividend Growth $72 $117 $163 $326 - ------------------------------------------------------------------------------------------------------------------------------ High Yield $70 $110 $153 $305 - ------------------------------------------------------------------------------------------------------------------------------ Income Builder $72 $117 $164 $327 - ------------------------------------------------------------------------------------------------------------------------------ Information $81 $141 $204 $402 - ------------------------------------------------------------------------------------------------------------------------------ Limited Duration $71 $112 $156 $311 - ------------------------------------------------------------------------------------------------------------------------------ Money Market $69 $108 $149 $297 - ------------------------------------------------------------------------------------------------------------------------------ Pacific Growth $82 $145 $209 $412 - ------------------------------------------------------------------------------------------------------------------------------ Quality Income Plus $69 $198 $150 $299 - ------------------------------------------------------------------------------------------------------------------------------ S&P 500 Index $69 $106 $146 $292 - ------------------------------------------------------------------------------------------------------------------------------ Strategist $69 $108 $149 $298 - ------------------------------------------------------------------------------------------------------------------------------ Utilities $71 $113 $157 $313 - ------------------------------------------------------------------------------------------------------------------------------ THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Emerging Markets Equity $86 $156 $228 $446 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Equity Growth $73 $120 $169 $336 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF International Magnum $78 $133 $190 $377 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Growth $78 $134 $193 $381 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Value $75 $126 $178 $354 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF U.S. Real Estate $76 $127 $181 $359 - ------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I) - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Comstock $72 $117 $164 $327 - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Emerging Growth $72 $115 $161 $322 - ------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS (SERIES I) - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation $73 $118 $166 $330 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Growth $73 $119 $167 $333 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Premier Equity $73 $118 $166 $330 - ------------------------------------------------------------------------------------------------------------------------------ ALLIANCE VARIABLE PRODUCTS SERIES FUND (CLASS B SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth $75 $126 $179 $355 - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth and Income $73 $120 $169 $337 - ------------------------------------------------------------------------------------------------------------------------------
PROSPECTUS 11
Variable Sub-Account 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------ Alliance Premier Growth $77 $131 $188 $372 - ------------------------------------------------------------------------------------------------------------------------------ LSA VARIABLE SERIES TRUST - ------------------------------------------------------------------------------------------------------------------------------ LSA Aggressive Growth $77 $130 $186 $368 - ------------------------------------------------------------------------------------------------------------------------------ PUTNAM VARIABLE TRUST (CLASS IB SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Growth and Income $72 $115 $161 $322 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT International Growth $76 $128 $183 $363 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Small Cap Value $76 $128 $183 $363 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Voyager $72 $117 $164 $327 - ------------------------------------------------------------------------------------------------------------------------------
EXAMPLE 2 Same assumptions as Example 1 above, except that you decided not to surrender your Contract, or you began receiving income payments (for at least 120 months if under an Income Plan with a specified period), at the end of each period.
Variable Sub-Account 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Aggressive Equity $30 $ 92 $157 $329 - ------------------------------------------------------------------------------------------------------------------------------ Capital Growth $29 $ 88 $150 $316 - ------------------------------------------------------------------------------------------------------------------------------ Competitive Edge $29 $ 89 $152 $321 - ------------------------------------------------------------------------------------------------------------------------------ Dividend Growth $27 $ 83 $142 $301 - ------------------------------------------------------------------------------------------------------------------------------ Equity $27 $ 82 $140 $297 - ------------------------------------------------------------------------------------------------------------------------------ European Growth $32 $ 98 $166 $347 - ------------------------------------------------------------------------------------------------------------------------------ Global Dividend Growth $30 $ 91 $155 $326 - ------------------------------------------------------------------------------------------------------------------------------ High Yield $28 $ 85 $144 $305 - ------------------------------------------------------------------------------------------------------------------------------ Income Builder $30 $ 91 $155 $327 - ------------------------------------------------------------------------------------------------------------------------------ Information $38 $116 $195 $402 - ------------------------------------------------------------------------------------------------------------------------------ Limited Duration $28 $ 86 $147 $311 - ------------------------------------------------------------------------------------------------------------------------------ Money Market $27 $ 82 $140 $297 - ------------------------------------------------------------------------------------------------------------------------------ Pacific Growth $39 $119 $201 $412 - ------------------------------------------------------------------------------------------------------------------------------ Quality Income Plus $27 $ 83 $141 $299 - ------------------------------------------------------------------------------------------------------------------------------ S&P 500 Index $26 $ 81 $138 $292 - ------------------------------------------------------------------------------------------------------------------------------ Strategist $27 $ 82 $141 $298 - ------------------------------------------------------------------------------------------------------------------------------ Utilities $28 $ 87 $148 $313 - ------------------------------------------------------------------------------------------------------------------------------ THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Emerging Markets Equity $43 $131 $219 $446 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Equity Growth $31 $ 94 $160 $336 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF International Magnum $35 $107 $182 $377 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Growth $36 $109 $184 $381 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Value $33 $100 $170 $354 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF U.S. Real Estate $33 $102 $172 $359 - ------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I) - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Comstock $30 $ 91 $155 $327 - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Emerging Growth $29 $ 90 $153 $322 - ------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS (SERIES I) - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation $30 $ 93 $157 $330 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Growth $31 $ 93 $159 $333 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Premier Equity $30 $ 93 $157 $330 - ------------------------------------------------------------------------------------------------------------------------------ ALLIANCE VARIABLE PRODUCTS SERIES FUND (CLASS B SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth $33 $100 $170 $355 - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth and Income $31 $ 95 $161 $337 - ------------------------------------------------------------------------------------------------------------------------------
PROSPECTUS 12
Variable Sub-Account 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------ Alliance Premier Growth $35 $106 $179 $372 - ------------------------------------------------------------------------------------------------------------------------------ LSA VARIABLE SERIES TRUST - ------------------------------------------------------------------------------------------------------------------------------ LSA Aggressive Growth $34 $105 $177 $368 - ------------------------------------------------------------------------------------------------------------------------------ PUTNAM VARIABLE TRUST (CLASS IB SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Growth and Income $29 $ 90 $153 $322 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT International Growth $34 $103 $174 $363 - ------------------------------------------------------------------------------------------------------------------------------ JPutnam VT Small Cap Value $34 $103 $174 $363 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Voyager $30 $ 92 $156 $327 - ------------------------------------------------------------------------------------------------------------------------------
PLEASE REMEMBER THAT YOU ARE LOOKING AT EXAMPLES AND NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. YOUR ACTUAL EXPENSES MAY BE LOWER OR GREATER THAN THOSE SHOWN ABOVE. SIMILARLY, YOUR RATE OF RETURN MAY BE LOWER OR GREATER THAN 5%, WHICH IS NOT GUARANTEED. THE ABOVE EXAMPLES ASSUME THE ELECTION OF BOTH THE ENHANCED EARNINGS DEATH BENEFIT OPTION AND THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2 WITH A MORTALITY AND EXPENSE RISK CHARGE OF 1.95%. IF THOSE OPTIONS WERE NOT ELECTED, THE EXPENSE FIGURES SHOWN ABOVE WOULD BE SLIGHTLY LOWER. TO REFLECT THE CONTRACT MAINTENANCE CHARGE IN THE EXAMPLES, WE ESTIMATED AN EQUIVALENT PERCENTAGE CHARGE, BASED ON AN ASSUMED AVERAGE CONTRACT SIZE OF $56,196. 13 PROSPECTUS FINANCIAL INFORMATION - ------------------------------------------------------------------- To measure the value of your investment in the Variable Sub-Accounts during the Accumulation Phase, we use a unit of measure we call the "ACCUMULATION UNIT."Each Variable Sub-Account has a separate value for its Accumulation Units we call "ACCUMULATION UNIT VALUE." Accumulation Unit Value is similar to, but not the same as, the share price of a mutual fund. Attached as Appendix A to this prospectus are tables showing the Accumulation Unit Values of each Variable Sub-Account. To obtain additional detail on each Variable Sub-Account's finances, please refer to the Variable Account's financial statements contained in the Statement of Additional Information. The financial statements of Northbrook also appear in the Statement of Additional Information. 14 PROSPECTUS THE CONTRACT - ------------------------------------------------------------------- CONTRACT OWNER The Variable Annuity II is a contract between you, the Contract owner, and Northbrook, a life insurance company. As the Contract owner, you may exercise all of the rights and privileges provided to you by the Contract. That means it is up to you to select or change (to the extent permitted): - - the investment alternatives during the Accumulation and Payout Phases, - - the amount and timing of your purchase payments and withdrawals, - - the programs you want to use to invest or withdraw money, - - the income payment plan you want to use to receive retirement income, - - the Annuitant (either yourself or someone else) on whose life the income payments will be based, - - the owner, while the Annuitant is alive, - - the Beneficiary or Beneficiaries who will receive the benefits that the Contract provides when the last surviving Contract owner dies, and - - any other rights that the Contract provides. If you die, any surviving Contract owner or, if none, the Beneficiary will exercise the rights and privileges provided to them by the Contract. The Contract cannot be jointly owned by both a non-natural person and a natural person. If the Contract owner is a Grantor Trust, the Contract owner will be considered a non-living person for purposes of this section and the Death Benefits section. The maximum age of the oldest Contract Owner cannot exceed age 90 as of the date we receive the completed application or request to select a new Contract owner. Changing ownership of this contract may cause adverse tax consequences and may not be allowed under qualified plans. Please consult with a competent tax advisor prior to making a request for a change of Contract Owner. You can use the Contract with or without a qualified plan. A "qualified plan" is a retirement savings plan, such as an IRA or tax-sheltered annuity, that meets the requirements of the Internal Revenue Code. Qualified plans may limit or modify your rights and privileges under the Contract. We use the term "Qualified Contract" to refer to a Contract used with a qualified plan. See "Qualified Plans" on page . ANNUITANT The Annuitant is the individual whose life span we use to determine income payments as well as the latest Payout Start Date. You initially designate an Annuitant in your application. The age of the oldest Annuitant cannot exceed 90 as of the date we receive the completed application. If the Contract owner is a natural person, you may change the Annuitant before the Payout Start Date. Before the Payout Start Date, you may also designate a joint Annuitant, who is a second person on whose life income payments depend. BENEFICIARY The Beneficiary is the person who may, in accordance with the terms of the Contract, elect to receive the death benefit or become the new Contract Owner subject to the Death of Owner provision if the sole surviving Contract Owner dies before the Payout Start Date. If the sole surviving Contract owner dies after the Payout Start Date, the Beneficiary will receive any guaranteed income payments scheduled to continue. You may name one or more Beneficiaries when you apply for a Contract. You may change or add Beneficiaries at any time while the Annuitant is living by writing to us, unless you have designated an irrevocable Beneficiary. We will provide a "Change of Beneficiary" form to be signed and filed with us. Any change will be effective at the time you sign the written notice, whether or not the Annuitant is living when we receive the notice. Until we receive your written notice to change a Beneficiary, we are entitled to rely on the most recent Beneficiary information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change your Beneficiary, you should deliver your written notice to us promptly. If you did not name a Beneficiary or, if the named Beneficiary is no longer living and there are no other surviving Beneficiaries, the new Beneficiary will be: - - your spouse, if he or she is still alive, otherwise - - your surviving children equally, or if you have no surviving children, - - your estate. If more than one Beneficiary survives you, (or the Annuitant, if the Contract owner is not a natural person) we will divide the death benefit among your Beneficiaries according to your most recent written instructions. If you have not given us written instructions, we will pay the death benefit in equal amounts to the surviving Beneficiaries. MODIFICATION OF THE CONTRACT Only a Northbrook officer may approve a change in or waive any provision of the Contract. Any change or waiver must be in writing. None of our agents has the 15 PROSPECTUS authority to change or waive the provisions of the Contract. We may not change the terms of the Contract without your consent, except to conform the Contract to applicable law or changes in the law. If a provision of the Contract is inconsistent with state law, we will follow state law. ASSIGNMENT No owner has a right to assign any interest in a Contract as collateral or security for a loan. However, you may assign periodic income payments under the Contract prior to the Payout Start Date. No Beneficiary may assign benefits under the Contract until they are payable to the Beneficiary. We will not be bound by any assignment until you sign it and file it with us. We are not responsible for the validity of any assignment. Federal law prohibits or restricts the assignment of benefits under many types of retirement plans and the terms of such plans may themselves contain restrictions on assignments. An assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT WITH YOUR ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT. PURCHASES - ------------------------------------------------------------------- MINIMUM PURCHASE PAYMENTS Your initial purchase payment must be at least $1,000. However, we reserve the right to raise that minimum to as much as $4,000. All subsequent purchase payments must be $25 or more. You may make purchase payments at any time prior to the Payout Start Date. We reserve the right to limit the maximum amount of purchase payments we will accept. We also reserve the right to reject any application. AUTOMATIC ADDITIONS PROGRAM You may make subsequent purchase payments of at least $25 by automatically transferring amounts from your bank account or your Morgan Stanley Active Assets(TM) Account. Please consult your Morgan Stanley Financial Advisor for details. ALLOCATION OF PURCHASE PAYMENTS At the time you apply for a Contract, you must decide how to allocate your purchase payments among the investment alternatives. The allocation you specify on your application will be effective immediately. All allocations must be in whole percentages that total 100% or in whole dollars. The minimum you may allocate to any investment alternative is $100. The minimum amount that you may allocate to the Guarantee Periods is $500. You can change your allocations by notifying us in writing. We will allocate your purchase payments to the investment alternatives according to your most recent instructions on file with us. Unless you notify us in writing otherwise, we will allocate subsequent purchase payments according to the allocation for the previous purchase payment. We will effect any change in allocation instructions at the time we receive written notice of the change in good order. We will credit the initial purchase payment that accompanies your completed application to your Contract within 2 business days after we receive the payment at our headquarters. If your application is incomplete, we will ask you to complete your application within 5 business days. If you do so, we will credit your initial purchase payment to your Contract within that 5 business day period. If you do not, we will return your purchase payment at the end of the 5 business day period unless you expressly allow us to hold it until you complete the application. We will credit subsequent purchase payments to the Contract on the business day that we receive the purchase payment at our headquarters. We use the term "BUSINESS DAY" to refer to each day Monday through Friday that the New York Stock Exchange is open for business. We also refer to these days as "VALUATION DATES". If we receive your purchase payment after 3 p.m. Central Time on any Valuation Date, we will credit your purchase payment using the Accumulation Unit Values computed on the next Valuation Date. RIGHT TO CANCEL You may cancel the Contract within the Cancellation Period, which is the 20-day period after you receive the Contract or such longer period as your state may require. If you exercise this Right to Cancel, the Contract terminates and we will pay you the full amount of your purchase payments allocated to the Fixed Account Options. We also will return your purchase payments allocated to the Variable Account after an adjustment, to the extent applicable law permits, to reflect investment gain or loss, including the deduction of mortality and expense risk charges and administrative expense charges, that occurred from the date of allocation through the date of cancellation. Some states may require us to return a greater amount to you. 16 PROSPECTUS CONTRACT VALUE - ------------------------------------------------------------------- Your Contract Value at any time during the Accumulation Phase is equal to the sum of the value of your Accumulation Units in the Variable Sub-Accounts you have selected, plus the value of your investment in the Fixed Account Options. ACCUMULATION UNITS To determine the number of Accumulation Units of each Variable Sub-Account to allocate to your Contract, we divide (i) the amount of the purchase payment or transfer you have allocated to a Variable Sub-Account by (ii) the Accumulation Unit Value of that Variable Sub-Account next computed after we receive your payment or transfer. For example, if we receive a $10,000 purchase payment allocated to a Variable Sub-Account when the Accumulation Unit Value for the Sub-Account is $10, we would credit 1,000 Accumulation Units of that Variable Sub-Account to your Contract. Withdrawals and transfers from a Variable Sub-Account would, of course, reduce the number of Accumulation Units of that Sub-Account allocated to your Contract. ACCUMULATION UNIT VALUE As a general matter, the Accumulation Unit Value for each Variable Sub-Account will rise or fall to reflect: - - changes in the share price of the Portfolio in which the Variable Sub-Account invests, and - - the deduction of amounts reflecting the mortality and expense risk charge, administrative expense charge, and any provision for taxes that have accrued since we last calculated the Accumulation Unit Value. We determine contract maintenance charges, withdrawal charges, and transfer fees (currently waived) separately for each Contract. They do not affect Accumulation Unit Value. Instead, we obtain payment of those charges and fees by redeeming Accumulation Units. For details on how we calculate Accumulation Unit Value, please refer to the Statement of Additional Information. We determine a separate Accumulation Unit Value for each Variable Sub-Account on each Valuation Date. We also determine a separate set of Accumulation Unit Values that reflect the cost of each optional benefit, or available combinations thereof, offered under the Contract. YOU SHOULD REFER TO THE PROSPECTUSES FOR THE FUNDS THAT ACCOMPANY THIS PROSPECTUS FOR A DESCRIPTION OF HOW THE ASSETS OF EACH PORTFOLIO ARE VALUED, SINCE THAT DETERMINATION DIRECTLY BEARS ON THE ACCUMULATION UNIT VALUE OF THE CORRESPONDING VARIABLE SUB-ACCOUNT AND, THEREFORE, YOUR CONTRACT VALUE. 17 PROSPECTUS INVESTMENT ALTERNATIVES: THE VARIABLE SUB-ACCOUNTS - ------------------------------------------------------------------- You may allocate your purchase payments to up to 36 Variable Sub-Accounts. Each Variable Sub-Account invests in the shares of a corresponding Portfolio. Each Portfolio has its own investment objective(s) and policies. We briefly describe the Portfolios below. For more complete information about each Portfolio, including expenses and risks associated with the Portfolio, please refer to the accompanying prospectuses for the Funds. You should carefully review the Fund prospectuses before allocating amounts to the Variable Sub-Accounts. PORTFOLIO: EACH PORTFOLIO SEEKS: INVESTMENT ADVISER: MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X) Aggressive Equity Portfolio Capital growth Morgan Stanley Investment Advisors, Inc. Capital Growth Portfolio Long-term capital growth Competitive Edge Best Ideas Portfolio Long-term capital growth Dividend Growth Portfolio Reasonable current income and long-term growth of income and capital Equity Portfolio Growth of capital and, as a secondary objective, income when consistent with its primary objective European Growth Portfolio To maximize the capital appreciation on its investments Global Dividend Growth Portfolio Reasonable current income and long-term growth of income and capital High Yield Portfolio High current income and, as a secondary objective, capital appreciation when consistent with its primary objective Income Builder Portfolio Reasonable income and, as a secondary objective, growth of capital Information Portfolio Long-term capital appreciation Limited Duration Portfolio High current income consistent with preservation of capital Money Market Portfolio High current income, preservation of capital, and liquidity Pacific Growth Portfolio To maximize the capital appreciation on its investments Quality Income Plus Portfolio High current income and, as a secondary objective, capital appreciation when consistent with its primary objective S&P 500 Index Portfolio Investment results that, before expenses, correspond to the total return of the Standard and Poor's 500 Composite Stock Price Index Strategist Portfolio High total investment return Utilities Portfolio Current income and long term growth of income and capital THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Morgan Stanley UIF Emerging Markets Equity Long-term capital appreciation Morgan Stanley Portfolio Investment Management Inc. Morgan Stanley UIF Equity Growth Portfolio Long-term capital appreciation Morgan Stanley UIF International Magnum Long-term capital appreciation Portfolio Morgan Stanley UIF Mid Cap Value Portfolio Above-average total return over a market cycle of three to five years Morgan Stanley UIF U.S. Real Estate Portfolio Above-average current income and long-term capital appreciation
18 PROSPECTUS PORTFOLIO: EACH PORTFOLIO SEEKS: INVESTMENT ADVISER: Morgan Stanley UIF Mid Cap Growth Portfolio Long-term capital growth Morgan Stanley Investments, L.P. VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I) Van Kampen LIT Comstock Portfolio Capital growth and income Van Kampen Asset Management Inc. Van Kampen LIT Emerging Growth Portfolio Capital appreciation AIM VARIABLE INSURANCE FUNDS* (SERIES I) AIM V.I. Capital Appreciation Fund Growth of capital A I M Advisors, Inc. AIM V.I. Growth Fund Growth of capital AIM V.I. Premier Equity Fund Long-term growth of capital. Income is a secondary objective. ALLIANCE VARIABLE PRODUCTS SERIES FUND Alliance Growth Portfolio Long-term growth of capital. Current income is Alliance Capital incidental to the Portfolio's objective Management, L.P. Alliance Growth and Income Portfolio Reasonable current income and reasonable opportunity for appreciation Alliance Premier Growth Portfolio Growth of capital by pursuing aggressive investment policies LSA VARIABLE SERIES TRUST LSA Aggressive Growth Fund** Long-term capital growth LSA Asset Management LLC PUTNAM VARIABLE TRUST (CLASS IB) Putnam VT Growth and Income Fund Capital growth and current income Putnam Investment Management, LLC Putnam VT International Growth Fund Capital appreciation Putnam VT Small Cap Value Fund Capital appreciation Putnam VT Voyager Fund Capital appreciation
*A portfolios' investment objective may be changed by the Funds' Board of Trustees without shareholder approval. **Sub-advised by Van Kampen Asset Management Inc. AMOUNTS YOU ALLOCATE TO VARIABLE SUB-ACCOUNTS MAY GROW IN VALUE, DECLINE IN VALUE, OR GROW LESS THAN YOU EXPECT, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE PORTFOLIOS IN WHICH THOSE VARIABLE SUB-ACCOUNTS INVEST. YOU BEAR THE INVESTMENT RISK THAT THE PORTFOLIOS MIGHT NOT MEET THEIR INVESTMENT OBJECTIVES. SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS, OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. 19 PROSPECTUS INVESTMENT ALTERNATIVES: THE FIXED ACCOUNT OPTIONS - ------------------------------------------------------------------- You may allocate all or a portion of your purchase payments to the Fixed Account Options. We currently offer the basic Dollar Cost Averaging Fixed Account Option, and we may offer the additional Dollar Cost Averaging Fixed Account Options described below. However, the 6 and 12 month Dollar Cost Averaging Options currently are not available. Please consult with your Morgan Stanley Financial Advisor for current information. The Fixed Account supports our insurance and annuity obligations. The Fixed Account consists of our general assets other than those in segregated asset accounts. We have sole discretion to invest the assets of the Fixed Account, subject to applicable law. Any money you allocate to a Fixed Account Option does not entitle you to share in the investment experience of the Fixed Account. DOLLAR COST AVERAGING FIXED ACCOUNT OPTIONS BASIC DOLLAR COST AVERAGING OPTION. You may establish a Dollar Cost Averaging Program, as described on page , by allocating purchase payments to the Basic Dollar Cost Averaging Option. Purchase payments that you allocate to the Basic Dollar Cost Averaging Option will earn interest for a 1 year period at the current rate in effect at the time of allocation. We will credit interest daily at a rate that will compound over the year to the annual interest rate we guaranteed at the time of allocation. Rates may be different than those available for the Guarantee Periods described below. After the one year period, we will declare a renewal rate which we guarantee for a full year. Subsequent renewal dates will be every twelve months for each purchase payment. Renewal rates will not be less than the minimum guaranteed rate found in the Contract. You may not transfer funds from other investment alternatives to the Basic Dollar Cost Averaging Option. 6 AND 12 MONTH DOLLAR COST AVERAGING OPTIONS. In the future, we may offer 6 and 12 month Dollar Cost Averaging Options. Under these options, you may establish a Dollar Cost Averaging Program by allocating purchase payments to the Fixed Account either for 6 months (the "6 Month Dollar Cost Averaging Option") or for 12 months (the "12 Month Dollar Cost Averaging Option"). Your purchase payments will earn interest for the period you select at the current rates in effect at the time of allocation. Rates may differ from those available for the Guarantee Periods described below. However, the crediting rates for the 6 and 12 Month Dollar Cost Averaging Options will never be less than 3% annually. You must transfer all of your money out of the 6 or 12 Month Dollar Cost Averaging Options to the Variable Sub-Accounts in equal monthly installments. If you discontinue a 6 or 12 Month Dollar Cost Averaging Option prior to last scheduled transfer, we will transfer any remaining money immediately to the Money Market Variable Sub-Account, unless you request a different Variable Sub-Account. You may not transfer funds from other investment alternatives to the 6 or 12 Month Dollar Cost Averaging Options. Transfers out of the Dollar Cost Averaging Fixed Account Options do not count towards the 12 transfers you can make without paying a transfer fee. We may declare more than one interest rate for different monies based upon the date of allocation to the Dollar Cost Averaging Fixed Account Options. For availability and current interest rate information, please contact your sales representative or our customer support unit at 1-800-654-2397. GUARANTEE PERIODS You may allocate purchase payments or transfers to one or more Guarantee Periods of the Fixed Account ("Guarantee Periods"). Each payment or transfer allocated to a Guarantee Period earns interest at a specified rate that we guarantee for a period of years. We will offer a 1 year Guarantee Period. We offer additional Guarantee Periods at our sole discretion. We currently offer a 1 year and a 6 year Guarantee Period. INTEREST RATES. We will tell you what interest rates and Guarantee Periods we are offering at a particular time. We will not change the interest rate that we credit to a particular allocation until the end of the relevant Guarantee Period. We may declare different interest rates for Guarantee Periods of the same length that begin at different times. We have no specific formula for determining the rate of interest that we will declare initially or in the future. We will set those interest rates based on investment returns available at the time of the determination. In addition, we may consider various other factors in determining interest rates including regulatory and tax requirements, our sales commission and administrative expenses, general economic trends, and competitive factors. WE DETERMINE THE INTEREST RATES TO BE DECLARED IN OUR SOLE DISCRETION. WE CAN NEITHER PREDICT NOR GUARANTEE WHAT THOSE RATES WILL BE IN THE FUTURE. The interest rate will never be less than the minimum guaranteed rate stated in the Contract. After the Guarantee Period, we will declare a renewal rate. Subsequent renewal dates will be on anniversaries of the first renewal date. On or about each renewal date, we will notify the owner of the interest rate(s) for the Contract Year then starting. 20 PROSPECTUS INVESTMENT ALTERNATIVES: TRANSFERS - ------------------------------------------------------------------- TRANSFERS DURING THE ACCUMULATION PHASE During the Accumulation Phase, you may transfer Contract Value among the investment alternatives. Transfers to any Guarantee Period must be at least $500. You may not, however, transfer Contract Value into any of the Dollar Cost Averaging Fixed Account Options. You may request transfers in writing on a form that we provide or by telephone according to the procedure described below. The minimum amount that you may transfer is $100 or the total amount in the investment alternative, whichever is less. We currently do not assess, but reserve the right to assess, a $25 charge on each transfer in excess of 12 per Contract Year. We will notify you at least 30 days before we begin imposing the transfer charge. We treat transfers to or from more than one Portfolio on the same day as one transfer. We limit the amount you may transfer from the Guarantee Periods to the Variable Account in any Contract Year to the greater of: 1) 25% of the aggregate value in the Guarantee Periods as of the most recent Contract Anniversary (if this amount is less than $1,000, then up to $1,000 may be transferred); or 2) 25% of the sum of all purchase payments and transfers to the Guarantee Periods as of the most recent Contract Anniversary. These restrictions do not apply to transfers pursuant to dollar cost averaging. If the first renewal interest rate is less than the current rate that was in effect at the time money was allocated or transferred to a Guarantee Period, we will waive the transfer restriction for that money and the accumulated interest thereon during the 60-day period following the first renewal date. We will process transfer requests that we receive before 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for that Date. We will process written requests completed after 3:00 p.m. on any Valuation Date using the Accumulation Unit Values for the next Valuation Date. The Contract permits us to defer transfers from the Fixed Account Options for up to six months from the date we receive your request. If we decide to postpone transfers for 30 days or more, we will pay interest as required by applicable law. Any interest would be payable from the date we receive the transfer request to the date we make the transfer. EXCESSIVE TRADING LIMITS For Contracts issued after May 2, 1999, we reserve the right to limit transfers among the Variable Sub-Accounts if we determine, in our sole discretion, that transfers by one or more Contract owners would be to the disadvantage of other Contract owners. We may limit transfers by taking such steps as: - - imposing a minimum time period between each transfer, - - refusing to accept transfer requests of an agent acting under a power of attorney on behalf of more than one Contract owner, or - - limiting the dollar amount that a Contract owner may transfer between the Variable Sub-Accounts and the Fixed Account Options at any one time. We may apply the restrictions in any manner reasonably designed to prevent transfers that we consider disadvantageous to other Contract owners. We reserve the right to waive any transfer restrictions. TRANSFERS DURING THE PAYOUT PHASE During the Payout Phase, you may make transfers among the Variable Sub-Accounts so as to change the relative weighting of the Variable Sub-Accounts on which your variable income payments will be based. In addition, you will have a limited ability to make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. You may not, however, convert any portion of your right to receive fixed income payments into variable income payments. You may not make any transfers for the first 6 months after the Payout Start Date. Thereafter, you may make transfers among the Variable Sub-Accounts or make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. Your transfers must be at least 6 months apart. TELEPHONE TRANSFERS You may make transfers by telephone by calling 1-800-654-2397 if you have on file a completed authorization form. The cut off time for telephone transfer requests is 3:00 p.m. Central Time. In the event that the New York Stock Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that the Exchange closes early for a period of time but then reopens for trading on the same day, we will process 21 PROSPECTUS telephone transfer requests as of the close of the Exchange on that particular day. We will not accept telephone requests received at any telephone number other than the number that appears in this paragraph or received after the close of trading on the Exchange. We may suspend, modify or terminate the telephone transfer privilege at any time without notice. We use procedures that we believe provide reasonable assurance that the telephone transfers are genuine. For example, we tape telephone conversations with persons purporting to authorize transfers and request identifying information. Accordingly, we disclaim any liability for losses resulting from allegedly unauthorized telephone transfers. However, if we do not take reasonable steps to help ensure that a telephone authorization is valid, we may be liable for such losses. DOLLAR COST AVERAGING PROGRAM Through our Dollar Cost Averaging Program, you may automatically transfer a set amount every month (or other intervals we may offer) during the Accumulation Phase from any Variable Sub-Account or the Dollar Cost Averaging Fixed Account Option(s) to any Variable Sub-Account. Transfers made through dollar cost averaging must be $100 or more. The theory of dollar cost averaging is that if purchases of equal dollar amounts are made at fluctuating prices, the aggregate average cost per unit will be less than the average of the unit prices on the same purchase dates. However, participation in this Program does not assure you of a greater profit from your purchases under the Program nor will it prevent or necessarily reduce losses in a declining market. Call or write us for information on how to enroll. AUTOMATIC PORTFOLIO REBALANCING PROGRAM Once you have allocated your money among the Variable Sub-Accounts, the performance of each Sub-Account may cause a shift in the percentage you allocated to each Sub-Account. If you select our Automatic Portfolio Rebalancing Program, we will automatically rebalance the Contract Value in each Variable Sub-Account and return it to the desired percentage allocations. We will not include money you allocate to the Fixed Account Options in the Automatic Portfolio Rebalancing Program. We will rebalance your account each quarter (or other intervals that we may offer) according to your instructions. We will transfer amounts among the Variable Sub-Accounts to achieve the percentage allocations you specify. You can change your allocations at any time by contacting us in writing or by telephone. The new allocation will be effective with the first rebalancing that occurs after we receive your request. We are not responsible for rebalancing that occurs prior to receipt of your request. Example: Assume that you want your initial purchase payment split among 2 Variable Sub-Accounts. You want 40% to be in the High Yield Variable Sub-Account and 60% to be in the Equity Growth Variable Sub-Account. Over the next 2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the High Yield Variable Sub-Account now represents 50% of your holdings because of its increase in value. If you choose to have your holdings rebalanced quarterly, on the first day of the next quarter, we would sell some of your units in the High Yield Variable Sub-Account and use the money to buy more units in the Equity Growth Variable Sub-Account so that the percentage allocations would again be 40% and 60% respectively. The Automatic Portfolio Rebalancing Program is available only during the Accumulation Phase. The transfers made under the Program do not count towards the 12 transfers you can make without paying a transfer fee, and are not subject to a transfer fee. Portfolio rebalancing is consistent with maintaining your allocation of investments among market segments, although it is accomplished by reducing your Contract Value allocated to the better performing segments. 22 PROSPECTUS EXPENSES - ------------------------------------------------------------------- As a Contract owner, you will bear, directly or indirectly, the charges and expenses described below. CONTRACT MAINTENANCE CHARGE During the Accumulation Phase, on each Contract Anniversary we will deduct a $30 contract maintenance charge from your Contract Value. This charge will be deducted on a pro rata basis from each investment alternative in the proportion that your investment in each bears to your Contract Value. We also will deduct a full contract maintenance charge if you withdraw your entire Contract Value. During the Payout Phase, we will deduct the charge proportionately from each income payment. The charge is to compensate us for the cost of administering the Contracts and the Variable Account. Maintenance costs include expenses we incur in billing and collecting purchase payments; keeping records; processing death claims, cash withdrawals, and policy changes; proxy statements; calculating Accumulation Unit Values and income payments; and issuing reports to Contract owners and regulatory agencies. We cannot increase the charge. The contract maintenance charge is waived under certain circumstances if you qualify for and elect the Longevity Reward Rider. See "Longevity Reward Rider" on page 28 for details. MORTALITY AND EXPENSE RISK CHARGE We deduct a mortality and expense risk charge daily at the following annual rates (as a percentage of average daily net assets): - - 1.25% Base Contract - - 1.38% w/Enhanced Death Benefit Option - - 1.38% w/Performance Death Benefit Option - - 1.38% w/Performance Income Benefit Option - - 1.49% w/Performance Benefit Combination Option - - 1.49% w/Death Benefit Combination Option - - 1.55% w/Income Benefit Combination Option 2 - - 1.75% w/Income and Death Benefit Combination Option 2 - - 1.88% w/Income and Performance Death Benefit Option (Washington only) We charge an additional mortality and expense risk charge of 0.20% for the Enhanced Earnings Death Benefit Option. If you qualify for and elect the Longevity Reward Rider, your mortality and expense risk charge would be lower by 0.07%. See the description of each Option and the Longevity Reward Rider for the availability of each. The mortality and expense risk charge is for all the insurance benefits available with your Contract (including our guarantee of annuity rates and the death benefits), for certain expenses of the Contract, and for assuming the risk (expense risk) that the current charges will not be sufficient in the future to cover the cost of administering the Contract. If the charges under the Contract are not sufficient, then we will bear the loss. We charge an additional amount for the Death Benefit Options and the Income Benefit Options to compensate us for the additional risk that we accept by providing these Options. We guarantee the mortality and expense risk charge and we cannot increase it. We assess the mortality and expense risk charge during both the Accumulation Phase and the Payout Phase. ADMINISTRATIVE EXPENSE CHARGE We deduct an administrative expense charge daily at an annual rate of 0.10% of the average daily net assets you have invested in the Variable Sub-Accounts. We intend this charge to cover actual administrative expenses that exceed the revenues from the contract maintenance charge. There is no necessary relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributed to that Contract. We assess this charge each day during the Accumulation Phase and the Payout Phase. TRANSFER FEE We do not currently impose a fee upon transfers among the investment alternatives. However, we reserve the right to charge $25 per transfer after the 12th transfer in each Contract Year. We will not charge a transfer fee on transfers that are part of a Dollar Cost Averaging or Automatic Portfolio Rebalancing Program. WITHDRAWAL CHARGE We may assess a withdrawal charge of up to 6% of the purchase payment(s) you withdraw. This charge declines to 0% after the expiration of 6 years from the day we receive the purchase payment being withdrawn. A schedule showing how the withdrawal charge declines over the 6-year period is shown on page 7. During each Contract Year, you can withdraw all purchase payments beyond the withdrawal charge period or up to 15% of the aggregate amount of your purchase payments (as of the Issue Date or the most recent Contract Anniversary, whichever is later), whichever is greater, without paying a withdrawal charge. Unused portions of this FREE WITHDRAWAL AMOUNT are not carried forward to future Contract Years. If you qualify for and elect the Longevity Reward Rider, a withdrawal charge of up to 3% will apply to 23 PROSPECTUS purchase payments received before or after the Rider Date. See "Longevity Reward Rider" on pages and for details. We will deduct withdrawal charges, if applicable, from the amount paid, unless you instruct otherwise. For purposes of the withdrawal charge, we will treat withdrawals as coming from purchase payments, starting with the oldest purchase payments first and then from earnings. Therefore, additional purchase payments may reduce your ability to withdraw earnings without incurring a withdrawal charge. However, for federal income tax purposes, please note that withdrawals are considered to have come first from earnings, which means you pay taxes on the earnings portion of your withdrawal. We do not apply a withdrawal charge in the following situations: - - on the Payout Start Date (a withdrawal charge may apply if you elect to receive income payments for a specified period of less than 120 months); - - the death of the Contract owner or Annuitant, unless the Settlement Value is used; and - - withdrawals taken to satisfy IRS minimum distribution rules for the Contract. We use the amounts obtained from the withdrawal charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts. To the extent that the withdrawal charge does not cover all sales commissions and other promotional or distribution expenses, we may use any of our corporate assets, including potential profit which may arise from the mortality and expense risk charge or any other charges or fee described above, to make up any difference. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. PREMIUM TAXES Some states and other governmental entities (e.g., municipalities) charge premium taxes or similar taxes. We are responsible for paying these taxes and will deduct them from your Contract Value. Some of these taxes are due when the Contract is issued, others are due when income payments begin or upon surrender. Our current practice is not to charge anyone for these taxes until income payments begin or when a total withdrawal occurs including payment upon death. At our discretion, we may discontinue this practice and deduct premium taxes from the purchase payments. Premium taxes generally range from 0% to 4%, depending on the state. At the Payout Start Date, if applicable, we deduct the charge for premium taxes from each investment alternative in the proportion that the Contract owner's value in the investment alternative bears to the total Contract Value. DEDUCTION FOR VARIABLE ACCOUNT INCOME TAXES We are not currently making a provision for taxes. In the future, however, we may make a provision for taxes if we determine, in our sole discretion, that we will incur a tax as a result of the operation of the Variable Account. We will deduct for any taxes we incur as a result of the operation of the Variable Account, whether or not we previously made a provision for taxes and whether or not it was sufficient. Our status under the Internal Revenue Code is briefly described in the Taxes section. OTHER EXPENSES Each Portfolio deducts advisory fees and other expenses from its assets. You indirectly bear the charges and expenses of the Portfolios whose shares are held by the Variable Sub-Accounts. These fees and expenses are described in the accompanying prospectuses for the Funds. For a summary of current estimates of those charges and expenses, see pages 8 and 9. We may receive compensation from the investment advisers or administrators of the Portfolios for administrative services we provide to the Portfolios. ACCESS TO YOUR MONEY - ------------------------------------------------------------------- You can withdraw some or all of your Contract Value at any time during the Accumulation Phase. Withdrawals also are available under limited circumstances on or after the Payout Start Date. See "Income Plans" on page . You can withdraw money from the Variable Account and/or the Fixed Account Options. The amount payable upon withdrawal is the Contract Value (or portion thereof) next computed after we receive the request for a withdrawal at our headquarters, less any withdrawal charges, contract maintenance charges, income tax 24 PROSPECTUS withholding, penalty tax, and any premium taxes. To complete a partial withdrawal from the Variable Account, we will cancel Accumulation Units in an amount equal to the withdrawal and any applicable charges and taxes. We will pay withdrawals from the Variable Account within 7 days of receipt of the request, subject to postponement in certain circumstances. You have the opportunity to name the investment alternative(s) from which you are taking the withdrawal. If none are named, then we will withdraw the amount proportionately from the investment alternatives in which you are invested according to the value of your investments therein. In general, you must withdraw at least $100 at a time. You also may withdraw a lesser amount if you are withdrawing your entire interest in a Variable Sub-Account. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. The total amount paid at surrender may be more or less than the total purchase payments due to prior withdrawals, any deductions, and investment performance. POSTPONEMENT OF PAYMENTS We may postpone the payment of any amounts due from the Variable Account under the Contract if: 1. The New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted; 2. An emergency exists as defined by the SEC; or 3. The SEC permits delay for your protection. In addition, we may delay payments or transfers from the Fixed Account Options for up to 6 months or shorter period if required by law. If we delay payment or transfer for 30 days or more, we will pay interest as required by law. Any interest would be payable from the date we receive the withdrawal request to the date we make the payment or transfer. SYSTEMATIC WITHDRAWAL PROGRAM You may choose to receive systematic withdrawal payments on a monthly basis at any time prior to the Payout Start Date. The minimum amount of each systematic withdrawal is $100. We will deposit systematic withdrawal payments into the Contract owner's bank account or Morgan Stanley Active Assets-TM- Account. Please consult with your Morgan Stanley Financial Advisor for details. Depending on fluctuations in the value of the Variable Sub-Accounts and the value of the Fixed Account Options, systematic withdrawals may reduce or even exhaust the Contract Value. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. Please consult your tax advisor before taking any withdrawal. We may modify or suspend the Systematic Withdrawal Program and charge a processing fee for the service. If we modify or suspend the Systematic Withdrawal Program, existing systematic withdrawal payments will not be affected. MINIMUM CONTRACT VALUE If the amount you withdraw reduces your Contract Value to less than $500, we may treat it as a request to withdraw your entire Contract Value. Your Contract will terminate if you withdraw all of your Contract Value. We will, however, ask you to confirm your withdrawal request before terminating your Contract. Before terminating any Contract whose value has been reduced by withdrawals to less than $500, we would inform you in writing of our intention to terminate your Contract and give you at least 30 days in which to make an additional purchase payment to restore your Contract's value to the contractual minimum of $500. If we terminate your Contract, we will distribute to you its Contract Value less withdrawal and other charges and applicable taxes. INCOME PAYMENTS - ------------------------------------------------------------------- PAYOUT START DATE The Payout Start Date is the day that money is applied to an Income Plan. The Payout Start Date must be: - - at least 30 days after the Issue Date; - - no later than the first day of the calendar month after the Annuitant's 90th birthday, or the 10th Contract Annivesary, if later. You may change the Payout Start Date at any time by notifying us in writing of the change at least 30 days before the scheduled Payout Start Date. Absent a 25 PROSPECTUS change, we will use the Payout Start Date stated in your Contract. INCOME PLANS An "Income Plan" is a series of scheduled payments to you or someone you designate. You may choose and change your choice of Income Plan until 30 days before the Payout Start Date. If you do not select an Income Plan, we will make income payments in accordance with Income Plan 1. After the Payout Start Date, you may not make withdrawals (except as described below) or change your choice of Income Plan. Three Income Plans are available under the Contract. Each is available to provide: - - fixed amount income payments; - - variable income payments; or - - a combination of the two. The three Income Plans are: INCOME PLAN 1 -- LIFE INCOME WITH PAYMENTS GUARANTEED FOR 10 YEARS. Under this plan, we make periodic income payments for at least as long as the Annuitant lives. If the Annuitant dies before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract. INCOME PLAN 2 -- JOINT AND SURVIVOR LIFE INCOME. Under this plan, we make periodic income payments for as long as either the Annuitant or the joint Annuitant is alive. No income payments will be made after the death of both the Annuitant and the joint Annuitant. INCOME PLAN 3 -- GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD. Under this plan, we make periodic income payments for the period you have chosen. These payments do not depend on the Annuitant's life. A withdrawal charge may apply if the specified period is less than 10 years. We will deduct the mortality and expense risk charge from the assets of the Variable Account supporting this Income Plan even though we may not bear any mortality risk. The length of any guaranteed payment period under your selected Income Plan generally will affect the dollar amounts of each income payment. As a general rule, longer guarantee periods result in lower income payments, all other things being equal. For example, if you choose an Income Plan with payments that depend on the life of the Annuitant but with no minimum specified period for guaranteed payments, the income payments generally will be greater than the income payments made under the same Income Plan with a minimum specified period for guaranteed payments. We may make other Income Plans available including ones that you and we agree upon. You may obtain information about them by writing or calling us. If you choose Income Plan 1 or 2, or, if available, another Income Plan with payments that continue for the life of the Annuitant or joint Annuitant, we may require proof of age and sex of the Annuitant or joint Annuitant before starting income payments, and proof that the Annuitant or joint Annuitant is still alive before we make each payment. Please note that under these Income Plans, if you elect to take no minimum guaranteed payments, it is possible that the payee could receive only 1 income payment if the Annuitant and any joint Annuitant both die before the second income payment, or only 2 income payments if they die before the third income payment, and so on. Generally, you may not make withdrawals after the Payout Start Date. One exception to this rule applies if you are receiving variable income payments that do not depend on the life of the Annuitant (such as under Income Plan 3). In that case you may terminate all or part of the Variable Account portion of the income payments at any time and receive a lump sum equal to the present value of the remaining variable payments associated with the amount withdrawn. To determine the present value of any remaining variable income payments being withdrawn, we use a discount rate equal to the assumed annual investment rate that we use to compute such variable income payments. The minimum amount you may withdraw under this feature is $1,000. A withdrawal charge may apply. You may apply your Contract Value to an Income Plan. If you elected the Performance Income Benefit Option, the Income Benefit Combination Option 2, or the Income and Death Benefit Combination Option 2, you may be able to apply an amount greater than your Contract Value to an Income Plan. You must apply at least the Contract Value in the Fixed Account Options on the Payout Start Date to fixed income payments. If you wish to apply any portion of your Fixed Account Option balance to provide variable income payments, you should plan ahead and transfer that amount to the Variable Sub-Accounts prior to the Payout Start Date. If you do not tell us how to allocate your Contract Value among fixed and variable income payments, we will apply your Contract Value in the Variable Account to variable income payments and your Contract Value in the Fixed Account Options to fixed income payments. We deduct applicable premium taxes from the Contract Value at the Payout Start Date. We will apply your Contract Value, less applicable taxes, to your Income Plan on the Payout Start Date. If the amount available to apply under an Income Plan is 26 PROSPECTUS less than $2,000, or not enough to provide an initial payment of at least $20, and state law permits, we may: - - terminate the Contract and pay you the Contract Value, less any applicable taxes, in a lump sum instead of the periodic payments you have chosen, or - - we may reduce the frequency of your payments so that each payment will be at least $20. VARIABLE INCOME PAYMENTS The amount of your variable income payments depends upon the investment results of the Variable Sub-Accounts you select, the premium taxes you pay, the age and sex of the Annuitant, and the Income Plan you choose. We guarantee that the payments will not be affected by (a) actual mortality experience and (b) the amount of our administration expenses. We cannot predict the total amount of your variable income payments. Your variable income payments may be more or less than your total purchase payments because (a) variable income payments vary with the investment results of the underlying Portfolios, and (b) the Annuitant could live longer or shorter than we expect based on the tables we use. In calculating the amount of the periodic payments in the annuity tables in the Contract, we assumed an annual investment rate of 3%. If the actual net investment return of the Variable Sub-Accounts you choose is less than this assumed investment rate, then the dollar amount of your variable income payments will decrease. The dollar amount of your variable income payments will increase, however, if the actual net investment return exceeds the assumed investment rate. The dollar amount of the variable income payments stays level if the net investment return equals the assumed investment rate. Please refer to the Statement of Additional Information for more detailed information as to how we determine variable income payments. FIXED INCOME PAYMENTS We guarantee income payment amounts derived from any Fixed Account Option for the duration of the Income Plan. We calculate the fixed income payments by: 1. deducting any applicable premium tax; and 2. applying the resulting amount to the greater of (a) the appropriate value from the income payment table in your Contract or (b) such other value as we are offering at that time. We may defer making fixed income payments for a period of up to 6 months or such shorter time state law may require. If we defer payments for 30 days or more, we will pay interest as required by law from the date we receive the withdrawal request to the date we make payment. INCOME BENEFIT OPTIONS Please keep in mind, once you have selected an optional Income or Death Benefit (each an "Option"), your ability to select a different Option may be limited. Please consult with your financial advisor concerning any such limitations before selecting any option. Further, if you select another option, the benefit(s) under the new option on the date we issue the new option will equal the Contract Value. You will not retain or transfer the benefits from the earlier option. Please consult with your financial advisor concerning the effect of selecting a different option before doing so. We may discontinue offering these options at anytime. PERFORMANCE INCOME BENEFIT In most states, the Performance Income Benefit cannot be added to new or existing Contracts after January 31, 2001. On the date we issued the rider for this benefit ("Rider Date"), the Performance Income Benefit is equal to the Contract Value. On each Contract Anniversary, we will recalculate your Performance Income Benefit to equal the greater of your Contract Value on that date or the most recently calculated Performance Income Benefit. We will also recalculate your Performance Income Benefit whenever you make an additional purchase payment or a partial withdrawal. Additional purchase payments will increase the Performance Income Benefit dollar-for-dollar. Withdrawals will reduce the Performance Income Benefit by an amount equal to: (i) the Performance Income Benefit just before the withdrawal, multiplied by (ii) the ratio of the withdrawal amount to the Contract Value just before the withdrawal. In the absence of any withdrawals or purchase payments, the Performance Income Benefit will be the greatest of the Contract Value on the Rider Date and all Contract Anniversary Contract Values on or prior to the Payout Start Date. We will recalculate the Performance Income Benefit as described above until the oldest Contract owner or Annuitant (if the Contract owner is not a natural person) attains age 85. After age 85, we will only recalculate the Performance Income Benefit to reflect additional purchase payments and withdrawals. If you select the Performance Income Benefit Option, the highest age of any Owner and Annuitant as of the date we receive the completed application, cannot exceed age 75. To exercise your Performance Income Benefit, you must apply it to an Income Plan. The Payout Start Date you select must begin on or after your tenth Contract Anniversary, after electing the benefit, and within 30 27 PROSPECTUS days after a Contract Anniversary. In addition, you must apply your Performance Income Benefit to an Income Plan that provides guaranteed payments for either a single or joint life for at least: 1. 10 years, if the youngest Annuitant's age is 80 or less on the date you apply the Benefit, or 2. 5 years, if the youngest Annuitant's age is greater than 80 on the date you apply the Benefit. If your current Contract Value is higher than the Performance Income Benefit, you can apply the Contract Value to any Income Plan. INCOME BENEFIT COMBINATION OPTION 2. The Income Benefit Combination Option 2 is available with Contracts issued on or after October 30, 2000 ("new Contracts"). The Income Benefit Combination Option 2 is also available with Contracts issued before October 30, 2000 ("existing Contracts") unless you elect or have elected an optional income or death benefit. The Income Benefit Combination Option 2 may not be available in all states. If you select the Income Benefit Combination Option 2, this Option guarantees that the amount you apply to an Income Plan will not be less than the income base ("Income Base") (which is the greater of Income Base A or Income Base B), described below. We sometimes refer to this as the "Best of the Best Income Benefit". ELIGIBILITY. If you select the Income Benefit Combination Option 2, the highest age of any Contract Owner and Annuitant on the date we receive the completed application or the written request to add the Rider, whichever is later, cannot exceed age 75. To qualify for this benefit, you must meet the following conditions as of the Payout Start Date: - - You must elect a Payout Start Date that is on or after the 10th anniversary of the date we issued the rider for this Option (the "Rider Date"); - - The Payout Start Date must occur during the 30-day period following a Contract Anniversary; - - You must apply the Income Base to fixed income payments or variable income payments as we may permit from time to time. Currently, you may apply the Income Base only to provide fixed income payments, which will be calculated using the appropriate Guaranteed Income Payment Table provided in your Contract; and - - The Income Plan you have selected must provide for payments guaranteed for either a single life or joint lives with a specified period of at least: 1. 10 years, if the youngest Annuitant's age is 80 or less on the date the amount is applied; or 2. 5 years, if the youngest Annuitant's age is greater than 80 on the date the amount is applied. If your current Contract Value is higher than the value calculated under Income Benefit Combination Option 2, you can apply the Contract Value to any Income Plan. INCOME BASE The Income Base is the greater of Income Base A or Income Base B. The Income Base is used solely for the purpose of calculating the guaranteed income benefit under this Option ("guaranteed income benefit") and does not provide a Contract Value or guarantee performance of any investment option. INCOME BASE A. On the Rider Date, Income Base A is equal to the Contract Value. After the Rider Date, we recalculate Income Base A as follows on the Contract Anniversary and when a purchase payment or withdrawal is made. - - For purchase payments, Income Base A is equal to the most recently calculated Income Base A plus the purchase payment. - - For withdrawals, Income Base A is equal to the most recently calculated Income Base A reduced by a withdrawal adjustment (described below). - - On each Contract Anniversary, Income Base A is equal to the greater of the Contract Value or the most recently calculated Income Base A. In the absence of any withdrawals or purchase payments, Income Base A will be the greatest of the Contract Value on the Rider Date and all Contract Anniversary Contract Values between the Rider Date and the Payout Start Date. We will recalculate Income Base A as described above until the first Contract Anniversary after the 85th birthday of the oldest Contract owner (or Annuitant if the Contract owner is not a natural person). After age 85, we will only recalculate Income Base A to reflect additional purchase payments and withdrawals. INCOME BASE B. On the Rider Date, Income Base B is equal to the Contract Value After the Rider Date, Income Base B plus any subsequent purchase payments and less a withdrawal adjustment (described below) for any subsequent withdrawals will accumulate daily at a rate equivalent to 5% per year until the first Contract Anniversary after the 85th birthday of the oldest Contract owner (or Annuitant if the Contract owner is not a natural person). 28 PROSPECTUS WITHDRAWAL ADJUSTMENT. The withdrawal adjustment is equal to (1) divided by (2), with the result multiplied by (3) where: 1) = the withdrawal amount 2) = the Contract Value immediately prior to the withdrawal, and 3) = the most recently calculated Income Base. GUARANTEED INCOME BENEFIT. The guaranteed income benefit amount is determined by applying the Income Base less any applicable taxes to the guaranteed rates for the Income Plan you elect. The Income Plan you elect must satisfy the conditions described above. As described above, you may currently apply the Income Base only to receive period certain fixed income payments. If, however, you apply the Contract Value and not the Income Base to an Income Plan, then you may select fixed and/or variable income ayments under any Income Plan we offer at that time. If you expect to apply your Contract Value to provide fixed and/or variable income payments, or you expect to apply your Contract Value to current annuity payment rates then in effect, electing the Income Benefit Combination Option 2 may not be appropriate. CERTAIN EMPLOYEE BENEFIT PLANS The Contracts offered by this prospectus contain income payment tables that provide for different payments to men and women of the same age, except in states that require unisex tables. We reserve the right to use income payment tables that do not istinguish on the basis of sex to the extent permitted by law. In certain employment-related situations, employers are required by law to use the same income payment tables for men and women. Accordingly, if the Contract is to be used in connection withan employment-related retirement or benefit plan and we do not offer unisex annuity tables in your state, you should consult with legal counsel as to whether the purchase of a Contract is appropriate. DEATH BENEFITS - ------------------------------------------------------------------- We will pay a death benefit if, prior to the Payout Start Date: 1. any Contract owner dies, or 2. the Annuitant dies. We will pay the death benefit to the new Contract owner who is determined immediately after the death. The new Contract owner would be a surviving Contract owner(s) or, if none, the Beneficiary(ies). In the case of the death of an Annuitant, we will pay the death benefit to the current Contract owner. A request for payment of the death benefit must include "DUE PROOF OF DEATH." We will accept the following documentation as Due Proof of Death: - - a certified copy of a death certificate, - - a certified copy of a decree of a court of competent jurisdiction as to the finding of death, or - - any other proof acceptable to us. DEATH BENEFIT AMOUNT Prior to the Payout Start Date, the death benefit is equal to the greatest of: 1. the Contract Value as of the date we determine the death benefit, or 2. the sum of all purchase payments made less any amounts deducted in connection with partial withdrawals (including any applicable withdrawal charges or premium taxes), or 3. the Contract Value on the most recent DEATH BENEFIT ANNIVERSARY prior to the date we determine the death benefit, plus any purchase payments and less any amounts deducted in connection with any partial withdrawals since that Death Benefit Anniversary. A "Death Benefit Anniversary" is every 6th Contract Anniversary beginning with the 6th Contract Anniversary. For example, the 6th, 12th and 18th Contract Anniversaries are the first three Death Benefit Anniversaries. We will determine the value of the death benefit as of the end of the Valuation Date on which we receive a complete request for payment of the death benefit. If we receive a request after 3 p.m. Central Time on a Valuation Date, we will process the request as of the end of the following Valuation Date. DEATH BENEFIT OPTIONS Please keep in mind, once you have selected an optional income or death benefit (each an "option"), your ability to select a different option may be limited. Please consult with your financial advisor concerning 29 PROSPECTUS any such limitations before selecting any option. Further, if you select another option, the benefit(s) under the new option on the date we issue the new option will equal the Contract Value. You will not retain or transfer the benefits from the earlier option. Please consult with your financial advisor concerning the effect of selecting a different option before doing so. We may discontinue offering these options at anytime. The Enhanced Death Benefit and the Performance Benefit Combination Options are no longer offered as a rider to the Contract, but apply to Contract owners who have previously elected these Options. The Performance Death Benefit, the Death Benefit Combination, the Income and Death Benefit Combination Option 2 (in the state of Washington, Income and Performance Death Benefit Option) and the Enhanced Earnings Death Benefit are optional benefits that you may elect. If the Contract owner is a natural person, these Options apply only on the death of the Contract owner. If the Contract owner is not a natural person, these Options apply only on the death of the Annuitant. For Contracts with a death benefit option, the death benefit will be the greater of (1) through (3) above, or (4) the death benefit option you selected. For Contracts with the Enhanced Earnings Death Benefit Option, the death benefit will be increased as described on page below. The death benefit options may not be available in all states. ENHANCED DEATH BENEFIT OPTION We are no longer offering the Enhanced Death Benefit option as a rider to the Contract in most states. The following describes the Option for Contract owners who have previously elected this Option or who may elect this Option in certain states. On the date we issue the rider for this option ("RIDER DATE") is equal to the Contract Value. On the first Contract anniversary after the Rider Date, the Enhanced Death Benefit is equal to the Contract Value on the Rider Date plus interest at an annual rate of 5% per year for the portion of a year since the Rider Date. On each subsequent Contract Anniversary, but not beyond the Contract Anniversary preceding the oldest Contract owners' 75th birthdays, we will recalculate the Enhanced Death Benefit as follows: First, we multiply the Enhanced Death Benefit as of the prior Contract Anniversary by 1.05. This results in an increase of 5% annually. Further, for all ages, we will adjust the Enhanced Death Benefit on each Contract Anniversary, or upon receipt of a death claim, as follows: - - For cash withdrawals, we will reduce the Enhanced Death Benefit by the following withdrawal adjustment. The withdrawal adjustment is equal to (i) divided by (ii), with the result multiplied by (iii), where: - - (i) = the withdrawal amount - - (ii) = the Contract Value just before the withdrawal - - (iii) = the most recently calculated Enhanced Death Benefit - - We will increase the Enhanced Death Benefit by any additional purchase payments since the prior Contract Anniversary. If you select the Enhanced Death Benefit Option, the highest age of any owner and Annuitant as of the date we receive the completed application, or the date we receive the written request to add the rider, whichever is later, cannot exceed age 70. PERFORMANCE DEATH BENEFIT OPTION. The Performance Death Benefit on the date we issue the rider for this option ("RIDER DATE") is equal to the Contract Value. On each Contract Anniversary, we will recalculate your Performance Death Benefit to equal the greater of your Contract Value on that date, or the most recently calculated Performance Death Benefit. We also will recalculate your Performance Death Benefit whenever you make an additional purchase payment or a partial withdrawal. Additional purchase payments will increase the Performance Death Benefit dollar-for-dollar. Withdrawals will reduce the Performance Death Benefit by an amount equal to: (i) the Performance Death Benefit immediately before the withdrawal, multiplied by (ii) the ratio of the withdrawal amount to the Contract Value just before the withdrawal. In the absence of any withdrawals or purchase payments, the Performance Death Benefit will be the greatest of the Contract Value on the Rider Date and all Contract Anniversary Contract Values on or before the date we calculate the death benefit. We will recalculate the Performance Death Benefit as described above until the oldest Contract owner (the Annuitant, if the owner is not a natural person), attains age 85. After age 85, we will recalculate the Performance Death Benefit only to reflect additional purchase payments and withdrawals. If you select the Performance Death Benefit Option, the highest age of any owner and Annuitant as of the date we receive the completed application, or the date we receive the 30 PROSPECTUS written request to add the rider, whichever is later, cannot exceed age 80. DEATH BENEFIT COMBINATION OPTION. If you select the Death Benefit Combination Option, the death benefit payable will be the greater of the death benefits provided by the Enhanced Death Benefit or the Performance Death Benefit (both calculated until the oldest Contract owner, or Annuitant if the Contract owner is a non-natural person, attains age 85). After age 85, the death benefit payable will be adjusted to reflect purchase payments and withdrawals to the extent described under "Enhanced Death Benefit Option" and "Performance Death Benefit Option" above. We sometimes refer to the Death Benefit Combination Option as the "Best of the Best" death benefit option. If you select the Death Benefit Combination Option, the highest age of any owner and Annuitant as of the date we receive the completed application, or the date we receive the written request to add the rider, whichever is later, cannot exceed age 80. PERFORMANCE BENEFIT COMBINATION OPTION. We are no longer offering the Performance Combination Option as a rider to the Contract. The following describes the Option for Contract owners who have previously elected this Option. This Option combines the Performance Death Benefit with the Performance Income Benefit. If you select the Performance Benefit Combination Option, the maximum age of any owner and Annuitant as of the date we receive the completed application, or the date we receive the written request to add the rider, whichever is later, cannot exceed age 75. INCOME AND DEATH BENEFIT COMBINATION OPTION 2. The Income and Death Benefit Combination Option 2 is available with contracts issued on or after October 30, 2000 ("new Contracts"). The Income and Death Benefit Combination Option 2 is also available with Contracts issued before October 30, 2000 unless you elect or have elected the Performance Income Benefit Option or the Performance Benefit Combination Option. The Income and Death Benefit Combination Option 2 may not be available in all states. We sometimes refer to this as the "Best of the Best Income and Death Benefit Combo". If you select the Income and Death Benefit Combination Option 2, which combines the features of the Income Benefit Combination (described on page ) with the features of the Death Benefit Combination (described on page ) with the following modifications. The death benefit payable will be the greater of the death benefits provided by the Enhanced Death Benefit or the Performance Death Benefit (both calculated until the first Contract Anniversary after the oldest Contract owner, or Annuitant if the Contract owner is a non-natural person, attains age 85). In calculating the death benefit payable provided by the Enhanced Death Benefit, for all ages, withdrawals will reduce the Enhanced Death Benefit by an amount equal to: (i) the Enhanced Death Benefit immediately before the withdrawal, multiplied by (ii) the ratio of the withdrawal amount to the Contract Value just before the withdrawal. If you select the Income and Death Benefit Combination Option 2, the highest age of any owner and Annuitant as of the date we receive the completed application, or the date we receive the request to add the rider, whichever is later, cannot exceed age 75. The Income and Death Benefit Combination Option 2 is not available in the state of Washington. On or about July 1, 2002, in the state of Washington only, we will offer the Income and Performance Death Benefit Combination Option which combines the features of the Income Benefit Combination Option 2 with the features of the Performance Death Benefit Option. The mortality and expense risk charge for the Income and Death Benefit Combination Option is an additional 0.43% which reflects an additional 0.30% for the Income Benefit Combination portion and 0.13% for the Performance Death Benefit portion. If you select the Income and Performance Death Benefit Combination Option, the highest age of any owner and Annuitant as of the date we receive the completed application, or the date we receive a written request to add the rider, cannot exceed age 75. ENHANCED EARNINGS DEATH BENEFIT OPTION. You may elect the Enhanced Earnings Death Benefit Option alone or together with any other death and/or income benefit option offered under the Contract. Under the Enhanced Earnings Death Benefit Option, if the oldest Contract owner (or the Annuitant if the Contract owner is a non-natural person) is age 69 or younger on the date we issue the rider for this option ("Rider Date"), the death benefit is increased by: - - 40% of the lesser of the In-Force Premium or Death Benefit Earnings. If the oldest Contract owner (or the Annuitant if the Contract owner is a non-natural person) is between the ages of 70 and 79 on the Rider Date, the death benefit is increased by: - - 25% of the lesser of the In-Force Premium or Death Benefit Earnings. For purpose of calculating the Enhanced Earnings Death Benefit, the following definitions apply: In-Force Premium equals the Contract Value on the Rider Date plus all purchase payments after the Rider Date less the sum of all Excess-of- Earnings Withdrawals after the Rider Date. If the Rider Date is the same as the Issue Date, then the Contract Value on the Rider Date is equal to your 31 PROSPECTUS initial purchase payment. Death Benefit Earnings equal the Contract Value minus the In-Force Premium. The Death Benefit Earnings amount will never be less than zero. An Excess-of-Earnings Withdrawal is the amount of a withdrawal which is in excess of the Death Benefit Earnings in the Contract immediately prior to the withdrawal. We will calculate the Enhanced Earnings Death Benefit Option as of the date we receive Due Proof of Death. We will pay the Enhanced Earnings Death Benefit with the death benefit as described under "Death Benefit Payments" below. The value of the Enhanced Earnings Death Benefit depends largely on the amount of earnings that accumulate under your Contract. If you expect to withdraw the earnings from your Contract Value, electing the Enhanced Earnings Death Benefit Option may not be appropriate. For purposes of calculating the Enhanced Earnings Death Benefit, earnings are considered to be withdrawn first before purchase payments. Your Financial Advisor can help you decide if the Enhanced Earnings Death Benefit Option is right for you. For examples of how the death benefit is calculated under the Enhanced Earnings Death Benefit Option, see Appendix B. None of the death benefits under the Enhanced Death Benefit, the Performance Death Benefit, the Performance Benefit Combination, the Death Benefit Combination, the Income and Death Benefit Combination Option 2, and/or the Enhanced Earnings Death Benefit will ever be greater than the maximum death benefit allowed by any nonforfeiture laws which govern the Contract. DEATH BENEFIT PAYMENTS If the new Contract owner is a natural person, the new Contract owner may elect to: 1. receive the death benefit in a lump sum, or 2. apply the death benefit to an Income Plan. Payments from the Income Plan must begin within 1 year of the date of death and must be payable throughout: - - the life of the new Contract owner; or - - for a guaranteed number of payments from 5 to 30 years, but not to exceed the life expectancy of the Contract owner. Options 1 and 2 above are only available if the new Contract owner elects one of these options within 180 days of the date of death. Otherwise, the new Contract owner will receive the SETTLEMENT VALUE. The "Settlement Value" is the Contract Value, less any applicable withdrawal charge and premium tax. The Settlement Value paid will be the Settlement Value next computed on or after the requested distribution date for payment, or on the mandatory distribution date of 5 years after the date of your death, whichever is earlier. We reserve the right to extend or waive the 180 day limit on a non-discriminatory basis. In any event, the entire value of the Contract must be distributed within 5 years after the date of death unless an Income Plan is elected or a surviving spouse continues the Contract in accordance with the provisions described below. If the new Contract owner is your spouse, then he or she may elect one of the options listed above or may continue the Contract in the Accumulation Phase as if the death had not occurred. The Contract may only be continued once. If the surviving spouse continues the Contract in the Accumulation Phase, the surviving spouse may make a single withdrawal of any amount within 1 year of the date of death without incurring a withdrawal charge. If the surviving spouse is under age 59 1/2, a 10% penalty tax may apply to the withdrawal. If the Enhanced Earnings Death Benefit Option has been elected, on the date the Contract is continued, the Rider Date for this Option is reset to the date the Contract is continued. For purposes of calculating future death benefits, your spouse's age on this new Rider Date will be used to determine applicable death benefit amounts. If you qualify for and elect (before the date of death) the Longevity Reward Rider, on the date the Contract is continued, the Contract Value will equal the amount of the death benefit. See "Longevity Reward Rider" on page 28 for details. If the new Contract owner is a corporation, trust, or other non-natural person, then the new Contract owner may elect, within 180 days of your death, to receive the death benefit in lump sum or may elect to receive the Settlement Value in a lump sum within 5 years of death. We reserve the right to extend or waive the 180 day limit on a non-discriminatory basis. DEATH OF ANNUITANT. If any Annuitant who is not also the Contract owner dies prior to the Payout Start Date, the Contract owner must elect one of the applicable options described below. If the Contract owner is a natural person, the Contract owner may elect to continue the Contract as if the death had not occurred, or, if we receive Due Proof of Death within 180 days of the date of the Annuitant's death, the Contract owner may choose to: 32 PROSPECTUS 1. receive the death benefit in a lump sum; or 2. apply the death benefit to an Income Plan that must begin within 1 year of the date of death and must be for a guaranteed number of payments for a period from 5 to 30 years but not to exceed the life expectancy of the Contract owner. If the Contract owner elects to continue the Contract or to apply the death benefit to an Income Plan, the new Annuitant will be the youngest Contract owner, unless the Contract owner names a different Annuitant. The Contract Owner has 60 days from the date the Company receives Due Proof of Death to select an Income Plan without incurring a tax on the entire gain in the Contract. If the Contract Owner elects to continue the Contract they will be taxed on the entire gain in the Contract computed on the date of continuance. We are required to report such gain to the IRS as income to the Contract Owner. An additional 10% federal tax penalty may apply if the Contract Owner is under age 59 1/2. Any amount included in the Contract Owner's gross income as a result of a Contract continuance will increase the investment in the Contract for future distributions. If the Contract owner is a non-natural person, the non-natural Contract owner may elect, within 180 days of the Annuitant's date of death, to receive the death benefit in a lump sum or may elect to receive the Settlement Value payable in a lump sum within 5 years of the Annuitant's date of death. If the non-natural Contract owner does not make one of the above described elections, the Settlement Value must be withdrawn by the non-natural Contract owner on or before the mandatory distribution date 5 years after the Annuitant's death. We reserve the right to extend or waive the 60 day limit on a non-discriminatory basis. LONGEVITY REWARD RIDER - ------------------------------------------------------------------- This rider may not be appropriate for you if you expect to make a withdrawal within the first three years of the rider date. ELGIBILITY You may elect the Longevity Reward Rider (Long Term Retention Rider in some states) at any time during the Accumulation Phase if on the date of application for the Rider: - - the Contract owner's initial purchase payment is no longer subject to a withdrawal charge; and - - the Contract owner's additional purchase payments, if any, would be subject to total withdrawal charges (assuming a current surrender of the Contract) equal to an amount no greater than 0.25% of the current Contract Value. MORTALITY AND EXPENSE RISK CHARGE If you elect the Rider then, commencing on the Rider Date, we will reduce the maximum mortality and expense risk charge ("M&E charge") by 0.07%. That means your M&E charge will never be greater than 1.18% (1.31% if you select the Enhanced Death Benefit Option, the Performance Death Benefit Option, or the Performance Income Benefit Option, 1.42% if you select the Peformance Benefit Combination Option, or the Death Benefit Combination Rider, 1.48 % if you select the Income Benefit Combination Option 2, 1.68% if you select the Income and Death Benefit Combination Option 2, 1.81% if you add the Income and Performance Death Benefit Option (available in Washington only). If you elect the Enhanced Earnings Death Benefit Option, an additional 0.20% mortality and expense risk charge will apply. The 0.10% administrative expense charge remains unchanged under this Rider. CONTRACT MAINTENANCE CHARGE If you elect the Rider, we will waive the contract maintenance charge for the life of the Contract, provided your total Contract Value is $40,000 or more on or after the Rider Date. CONTRACT CONTINUATION BY A SURVIVING SPOUSE If the surviving spouse continues the Contract as described under Death Benefit Payments on page of the prospectus, the following provision applies: On the date the Contract is continued, the Contract Value will equal the amount of the death benefit as determined as of the Valuation Date on which we received Due Proof of Death (the next Valuation Date, if we receive Due Proof of Death after 3 p.m. Central Time). Unless otherwise instructed by the continuing spouse, the excess, if any, of the death benefit amount over the Contract Value will be allocated to the Variable Sub-Accounts. This excess will be allocated in 33 PROSPECTUS proportion to your Contract Value in the investment alternatives on the Valuation Date that we receive Due Proof of Death, except that any portion of this excess attributable to the Fixed Account Options will be allocated to the Money Market Variable Sub-Account. Within 30 days of the date the Contract is continued, your surviving spouse may choose one of the following transfer alternatives without incurring a transfer fee. - - Transfer all or a portion of the excess among the Variable Sub-Accounts; - - Transfer all or a portion of the excess into the Standard Fixed Account; or - - Transfer all or a portion of the excess into a combination of Variable Sub-Accounts and the Standard Fixed Account. Any such transfer does not count towards the 12 transfers you can make each Contract Year without paying a transfer fee but is subject to any minimum allocation amount specified in your Contract. All ownership rights under the Contract will then be available to your spouse as the new Contract owner. NEW WITHDRAWAL CHARGE If you elect the Rider, we will apply the new withdrawal charge schedule set forth below. That means that we may assess a withdrawal charge of up to 3% of the amount of purchase payments you withdraw after the Rider Date. The withdrawal charge applies to purchase payments made both before the Rider Date ("exisiting payments"), as well as payments made on or after the Rider Date ("new purchase payments"). The withdrawal charge declines to 0% according to the following schedule:
NEW PURCHASE PAYMENTS EXISTING PURCHASE Number of Complete Withdrawal Charge PAYMENTS Years Since We (as a Percentage of Number of Complete Received the New New or Existing Years Since Rider Purchase Payment Purchase Payments Date Being Withdrawn Withdrawn) 0 0 3% 1 1 2% 2 2 1% 3+ 3+ 0%
Once all purchase payments have been withdrawn, additional withdrawals will not be assessed a withdrawal charge. The maximum aggregate early withdrawal charge on existing and new purchase payments withdrawn after the Rider Date is 3% of your purchase payments. FREE WITHDRAWAL AMOUNT If you elect the Rider, each Contract Year, you will continue to have the option to make withdrawals of up to 15% of your purchase payments without paying a withdrawal charge. However, under the Rider, the Free Withdrawal Amount is 15% of the amount of purchase payments as of the Rider Date or the most recent Contract Anniversary, whichever is later. As with all withdrawals, we will treat withdrawals as coming from the oldest purchase payments first. Unused portions of the Free Withdrawal Amount do not carry forward to future Contract Years. MORE INFORMATION - ------------------------------------------------------------------- NORTHBROOK Northbrook is the issuer of the Contract. Northbrook is a stock life insurance company organized in under the laws of the State of Arizona in 1998. Previously, from 1978 to 1998, Northbrook was organized under the laws of the State of Illinois. Northbrook is currently licensed to operate in all states (except New York), the District of Columbia, and Puerto Rico. We are no longer offering this Contract in most states. Our headquarters are located at 3100 Sanders Road, Northbrook, Illinois, 60062. Northbrook is a wholly owned subsidiary of Allstate Life Insurance Company ("ALLSTATE LIFE"), an Illinois stock life insurance company. Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, an Illinois stock property-liability insurance company. All of the outstanding capital stock of Allstate Insurance Company is owned by The Allstate Corporation. Northbrook and Allstate Life entered into a reinsurance agreement effective December 31, 1987. Under the reinsurance agreement, Allstate Life reinsures all of Northbrook's liabilities under the Contracts. The reinsurance agreement provides us with financial backing from Allstate Life. However, it does not create a direct contractual relationship between Allstate Life and you. In other words, the obligations of Allstate Life under the reinsurance agreement are to Northbrook; Northbrook remains the sole obligor under the Contract to you. 34 PROSPECTUS Independent rating agencies regularly evaluate life insurers' claims-paying ability, quality of investments, and overall stability. A.M. Best Company assigns an A+ (Superior) financial strength rating to Allstate Life, which results in an A+r rating to Northbrook due to the reinsurance agreement with Allstate Life mentioned above. Standard & Poor's assigns an AA+ (Very Strong) financial strength rating and Moody's Investors Service assigns an Aa2 (Excellent) financial strength rating to Northbrook, sharing the same ratings of its parent, Allstate Life. These ratings do not reflect the investment performance of the Variable Account. We may from time to time advertise these ratings in our sales literature. THE VARIABLE ACCOUNT Northbrook established the Northbrook Variable Annuity Account II on May 8, 1990. We have registered the Variable Account with the SEC as a unit investment trust. The SEC does not supervise the management of the Variable Account or Northbrook. We own the assets of the Variable Account. The Variable Account is a segregated asset account under Arizona insurance law. That means we account for the Variable Account's income, gains, and losses separately from the results of our other operations. It also means that only the assets of the Variable Account that are in excess of the reserves and other Contract liabilities with respect to the Variable Account are subject to liabilities relating to our other operations. Our obligations arising under the Contracts are general corporate obligations of Northbrook. The Variable Account consists of multiple Variable Sub-Accounts, each of which are available under the Contract. We may add new Variable Sub-Accounts or eliminate one or more of them, if we believe marketing, tax, or investment conditions so warrant. We do not guarantee the investment performance of the Variable Account, its Sub-Accounts or the Portfolios. We may use the Variable Account to fund our other annuity contracts. We will account separately for each type of annuity contract funded by the Variable Account. THE PORTFOLIOS DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. We automatically reinvest all dividends and capital gains distributions from the Portfolios in shares of the distributing Portfolio at their net asset value. VOTING PRIVILEGES. As a general matter, you do not have a direct right to vote the shares of the Portfolios held by the Variable Sub-Accounts to which you have allocated your Contract Value. Under current law, however, you are entitled to give us instructions on how to vote those shares on certain matters. Based on our present view of the law, we will vote the shares of the Portfolios that we hold directly or indirectly through the Variable Account in accordance with instructions that we receive from Contract owners entitled to give such instructions. As a general rule, before the Payout Start Date, the Contract owner or anyone with a voting interest is the person entitled to give voting instructions. The number of shares that a person has a right to instruct will be determined by dividing the Contract Value allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. After the Payout Start Date the person receiving income payments has the voting interest. The payee's number of votes will be determined by dividing the reserves for such Contract allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. The votes decrease as income payments are made and as the reserves for the Contract decrease. We will vote shares attributable to Contracts for which we have not received instructions, as well as shares attributable to us, in the same proportion as we vote shares for which we have received instructions, unless we determine that we may vote such shares in our own discretion. We will apply voting instructions to abstain on any item to be voted upon on a pro rata basis to reduce the votes eligible to be cast. We reserve the right to vote Portfolio shares as we see fit without regard to voting instructions to the extent permitted by law. If we disregard voting instructions, we will include a summary of that action and our reasons for that action in the next semi-annual financial report we send to you. CHANGES IN PORTFOLIOS. We reserve the right, subject to any applicable law, to make additions to, deletions from or substitutions for the Portfolio shares held by any Variable Sub-Account. If the shares of any of the Portfolios are no longer available for investment by the Variable Account or if, in our judgment, further investment in such shares is no longer desirable in view of the purposes of the Contract, we may eliminate that Portfolio and substitute shares of another eligible investment fund. Any substitution of securities will comply with the requirements of the Investment Company Act of 1940. We also may add new Variable Sub-Accounts that invest in additional mutual funds. We will notify you in advance of any change. CONFLICTS OF INTEREST. Certain of the Portfolios sell their shares to separate accounts underlying both variable life insurance and variable annuity contracts. It is conceivable that in the future it may be unfavorable for variable 35 PROSPECTUS life insurance separate accounts and variable annuity separate accounts to invest in the same Portfolio. The boards of directors or trustees of these Portfolios monitor for possible conflicts among separate accounts buying shares of the Portfolios. Conflicts could develop for a variety of reasons. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, a Portfolio's board of directors or trustees may require a separate account to withdraw its participation in a Portfolio. A Portfolio's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account withdrawing because of a conflict. THE CONTRACT The Contracts are distributed exclusively by their principal underwriter, Morgan Stanley DW Inc., Morgan Stanley DW, a wholly owned subsidiary of Morgan Stanley Dean Witter & Co., is located at 1585 Broadway, New York, New York 10036. Morgan Stanley DW is a member of the New York Stock Exchange and the National Association of Securities Dealers. In states where we are still offering the Contracts, we may pay up to a maximum sales commission of 6.0% of purchase payments and an annual sales administration expense of up to 0.125% of the average net assets of the Fixed Account to Morgan Stanley DW. In addition, Morgan Stanley DW may pay annually to its representatives, from its profits, a persistency bonus that will take into account, among other things, the length of time purchase payments have been held under the Contract and Contract Values. ADMINISTRATION. We have primary responsibility for all administration of the Contracts and the Variable Account. We provide the following administrative services, among others: - - issuance of the Contracts; - - maintenance of Contract owner records; - - Contract owner services; - - calculation of unit values; - - maintenance of the Variable Account; and - - preparation of Contract owner reports. We will send you Contract statements at least annually prior to the Payout Start Date. Contract statements are currently mailed on a quarterly basis. You should notify us promptly in writing of any address change. You should read your statements and confirmations carefully and verify their accuracy. You should contact us promptly if you have a question about a periodic statement. We will investigate all complaints and make any necessary adjustments retroactively, but you must notify us of a potential error within a reasonable time after the date of the questioned statement. If you wait too long, we will make the adjustment as of the date that we receive notice of the potential error. We also will provide you with additional periodic and other reports, information and prospectuses as may be required by federal securities laws. QUALIFIED PLANS If you use the Contract with a qualified plan, the plan may impose different or additional conditions or limitations on withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates, income payments, and other Contract features. In addition, adverse tax consequences may result if qualified plan limits on distributions and other conditions are not met. Please consult your qualified plan administrator for more information. LEGAL MATTERS Foley and Lardner, Washington, D.C., has advised Northbrook on certain federal securities law matters. All matters of state law pertaining to the Contracts, including the validity of the Contracts and Northbrook's right to issue such Contracts under state insurance law, have been passed upon by Michael J. Velotta, General Counsel of Northbrook. TAXES - ------------------------------------------------------------------- THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. NORTHBROOK MAKES 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 your individual circumstances. If you are concerned about any tax consequences with regard to your individual circumstances, you should consult a competent tax adviser. 36 PROSPECTUS 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. 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. TAXATION OF ANNUITIES IN GENERAL - ------------------------------------------------------------------- TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value until a distribution occurs. This rule applies only where: 1. the Contract Owner is a natural person, 2. the investments of the Variable Account are "adequately diversified" according to Treasury Department regulations, and 3. Northbrook is considered the owner of the Variable Account assets for federal income tax purposes. NON-NATURAL OWNERS. As a general rule, annuity contracts owned by non-natural persons such as corporations, trusts, or other entities are not treated as annuity contracts for federal income tax purposes. The income on such contracts does not enjoy tax deferral and is taxed as ordinary income received or accrued by the owner during the taxable year. 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) immediate annuity 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. DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an annuity for federal income tax purposes, the investments in the Variable Account must be "ADEQUATELY DIVERSIFIED" consistent with standards under Treasury Department regulations. If the investments in the Variable Account are not adequately diversified, the Contract will not be treated as an annuity contract for federal income tax purposes. As a result, the income on the Contract will be taxed as ordinary income received or accrued by the Contract Owner during the taxable year. Although Northbrook does not have control over the Portfolios or their investments, we expect the Portfolios to meet the diversification requirements. OWNERSHIP TREATMENT. The IRS has stated that a contract owner will be considered the owner of separate account assets if he possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. At the time the diversification regulations were issued, the Treasury Department announced that the regulations do not provide guidance concerning circumstances in which investor control of the separate account investments may cause a contract owner to be treated as the owner of the separate account. The Treasury Department also stated that future guidance would be issued regarding the extent that owners could direct sub-account investments without being treated as owners of the underlying assets of the separate account. Your rights under the Contract are different than those described by the IRS in rulings in which it found that contract owners were not owners of separate account assets. For example, you have the choice to allocate 37 PROSPECTUS premiums and Contract Values among a broader selection of investment alternatives. Also, you may be able to transfer among investment alternatives more frequently than in such rulings. These differences could result in you being treated as the owner of the Variable Account. If this occurs, income and gain from the Variable Account assets would be includible in your gross income. Northbrook does not know what standards will be set forth in any regulations or rulings which the Treasury Department may issue. It is possible that future standards announced by the Treasury Department could adversely affect the tax treatment of your Contract. We reserve the right to modify the Contract as necessary to attempt to prevent you from being considered the federal tax owner of the assets of the Variable Account. However, we make no guarantee that such modification to the Contract will be successful. TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal under a non-qualified Contract, amounts received are taxable to the extent the Contract Value, without regard to surrender charges, exceeds the investment in the Contract. The investment in the Contract is the gross premium paid for the contract minus any amounts previously received from the Contract if such amounts were properly excluded from your gross income. If you make a full withdrawal under a non-Qualified Contract, the amount received will be taxable only to the extent it exceeds the investment in the Contract. TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of annuity payments received from a non-qualified Contract provides for the return of your investment in the Contract in equal tax-free amounts over the payment period. The balance of each payment received is taxable. For fixed annuity payments, the amount excluded from income is determined by multiplying the payment by the ratio of the investment in the Contract (adjusted for any refund feature or period certain) to the total expected value of annuity payments for the term of the Contract. If you elect variable annuity payments, the amount excluded from taxable income is determined by dividing the investment in the Contract by the total number of expected payments. The annuity payments will be fully taxable after the total amount of the investment in the Contract is excluded using these ratios. The Federal tax treatment of annuity payments is unclear in some respects. As a result, if the IRS should provide further guidance, it is possible that the amount we calculate and report to the IRS as taxable could be different. If you die, and annuity payments cease before the total amount of the investment in the Contract is recovered, the unrecovered amount will be allowed as a deduction for your last taxable year. WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding the taxation of any additional withdrawal received after the Payout Start Date. It is possible that a greater or lesser portion of such a payment could be taxable than the amount we determine. DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for federal income tax purposes, the Contract must provide: 1. if any Contract Owner dies on or after the Payout 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 Contract Owner's death; 2. if any Contract Owner dies prior to the Payout Start Date, the entire interest in the Contract will be distributed within 5 years after the date of the Contract Owner's death. These requirements are satisfied if any portion of the Contract Owner's interest that 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 1 year of the Contract Owner's death. If the Contract Owner's designated Beneficiary is the surviving spouse of the Contract Owner, the Contract may be continued with the surviving spouse as the new Contract Owner. 3. if the Contract Owner is a non-natural person, then the Annuitant will be treated as the Contract 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 Contract Owner. TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in income as follows: 1. if distributed in a lump sum, the amounts are taxed in the same manner as a full withdrawal, or 2. if distributed under an Income Plan, the amounts are taxed in the same manner as annuity payments. PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the taxable amount of any premature distribution from a non-Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions: 1. made on or after the date the Contract Owner attains age 59 1/2, 2. made as a result of the Contract Owner's death or becoming totally disabled, 3. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the 38 PROSPECTUS joint lives or joint life expectancies of the Contract Owner and the Beneficiary, 4. made under an immediate annuity, or 5. attributable to investment in the Contract before August 14, 1982. You should consult a competent tax advisor to determine how these exceptions may apply to your situation. SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts using substantially equal periodic payments or immediate annuity payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the Contract Owner's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. You should consult a competent tax advisor prior to taking a withdrawal. TAX FREE EXCHANGES UNDER IRC SECTION 1035. A 1035 exchange is a tax-free exchange of a non-qualified life insurance contract, endowment contract or annuity contract for a new non-qualified annuity contract. The Contract Owner(s) must be the same on the old and new contract. Basis from the old contract carries over to the new contract so long as we receive that information from the relinquishing company. If basis information is never received, we will assume that all exchanged funds represent earnings and will allocate no cost basis to them. TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without full and adequate consideration to a person other than your spouse (or to a former spouse incident to a divorce), you will be taxed on the difference between the Contract Value and the investment in the Contract at the time of transfer. Except for certain Qualified Contracts, any amount you receive as a loan under a Contract, and any assignment or pledge (or agreement to assign or pledge) of the Contract Value is taxed as a withdrawal of such amount or portion and may also incur the 10% penalty tax. Currently we do not allow assignments. AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-qualified deferred annuity contracts issued by Northbrook (or its affiliates) to the same Contract Owner during any calendar year be aggregated and treated as one annuity contract for purposes of determining the taxable amount of a distribution. INCOME TAX WITHHOLDING Generally, Northbrook is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% of the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Northbrook is required to withhold federal income tax using the wage withholding rates for all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory. Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number. QUALIFIED CONTRACTS The income on qualified plan and IRA investments is tax deferred, and the income on variable annuities held by such plans does not receive any additional tax deferral. You should review the annuity features, including all benefits and expenses, prior to purchasing a variable annuity in a qualified plan or IRA. Contracts may be used as investments with certain qualified plans such as: - - Individual Retirement Annuities or Accounts (IRAs) under Section 408 of the Code; - - Roth IRAs under Section 408A of the Code; - - Simplified Employee Pension Plans under Section 408(k) of the Code; - - Savings Incentive Match Plans for Employees (SIMPLE) Plans under Section 408(p) of the Code; - - Tax Sheltered Annuities under Section 403(b) of the Code; - - Corporate and Self Employed Pension and Profit Sharing Plans under Sections 401 and 403; and - - State and Local Government and Tax-Exempt Organization Deferred Compensation Plans under Section 457. Northbrook reserves the right to limit the availability of the Contract for use with any of the Qualified Plans listed above or to modify the Contract to conform with tax requirements. 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 certain 39 PROSPECTUS transactions such as excess contributions, premature distributions, and, distributions that do not conform to specified commencement and minimum distribution rules. In the case of certain qualified plans, the terms of the plans may govern the right to benefits, regardless of the terms of the Contract. TAXATION OF WITHDRAWALS FROM A QUALIFIED CONTRACT. If you make a partial withdrawal under a Qualified Contract other than a Roth IRA, the portion of the payment that bears the same ratio to the total payment that the investment in the Contract (i.e., nondeductible IRA contributions, after tax contributions to qualified plans) bears to the Contract Value, is excluded from your income. We do not keep track of nondeductible contributions, and all tax reporting of distributions from Qualified Contracts other than Roth IRAs will indicate that the distribution is fully taxable. "QUALIFIED DISTRIBUTIONS" from Roth IRAs are not included in gross income. "Qualified distributions" are any distributions made more than five taxable years after the taxable year of the first contribution to any Roth IRA and which are: - - made on or after the date the Contract Owner attains age 59 1/2, - - made to a beneficiary after the Contract Owner's death, - - attributable to the Contract Owner being disabled, or - - made for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000). "NONQUALIFIED DISTRIBUTIONS" from Roth IRAs are treated as made from contributions first and are included in gross income only to the extent that distributions exceed contributions. All tax reporting of distributions from Roth IRAs will indicate that the taxable amount is not determined. REQUIRED MINIMUM DISTRIBUTIONS. Generally, qualified plans require minimum distributions upon reaching age 70 1/2. Failure to withdraw the required minimum distribution will result in a 50% tax penalty on the shortfall not withdrawn from the Contract. Not all income plans offered under the Contract satisfy the requirements for minimum distributions. Because these distributions are required under the Code and the method of calculation is complex, please see a competent tax advisor. THE DEATH BENEFIT AND QUALIFIED CONTRACTS. Pursuant to the Code and IRS regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA) may not invest in life insurance contracts. However, an IRA may provide a death benefit that equals the greater of the purchase payments or the Contract Value. The Contract offers a death benefit that in certain circumstances may exceed the greater of the purchase payments or 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 satisfy the requirements of an IRA. We believe that these regulations do not prohibit all forms of optional death benefits. Northbrook reserves the right to limit the availability of the Contract for use with any of the qualified plans listed above. PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM QUALIFIED CONTRACTS. A 10% penalty tax applies to the taxable amount of any premature distribution from a Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions: 1. made on or after the date the Contract Owner attains age 59 1/2, 2. made as a result of the Contract Owner's death or total disability, 3. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary, 4. made pursuant to an IRS levy, 5. made for certain medical expenses, 6. made to pay for health insurance premiums while unemployed (only applies for IRAs), 7. made for qualified higher education expenses (only applies for IRAs), and 8. made for a first time home purchase (up to a $10,000 lifetime limit and only applies for IRAs). During the first 2 years of the individual's participation in a SIMPLE IRA, distributions that are otherwise subject to the premature distribution penalty, will be subject to a 25% penalty tax. You should consult a competent tax advisor to determine how these exceptions may apply to your situation. SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON QUALIFIED CONTRACTS. With respect to Qualified Contracts using substantially equal periodic payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to a 40 PROSPECTUS 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. You should consult a competent tax advisor prior to taking a withdrawal. INCOME TAX WITHHOLDING ON QUALIFIED CONTRACTS. Generally, Northbrook is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions that are not considered "ELIGIBLE ROLLOVER DISTRIBUTIONS." The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% from the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Northbrook is required to withhold federal income tax at a rate of 20% on all "ELIGIBLE ROLLOVER DISTRIBUTIONS" unless you elect to make a "DIRECT ROLLOVER" of such amounts to an IRA or eligible retirement plan. Eligible rollover distributions generally include all distributions from Qualified Contracts, excluding IRAs, with the exception of: 1. required minimum distributions, or 2. a series of substantially equal periodic payments made over a period of at least 10 years, or, 3. a series of substantially equal periodic payments made over the life (joint lives) of the participant (and beneficiary), or, 4. hardship distributions. For all annuitized distributions that are not subject to the 20% withholding requirement, Northbrook is required to withhold federal income tax using the wage withholding rates from all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory. Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number. INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity (IRA). Individual Retirement Annuities 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 Individual Retirement Annuity. ROTH INDIVIDUAL RETIREMENT ANNUITIES. Section 408A of the Code permits eligible individuals to make nondeductible contributions to an individual retirement program known as a Roth Individual Retirement Annuity. Roth Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence. Subject to certain limitations, a traditional Individual Retirement Account or Annuity may be converted or "ROLLED OVER" to a Roth Individual Retirement Annuity. The income portion of a conversion or rollover distribution is taxable currently, but is exempted from the 10% penalty tax on premature distributions. SIMPLIFIED EMPLOYEE PENSION PLANS. Section 408(k) of the Code allows eligible employers to establish simplified employee pension plans for their employees using individual retirement annuities. Under these plans the employer may, within specified limits, make deductible contributions on behalf of the employees to the individual retirement annuities. Employers intending to use the Contract in connection with such plans should seek competent tax advice. SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE PLANS). Sections 408(p) and 401(k) of the Code allow eligible 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 IRA 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. TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS (TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND YOUR COMPETENT TAX ADVISOR. TAX SHELTERED ANNUITIES. Section 403(b) of the Tax Code provides tax-deferred retirement savings plans for employees of certain non-profit and educational organizations. Under Section 403(b), any contract used for a 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, 41 PROSPECTUS - - becomes disabled, or - - incurs a hardship (earnings on salary reduction contributions may not be distributed on account of 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. Self-employed individuals may establish tax favored retirement plans for themselves and their employees. Such retirement plans (commonly referred to as "H.R.10" or "KEOGH") may permit the purchase of annuity contracts. 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. In eligible governmental plans, all assets and income must be held in a trust/custodial account/annuity contract for the exclusive benefit of the participants and their beneficiaries. To the extent the Contracts are used in connection with a non-governmental 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. Under eligible 457 plans, contributions made for the benefit of the employees will not be includible in the employees' gross income until distributed from the plan. PERFORMANCE INFORMATION - ------------------------------------------------------------------- We may advertise the performance of the Variable Sub-Accounts, including yield and total return information. Yield refers to the income generated by an investment in a Variable Sub-Account over a specified period. Total return represents the change, over a specified period of time, in the value of an investment in a Variable Sub-Account after reinvesting all income distributions. All performance advertisements will include, as applicable, standardized yield and total return figures that reflect the deduction of insurance charges, the contract maintenance charge, and withdrawal charge. Performance advertisements also may include total return figures that reflect the deduction of insurance charges, but not the contract maintenance or withdrawal charges. The deduction of such charges would reduce the performance shown. In addition, performance advertisements may include aggregate, average, year-by-year, or other types of total return figures. Performance information for periods prior to the inception date of the Variable Sub-Accounts will be based on the historical performance of the corresponding Portfolios for the periods beginning with the inception dates of the Portfolios and adjusted to reflect current Contract expenses. You should not interpret these figures to reflect actual historical performance of the Variable Account. We may include in advertising and sales materials tax deferred compounding charts and other hypothetical illustrations that compare currently taxable and tax deferred investment programs based on selected tax brackets. Our advertisements also may compare the performance of our Variable Sub-Accounts with: (a) certain unmanaged market indices, including but not limited to the Dow Jones Industrial Average, the Standard & Poor's 500, and the Shearson Lehman Bond Index; and/or (b) other management investment companies with investment objectives similar to the underlying funds being compared. In addition, our advertisements may include the performance ranking assigned by various publications, including the Wall Street Journal, Forbes, Fortune, Money, Barron's, Business Week, USA Today, and statistical services, including Lipper Analytical Services Mutual Fund Survey, Lipper Annuity and Closed End Survey, the Variable Annuity Research Data Survey, and SEI. 42 PROSPECTUS APPENDIX A - ------------------------------------------------------------------- The following tables show the Accumulation Unit Values for each of the Variable Sub-Accounts for base Contracts without any optional benefit (with a 1.25% mortality and expense risk charge), and Contracts with the Enhanced Earnings Death Benefit Option and the Income and Death Benefit Combination Option 2 (with a 1.95% mortality and expense risk charge). These two tables represent the lowest and highrst combination of charges available under the Contracts. The Statement of Additional Information, which is available upon request without charge, contains the Accumulation Unit Values for Contracts with each other optional benefit, or available combination thereof. Please contact us at 1-800-654-2397 to obtain a copy of the Statement of Additional Information. Accumulation Unit Values are shown since inception of the Variable Sub-Accounts or since the Contracts were first offered with the applicable Option(s), if later. The inception dates for the Variable Sub-Accounts are as follows: The Money Market, Quality Income Plus, High Yield, Utilities, Dividend Growth, Equity and Strategist Variable Sub-Accounts commenced operations on October 25, 1990. The Capital Growth and European Growth Variable Sub-Accounts commenced operations on March 1, 1991. The Global Dividend Growth and Pacific Growth Variable Sub-Accounts commenced operations on February 23, 1994. The Income Builder Variable Sub-Account commenced operation on January 21, 1997. The Equity Growth, International Magnum, Emerging Markets Equity, and Emerging Growth Variable Sub-Accounts commenced operation on March 16, 1998. The S&P 500 Index, Competitive Edge ("Best Ideas") and U.S. Real Estate Variable Sub-Accounts commenced operations on May 18, 1998. The Limited Duration and Aggressive Equity Variable Sub-Accounts commenced operations on May 3, 1999. The Mid Cap Value Sub-Account, the AIM V.I. Capital Appreciation, Growth and Premier Equity Variable Sub-Accounts, the Alliance Growth, Growth and Income, and Premier Growth Variable Sub-Accounts, and the Putnam VT Growth and Income, International Growth and Voyager Variable Sub-Accounts commenced operations on January 31, 2000. The Information Sub-Account commenced operations on November 6, 2001. No Accumulation Unit Values are shown for the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock, LSA Aggressive Growth, or Putnam VT Small Cap Value Variable Sub-Accounts, which were first offered under the Conracts on May 1, 2002. 43 PROSPECTUS ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT FOR EACH OF THE LAST TEN FISCAL YEARS (BASE CONTRACT)
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31 -------------------------------------------------------------- 1992 1993 1994 1995 1996 ---------- ---------- ---------- ---------- ---------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X SHARES) Aggressive Equity Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Capital Growth Accumulation Unit Value, Beginning of Period..................................... $12.697 $12.731 $11.682 $11.379 $14.923 Accumulation Unit Value, End of Period...... $12.731 $11.682 $11.379 $14.923 $16.421 Number of Units Outstanding, End of Period..................................... 2,655,336 3,556,779 3,411,788 3,917,752 4,277,823 Competitive Edge Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Dividend Growth Accumulation Unit Value, Beginning of Period..................................... $13.911 $14.844 $16.746 $15.981 $21.505 Accumulation Unit Value, End of Period...... $14.844 $16.746 $15.981 $21.505 $26.298 Number of Units Outstanding, End of Period..................................... 7,123,073 21,941,369 28,980,558 33,515,201 38,902,776 Equity Accumulation Unit Value, Beginning of Period..................................... $16.799 $16.599 $19.604 $18.392 $25.864 Accumulation Unit Value, End of Period...... $16.599 $19.604 $18.392 $25.864 $28.669 Number of Units Outstanding, End of Period..................................... 1,417,732 5,917,819 8,914,107 10,835,413 13,438,192 European Growth Accumulation Unit Value, Beginning of Period..................................... $10.020 $10.280 $14.290 $15.278 $18.976 Accumulation Unit Value, End of Period...... $10.280 $14.290 $15.278 $18.976 $24.335 Number of Units Outstanding, End of Period..................................... 719,495 4,448,126 8,491,681 8,587,679 10,006,937 Global Dividend Growth Accumulation Unit Value, Beginning of Period..................................... -- -- $10.000 $9.12 $11.935 Accumulation Unit Value, End of Period...... -- -- $9.912 $11.935 $13.845 Number of Units Outstanding, End of Period..................................... -- -- 12,306,690 15,325,898 19,847,332 High Yield Accumulation Unit Value, Beginning of Period..................................... $13.982 $16.336 $20.022 $19.264 $21.859 Accumulation Unit Value, End of Period...... $16.336 $20.022 $19.264 $21.859 $24.148 Number of Units Outstanding, End of Period..................................... 377,434 2,451,231 4,082,485 5,536,230 7,988,916 Income Builder Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Information Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- --
44 PROSPECTUS
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31 -------------------------------------------------------------- 1992 1993 1994 1995 1996 ---------- ---------- ---------- ---------- ---------- Limited Duration Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Money Market Accumulation Unit Value, Beginning of Period..................................... $10.549 $10.765 $10.913 $11.178 $11.653 Accumulation Unit Value, End of Period...... $10.765 $10.913 $11.178 $11.653 $12.084 Number of Units Outstanding, End of Period..................................... 3,481,984 7,643,579 19,047,342 17,483,665 21,476,904 Pacific Growth Accumulation Unit Value, Beginning of Period..................................... -- -- $10.000 $9.221 $9.619 Accumulation Unit Value, End of Period...... -- -- $9.221 $9.619 $9.858 Number of Units Outstanding, End of Period..................................... -- -- 7,080,863 8,865,898 11,810,540 Quality Income Plus Accumulation Unit Value, Beginning of Period..................................... $12.163 $12.993 $14.487 $13.344 $16.373 Accumulation Unit Value, End of Period...... $12.993 $14.487 $13.344 $16.373 $16.404 Number of Units Outstanding, End of Period..................................... 6,701,534 26,314,453 25,348,646 26,735,500 24,233,104 S&P 500 Index Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Strategist Accumulation Unit Value, Beginning of Period..................................... $13.266 $14.035 $15.286 $15.675 $16.919 Accumulation Unit Value, End of Period...... $14.035 $15.286 $15.675 $16.919 $19.199 Number of Units Outstanding, End of Period..................................... 3,385,842 11,837,077 18,218,900 17,717,645 17,132,441 Utilities Accumulation Unit Value, Beginning of Period..................................... $12.454 $13.840 $15.798 $14.180 $17.999 Accumulation Unit Value, End of Period...... $13.840 $15.798 $14.180 $17.999 $19.298 Number of Units Outstanding, End of Period..................................... 6,626,508 25,354,331 22,552,568 22,626,178 19,259,329 THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Morgan Stanley UIF Emerging Markets Equity Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Morgan Stanley UIF Equity Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Morgan Stanley UIF International Magnum Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Morgan Stanley UIF Mid Cap Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Morgan Stanley UIF Mid Cap Value Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- --
45 PROSPECTUS
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31 -------------------------------------------------------------- 1992 1993 1994 1995 1996 ---------- ---------- ---------- ---------- ---------- Morgan Stanley UIF U.S. Real Estate Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I) Van Kampen LIT Comstock Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Van Kampen LIT Emerging Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. Capital Appreciation Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- AIM V.I. Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- AIM V.I. Premier Equity Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- ALLIANCE VARIABLE PRODUCTS SERIES (CLASS B SHARES) Alliance Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Alliance Growth and Income Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- --
46 PROSPECTUS
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31 -------------------------------------------------------------- 1992 1993 1994 1995 1996 ---------- ---------- ---------- ---------- ---------- Alliance Premier Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- LSA VARIABLE SERIES TRUST LSA Aggressive Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) Putnam VT Growth and Income Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Putnam VT International Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Putnam VT Small Cap Value Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Putnam VT Voyager Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- --
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31 -------------------------------------------------------------- 1997 1998 1999 2000 2001 ---------- ---------- ---------- ---------- ---------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X SHARES) Aggressive Equity Accumulation Unit Value, Beginning of Period..................................... -- -- $10.000 $14.447 $8.324 Accumulation Unit Value, End of Period...... -- -- $14.447 $8.324 $9.905 Number of Units Outstanding, End of Period..................................... -- -- 924,675 330,757 2,037,605 Capital Growth Accumulation Unit Value, Beginning of Period..................................... $16.421 $20.177 $23.806 $31.319 $31.297 Accumulation Unit Value, End of Period...... $20.177 $23.806 $31.319 $31.297 $22.751 Number of Units Outstanding, End of Period..................................... 4,469,790 3,662,958 3,251,167 3,021,082 2,203,970 Competitive Edge Accumulation Unit Value, Beginning of Period..................................... -- $10.000 $9.728 $12.177 $9.926 Accumulation Unit Value, End of Period...... -- $9.728 $12.177 $9.926 $7.501 Number of Units Outstanding, End of Period..................................... -- 1,432,745 1,766,647 2,405,879 1,726,377 Dividend Growth Accumulation Unit Value, Beginning of Period..................................... $26.298 $32.590 $36.725 $35.384 $36.762 Accumulation Unit Value, End of Period...... $32.590 $36.725 $35.384 $36.762 $34.380 Number of Units Outstanding, End of Period..................................... 39,673,542 36,334,173 31,771,950 22,447,720 18,402,631
47 PROSPECTUS
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31 -------------------------------------------------------------- 1997 1998 1999 2000 2001 ---------- ---------- ---------- ---------- ---------- Equity Accumulation Unit Value, Beginning of Period..................................... $28.669 $38.873 $50.025 $78.284 $67.698 Accumulation Unit Value, End of Period...... $38.873 $50.025 $78.284 $67.698 $48.840 Number of Units Outstanding, End of Period..................................... 13,511,972 12,608,741 13,033,466 12,262,797 9,213,699 European Growth Accumulation Unit Value, Beginning of Period..................................... $24.335 $27.870 $34,083 $43.419 $40.733 Accumulation Unit Value, End of Period...... $27.870 $34.083 $43.419 $40.733 $33.048 Number of Units Outstanding, End of Period..................................... 9,765,284 8,967,887 7,442,535 6,307,478 4,613,136 Global Dividend Growth Accumulation Unit Value, Beginning of Period..................................... $13.845 $15.304 $16.991 $19.219 $18.489 Accumulation Unit Value, End of Period...... $15.304 $16.991 $19.219 $18.489 $17.100 Number of Units Outstanding, End of Period..................................... 21,662,482 17,634,472 15,377,323 11,064,552 8,650,672 High Yield Accumulation Unit Value, Beginning of Period..................................... $24.148 $26.652 $24.658 $24.009 $16.055 Accumulation Unit Value, End of Period...... $26.652 $24.658 $24.009 $16.055 $10.493 Number of Units Outstanding, End of Period..................................... 8,797,892 8,199,142 6,186,696 4,112,148 2,971,097 Income Builder Accumulation Unit Value, Beginning of Period..................................... $10.000 $12.084 $12.297 $12.997 $12.846 Accumulation Unit Value, End of Period...... $12.084 $12.297 $12.997 $12.846 $12.964 Number of Units Outstanding, End of Period..................................... 2,364,583 2,979,980 2,557,977 1,868,522 1,759,604 Information Accumulation Unit Value, Beginning of Period..................................... -- -- -- $10.000 $9.292 Accumulation Unit Value, End of Period...... -- -- -- $9.292 $5.236 Number of Units Outstanding, End of Period..................................... -- -- -- 63,540 289,805 Limited Duration Accumulation Unit Value, Beginning of Period..................................... -- -- $10.000 $10.065 $10.511 Accumulation Unit Value, End of Period...... -- -- $10.065 $10.511 $11.067 Number of Units Outstanding, End of Period..................................... -- -- 127,159 247,190 998,378 Money Market Accumulation Unit Value, Beginning of Period..................................... $12.084 $12.546 $12.979 $13.46 $14.083 Accumulation Unit Value, End of Period...... $12.546 $12.979 $13.46 $14.083 $14.436 Number of Units Outstanding, End of Period..................................... 18,625,330 21,159,031 17,541,394 13,100,511 14,122,157 Pacific Growth Accumulation Unit Value, Beginning of Period..................................... $9.858 $6.059 $5.356 $8.780 $5.762 Accumulation Unit Value, End of Period...... $6.059 $5.356 $8.780 $5.762 $4.126 Number of Units Outstanding, End of Period..................................... 8,191,656 6,325,967 7,412,158 5,717,245 3,936,434 Quality Income Plus Accumulation Unit Value, Beginning of Period..................................... $16.404 $17.983 $19.265 $18.200 $19.949 Accumulation Unit Value, End of Period...... $17.983 $19.265 $18.200 $19.949 $21.563 Number of Units Outstanding, End of Period..................................... 20,839,536 20,312,197 16,872,144 12,923,991 11,955,743 S&P 500 Index Accumulation Unit Value, Beginning of Period..................................... -- $10.000 $11.126 $13.198 $11.800 Accumulation Unit Value, End of Period...... -- $11.126 $13.198 $11.800 $10.217 Number of Units Outstanding, End of Period..................................... -- 1,722,709 4,729,418 5,685,459 4,881,154 Strategist Accumulation Unit Value, Beginning of Period..................................... $19.199 $21.540 $26.875 $31.136 $31.226 Accumulation Unit Value, End of Period...... $21.540 $26.875 $31.136 $31.226 $27.669 Number of Units Outstanding, End of Period..................................... 16,153,105 14,574,012 13,273,409 11,520,579 8,955,954
48 PROSPECTUS
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31 -------------------------------------------------------------- 1997 1998 1999 2000 2001 ---------- ---------- ---------- ---------- ---------- Utilities Accumulation Unit Value, Beginning of Period..................................... $19.298 $24.208 $29.461 $32.870 $33.417 Accumulation Unit Value, End of Period...... $24.208 $29.461 $32.870 $33.417 $24.478 Number of Units Outstanding, End of Period..................................... 15,172,387 13,541,542 11,688,649 9,889,545 7,554,143 THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Morgan Stanley UIF Emerging Markets Equity Accumulation Unit Value, Beginning of Period..................................... -- $10.000 $7.102 $13.643 $8.224 Accumulation Unit Value, End of Period...... -- $7.102 $13.643 $8.224 $7.586 Number of Units Outstanding, End of Period..................................... -- 82,002 609,573 496,918 391,194 Morgan Stanley UIF Equity Growth Accumulation Unit Value, Beginning of Period..................................... -- $10.000 $10.104 $13.901 $12.105 Accumulation Unit Value, End of Period...... -- $10.104 $13.901 $12.105 $10.137 Number of Units Outstanding, End of Period..................................... -- 822,038 1,653,843 2,584,832 1,754,951 Morgan Stanley UIF International Magnum Accumulation Unit Value, Beginning of Period..................................... -- $10.000 $9.790 $12.092 $10.448 Accumulation Unit Value, End of Period...... -- $9.790 $12.092 $10.448 $8.319 Number of Units Outstanding, End of Period..................................... -- 136,628 281,569 521,562 463,678 Morgan Stanley UIF Mid Cap Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Morgan Stanley UIF Mid Cap Value Accumulation Unit Value, Beginning of Period..................................... -- -- -- $10.000 $10.243 Accumulation Unit Value, End of Period...... -- -- -- $10.243 $9.786 Number of Units Outstanding, End of Period..................................... -- -- -- 130,014 842,184 Morgan Stanley UIF U.S. Real Estate Accumulation Unit Value, Beginning of Period..................................... -- $10.000 $9.062 $8.808 $11.235 Accumulation Unit Value, End of Period...... -- $9.062 $8.808 $11.235 $12.174 Number of Units Outstanding, End of Period..................................... -- 79,729 230,000 509,161 494,048 VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I) Van Kampen LIT Comstock Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Van Kampen LIT Emerging Growth Accumulation Unit Value, Beginning of Period..................................... -- $10.000 $11.997 $24.191 $21.445 Accumulation Unit Value, End of Period...... -- $11.997 $24.191 $21.445 $14.493 Number of Units Outstanding, End of Period..................................... -- 254,704 1,761,875 3,397,290 2,278,513 AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. Capital Appreciation Accumulation Unit Value, Beginning of Period..................................... -- -- $10.000 $14.447 $8.324 Accumulation Unit Value, End of Period...... -- -- $14.447 $8.324 $6.300 Number of Units Outstanding, End of Period..................................... -- -- -- 330,757 336,633 AIM V.I. Growth Accumulation Unit Value, Beginning of Period..................................... -- -- $10.000 $14.447 $7.343 Accumulation Unit Value, End of Period...... -- -- $14.447 $7.343 $4.789 Number of Units Outstanding, End of Period..................................... -- -- -- 199,117 189,526
49 PROSPECTUS
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31 -------------------------------------------------------------- 1997 1998 1999 2000 2001 ---------- ---------- ---------- ---------- ---------- AIM V.I. Premier Equity Accumulation Unit Value, Beginning of Period..................................... -- -- $10.000 $14.447 $8.001 Accumulation Unit Value, End of Period...... -- -- $14.447 $8.001 $6.901 Number of Units Outstanding, End of Period..................................... -- -- -- 658,113 997,796 ALLIANCE VARIABLE PRODUCTS SERIES (CLASS B SHARES) Alliance Growth Accumulation Unit Value, Beginning of Period..................................... -- -- $10.000 $14.447 $8.145 Accumulation Unit Value, End of Period...... -- -- $14.447 $8.145 $6.135 Number of Units Outstanding, End of Period..................................... -- -- -- 256,762 375,013 Alliance Growth and Income Accumulation Unit Value, Beginning of Period..................................... -- -- $10.000 $14.447 $10.764 Accumulation Unit Value, End of Period...... -- -- $14.447 $10.764 $10.635 Number of Units Outstanding, End of Period..................................... -- -- -- 710,787 2,686,180 Alliance Premier Growth Accumulation Unit Value, Beginning of Period..................................... -- -- $10.000 $14.447 $7.861 Accumulation Unit Value, End of Period...... -- -- $14.447 $7.861 $6.406 Number of Units Outstanding, End of Period..................................... -- -- -- 1,090,403 1,004,407 LSA VARIABLE SERIES TRUST LSA Aggressive Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) Putnam VT Growth and Income Accumulation Unit Value, Beginning of Period..................................... -- -- -- $32.870 $10.800 Accumulation Unit Value, End of Period...... -- -- -- $10.800 $9.973 Number of Units Outstanding, End of Period..................................... -- -- -- 294,258 357,566 Putnam VT International Growth Accumulation Unit Value, Beginning of Period..................................... -- -- -- $32.870 $9.083 Accumulation Unit Value, End of Period...... -- -- -- $9.083 $7.114 Number of Units Outstanding, End of Period..................................... -- -- -- 577,155 662,362 Putnam VT Small Cap Value Accumulation Unit Value, Beginning of Period..................................... -- -- -- -- -- Accumulation Unit Value, End of Period...... -- -- -- -- -- Number of Units Outstanding, End of Period..................................... -- -- -- -- -- Putnam VT Voyager Accumulation Unit Value, Beginning of Period..................................... -- -- -- $32.870 $8.125 Accumulation Unit Value, End of Period...... -- -- -- $8.125 $6.219 Number of Units Outstanding, End of Period..................................... -- -- -- 594,706 647,820
* The inception dates for the Variable Sub-Accounts are shown above this table on page . The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.25%. 50 PROSPECTUS ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED (WITH THE ENHANCED EARNINGS DEATH BENEFIT OPTION AND INCOME AND DEATH BENEFIT COMBINATION OPTION 2)
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------------------- 2000 2001 ---------- ------------ MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X SHARES) Aggressive Equity Accumulation Unit Value, Beginning of Period.............. $10.000 $10.129 Accumulation Unit Value, End of Period.................... $10.129 $7.098 Number of Units Outstanding, End of Period................ 0 1,652 Capital Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $10.319 Accumulation Unit Value, End of Period.................... $10.319 $7.448 Number of Units Outstanding, End of Period................ 0 16,923 Competitive Edge Aumulation Unit Value, Beginning of Period................ $10.000 $9.869 Accumulation Unit Value, End of Period.................... $9.869 $7.411 Number of Units Outstanding, End of Period................ 0 5,126 Dividend Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $10.495 Accumulation Unit Value, End of Period.................... $10.495 $9.745 Number of Units Outstanding, End of Period................ 3,475 41,334 Equity Accumulation Unit Value, Beginning of Period.............. $10.000 $10.128 Accumulation Unit Value, End of Period.................... $10.128 $7.255 Number of Units Outstanding, End of Period................ 0 69,035 European Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $10.401 Accumulation Unit Value, End of Period.................... $10.401 $8.378 Number of Units Outstanding, End of Period................ 0 25,476 Global Dividend Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $10.319 Accumulation Unit Value, End of Period.................... $10.319 $9.476 Number of Units Outstanding, End of Period................ 0 18,699 High Yield Accumulation Unit Value, Beginning of Period.............. $10.000 $$9.542 Accumulation Unit Value, End of Period.................... $9.542 $6.192 Number of Units Outstanding, End of Period................ 98 204 Income Builder Accumulation Unit Value, Beginning of Period.............. $10.000 $10.277 Accumulation Unit Value, End of Period.................... $10.277 $10.483 Number of Units Outstanding, End of Period................ 0 0 Information Accumulation Unit Value, Beginning of Period.............. $10.000 $9.593 Accumulation Unit Value, End of Period.................... $9.593 $5.367 Number of Units Outstanding, End of Period................ 0 1,581
51 PROSPECTUS
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------------------- 2000 2001 ---------- ------------ Limited Duration Accumulation Unit Value, Beginning of Period.............. $10.000 $10.007 Accumulation Unit Value, End of Period.................... $10.007 $10.461 Number of Units Outstanding, End of Period................ 0 9,043 Money Market Accumulation Unit Value, Beginning of Period.............. $10.000 $10.017 Accumulation Unit Value, End of Period.................... $10.017 $10.194 Number of Units Outstanding, End of Period................ 0 0 Pacific Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $9.499 Accumulation Unit Value, End of Period.................... $9.499 $6.753 Number of Units Outstanding, End of Period................ 0 5,263 Quality Income Plus Accumulation Unit Value, Beginning of Period.............. $10.000 $10.017 Accumulation Unit Value, End of Period.................... $10.017 $10.751 Number of Units Outstanding, End of Period................ 2,755 13,344 S&P 500 Index Accumulation Unit Value, Beginning of Period.............. $10.000 $9.978 Accumulation Unit Value, End of Period.................... $9.978 $8.578 Number of Units Outstanding, End of Period................ 0 4,348 Strategist Accumulation Unit Value, Beginning of Period.............. $10.000 $10.071 Accumulation Unit Value, End of Period.................... $10.071 $8.861 Number of Units Outstanding, End of Period................ 3,347 5,682 Utilities Accumulation Unit Value, Beginning of Period.............. $10.000 $10.139 Accumulation Unit Value, End of Period.................... $10.139 $7.374 Number of Units Outstanding, End of Period................ 6,315 3,081 THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Morgan Stanley UIF Emerging Markets Equity Accumulation Unit Value, Beginning of Period.............. $10.000 $9.538 Accumulation Unit Value, End of Period.................... $9.538 $8.736 Number of Units Outstanding, End of Period................ 0 7,015 Morgan Stanley UIF Equity Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $9.829 Accumulation Unit Value, End of Period.................... $9.829 $8.172 Number of Units Outstanding, End of Period................ 0 6,041 Morgan Stanley UIF International Magnum Accumulation Unit Value, Beginning of Period.............. $10.000 $10.198 Accumulation Unit Value, End of Period.................... $10.198 $8.062 Number of Units Outstanding, End of Period................ 0 4,891 Morgan Stanley UIF Mid Cap Growth Accumulation Unit Value, Beginning of Period.............. -- -- Accumulation Unit Value, End of Period.................... -- -- Number of Units Outstanding, End of Period................ -- --
52 PROSPECTUS
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------------------- 2000 2001 ---------- ------------ Morgan Stanley UIF Mid Cap Value Accumulation Unit Value, Beginning of Period.............. $10.000 $10.319 Accumulation Unit Value, End of Period.................... $10.319 $9.790 Number of Units Outstanding, End of Period................ 0 7,459 Morgan Stanley UIF U.S. Real Estate Accumulation Unit Value, Beginning of Period.............. $10.000 $10.025 Accumulation Unit Value, End of Period.................... $10.025 $10.786 Number of Units Outstanding, End of Period................ 0 4,991 VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I) Van Kampen LIT Comstock Accumulation Unit Value, Beginning of Period.............. -- -- Accumulation Unit Value, End of Period.................... -- -- Number of Units Outstanding, End of Period................ -- -- Van Kampen LIT Emerging Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $9.838 Accumulation Unit Value, End of Period.................... $9.838 $6.601 Number of Units Outstanding, End of Period................ 0 17,319 AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. Capital Appreciation Accumulation Unit Value, Beginning of Period.............. $10.000 $9.895 Accumulation Unit Value, End of Period.................... $9.895 $7.436 Number of Units Outstanding, End of Period................ 0 13,961 AIM V.I. Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $9.911 Accumulation Unit Value, End of Period.................... $9.911 $6.418 Number of Units Outstanding, End of Period................ 0 4,135 AIM V.I. Premier Equity Accumulation Unit Value, Beginning of Period.............. $10.000 $10.158 Accumulation Unit Value, End of Period.................... $10.158 $8.700 Number of Units Outstanding, End of Period................ 0 3,960 ALLIANCE VARIABLE PRODUCTS SERIES (CLASS B SHARES) Alliance Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $9.927 Accumulation Unit Value, End of Period.................... $9.927 $7.424 Number of Units Outstanding, End of Period................ 0 4,367 Alliance Growth and Income Accumulation Unit Value, Beginning of Period.............. $10.000 $10.359 Accumulation Unit Value, End of Period.................... $10.359 $10.162 Number of Units Outstanding, End of Period................ 0 5,013
53 PROSPECTUS
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------------------- 2000 2001 ---------- ------------ Alliance Premier Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $9.807 Accumulation Unit Value, End of Period.................... $9.807 $7.935 Number of Units Outstanding, End of Period................ 0 5,423 LSA VARIABLE SERIES TRUST LSA Aggressive Growth Accumulation Unit Value, Beginning of Period.............. -- -- Accumulation Unit Value, End of Period.................... -- -- Number of Units Outstanding, End of Period................ -- -- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) Putnam VT Growth and Income Accumulation Unit Value, Beginning of Period.............. $10.000 $10.225 Accumulation Unit Value, End of Period.................... $10.225 $9.375 Number of Units Outstanding, End of Period................ 0 3,587 Putnam VT International Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $10.316 Accumulation Unit Value, End of Period.................... $10.316 $8.022 Number of Units Outstanding, End of Period................ 0 4,133 Putnam VT Small Cap Value Accumulation Unit Value, Beginning of Period.............. -- -- Accumulation Unit Value, End of Period.................... -- -- Number of Units Outstanding, End of Period................ -- -- Putnam VT Voyager Accumulation Unit Value, Beginning of Period.............. $10.000 $9.817 Accumulation Unit Value, End of Period.................... $9.817 $7.522 Number of Units Outstanding, End of Period................ 0 4,086
* Contracts with the Enhanced Earnings Death Benefit Option and the Income and Death Benefit Combination Option 2 were first offered under the Contracts on October 30, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page above. The Accumulation Unit Value for each of these Variable Sub-Accounts was initially set at $10.000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.95% and an administrative expense charge of 0.10%. 54 PROSPECTUS APPENDIX B CALCULATION OF ENHANCED EARNINGS DEATH BENEFIT - ------------------------------------------------------------------- EXAMPLE 1. In this example, assume that the oldest Owner is age 65 at the time the Contract is issued and elects the Enhanced Earnings Death Benefit Option when the Contract is issued. The Owner makes an initial puchase payment of $100,000. After four years, the Owner dies. On the date Northbrook receives Due Proof of Death, the Contract Value is $125,000. Prior to his death, the Owner did not make any additional purchase payments or take any withdrawals. Excess-of-Earnings Withdrawals = $0 In-Force Premium = $100,000 ($100,000 + $0 - $0) Death Benefit Earnings = $25,000 ($125,000 - $100,000) Enhanced Earnings Death Benefit = 40% X $25,000 = $10,000. Since Death Benefit Earnings are less than In-Force Premium, the Death Benefit Earnings are used to compute the Enhanced Earnings Death Benefit amount. EXAMPLE 2. In the second example, assume the same facts as above, except that the Owner has taken a withdrawal of $10,000 during the second year of the Contract. At the time the withdrawal is taken, the Contract Value is $105,000. Here, $5,000 of the withdrawal is in excess of the Death Benefit Earnings at the time of the ithdrawal. The Contract Value on the date Northbrook receives Due Proof of Death will be assumed to be $114,000. Excess of Earnings Withdrawals = $5,000 ($10,000 - $5,000) In-Force Premium = $95,000 ($100,000 + $0 - $5,000) Death Benefit Earnings = $19,000 ($114,000 - $95,000) Enhanced Earnings Death Benefit = 40% X $19,000 = $7,600. Since Death Benefit Earnings are less than In-Force Premium, the Death Benefit Earnings are used to compute the Enhanced Earnings Death Benefit amount. EXAMPLE 3. This third example is intended to illustrate the effect of adding the Enhanced Earnings Death Benefit Option after the Contract has been issued and the effect of later purchase payments. In this example, assume that the oldest Owner is age 75 at the time the Enhanced Earnings Death Benefit is elected. At the time the Contract is issued, the Owner makes a purchase payment of $100,000. After two years pass, the Owner elects to add the Enhanced Earnings Death Benefit Option. On the date this Option is added, the Contract Value is $110,000. Two years later, the Owner withdraws $50,000. Immediately prior to the withdrawal, the Contract Value is $130,000. Another two years later, the Owner makes an additional purchase payment of $40,000. A year later, the Owner dies with a Contract Value of $140,000 on the date we receive Due Proof of Death. Excess of Earnings Withdrawals = $30,000 ($50,000 - $20,000) In-Force Premium = $120,000 ($110,000 + $40,000 - $30,000) Death Benefit Earnings = $20,000 ($140,000 - $120,000) Enhanced Earnings Death Benefit = 25% of $20,000 = $5,000. In this example, In-Force Premium is the Contract Value on the date the Rider was issued plus all later withdrawals and minus Excess-of-Earnings withdrawals. Since Death Benefit Earnings are less than In-Force Premium, the Death Benefit Earnings are used to compute the Enhanced Earnings Death Benefit amount. 55 PROSPECTUS STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS - -------------------------------------------------------------------
PAGE - ----------------------------------------------------- ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS - ----------------------------------------------------- THE CONTRACT - ----------------------------------------------------- Purchases - ----------------------------------------------------- Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers) - ----------------------------------------------------- PERFORMANCE INFORMATION - ----------------------------------------------------- Calculation of Accumulation Unit Values - ----------------------------------------------------- Calculation of Variable Income Payments - -----------------------------------------------------
- -----------------------------------------------------
PAGE GENERAL MATTERS - ----------------------------------------------------- Incontestability - ----------------------------------------------------- Settlements - ----------------------------------------------------- Safekeeping of the Variable Account's Assets - ----------------------------------------------------- Premium Taxes - ----------------------------------------------------- Tax Reserves - ----------------------------------------------------- EXPERTS - ----------------------------------------------------- APPENDIX A -- ACCUMULATION UNIT VALUES - ----------------------------------------------------- FINANCIAL STATEMENTS - -----------------------------------------------------
------------------------------ THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS. 56 PROSPECTUS MORGAN STANLEY VARIABLE ANNUITY II ASSETMANAGER NORTHBROOK LIFE INSURANCE COMPANY 300 N. MILWAUKEE AVE. VERNON HILLS, IL 60001 TELEPHONE NUMBER: 1-800-654-2397 PROSPECTUS DATED MAY 1, 2002 - -------------------------------------------------------------------------------- Northbrook Life Insurance Company ("NORTHBROOK") is offering the Morgan Stanley Variable Annuity II AssetManager, an individual and group flexible premium deferred variable annuity contract ("CONTRACT"). This prospectus contains information about the Contract that you should know before investing. Please keep it for future reference. New Contracts may not be purchased in all states. Please check with your Morgan Stanley Financial Advisor for current availability. If you have already purchased the Contract you may continue to add to it. The Contract offers 38 investment alternatives ("INVESTMENT ALTERNATIVES"). The investment alternatives include 2 fixed account options "FIXED ACCOUNT OPTIONS") and 36 variable sub-accounts ("VARIABLE SUB-ACCOUNTS") of the Northbrook Variable Annuity Account II ("VARIABLE ACCOUNT"). Each Variable Sub-Account invests exclusively in shares of portfolios ("PORTFOLIOS") of the following mutual funds ("FUNDS"): MORGAN STANLEY VARIABLE INVESTMENT SERIES AIM VARIABLE INSURANCE FUNDS (SERIES I) (CLASS X SHARES) ALLIANCE VARIABLE PRODUCTS SERIES FUND, INC. THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (CLASS B SHARES) VAN KAMPEN LIFE INVESTMENT TRUST LSA VARIABLE SERIES TRUST PUTNAM VARIABLE TRUST (CLASS IB SHARES)
WE (Northbrook) have filed a Statement of Additional Information, dated May 1, 2002, with the Securities and Exchange Commission ("SEC"). It contains more information about the Contract and is incorporated herein by reference, which means that it is legally a part of this prospectus. Its table of contents appears on page B-1 of this prospectus. For a free copy, please write or call us at the address or telephone number above, or go to the SEC's Web site (http://www.sec.gov). You can find other information and documents about us, including documents that are legally a part of this prospectus, at the SEC's Web site. - -------------------------------------------------------------------------------- THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS, NOR HAS IT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A FEDERAL CRIME. IMPORTANT NOTICES INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
1 PROSPECTUS TABLE OF CONTENTS - -------------------------------------------------------------------
PAGE - ---------------------------------------------------------------------------- OVERVIEW - ---------------------------------------------------------------------------- Important Terms 3 - ---------------------------------------------------------------------------- The Contract at a Glance 4 - ---------------------------------------------------------------------------- How the Contract Works 6 - ---------------------------------------------------------------------------- Expense Table 7 - ---------------------------------------------------------------------------- Financial Information 12 - ---------------------------------------------------------------------------- CONTRACT FEATURES - ---------------------------------------------------------------------------- The Contract 13 - ---------------------------------------------------------------------------- Purchases 14 - ---------------------------------------------------------------------------- Contract Value 15 - ---------------------------------------------------------------------------- Investment Alternatives 16 - ---------------------------------------------------------------------------- The Variable Sub-Accounts 16 - ---------------------------------------------------------------------------- The Fixed Account Options 18 - ---------------------------------------------------------------------------- Transfers 18 - ---------------------------------------------------------------------------- Expenses 20 - ----------------------------------------------------------------------------
PAGE - ---------------------------------------------------------------------------- Access To Your Money 22 - ---------------------------------------------------------------------------- Income Payments 23 - ---------------------------------------------------------------------------- Death Benefits 25 - ---------------------------------------------------------------------------- OTHER INFORMATION - ---------------------------------------------------------------------------- More Information: 29 - ---------------------------------------------------------------------------- Northbrook 29 - ---------------------------------------------------------------------------- The Variable Account 29 - ---------------------------------------------------------------------------- The Portfolios 29 - ---------------------------------------------------------------------------- The Contract 30 - ---------------------------------------------------------------------------- Qualified Plans 30 - ---------------------------------------------------------------------------- Legal Matters 30 - ---------------------------------------------------------------------------- Taxes 31 - ---------------------------------------------------------------------------- Performance Information 36 - ---------------------------------------------------------------------------- APPENDIX A -- ACCUMULATION UNIT VALUES A-1 - ---------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS B-1 - ----------------------------------------------------------------------------
2 PROSPECTUS IMPORTANT TERMS - ------------------------------------------------------------------- This prospectus uses a number of important terms that you may not be familiar with. The index below identifies the page that describes each term. The first use of each term in this prospectus appears in highlights.
PAGE - ---------------------------------------------------------------------------- Accumulation Phase - ---------------------------------------------------------------------------- Accumulation Unit - ---------------------------------------------------------------------------- Accumulation Unit Value - ---------------------------------------------------------------------------- Annuitant - ---------------------------------------------------------------------------- Automatic Additions Program - ---------------------------------------------------------------------------- Automatic Portfolio Rebalancing Program - ---------------------------------------------------------------------------- Beneficiary - ---------------------------------------------------------------------------- Cancellation Period - ---------------------------------------------------------------------------- *Contract - ---------------------------------------------------------------------------- Contract Anniversary - ---------------------------------------------------------------------------- Contract Owner ("You") - ---------------------------------------------------------------------------- Contract Value - ---------------------------------------------------------------------------- Contract Year - ---------------------------------------------------------------------------- Death Benefit Anniversary - ---------------------------------------------------------------------------- Death Benefit Combination Option - ---------------------------------------------------------------------------- Dollar Cost Averaging Fixed Account Options - ---------------------------------------------------------------------------- Dollar Cost Averaging Program - ---------------------------------------------------------------------------- Due Proof of Death - ---------------------------------------------------------------------------- Enhanced Death Benefit Option - ---------------------------------------------------------------------------- Fixed Account Options - ----------------------------------------------------------------------------
PAGE - ---------------------------------------------------------------------------- Free Withdrawal Amount - ---------------------------------------------------------------------------- Funds - ---------------------------------------------------------------------------- Income Plan - ---------------------------------------------------------------------------- Investment Alternatives - ---------------------------------------------------------------------------- Issue Date - ---------------------------------------------------------------------------- Northbrook ("We") - ---------------------------------------------------------------------------- Payout Phase - ---------------------------------------------------------------------------- Payout Start Date - ---------------------------------------------------------------------------- Performance Benefit Combination Option - ---------------------------------------------------------------------------- Performance Death Benefit Option - ---------------------------------------------------------------------------- Performance Income Benefit Option - ---------------------------------------------------------------------------- Portfolios - ---------------------------------------------------------------------------- Qualified Contracts - ---------------------------------------------------------------------------- Right to Cancel - ---------------------------------------------------------------------------- SEC - ---------------------------------------------------------------------------- Settlement Value - ---------------------------------------------------------------------------- Systematic Withdrawal Program - ---------------------------------------------------------------------------- Valuation Date - ---------------------------------------------------------------------------- Variable Account - ---------------------------------------------------------------------------- Variable Sub-Account - ----------------------------------------------------------------------------
*In certain states the Contract is available only as a group Contract. In these states, we will issue you a certificate that represents your ownership and that summarizes the provisions of the group Contract. References to "Contract" in this prospectus include certificates, unless the context requires otherwise. 3 PROSPECTUS THE CONTRACT AT A GLANCE - ------------------------------------------------------------------- The following is a snapshot of the Contract. Please read the remainder of this prospectus for more information. FLEXIBLE PAYMENTS You can purchase a Contract with an initial purchase payment of $10,000 or more. You can add to your Contract as often and as much as you like, but each payment must be at least $100. You must maintain a minimum account size of $500. - -------------------------------------------------------------------------------------------------------- RIGHT TO CANCEL You may cancel your Contract within 20 days of receipt or any longer period as your state may require ("CANCELLATION PERIOD"). Upon cancellation, we will return your purchase payments adjusted, to the extent applicable law permits, to reflect the investment experience of any amounts allocated to the Variable Account, including the deduction of mortality and expense risk charges and administrative expense charges. - -------------------------------------------------------------------------------------------------------- EXPENSES You will bear the following expenses: - Total Variable Account annual fees equal to 1.59% of average daily net assets (1.72% if you select the ENHANCED DEATH BENEFIT OPTION, the PERFORMANCE DEATH BENEFIT OPTION, or the PERFORMANCE INCOME BENEFIT OPTION, and 1.83% if you select the PERFORMANCE BENEFIT COMBINATION OPTION, or the DEATH BENEFIT COMBINATION OPTION) - Annual contract maintenance charge of $35 (waived in certain cases) - Withdrawal charges not to exceed 1% of purchase payment(s) withdrawn (with certain exceptions) - Transfer fee of $10 after 12th transfer in any CONTRACT YEAR (fee currently waived.) - State premium tax (if your state imposes one) In addition, each Portfolio pays expenses that you will bear indirectly if you invest in a Variable Sub-Account. - -------------------------------------------------------------------------------------------------------- INVESTMENT ALTERNATIVES The Contract offers 38 investment alternatives including: - 2 Fixed Account Options (which credit interest at rates we guarantee) - 36 Variable Sub-Accounts investing in Portfolios offering professional money management by these investment advisers: - A I M Advisors, Inc. - Alliance Capital Management, L.P. - LSA Asset Management LLC - Morgan Stanley Investment Advisors, Inc. - Morgan Stanley Investments, L.P. - Morgan Stanley Investment Management, Inc. - Putnam Investment Management, Inc. - Van Kampen Asset Management Inc. To find out current rates being paid on the Fixed Account Options, or to find out how the Variable Sub-Accounts have performed, call us at 1-800-654-2397.
4 PROSPECTUS - -------------------------------------------------------------------------------------------------------- SPECIAL SERVICES For your convenience, we offer these special services: - AUTOMATIC ADDITIONS PROGRAM - AUTOMATIC PORTFOLIO REBALANCING PROGRAM - DOLLAR COST AVERAGING PROGRAM - SYSTEMATIC WITHDRAWAL PROGRAM - -------------------------------------------------------------------------------------------------------- INCOME PAYMENTS You can choose fixed income payments, variable income payments, or a combination of the two. You can receive your income payments in one of the following ways: - life income with guaranteed payments - joint and survivor life income with guaranteed payments - guaranteed payments for a specified period - -------------------------------------------------------------------------------------------------------- DEATH BENEFITS If you or the ANNUITANT dies before the PAYOUT START DATE, we will pay the death benefit described in the Contract. We also offer 3 Death Benefit Options. - -------------------------------------------------------------------------------------------------------- TRANSFERS Before the Payout Start Date, you may transfer your Contract value ("CONTRACT VALUE") among the investment alternatives, with certain restrictions. Transfers must be at least $100 or the total amount in the investment alternative, whichever is less. We do not currently impose a fee upon transfers. However, we reserve the right to charge $10 per transfer after the 12th transfer in each "CONTRACT YEAR," which we measure from the date we issue your contract or a Contract anniversary ("CONTRACT ANNIVERSARY") - -------------------------------------------------------------------------------------------------------- WITHDRAWALS You may withdraw some or all of your Contract Value at anytime during the Accumulation Phase. In general, you must withdraw at least $100 at a time or the total amount in the investment alternative, if less. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. A withdrawal charge also may apply.
5 PROSPECTUS HOW THE CONTRACT WORKS - ------------------------------------------------------------------- The Contract basically works in two ways. First, the Contract can help you (we assume you are the "CONTRACT OWNER") save for retirement because you can invest in up to 38 investment alternatives and pay no federal income taxes on any earnings until you withdraw them. You do this during what we call the "ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on the date we issue your Contract (we call that date the "ISSUE DATE") and continues until the Payout Start Date, which is the date we apply your money to provide income payments. During the Accumulation Phase, you may allocate your purchase payments to any combination of the Variable Sub-Accounts and/or the Fixed Account Options. If you invest in the Fixed Account Options, you will earn a fixed rate of interest that we declare periodically. If you invest in any of the Variable Sub-Accounts, your investment return will vary up or down depending on the performance of the corresponding Portfolios. Second, the Contract can help you plan for retirement because you can use it to receive retirement income for life and/or for a pre-set number of years, by selecting one of the income payment options (we call these "INCOME PLANS") described on page . You receive income payments during what we call the "PAYOUT PHASE" of the Contract, which begins on the Payout Start Date and continues until we make the last payment required by the Income Plan you select. During the Payout Phase, if you select a fixed income payment option, we guarantee the amount of your payments, which will remain fixed. If you select a variable income payment option, based on one or more of the Variable Sub-Accounts, the amount of your payments will vary up or down depending on the performance of the corresponding Portfolios. The amount of money you accumulate under your Contract during the Accumulation Phase and apply to an Income Plan will determine the amount of your income payments during the Payout Phase.
ISSUE ACCUMULATION PHASE PAYOUT PAYOUT DATE START PHASE DATE ------------------------------------------------------------------------------------------------------------ You buy You save for You elect to receive You can receive Or you can a Contract retirement income income payments receive income payments or receive for a set period payments for life a lump sum payment
As the Contract owner, you exercise all of the rights and privileges provided by the Contract. If you die, any surviving Contract owner or, if there is none, the BENEFICIARY will exercise the rights and privileges provided by the Contract. SEE "The Contract." In addition, if you die before the Payout Start Date, we will pay a death benefit to any surviving Contract owner, or if there is none, to your Beneficiary. SEE "Death Benefits." Please call us at 1-800-654-2397 if you have any question about how the Contract works. 6 PROSPECTUS EXPENSE TABLE - ------------------------------------------------------------------- The table below lists the expenses that you will bear directly or indirectly when you buy a Contract. The table and the examples that follow do not reflect premium taxes that may be imposed by the state where you reside. For more information about Variable Account expenses, see "Expenses," below. For more information about Portfolio expenses, please refer to the accompanying prospectuses for the Funds. CONTRACT OWNER TRANSACTION EXPENSES Withdrawal Charge (as a percentage of purchase payments withdrawn)*
Number of Complete Years Since We Received the Payment Being Withdrawn 0 1 - ------------------------------------------------------------------------------- Applicable Charge 1% 0% - ------------------------------------------------------------------------------- Annual Contract Maintenance Charge $35.00** - ------------------------------------------------------------------------------- Transfer Fee $10*** - -------------------------------------------------------------------------------
*Each Contract Year, you may withdraw up to 15% of the aggregate amount of your purchase payments as of the beginning of the Contract Year without incurring a withdrawal charge. **We will waive this charge in certain cases. See "Expenses." ***Applies solely to the thirteenth and subsequent transfers within a Contract Year excluding transfers due to dollar cost averaging and automatic portfolio rebalancing. We are currently waiving the transfer fee. VARIABLE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF AVERAGE DAILY NET ASSET VALUE DEDUCTED FROM EACH VARIABLE SUB-ACCOUNT) Basic Contract Mortality and Expense Risk Charge 1.49% - ------------------------------------------------------------------- Administrative Expense Charge 0.10% - ------------------------------------------------------------------- Total Variable Account Annual Expense 1.59% - -------------------------------------------------------------------
With the Enhanced Death Benefit, Performance Income Benefit or Performance Death Benefit Option Mortality and Expense Risk Charge 1.62% - ------------------------------------------------------------------- Administrative Expense Charge 0.10% - ------------------------------------------------------------------- Total Variable Account Annual Expense 1.72% - -------------------------------------------------------------------
With the Performance Benefit Combination or the Death Benefit Combination Option Mortality and Expense Risk Charge 1.73% - ------------------------------------------------------------------- Administrative Expense Charge 0.10% - ------------------------------------------------------------------- Total Variable Account Annual Expense 1.83% - -------------------------------------------------------------------
7 PROSPECTUS PORTFOLIO ANNUAL EXPENSES (after voluntary reductions and reimbursements for certain Portfolios) (as a percentage of Portfolio average daily net assets)(1)
Rule Management 12b-1 Other Total Portfolio Portfolio Fees Fees Expenses Annual Expenses - ------------------------------------------------------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X) - ------------------------------------------------------------------------------------------------------------------------------- Aggressive Equity Portfolio 0.75% N/A 0.09% 0.84% - ------------------------------------------------------------------------------------------------------------------------------- Capital Growth Portfolio 0.65% N/A 0.05% 0.70% - ------------------------------------------------------------------------------------------------------------------------------- Competitive Edge Portfolio 0.65% N/A 0.10% 0.75% - ------------------------------------------------------------------------------------------------------------------------------- Dividend Growth Portfolio 0.54% N/A 0.01% 0.55% - ------------------------------------------------------------------------------------------------------------------------------- Equity Portfolio 0.49% N/A 0.02% 0.51% - ------------------------------------------------------------------------------------------------------------------------------- European Growth Portfolio 0.95% N/A 0.07% 1.02% - ------------------------------------------------------------------------------------------------------------------------------- Global Dividend Growth Portfolio 0.75% N/A 0.05% 0.80% - ------------------------------------------------------------------------------------------------------------------------------- High Yield Portfolio 0.50% N/A 0.09% 0.59% - ------------------------------------------------------------------------------------------------------------------------------- Income Builder Portfolio 0.75% N/A 0.06% 0.81% - ------------------------------------------------------------------------------------------------------------------------------- Information Portfolio (2) 0.75% N/A 0.87% 1.62% - ------------------------------------------------------------------------------------------------------------------------------- Limited Duration Portfolio (3) 0.45% N/A 0.20% 0.65% - ------------------------------------------------------------------------------------------------------------------------------- Money Market Portfolio 0.50% N/A 0.01% 0.51% - ------------------------------------------------------------------------------------------------------------------------------- Pacific Growth Portfolio 0.95% N/A 0.78% 1.73% - ------------------------------------------------------------------------------------------------------------------------------- Quality Income Plus Portfolio 0.50% N/A 0.03% 0.53% - ------------------------------------------------------------------------------------------------------------------------------- S&P 500 Index Portfolio 0.40% N/A 0.06% 0.46% - ------------------------------------------------------------------------------------------------------------------------------- Strategist Portfolio 0.50% N/A 0.02% 0.52% - ------------------------------------------------------------------------------------------------------------------------------- Utilities Portfolio 0.65% N/A 0.02% 0.67% - ------------------------------------------------------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (4) - ------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Emerging Markets Equity Portfolio 1.25% N/A 0.87% 2.12% - ------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Equity Growth Portfolio 0.55% N/A 0.36% 0.91% - ------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF International Magnum Portfolio 0.80% N/A 0.54% 1.34% - ------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Mid Cap Growth Portfolio 0.75% N/A 0.64% 1.39% - ------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Mid Cap Value Portfolio 0.75% N/A 0.35% 1.10% - ------------------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF U.S. Real Estate Portfolio 0.80% N/A 0.35% 1.15% - ------------------------------------------------------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I) - ------------------------------------------------------------------------------------------------------------------------------- Van Kampen LIT Comstock Portfolio 0.60% N/A 0.21% 0.81% - ------------------------------------------------------------------------------------------------------------------------------- Van Kampen LIT Emerging Growth Portfolio 0.70% N/A 0.06% 0.76% - ------------------------------------------------------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) - ------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Capital Appreciation Fund 0.61% N/A 0.24% 0.85% - ------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Growth Fund 0.62% N/A 0.26% 0.88% - ------------------------------------------------------------------------------------------------------------------------------- AIM V.I. Premier Equity Fund (5) 0.60% N/A 0.25% 0.85% - ------------------------------------------------------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (CLASS B SHARES) - ------------------------------------------------------------------------------------------------------------------------------- Alliance Growth Portfolio 0.75% 0.25% 0.11% 1.11% - ------------------------------------------------------------------------------------------------------------------------------- Alliance Growth and Income Portfolio 0.63% 0.25% 0.04% 0.92% - ------------------------------------------------------------------------------------------------------------------------------- Alliance Premier Growth Portfolio 1.00% 0.25% 0.04% 1.29% - ------------------------------------------------------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST - ------------------------------------------------------------------------------------------------------------------------------- LSA Aggressive Growth Fund (6) 0.95% N/A 0.30% 1.25% - ------------------------------------------------------------------------------------------------------------------------------- PUTNAM VARIABLE TRUST (CLASS IB SHARES) (7) - ------------------------------------------------------------------------------------------------------------------------------- Putnam VT Growth and Income Fund 0.46% 0.25% 0.05% 0.76% - ------------------------------------------------------------------------------------------------------------------------------- Putnam VT International Growth Fund 0.76% 0.25% 0.18% 1.19% - ------------------------------------------------------------------------------------------------------------------------------- Putnam VT Small Cap Value Fund 0.80% 0.25% 0.14% 1.19% - ------------------------------------------------------------------------------------------------------------------------------- Putnam VT Voyager Fund 0.53% 0.25% 0.04% 0.82% - -------------------------------------------------------------------------------------------------------------------------------
(1) Figures shown in the Table are for the year ended December 31, 2001 (except as otherwise noted). (2) The investment manager had agreed to assume all operating expenses and to waive the compensation provided for in its Investment Management Agreement until such time as the Portfolio had $50 million of net 8 PROSPECTUS assets or December 31, 2001, whichever occurred first. With these assumptions and expense waivers in effect, "Management Fees", "Rule 12b-1 Fees", "Other Expenses" and "Total Portfolio Annual Expenses" were 0.00%, N/A, 0.00% and 0.00%, respectively. The Investment Manager will not continue these expense waivers in 2002. Therefore, expenses in the above Table are estimated for 2002. (3) Effective May 1, 2002, the Short-Term Bond Portfolio changed its name to the Limited Duration Portfolio. For the period June 1, 2001 through December 31, 2001, the Investment Manager had agreed to waive its fee and reimburse operating expenses to the extent they exceeded 0.50% of daily net assets. With these expense waivers and reimbursements in effect, "Management Fees", "Rule 12b-1 Fees", "Other Expenses" and "Total Portfolio Annual Expenses" were 0.41%, N/A, 0.20% and 0.61%, respectively. "Other Expenses" do not include the effect of an expense offset of 0.06%. The Investment Manager will not continue these expense waivers in 2002. Therefore, expenses in the above Table are estimated for 2002. (4) "Total Portfolio Annual Expenses" listed in the table above reflect gross ratios prior to any voluntary waivers/ reimbursements of expenses by the adviser. For the year ended December 31, 2001, the management fee was reduced to reflect the voluntary waiver of a portion or all of the management fee and the reimbursement by the Portfolios' adviser to the extent "Total Portfolio Annual Expenses" exceed the following percentages: Emerging Markets Equity Portfolio 1.75%; Equity Growth Portfolio 0.85%; International Magnum Portfolio 1.15%; Mid Cap Growth Portfolio 1.05%; Mid Cap Value Portfolio 1.05%; U.S. Real Estate Portfolio 1.10%. The adviser may terminate this voluntary waiver at any time at its sole discretion. After such reductions, the "Management Fees", "Rule 12b-1 Fees", "Other Expenses" and "Total Portfolio Annual Expenses" were as follows:
Total Rule Portfolio Management 12b-1 Other Annual Portfolio Fees Fees Expenses Expenses - --------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Emerging Markets Equity Portfolio 0.98% N/A 0.87% 1.85% - --------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Equity Growth Portfolio 0.49% N/A 0.36% 0.85% - --------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF International Magnum Portfolio 0.62% N/A 0.54% 1.16% - --------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Mid Cap Growth Portfolio 0.41% N/A 0.64% 1.05% - --------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Mid Cap Value Portfolio 0.70% N/A 0.35% 1.05% - --------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF U.S. Real Estate Portfolio 0.75% N/A 0.35% 1.10% - ---------------------------------------------------------------------------------------------------------------
Additionally, in determining the actual amount of voluntary management fee waiver and/or expense reimbursement for a Portfolio, if any, the adviser excludes from total annual operating expenses certain investment related expenses, such as foreign country tax expense and interest expense on borrowing. Included in "Other Expenses" of the Emerging Markets Equity Portfolio and International Magnum Portfolio are 0.10% and 0.01% of such investment related expenses, respectively. (5) Effective May 1, 2002, the AIM V.I. Value Fund changed its name to the AIM V.I. Premier Equity Fund. (6) Figures shown are based on estimates for the current fiscal year. Under an expense limitation agreement ("Agreement"), the manager has agreed to reduce its fees or reimburse the Portfolio for expenses incurred above certain limits. Currently, this limit is set so that the Portfolio will not incur expenses (including interest, taxes, brokerage commissions and extraordinary expenses) that exceed the amount of its management fee plus 0.30% of its average daily net assets. Without these fee reductions or expense reimbursements, "Other Expenses" and "Total Portfolio Annual Expenses" for 2002 are expected to be 7.65% and 8.60%. These reductions and reimbursements will remain in effect until at least April 30, 2003. Under certain circumstances, the Agreement provides that, commencing June 1, 2002 and continuing for three years thereafter, the manager may recoup a certain amount of its fee reductions and reimbursements. The total amount of reimbursement, if any, paid in any year to the manager may not, however, cause "Total Portfolio Annual Expenses" to exceed the percentages listed in the table. (7) "Rule 12b-1 Fees" are restated to reflect an increase in Rule 12b-1 Fees effective April 30, 2001. Actual Rule 12b-1 Fees during the most recent fiscal year were 0.22%. See the Funds' prospectus for more information about Rule 12b-1 Fees payable under the Funds' distribution plan. 9 PROSPECTUS EXPENSE EXAMPLE The example below shows the dollar amount of expenses that you would bear directly or indirectly if you: - - invested $1,000 in a Variable Sub-Account, - - earned a 5% annual return on your investment, - - surrendered your Contract, continued your Contract, or you began receiving income payments for a specified period of less than 120 months, at the end of each time period, and - - elected the Performance Benefit Combination Option or the Death Benefit Combination Option. The examples are based on the expenses shown in the Portfolio Annual Expenses table, which reflects certain waiver and reimbursement arrangements as explained in the footnotes to the table. The examples assume those arrangements remain in effect for the periods presented.
1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X) - ------------------------------------------------------------------------------------------------------------------------------ Aggressive Equity $28 $ 86 $147 $310 - ------------------------------------------------------------------------------------------------------------------------------ Capital Growth $27 $ 82 $140 $296 - ------------------------------------------------------------------------------------------------------------------------------ Competitive Edge $27 $ 83 $142 $301 - ------------------------------------------------------------------------------------------------------------------------------ Dividend Growth $25 $ 77 $132 $281 - ------------------------------------------------------------------------------------------------------------------------------ Equity $25 $ 76 $130 $277 - ------------------------------------------------------------------------------------------------------------------------------ European Growth $30 $ 92 $156 $328 - ------------------------------------------------------------------------------------------------------------------------------ Global Dividend Growth $28 $ 85 $145 $306 - ------------------------------------------------------------------------------------------------------------------------------ High Yield $26 $ 79 $134 $285 - ------------------------------------------------------------------------------------------------------------------------------ Income Builder $28 $ 85 $145 $307 - ------------------------------------------------------------------------------------------------------------------------------ Information $36 $110 $186 $384 - ------------------------------------------------------------------------------------------------------------------------------ Limited Duration $26 $ 80 $137 $291 - ------------------------------------------------------------------------------------------------------------------------------ Money Market $25 $ 76 $130 $277 - ------------------------------------------------------------------------------------------------------------------------------ Pacific Growth $37 $113 $191 $394 - ------------------------------------------------------------------------------------------------------------------------------ Quality Income Plus $25 $ 77 $131 $279 - ------------------------------------------------------------------------------------------------------------------------------ S&P 500 Index $24 $ 75 $127 $272 - ------------------------------------------------------------------------------------------------------------------------------ Strategist $25 $ 76 $131 $278 - ------------------------------------------------------------------------------------------------------------------------------ Utilities $26 $ 81 $138 $293 - ------------------------------------------------------------------------------------------------------------------------------ THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Emerging Markets Equity $41 $125 $210 $429 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Equity Growth $29 $ 88 $150 $317 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF International Magnum $33 $101 $172 $358 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Growth $34 $103 $174 $363 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Value $31 $ 94 $160 $335 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF U.S. Real Estate $31 $ 96 $162 $340 - ------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I) - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Comstock $28 $ 85 $145 $307 - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Emerging Growth $27 $ 84 $143 $302 - ------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS (SERIES I) - ------------------------------------------------------------------------------------------------------------------------------ AIM V. I. Capital Appreciation $28 $ 87 $147 $311 - ------------------------------------------------------------------------------------------------------------------------------ AIM V. I. Growth $29 $ 87 $149 $314 - ------------------------------------------------------------------------------------------------------------------------------ AIM V. I. Premier Equity $28 $ 87 $147 $311 - ------------------------------------------------------------------------------------------------------------------------------ ALLIANCE VARIABLE PRODUCTS SERIES FUND (CLASS B SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth $31 $ 94 $160 $336 - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth and Income $29 $ 89 $151 $318 - ------------------------------------------------------------------------------------------------------------------------------ Alliance Premier Growth $33 $100 $169 $354 - ------------------------------------------------------------------------------------------------------------------------------ LSA VARIABLE SERIES TRUST - ------------------------------------------------------------------------------------------------------------------------------ LSA Aggressive Growth $32 $ 99 $167 $350 - ------------------------------------------------------------------------------------------------------------------------------
PROSPECTUS 10 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------ PUTNAM VARIABLE TRUST (CLASS IB SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Growth and Income $27 $ 84 $143 $302 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT International Growth $32 $ 97 $164 $344 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Small Cap Value $32 $ 97 $164 $344 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Voyager $28 $ 86 $146 $308 - ------------------------------------------------------------------------------------------------------------------------------
PLEASE REMEMBER THAT YOU ARE LOOKING AT AN EXAMPLE AND NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. YOUR ACTUAL EXPENSES MAY BE LOWER OR GREATER THAN THOSE SHOWN ABOVE. SIMILARLY, YOUR RATE OF RETURN MAY BE LOWER OR GREATER THAN 5%, WHICH IS NOT GUARANTEED. THE ABOVE EXAMPLE ASSUMES THE ELECTION OF THE PERFORMANCE BENEFIT COMBINATION OPTION, OR THE DEATH BENEFIT COMBINATION OPTION, WITH A MORTALITY AND EXPENSE RISK CHARGE OF 1.73%. IF THOSE OPTIONS WERE NOT ELECTED, THE EXPENSE FIGURES SHOWN ABOVE WOULD BE SLIGHTLY LOWER. TO REFLECT THE CONTRACT MAINTENANCE CHARGE IN THE EXAMPLES, WE ESTIMATED AN EQUIVALENT PERCENTAGE CHARGE, BASED ON AN ASSUMED AVERAGE CONTRACT SIZE OF $53,512. 11 PROSPECTUS FINANCIAL INFORMATION - ------------------------------------------------------------------- To measure the value of your investment in the Variable Sub-Accounts during the Accumulation Phase, we use a unit of measure we call the "ACCUMULATION UNIT." Each Variable Sub-Account has a separate value for its Accumulation Units we call the "ACCUMULATION UNIT VALUE." Accumulation Unit Value is similar to, but not the same as, the share price of a mutual fund. Attached as Appendix A to this prospectus are tables showing the Accumulation Unit Values of each Variable Sub-Account since the date we first offered the Contracts. To obtain additional detail on each Variable Sub-Account's finances, please refer to the Variable Account's financial statements contained in the Statement of Additional Information. The financial statements of Northbrook also appear in the Statement of Additional Information. 12 PROSPECTUS THE CONTRACT - ------------------------------------------------------------------- CONTRACT OWNER The Variable Annuity II AssetManager is a contract between you, the Contract owner, and Northbrook, a life insurance company. As the Contract owner, you may exercise all of the rights and privileges provided to you by the Contract. That means it is up to you to select or change (to the extent permitted): - - the investment alternatives during the Accumulation and Payout Phases, - - the amount and timing of your purchase payments and withdrawals, - - the programs you want to use to invest or withdraw money, - - the income payment plan you want to use to receive retirement income, - - the Owner, while the Annuitant is alive, - - the Annuitant (either yourself or someone else) on whose life the income payments will be based, - - the Beneficiary or Beneficiaries who will receive the benefits that the Contract provides when the last surviving Contract owner dies, and - - any other rights that the Contract provides. If you die, any surviving Contract owner, or, if none, the Beneficiary will exercise the rights and privileges provided to them by the Contract. The Contract cannot be jointly owned by both a non-natural person and a natural person. If the Contract owner is a Grantor Trust, the Contract owner will be considered a non-living person for purposes of this section and the Death Benefits section. The age of the oldest Contract Owner cannot exceed 90 as of the date we receive the completed application. Changing ownership of this contract may cause adverse tax consequences and may not be allowed under qualified plans. Please consult with a competent tax advisor prior to making a request for a change of Contract Owner. You can use the Contract with or without a qualified plan. A "qualified plan" is a retirement savings plan, such as an IRA or tax-sheltered annuity, that meets the requirements of the Internal Revenue Code. Qualified plans may limit or modify your rights and privileges under the Contract. We use the term "Qualified Contract" to refer to a Contract used with a qualified plan. See "Qualified Plans" on page . ANNUITANT The Annuitant is the individual whose life determines the amount and duration of income payments (other than under Income Plans with guaranteed payments for a specified period). The Annuitant must be a natural person. The age of the oldest Annuitant cannot exceed 90 as of the date we receive the completed application. You initially designate an Annuitant in your application. If the Contract owner is a natural person, you may change the Annuitant at any time prior to the Payout Start Date. Once we receive your change request, any change will be effective at the time you sign the written notice. We are not liable for any payment we make or other action we take before receiving any written request from you. Before the Payout Start Date, you may designate a joint Annuitant, who is a second person on whose life income payments depend. If the Annuitant dies prior to the Payout Start Date, the new Annuitant will be the youngest Contract owner, otherwise, the youngest Beneficiary, unless the Contract owner names a different Annuitant. BENEFICIARY The Beneficiary is the person who may, in accordance with the terms of the Contract, elect to receive the death benefit or become the new Contract Owner if the sole surviving Contract owner dies before the Payout Start Date. If the sole surviving Contract owner dies after the Payout Start Date, the Beneficiary will receive any guaranteed income payments scheduled to continue. You may name one or more Beneficiaries when you apply for a Contract. You may also name one or more contingent Beneficiaries who will receive any death benefit or guaranteed income benefit if there are no surviving primary Beneficiaries upon the death of the sole surviving Contract owner. You may change or add Beneficiaries at any time by writing to us, unless you have designated an irrevocable Beneficiary. We will provide a Change of Beneficiary form to be signed and filed with us. Any change will be effective at the time you sign the written notice, whether or not the Annuitant is living when we receive the notice. Until we receive your written notice to change a Beneficiary, we are entitled to rely on the most recent Beneficiary information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change your Beneficiary, you should deliver your written notice to us promptly. If you did not name a Beneficiary or, if the named Beneficiary is no longer living and there are no other surviving Beneficiaries, the new Beneficiary will be: - - your spouse, if he or she is still alive, otherwise - - your surviving children equally, or if you have no surviving children, - - your estate. 13 PROSPECTUS If more than one Beneficiary survives you, (or the Annuitant, if the Contract owner is not a natural person) we will divide the death benefit among your Beneficiaries according to your most recent written instructions. If you have not given us written instructions, we will pay the death benefit in equal amounts to the surviving Beneficiaries. MODIFICATION OF THE CONTRACT Only a Northbrook officer may approve a change in or waive any provision of the Contract. Any change or waiver must be in writing. None of our agents has the authority to change or waive the provisions of the Contract. We may not change the terms of the Contract without your consent, except to conform the Contract to applicable law or changes in the law. If a provision of the Contract is inconsistent with state law, we will follow state law. ASSIGNMENT No owner has a right to assign any interest in a Contract as collateral or security for a loan. However, you may assign periodic income payments under the Contract prior to the Payout Start Date. No Beneficiary may assign benefits under the Contract until they are payable to the Beneficiary. We will not be bound by any assignment until the assignor signs it and files it with us. We are not responsible for the validity of any assignment. Federal law prohibits or restricts the assignment of benefits under many types of retirement plans and the terms of such plans may themselves contain restrictions on assignments. An assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT WITH YOUR ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT. PURCHASES - ------------------------------------------------------------------- MINIMUM PURCHASE PAYMENTS Your initial purchase payment must be at least $10,000. We may increase or decrease this minimum in the future. You may make additional purchase payments of at least $100 at any time prior to the Payout Start Date. We reserve the right to limit the maximum amount of purchase payments we will accept. We also reserve the right to reject any application. The Contract may not be available for sale in all states. AUTOMATIC ADDITIONS PROGRAM You may make subsequent purchase payments of at least $100 by automatically transferring amounts from your bank account or your Morgan Stanley Active Assets-TM- Account. Please consult your Morgan Stanley Financial Advisor for details. ALLOCATION OF PURCHASE PAYMENTS At the time you apply for a Contract, you must decide how to allocate your purchase payments among the investment alternatives. The allocation you specify on your application will be effective immediately. All allocations must be in whole percentages that total 100% or in whole dollars. The minimum you may allocate to any investment alternative is $100. You can change your allocations by notifying us in writing. We will allocate your purchase payments to the investment alternatives according to your most recent instructions on file with us. Unless you notify us in writing otherwise, we will allocate subsequent purchase payments according to the allocation for the previous purchase payment. We will effect any change in allocation instructions at the time we receive written notice of the change in good order. We will credit the initial purchase payment that accompanies your completed application to your Contract within 2 business days after we receive the payment at our headquarters. If your application is incomplete, we will ask you to complete your application within 5 business days. If you do so, we will credit your initial purchase payment to your Contract within that 5 business day period. If you do not, we will return your purchase payment at the end of the 5 business day period unless you expressly allow us to hold it until you complete the application. We will credit subsequent purchase payments to the Contract on the business day that we receive the purchase payment at our headquarters. We use the term "BUSINESS DAY" to refer to each day Monday through Friday that the New York Stock Exchange is open for business. We also refer to these days as "VALUATION DATES." If we receive your purchase payment after 3 p.m. Central Time on any Valuation Date, we will credit your purchase payment using the Accumulation Unit Values computed on the next Valuation Date. RIGHT TO CANCEL You may cancel the Contract within the Cancellation Period, which is the 20-day period after you receive the Contract or such longer period as your state may 14 PROSPECTUS require. If you exercise this Right to Cancel, the Contract terminates and we will pay you the full amount of your purchase payments allocated to the Fixed Account Options. We also will return your purchase payments allocated to the Variable Account after an adjustment, to the extent applicable law permits, to reflect investment gain or loss, including the deduction of mortality and expense risk charges and administrative expense charges, that occurred from the date of allocation through the date of cancellation. Some states may require us to return a greater amount to you. If your Contract is qualified under Section 408 of the Internal Revenue Code, we will refund the greater of any purchase payments or the Contract Value. CONTRACT VALUE - ------------------------------------------------------------------- Your Contract Value at any time during the Accumulation Phase is equal to the sum of the value of your Accumulation Units in the Variable Sub-Accounts you have selected, plus the value of your investment in the Fixed Account Options. ACCUMULATION UNITS To determine the number of Accumulation Units of each Variable Sub-Account to allocate to your Contract, we divide (i) the amount of the purchase payment or transfer you have allocated to a Variable Sub-Account by (ii) the Accumulation Unit Value of that Variable Sub-Account next computed after we receive your payment or transfer. For example, if we receive a $10,000 purchase payment allocated to a Variable Sub-Account when the Accumulation Unit Value for the Sub-Account is $10, we would credit 1,000 Accumulation Units of that Variable Sub-Account to your Contract. Withdrawals and transfers from a Variable Sub-Account would, of course, reduce the number of Accumulation Units of that Sub-Account allocated to your Contract. ACCUMULATION UNIT VALUE As a general matter, the Accumulation Unit Value for each Variable Sub-Account will rise or fall to reflect: - - changes in the share price of the Portfolio in which the Variable Sub-Account invests, and - - the deduction of amounts reflecting the mortality and expense risk charge, administrative expense charge, and any provision for taxes that have accrued since we last calculated the Accumulation Unit Value. We determine contract maintenance charges, withdrawal charges, and transfer fees (currently waived) separately for each Contract. They do not affect Accumulation Unit Value. Instead, we obtain payment of those charges and fees by redeeming Accumulation Units. For details on how we calculate Accumulation Unit Value, please refer to the Statement of Additional Information. We determine a separate Accumulation Unit Value for each Variable Sub-Account on each Valuation Date. We also determine a second set of Accumulation Unit Values that reflect the cost of the Enhanced Death Benefit Option, the Performance Death Benefit Option, or the Performance Income Benefit Option, and a third set of Accumulation Unit Values that reflect the cost of the Performance Benefit Combination Option and Death Benefit Combination Option. YOU SHOULD REFER TO THE PROSPECTUSES FOR THE FUNDS THAT ACCOMPANY THIS PROSPECTUS FOR A DESCRIPTION OF HOW THE ASSETS OF EACH PORTFOLIO ARE VALUED, SINCE THAT DETERMINATION DIRECTLY BEARS ON THE ACCUMULATION UNIT VALUE OF THE CORRESPONDING VARIABLE SUB-ACCOUNT AND, THEREFORE, YOUR CONTRACT VALUE. 15 PROSPECTUS INVESTMENT ALTERNATIVES: THE VARIABLE SUB-ACCOUNTS - ------------------------------------------------------------------- You may allocate your purchase payments to up to 36 Variable Sub-Accounts. Each Variable Sub-Account invests in the shares of a corresponding Portfolio. Each Portfolio has its own investment objective(s) and policies. We briefly describe the Portfolios below. For more complete information about each Portfolio, including expenses and risks associated with the Portfolio, please refer to the accompanying prospectuses for the Funds. You should carefully review the Fund prospectuses before allocating amounts to the Variable Sub-Accounts. PORTFOLIO: EACH PORTFOLIO SEEKS: INVESTMENT ADVISER: MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X) Aggressive Equity Portfolio Capital growth MORGAN STANLEY INVESTMENT ADVISORS, INC. Capital Growth Portfolio Long-term capital growth Competitive Edge "Best Ideas" Portfolio Long-term capital growth Dividend Growth Portfolio Reasonable current income and long-term growth of income and capital Equity Portfolio Growth of capital and, as a secondary objective, income when consistent with its primary objective. European Growth Portfolio Maximum capital appreciation on its investments Global Dividend Growth Portfolio Reasonable current income and long-term growth of income and capital High Yield Portfolio High current income and, as a secondary objective, capital appreciation when consistent with its primary objective Income Builder Portfolio Reasonable income and, as a secondary objective, growth of capital Information Portfolio Long-term capital appreciation Limited Duration Portfolio High current income consistent with preservation of capital Money Market Portfolio High current income, preservation of capital, and liquidity Pacific Growth Portfolio Maximum capital appreciation on its investments Quality Income Plus Portfolio High current income and, as a secondary objective, capital appreciation when consistent with its primary objective S&P 500 Index Portfolio Investment results that, before expenses, correspond to the total return of the Standard and Poor's 500 Composite Stock Price Index Strategist Portfolio High total investment return Utilities Portfolio Current income and long-term growth of income and capital
16 PROSPECTUS PORTFOLIO: EACH PORTFOLIO SEEKS: INVESTMENT ADVISER: THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Morgan Stanley UIF Emerging Markets Long-term capital appreciation MORGAN STANLEY INVESTMENT MANAGEMENT Equity Portfolio Morgan Stanley UIF Equity Growth Long-term capital appreciation Portfolio Morgan Stanley UIF International Magnum Long-term capital appreciation Portfolio Morgan Stanley UIF Mid Cap Growth Long-term capital growth Portfolio Morgan Stanley UIF U.S. Real Estate Above-average current income and Portfolio long-term capital appreciation Morgan Stanley UIF Mid Cap Value Above-average total return over a market MORGAN STANLEY INVESTMENTS, L.P. Portfolio cycle of three to five years VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I) Van Kampen LIT Comstock Portfolio Capital growth and income VAN KAMPEN ASSET MANAGEMENT INC. Van Kampen LIT Emerging Growth Portfolio Capital appreciation AIM VARIABLE INSURANCE FUNDS* (SERIES I) AIM V.I. Capial Appreciation Fund Growth of capital A I M ADVISORS, INC. AIM V.I. Growth Fund Growth of capital AIM V.I. Premier Equity Fund Long-term growth of capital. Income is a secondary objective. ALLIANCE VARIALE PRODUCTS SERIES FUND (CLASS B SHARES) Alliance Growth Portfolio Long-term growth of capital ALLIANCE CAPITAL MANAGEMENT, L.P. Current income is incidental to the Portfolio's objective Alliance Growth and Income Portfolio Reasonable current income and reasonable opportunity for appreciation Alliance Premier Growth Portfolio Growth of capital by pursuing aggressive investment policies LSA VARIABLE SERIES TRUST LSA Aggressive Growth Fund** Long-term capital growth LSA ASSET MANAGEMENT LLC PUTNAM VARIABLE TRUST (CLASS IB SHARES) Putnam VT Growth and Income Fund Capital growth and current income PUTNAM INVESTMENT MANAGEMENT, LLC Putnam VT International Growth Fund Capital appreciation Putnam VT Small Cap Value Fund Capital appreciation Putnam VT Voyager Fund Capital appreciation
*A Portfolio's investment objective may be changed by the Fund's Board of Trustees without shareholder approval. **Sub-advised by Van Kampen Asset Management Inc. AMOUNTS YOU ALLOCATE TO VARIABLE SUB-ACCOUNTS MAY GROW IN VALUE, DECLINE IN VALUE, OR GROW LESS THAN YOU EXPECT, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE PORTFOLIOS IN WHICH THOSE VARIABLE SUB-ACCOUNTS INVEST. YOU BEAR THE INVESTMENT RISK THAT THE PORTFOLIOS MIGHT NOT MEET THEIR INVESTMENT OBJECTIVES. SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS, OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. 17 PROSPECTUS INVESTMENT ALTERNATIVES: THE FIXED ACCOUNT - ------------------------------------------------------------------- You may allocate all or a portion of your purchase payments to the Fixed Account Options. We currently offer the basic dollar cost averaging fixed account option, and we may offer the additional dollar cost averaging fixed account options described below. However, the 6 and 12 month dollar cost averaging options described below currently are not available. Please consult with your Morgan Stanley Financial Advisor for current information. The Fixed Account supports our insurance and annuity obligations. The Fixed Account consists of our general assets other than those in segregated asset accounts. We have sole discretion to invest the assets of the Fixed Account, subject to applicable law. Any money you allocate to a Fixed Account Option does not entitle you to share in the investment experience of the Fixed Account. DOLLAR COST AVERAGING FIXED ACCOUNT OPTIONS BASIC DOLLAR COST AVERAGING OPTION. You may establish a Dollar Cost Averaging Program, as described on pages 17-18, by allocating purchase payments to the Basic Dollar Cost Averaging Option. Purchase payments that you allocate to the Basic Dollar Cost Averaging Option will earn interest for a 1 year period at the current rate in effect at the time of allocation. We will credit interest daily at a rate that will compound over the year to the annual interest rate we guaranteed at the time of allocation. After the one year period, we will declare a renewal rate which we guarantee for a full year. Subsequent renewal dates will be every twelve months for each purchase payment. Renewal rates will not be less than the minimum guaranteed rate found in the Contract. You may not transfer funds from other investment alternatives to the Basic Dollar Cost Averaging Option. 6 AND 12 MONTH DOLLAR COST AVERAGING OPTIONS. In the future, we may offer 6 and 12 month dollar cost averaging options. Under these options, you may establish a Dollar Cost Averaging Program by allocating purchase payments to the Fixed Account either for 6 months (the "6 Month Dollar Cost Averaging Option") or for 12 months (the "12 Month Dollar Cost Averaging Option"). Your purchase payments will earn interest for the period you select at the current rates in effect at the time of allocation. The crediting rates for the 6 and 12 Month Dollar Cost Averaging Options will never be less than 3% annually. You must transfer all of your money out of the 6 or 12 Month Dollar Cost Averaging Options to the Variable Sub-Accounts in equal monthly installments. If you discontinue a 6 or 12 Month Dollar Cost Averaging Option prior to last scheduled transfer, we will transfer any remaining money immediately to the Money Market Variable Sub-Account, unless you request a different Variable Sub-Account. You may not transfer funds from other investment alternatives to the 6 or 12 Month Dollar Cost Averaging Options. Transfers out of the Dollar Cost Averaging Fixed Account Options do not count towards the 12 transfers you can make without paying a transfer fee. We may declare more than one interest rate for different monies based upon the date of allocation to the Dollar Cost Averaging Fixed Account Options. For availability and current interest rate information, please contact your Morgan Stanley Financial Advisor or our customer support unit at 1-800-654-2397. INVESTMENT ALTERNATIVES: TRANSFERS - ------------------------------------------------------------------- TRANSFERS DURING THE ACCUMULATION PHASE During the Accumulation Phase, you may transfer the Contract Value among the investment alternatives. You may not transfer Contract Value into any of the Dollar Cost Averaging Fixed Account Options. You may request transfers in writing on a form that we provide or by telephone according to the procedure described below. The minimum amount that you may transfer is $100 or the total amount in the investment alternative, whichever is less. We currently do not assess, but reserve the right to assess, a $10 charge on each transfer in excess of 12 per Contract Year. We will notify you at least 30 days before we begin imposing the transfer charge. We treat transfers to or from more than one Portfolio on the same day as one transfer. We will process transfer requests that we receive before 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for that Date. We will process requests completed after 3:00 p.m. on any Valuation Date using the Accumulation Unit Values for the next Valuation Date. The Contract permits us to defer transfers from the Fixed Account Options for up to 6 months from the date we receive your request. If we decide to postpone transfers for 30 days or more, we will pay interest as required by applicable law. Any 18 PROSPECTUS interest would be payable from the date we receive the transfer request to the date we make the transfer. EXCESSIVE TRADING LIMITS For Contracts issued after May 2, 1999, we reserve the right to limit transfers among the Variable Sub-Accounts if we determine, in our sole discretion, that transfers by one or more Contract owners would be to the disadvantage of other Contract owners. We may limit transfers by taking such steps as: - - imposing a minimum time period between each transfer, - - refusing to accept transfer requests of an agent acting under a power of attorney on behalf of more than one Contract owner, or - - limiting the dollar amount that a Contract owner may transfer between the Variable Sub-Accounts and the Fixed Account Options at any one time. We may apply the restrictions in any manner reasonably designed to prevent transfers that we consider disadvantageous to other Contract owners. We reserve the right to waive any transfer restrictions. TRANSFERS DURING THE PAYOUT PHASE During the Payout Phase, you may make transfers among the Variable Sub-Accounts so as to change the relative weighting of the Variable Sub-Accounts on which your variable income payments will be based. In addition, you will have a limited ability to make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. You may not, however, convert any portion of your right to receive fixed income payments into variable income payments. You may not make any transfers for the first 6 months after the Payout Start Date. Thereafter, you may make transfers among the Variable Sub-Accounts or make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments. Your transfers must be at least 6 months apart. TELEPHONE TRANSFERS You may make transfers by telephone by calling 1-800-654-2397 if you first send us a completed authorization form. The cut off time for telephone transfer requests is 3:00 p.m. Central Time. In the event that the New York Stock Exchange closes early, i.e., before 3:00 p.m. Central Time. In the event that the Exchange closes early for a period of time but then reopens for trading on the same day, we will process telephone transfer requests as of the close of the Exchange on that particular day. We will not accept telephone requests received at any telephone number other than the number that appears in this paragraph or received after the close of trading on the Exchange. We may suspend, modify or terminate the telephone transfer privilege at any time without notice. We use procedures that we believe provide reasonable assurance that the telephone transfers are genuine. For example, we tape telephone conversations with persons purporting to authorize transfers and request identifying information. Accordingly, we disclaim any liability for losses resulting from allegedly unauthorized telephone transfers. However, if we do not take reasonable steps to help ensure that a telephone authorization is valid, we may be liable for such losses. DOLLAR COST AVERAGING PROGRAM Through our Dollar Cost Averaging Program, you may automatically transfer a set amount every month (or other intervals we may offer) during the Accumulation Phase from any Variable Sub-Account or the Dollar Cost Averaging Fixed Account Options to any Variable Sub-Account. Transfers made through dollar cost averaging must be $100 or more. We will not charge a transfer fee for transfers made under this Program, nor will such transfers count against the 12 transfers you can make each Contract Year without paying a transfer fee. The theory of dollar cost averaging is that if purchases of equal dollar amounts are made at fluctuating prices, the aggregate average cost per unit will be less than the average of the unit prices on the same purchase dates. However, participation in this Program does not assure you of a greater profit from your purchases under the Program nor will it prevent or necessarily reduce losses in a declining market. Call or write us for information on how to enroll. AUTOMATIC PORTFOLIO REBALANCING PROGRAM Once you have allocated your money among the Variable Sub-Accounts, the performance of each Sub-Account may cause a shift in the percentage you allocated to each Sub-Account. If you select our Automatic Portfolio Rebalancing Program, we will automatically rebalance the Contract Value in each Variable Sub-Account and return it to the desired percentage allocations. We will not include money you allocate to the Fixed Account Options in the Automatic Portfolio Rebalancing Program. We will rebalance your account each quarter (or other intervals that we may offer) according to your instructions. We will transfer amounts among the Variable Sub-Accounts to achieve the percentage allocations you specify. You can change your allocations at any time by contacting us in writing or by telephone. The new 19 PROSPECTUS allocation will be effective with the first rebalancing that occurs after we receive your request. We are not responsible for rebalancing that occurs prior to receipt of your request. Example: Assume that you want your initial purchase payment split among 2 Variable Sub-Accounts. You want 40% to be in the High Yield Variable Sub-Account and 60% to be in the Equity Growth Variable Sub-Account. Over the next 2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the High Yield Variable Sub-Account now represents 50% of your holdings because of its increase in value. If you choose to have your holdings rebalanced quarterly, on the first day of the next quarter, we would sell some of your units in the High Yield Variable Sub-Account and use the money to buy more units in the Equity Growth Variable Sub-Account so that the percentage allocations would again be 40% and 60% respectively. The Automatic Portfolio Rebalancing Program is available only during the Accumulation Phase. The transfers made under the Program do not count towards the 12 transfers you can make without paying a transfer fee, and are not subject to a transfer fee. Portfolio rebalancing is consistent with maintaining your allocation of investments among market segments, although it is accomplished by reducing your Contract Value allocated to the better performing segments. EXPENSES - ------------------------------------------------------------------- As a Contract owner, you will bear, directly or indirectly, the charges and expenses described below. CONTRACT MAINTENANCE CHARGE During the Accumulation Phase, on each Contract Anniversary, we will deduct a $35 contract maintenance charge from your Contract Value. This charge will be deducted on a pro-rata basis from each investment alternative in the proportion that your investment in each bears to your Contract Value. We also will deduct a full contract maintenance charge if you withdraw your entire Contract Value. During the Payout Phase, we will deduct the charge proportionately from each income payment. The charge is to compensate us for the cost of administering the Contracts and the Variable Account. Maintenance costs include expenses we incur in billing and collecting purchase payments; keeping records; processing death claims, cash withdrawals, and policy changes; proxy statements; calculating Accumulation Unit Values and income payments; and issuing reports to Contract owners and regulatory agencies. We cannot increase the charge. We will waive this charge if: - - total purchase payments equal $50,000 or more, or - - all of your money is allocated to the Fixed Account Options, as of the Contract Anniversary. After the Payout Start Date, we will waive this charge if: - - the Contract Value is $50,000 or more as of the Payout Start Date, or - - all income payments are fixed amount income payments. MORTALITY AND EXPENSE RISK CHARGE We deduct a mortality and expense risk charge daily at an annual rate of 1.49% of the average daily net assets you have invested in the Variable Sub-Accounts (1.62% if you select either the Enhanced Death Benefit Option, the Performance Death Benefit Option or the Performance Income Benefit Option, and 1.73% if you select the Performance Benefit Combination Option or the Death Benefit Combination Option). The mortality and expense risk charge is for all the insurance benefits available with your Contract (including our guarantee of annuity rates and the death benefits), for certain expenses of the Contract, and for assuming the risk (expense risk) that the current charges will not be sufficient in the future to cover the cost of administering the Contract. If the charges under the Contract are not sufficient, then we will bear the loss. We charge an additional amount for the Death Benefit Options and the Income Benefit Options to compensate us for the additional risk that we accept by providing these Options. We guarantee the mortality and expense risk charge and we cannot increase it. We assess the mortality and expense risk charge during both the Accumulation Phase and the Payout Phase. ADMINISTRATIVE EXPENSE CHARGE We deduct an administrative expense charge daily at an annual rate of 0.10% of the average daily net assets you have invested in the Variable Sub-Accounts. We intend 20 PROSPECTUS this charge to cover actual administrative expenses that exceed the revenues from the contract maintenance charge. There is no necessary relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributed to that Contract. We assess this charge each day during the Accumulation Phase and the Payout Phase. TRANSFER FEE We do not currently impose a fee upon transfers among the investment alternatives. However, we reserve the right to charge $10 per transfer after the 12th transfer in each Contract Year. We will not charge a transfer fee on transfers that are part of a Dollar Cost Averaging or Automatic Portfolio Rebalancing Program. WITHDRAWAL CHARGE We may assess a withdrawal charge of 1% of the purchase payment(s) you withdraw if the amount being withdrawn has been invested in the Contract for less than 1 year. However, during each Contract Year, you can withdraw up to 15% of the aggregate amount of your purchase payments as of the beginning of the Contract Year without paying the charge. Unused portions of this Free Withdrawal Amount are not carried forward to future Contract Years. We will deduct withdrawal charges, if applicable, from the amount paid, unless you instruct otherwise. For purposes of the withdrawal charge, we will treat withdrawals as coming from purchase payments, starting with the oldest purchase payments first. Therefore, additional purchase payments may reduce your ability to withdraw earnings without incurring a withdrawal charge. However, for federal income tax purposes, please note that withdrawals are considered to have come first from earnings, which means you pay taxes on the earnings portion of your withdrawal. We do not apply a withdrawal charge in the following situations: - - on the Payout Start Date (a withdrawal charge may apply if you elect to receive income payments for a specified period of less than 120 months); - - the death of the Contract owner or Annuitant (unless the Settlement Value is used); and - - withdrawals taken to satisfy IRS minimum distribution rules for the Contract. This waiver does not apply to Contracts owned by an Individual Retirement Account. We use the amounts obtained from the withdrawal charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts. To the extent that the withdrawal charge does not cover all sales commissions and other promotional or distribution expenses, we may use any of our corporate assets, including potential profit which may arise from the mortality and expense risk charge or any other charges or fee described above, to make up any difference. Withdrawals also may be subject to tax penalties or income tax. You should consult your own tax counsel or other tax advisers regarding any withdrawals. PREMIUM TAXES Some states and other governmental entities (e.g., municipalities) charge premium taxes or similar taxes. We are responsible for paying these taxes and will deduct them from your Contract Value. Some of these taxes are due when the Contract is issued, others are due when income payments begin or upon surrender. Our current practice is not to charge anyone for these taxes until income payments begin or when a total withdrawal occurs including payment upon death. At our discretion, we may discontinue this practice and deduct premium taxes from the purchase payments. Premium taxes generally range from 0% to 4%, depending on the state. At the Payout Start Date, if applicable, we deduct the charge for premium taxes from each investment alternative in the proportion that the Contract owner's value in the investment alternative bears to the total Contract Value. DEDUCTION FOR VARIABLE ACCOUNT INCOME TAXES We are not currently making a provision for taxes. In the future, however, we may make a provision for taxes if we determine, in our sole discretion, that we will incur a tax as a result of the operation of the Variable Account. We will deduct for any taxes we incur as a result of the operation of the Variable Account, whether or not we previously made a provision for taxes and whether or not it was sufficient. Our status under the Internal Revenue Code is briefly described in the "Taxes" section. OTHER EXPENSES Each Portfolio deducts advisory fees and other expenses from its assets. You indirectly bear the charges and expenses of the Portfolios whose shares are held by the Variable Sub-Accounts. These fees and expenses are described in the accompanying prospectuses for the Funds. For a summary of current estimates of those charges and expenses, see pages and above. We may receive compensation from the investment advisers or administrators of the Portfolios for administrative services we provide to the Portfolios. 21 PROSPECTUS ACCESS TO YOUR MONEY - ------------------------------------------------------------------- You can withdraw some or all of your Contract Value at any time during the Accumulation Phase. Withdrawals also are available under limited circumstances on or after the Payout Start Date. See "Income Plans" below. You can withdraw money from the Variable Account and/or the Fixed Account Options. The amount payable upon withdrawal is the Contract Value (or portion thereof) next computed after we receive the request for a withdrawal at our headquarters, less any withdrawal charges, contract maintenance charges, income tax withholding, penalty tax, and any premium taxes. To complete a partial withdrawal from the Variable Account, we will cancel Accumulation Units in an amount equal to the withdrawal and any applicable charges and taxes. We will pay withdrawals from the Variable Account within 7 days of receipt of the request, subject to postponement in certain circumstances. You have the opportunity to name the investment alternative(s) from which you are taking the withdrawal. If none are named, then we will withdraw the amount proportionately from the investment alternatives in which you are invested according to each alternative's percentage share of the Contract Value. In general, you must withdraw at least $100 at a time. You also may withdraw a lesser amount if you are withdrawing your entire interest in a Variable Sub-Account. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. The total amount paid at surrender may be more or less than the total purchase payments due to prior withdrawals, any deductions, and investment performance. POSTPONEMENT OF PAYMENTS We may postpone the payment of any amounts due from the Variable Account under the Contract if: 1. The New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted; 2. An emergency exists as defined by the SEC; or 3. The SEC permits delay for your protection. In addition, we may delay payments or transfers from the Fixed Account Options for up to 6 months or shorter period if required by law. If we delay payment or transfer for 30 days or more, we will pay interest as required by law. Any interest would be payable from the date we receive the withdrawal request to the date we make the payment or transfer. SYSTEMATIC WITHDRAWAL PROGRAM You may choose to receive systematic withdrawal payments on a monthly basis at any time prior to the Payout Start Date. The minimum amount of each systematic withdrawal is $100. We will deposit systematic withdrawal payments into the Contract owner's bank account or Morgan Stanley Active Assets Account. Please consult with your Morgan Stanley Financial Advisor for details. Depending on fluctuations in the value of the Variable Sub-Accounts and the value of the Fixed Account Options, systematic withdrawals may reduce or even exhaust the Contract Value. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. Please consult your tax advisor before taking any withdrawal. We may modify or suspend the Systematic Withdrawal Program and charge a processing fee for the service. If we modify or suspend the Systematic Withdrawal Program, existing systematic withdrawal payments will not be affected. MINIMUM CONTRACT VALUE If the amount you withdraw reduces your Contract Value to less than $1000, we may treat it as a request to withdraw your entire Contract Value. Your Contract will terminate if you withdraw all of your Contract Value. We will, however, ask you to confirm your withdrawal request before terminating your Contract. Before terminating any Contract whose value has been reduced by withdrawals to less than $1000, we will inform you in writing of our intention to terminate your Contract and give you at least 30 days in which to make an additional purchase payment to restore your Contract's value to the contractual minimum of $1000. If we terminate your Contract, we will distribute to you its Contract Value less withdrawal and other applicable charges and taxes. 22 PROSPECTUS INCOME PAYMENTS - ------------------------------------------------------------------- PAYOUT START DATE The Payout Start Date is the day that money is applied to an Income Plan. The Payout Start Date must be: - - at least 30 days after the Issue Date; and - - no later than the first day of the calendar month after the Annuitant's 90th birthday, or the 10th Contract Anniversary, if later. You may change the Payout Start Date at any time by notifying us in writing of the change at least 30 days before the scheduled Payout Start Date. Absent a chance, we will use the Payout Start Date stated in your Contract. INCOME PLANS An "Income Plan" is a series of payments on a scheduled basis to you or to another person designated by you. You may choose and change your choice of Income Plan until 30 days before the Payout Start Date. If you do not select an Income Plan, we will make income payments in accordance with Income Plan 1 with guaranteed payments for 10 years unless changed by the Contract owner. After the Payout Start Date, you may not make withdrawals (except as described below) or change your choice of Income Plan. Three Income Plans are available under the Contract. Each is available to provide: - - fixed income payments; - - variable income payments; or - - a combination of the two. The three Income Plans are: INCOME PLAN 1 -- LIFE INCOME WITH GUARANTEED PAYMENTS. Under this plan, we make periodic income payments for at least as long as the Annuitant lives. If the Annuitant dies before we have made all of the guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments. INCOMEPLAN 2 -- JOINT AND SURVIVOR LIFE INCOME WITH GUARANTEED PAYMENTS. We will make payments for as long as either the Annuitant or joint Annuitant, named at the time of Income Plan selection, lives. If both the Annuitant and the joint Annuitant die before the selected number of guaranteed payments have been made, we will continue to pay the remainder of the guaranteed payments. INCOME PLAN 3 -- GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD. Under this plan, we make periodic income payments for the period you have chosen. These payments do not depend on the Annuitant's life. A withdrawal charge may apply if the specified period is less than 10 years. We will deduct the mortality and expense risk charge from the assets of the Variable Account supporting this Income Plan even though we may not bear any mortality risk. The length of any guaranteed payment period under your selected Income Plan generally will affect the dollar amounts of each income payment. As a general rule, longer guarantee periods result in lower income payments, all other things being equal. For example, if you choose an Income Plan with payments that depend on the life of the Annuitant but with no minimum specified period for guaranteed payments, the income payments generally will be greater than the income payments made under the same Income Plan with a minimum specified period for guaranteed payments. We may make other Income Plans available including ones that you and we agree upon. You may obtain information about them by writing or calling us. If you choose Income Plan 1 or 2, or, if available, another Income Plan with payments that continue for the life of the Annuitant or joint Annuitant, we may require proof of age and sex of the Annuitant or joint Annuitant before starting income payments, and proof that the Annuitant or joint Annuitant is still alive before we make each payment. Please note that under these Income Plans, if you elect to take no minimum guaranteed payments, it is possible that the payee could receive only 1 income payment if the Annuitant and any joint Annuitant both die before the second income payment, or only 2 income payments if they die before the third income payment, and so on. Generally, you may not make withdrawals after the Payout Start Date. One exception to this rule applies if you are receiving variable income payments that do not depend on the life of the Annuitant (such as under Income Plan 3). In that case you may terminate all or part of the Variable Account portion of the income payments at any time and receive a lump sum equal to the present value of the remaining variable payments associated with the amount withdrawn. To determine the present value of any remaining variable income payments being withdrawn, we use a discount rate equal to the assumed annual investment rate that we use to complete such variable income payments. The minimum amount you may withdraw under this feature is $1,000. A withdrawal charge may apply. You may apply your Contract Value to an Income Plan. If you elected the Performance Income Benefit Option or the Performance Benefit Combination Option, you may be able to apply an amount greater than your Contract Value to an Income Plan. You must apply at least the Contract Value in the Fixed Account Options on the Payout Start Date to fixed income payments. If you wish to apply any portion of your Fixed Account Options balance to provide variable income payments, you should plan ahead and transfer that amount to the 23 PROSPECTUS Variable Sub-Accounts prior to the Payout Start Date. If you do not tell us how to allocate your Contract Value among fixed and variable income payments, we will apply your Contract Value in the Variable Account to variable income payments and your Contract Value in the Fixed Account Options to fixed income payments. We deduct applicable premium taxes from the Contract Value at the Payout Start Date. We will apply your Contract Value, less applicable taxes, to your Income Plan on the Payout Start Date. If the amount available to apply under an Income Plan is less than $2,000, or not enough to provide an initial payment of at least $20, and state law permits, we may: - - pay you the Contract Value, less any applicable taxes, in a lump sum instead of the periodic payments you have chosen, or - - we may reduce the frequency of your payments so that each payment will be at least $20. VARIABLE INCOME PAYMENTS The amount of your variable income payments depends upon the investment results of the Variable Sub-Accounts you select, the premium taxes you pay, the age and sex of the Annuitant, and the Income Plan you choose. We guarantee that the payments will not be affected by (a) actual mortality experience, and (b) the amount of our administration expenses. We cannot predict the total amount of your variable income payments. Your variable income payments may be more or less than your total purchase payments because (a) variable income payments vary with the investment results of the underlying Portfolios, and (b) the Annuitant could live longer or shorter than we expect based on the tables we use. In calculating the amount of the periodic payments in the annuity tables in the Contract, we assumed an annual investment rate of 3%. If the actual net investment return of the Variable Sub-Accounts you choose is less than this assumed investment rate, then the dollar amount of your variable income payments will decrease. The dollar amount of your variable income payments will increase, however, if the actual net investment return exceeds the assumed investment rate. The dollar amount of the variable income payments stays level if the net investment return equals the assumed investment rate. Please refer to the Statement of Additional Information for more detailed information as to how we determine variable income payments. We reserve the right to make other annual investment rates available under the Contract. FIXED INCOME PAYMENTS We guarantee income payment amounts derived from any Fixed Account Option for the duration of the Income Plan. We calculate the fixed income payments by: 1. deducting any applicable premium tax; and 2. applying the resulting amount to the greater of (a) the appropriate value from the income payment table in your Contract, or (b) such other value as we are offering at that time. We may defer making fixed income payments for a period of up to 6 months or such shorter time state law may require. If we defer payments for 30 days or more, we will pay interest as required by law from the date we receive the withdrawal request to the date we make payment. PERFORMANCE INCOME BENEFIT The Performance Income Benefit is an optional benefit that you may elect. Keep in mind that once you have selected an optional income or death benefit your ability to select a different option may be limited. At present, we do not permit you to simultaneously elect the Performance Income Benefit and the Death Benefit Combination Option. We do, however, reserve the right to do so in the future. Please consult with your Financial Advisor concerning any such limitations before selecting any option. Further, if you select another option, the benefits under the new option on the date we issue the new option will equal the Contract Value. You will not retain or transfer the benefits of the earlier option. Please consult with your Financial Advisor concerning the effect of selecting a different option before doing so. We may discontinue offering this option at any time. On the date we issue the rider for this benefit ("Rider Date"), the Performance Income Benefit is equal to the Contract Value. On each Contract Anniversary, we will recalculate your Performance Income Benefit to equal the greater of your Contract Value on that date or the most recently calculated Performance Income Benefit. We will also recalculate your Performance Income Benefit whenever you make an additional purchase payment or a partial withdrawal. Additional purchase payments will increase the Performance Income Benefit dollar-for-dollar. Withdrawals will reduce the Performance Income Benefit by an amount equal to: (i) the Performance Income Benefit just before the withdrawal, multiplied by (ii) the ratio of the withdrawal amount to the Contract Value just before the withdrawal. In the absence of any withdrawals or purchase payments, the Performance Income Benefit will be the greatest of the Contract Value on the Rider Date and all Contract Anniversary Contract Values on or prior to the Payout Start Date. 24 PROSPECTUS We will recalculate the Performance Income Benefit as described above until the oldest Contract owner or Annuitant (if the Contract owner is not a natural person) attains age 85. After age 85, we will only recalculate the Performance Income Benefit to reflect additional purchase payments and withdrawals. If you select the Performance Income Benefit Option, the maximum age of any owner and annuitant as of the date we receive the completed application, or the date we receive the request to add the rider, whichever is later, cannot exceed age 75. To exercise your Performance Income Benefit, you must apply it to an Income Plan. The Payout Start Date you select must begin on or after your tenth Contract Anniversary, after electing the benefit, and within 30 days after a Contract Anniversary. In addition, you must apply your Performance Income Benefit to an Income Plan that provides guaranteed payments for either a single or joint life for at least: 1. 10 years, if the youngest Annuitant's age is 80 or less on the date you apply the Benefit, or 2. 5 years, if the youngest Annuitant's age is greater than 80 on the date you apply the Benefit. If your current Contract Value is higher than the Performance Income Benefit, you can apply the Contract Value to any Income Plan. The Performance Income Benefit may not be available in all states. CERTAIN EMPLOYEE BENEFIT PLANS The Contracts offered by this prospectus contain income payment tables that provide for different payments to men and women of the same age, except in states that require unisex tables. We reserve the right to use income payment tables that do not distinguish on the basis of sex to the extent permitted by law. In certain employment-related situations, employers are required by law to use the same income payment tables for men and women. Accordingly, if the Contract is to be used in connection with an employment-related retirement or benefit plan and we do not offer unisex annuity tables in your state, you should consult with legal counsel as to whether the purchase of a Contract is appropriate. DEATH BENEFITS - ------------------------------------------------------------------- We will pay a death benefit if, prior to the Payout Start Date: 1. any Contract owner dies, or 2. the Annuitant dies. We will pay the death benefit to the new Contract owner who is determined immediately after the death. The new Contract owner ("New Owner") would be a surviving Contract owner(s) or, if none, the Beneficiary(ies). In the case of the death of an Annuitant, we will pay the death benefit to the current Contract owner. A request for payment of the death benefit must include "DUE PROOF OF DEATH." We will accept the following documentation as Due Proof of Death: - - a certified copy of a death certificate, - - a certified copy of a decree of a court of competent jurisdiction as to the finding of death, or - - any other proof acceptable to us. DEATH BENEFIT AMOUNT Prior to the Payout Start Date, if we receive a complete request for payment of the death benefit within 180 days of the date of death, the death benefit is equal to the greatest of: 1. the Contract Value as of the date we determine the death benefit, or 2. the sum of all purchase payments made less any amounts deducted in connection with partial withdrawals (including any applicable withdrawal charges or premium taxes), or 3. the Contract Value on the most recent DEATH BENEFIT ANNIVERSARY prior to the date we determine the death benefit, plus any purchase payments and less any amounts deducted in connection with any partial withdrawals since that Death Benefit Anniversary. If we do not receive a complete request for payment of the death benefit within 180 days of the date of death, the death benefit is equal to the Contract Value as of the date we determine the death benefit. We reserve the right to waive the 180 day limit on a non-discriminatory basis. A "Death Benefit Anniversary" is every 6th Contract Anniversary beginning with the 6th Contract Anniversary. For example, the 6th, 12th and 18th Contract Anniversaries are the first three Death Benefit Anniversaries. We will determine the value of the death benefit as of the end of the Valuation Date on which we receive a complete request for payment of the death benefit. If we receive a request after 3 p.m. Central Time on a Valuation Date, we will process the request as of the end of the following Valuation Date. 25 PROSPECTUS DEATH BENEFIT OPTIONS The Enhanced Death Benefit, the Performance Death Benefit, the Performance Benefit Combination, and the Death Benefit Combination Options are optional benefits that you may elect. Keep in mind that once you have selected an optional death benefit your ability to select a different option may be limited. Please consult with your Financial Advisor concerning any such limitations before selecting any option. Further, if you select another option, the benefits under the new option on the date we issue the new option will equal the Contract Value. You will not retain or transfer the benefits of the earlier option. Please consult with your Financial Advisor concerning the effect of selecting a different option before doing so. We may discontinue the offering of these options at any time. If the Contract owner is a natural person, these Options apply only on the death of the Contract owner. If the Contract owner is not a natural person, these Options apply only on the death of the Annuitant. For Contracts with a death benefit option, the death benefit will be the greater of (1) through (3) above, or (4) the death benefit option you selected. If we do not receive a complete request for settlement of the death benefit within 180 days of the date of death, the death benefit option will not apply and the death benefit will be equal to the Contract Value as of the date we determine the death benefit. The death benefit options may not be available in all states. ENHANCED DEATH BENEFIT OPTION The Enhanced Death Benefit on the date we issue the rider for this option ("Rider Date") is equal to the Contract Value. On the first Contract anniversary after the Rider Date, the Enhanced Death Benefit is equal to the Contract Value on the Rider Date plus interest at an annual rate of 5% per year for the portion of the year since the Rider Date. On each subsequent Contract Anniversary, but not beyond the Contract Anniversary preceding the oldest Contract owners' 75th birthdays, we will recalculate the Enhanced Death Benefit as follows: First, we multiply the Enhanced Death Benefit as of the prior Contract Anniversary by 1.05. This results in an increase of 5% annually. Further, for all ages, we will adjust the Enhanced Death Benefit on each Contract Anniversary, or upon receipt of a death claim, as follows: - - For cash withdrawal, we will reduce the Enhanced Death Benefit by the following withdrawal adjustment. The withdrawal adjustment is equal to (i) divided by (ii), with the result multiplied by (ii), when: (i) = withdrawal amount (ii) = the Contract Value just before the withdrawal, (iii) = the most recently calculated Enhanced Death Benefit. - - We will increase the Enhanced Death Benefit by any additional purchase payments since the prior Contract Anniversary. If you select the Enhanced Death Benefit Option, the maximum age of any owner, or annuitant if the owner is a non-natural person, on the date we receive the completed application, or the date we receive the written request to add the rider, whichever is later, cannot exceed age 70. PERFORMANCE DEATH BENEFIT OPTION. The Performance Death Benefit on the date we issue the rider for this option ("Rider Date") is equal to the Contract Value. On each Contract Anniversary, we will recalculate your Performance Death Benefit to equal the greater of your Contract Value on that date, or the most recently calculated Performance Death Benefit. We also will recalculate your Performance Death Benefit whenever you make an additional purchase payment or a partial withdrawal. Additional purchase payments will increase the Performance Death Benefit dollar-for-dollar. Withdrawals will reduce the Performance Death Benefit by an amount equal to: (i) the Performance Death Benefit immediately before the withdrawal, multiplied by (ii) the ratio of the withdrawal amount to the Contract Value just before the withdrawal. In the absence of any withdrawals or purchase payments, the Performance Death Benefit will be the greatest of the Contract Value on the Rider Date and all Contract Anniversary Contract Values on or before the date we calculate the death benefit. We will recalculate the Performance Death Benefit as described above until the oldest Contract owner (the Annuitant, if the owner is not a natural person), attains age 85. After age 85, we will recalculate the Performance Death Benefit only to reflect additional purchase payments and withdrawals. If you select the Performance Death Benefit Option, the maximum age of any owner and Annuitant as of the date we receive the completed application, or the date we receive the written request to add the rider, whichever is later, cannot exceed age 80. DEATH BENEFIT COMBINATION OPTION. If you select the Death Benefit Combination Option, the death benefit payable will be the greater of the death benefits 26 PROSPECTUS provided by the Enhanced Death Benefit or the Performance Death Benefit (both calculated until the oldest Contract owner, or Annuitant if the Contract owner is a non-natural person, attains age 85). After age 85, the death benefit payable will be adjusted to reflect purchase payments and withdrawals to the extent described under "Enhanced Death Benefit Option" and "Performance Death Benefit Option" above. We sometimes refer to the Death Benefit Combination Option as the "Best of the Best" death benefit option. If you select the Death Benefit Combination Option, the maximum age of any Contract owner and Annuitant as of the date we receive the completed application, or the date we receive the written request to add the rider, whichever is later, cannot exceed age 80. PERFORMANCE BENEFIT COMBINATION OPTION. You may elect the Performance Death Benefit in combination with the Performance Income Benefit. We call this the "Performance Benefit Combination Option." If you select the Performance Benefit Combination Option, the maximum age of any Contract owner and Annuitant as of the date we receive the completed application, or the date we receive the written request to add the rider, whichever is later, cannot exceed age 75. None of the death benefits under the Enhanced Death Benefit, the Performance Death Benefit, the Performance Benefit Combination, or the Death Benefit Combination Option will ever be greater than the maximum death benefit allowed by any nonforfeiture laws which govern the Contract. DEATH BENEFIT PAYMENTS If the New Owner is your spouse, the New Owner may: 1. elect to receive the death benefit in a lump sum, or 2. elect to apply the death benefit to an Income Plan. Payments from the Income Plan must begin within one year of the date of death and must be payable throughout: - - the life of the New Owner; - - for a guaranteed number of payments from 5 to 50 years, but not to exceed the life expectancy of the New Owner; or - - over the life of the New Owner with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of the New Owner. If your spouse does not elect one of the options above, the Contract will continue in the Accumulation Phase as if the death had not occurred. If the contract is continued in the Accumulation Phase, the following restrictions apply: On the date the Contract is continued, the Contract Value will equal the amount of the death benefit as determined as of the Valuation Date on which we receive the complete request for settlement of the death benefit (the next Valuation Date, if we receive the request after 3:00 p.m. Central Time). Unless otherwise instructed by the continuing spouse, the excess, if any, of the death benefit over the Contract Value will be allocated to the Sub-Accounts of the Variable Account. This excess will be allocated in proportion to your Contract Value in those Sub-Accounts as of the end of the Valuation Date that we receive the complete request for settlement of the death benefit except that any portion of this excess attributable to the Fixed Account Options will be allocated to the Money Market Variable Sub- Account. Within 30 days of the date the Conract is continued, your surviving spouse may choose one of the following transfer alternatives without incurring a transfer fee: (i) transfer all or a portion of the excess among the Variable Sub-Accounts; (ii) transfer all or a portion of the excess into the Basic Dollar Cost Averaging Option; or (iii) transfer all or a portion of the excess into a combination of Variable Sub-Accounts and the Basic Dollar Cost Averaging Option. Any such transfer does not count as one of the free transfers allowed each Contract Year and is subject to any minimum allocation amount specified in your Contract. The surviving spouse may make a single withdrawal of any amount within one year of the date of your death without incurring a withdrawal charge. Only one spousal continuation is allowed under this Conract. If the New Owner is a natural person, and not your spouse, or if there are multiple natural person New Owners, the New Owner may: 1. elect to receive the death benefit in a lump sum, or 2. elect to apply the death benefit to an Income Plan. Payments from the Income Plan must begin within one year of the date of death and must be payable throughout: - - the life of the New Owner; - - for a guaranteed number of payments from 5 to 50 years, but not to exceed the life expectancy of the New Owner; or 27 PROSPECTUS - - over the life of the New Owner with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of the New Owner. If the New Owner does not elect one of the options above, then the New Owner must receive the Contract Value payable within 5 years of your date of death. The Contract Value will equal the amount of the death benefit as determined as of the Valuation Date on which we receive the complete request for settlement of the death benefit (the next Valuation Date, if we receive the request after 3:00 p.m. Central Time). Unless otherwise instructed by the New Owner, the excess, if any, of the death benefit over the Contract Value will be allocated to the money market Variable Sub-Account. The New Owner may exercise all rights as set forth in the TRANSFERS section during this 5 year period. No additional purchase payments may be added to the Contract under this election. Withdrawal charges will be waived for any withdrawals made during this 5 year period. If the New Owner dies prior to the receiving all of the Contract Value, then the New Owner's named beneficiary(ies) will receive the greater of the Settlement Value or the remaining Contract Value. This amount must be received as a lump sum within 5 years of the date of the original Owner's death. We reserve the right to offer additional options upon Death of Owner. If the New Owner is a corporation, trust, or other non-natural person: (a) The New Owner may elect to receive the death benefit in a lump sum; or (b) If the New Owner does not elect the option above, then the New Owner must receive the Contract Value payable within 5 years of your date of death. On the date we receive the complete request for payment of the death benefit, the Contract Value under this option will be the death benefit. Unless otherwise instructed by the New Owner, the excess, if any, of the death benefit over the Contract Value will be allocated to the Money Market Variable Sub-Account. The New Owner may exercise all rights as set forth in the TRANSFERS provision during this 5 year period.No additional purchase payments may be added to the Contract under this election. Withdrawal charges will be waived during this 5 year period. We reserve the right to offer additional options upon death of Owner. If any New Owner is a non-living person, all New Owners will be considered to be non-living persons for the above purposes. Under any of these options, all ownership rights, subject to any restrictions previously placed upon the Beneficiary, are available to the New Owner from the date of your death to the date on which the death proceeds are paid. DEATH OF ANNUITANT If the Annuitant who is not also the Contract owner dies prior to the Payout Start Date and the Contract owner is a living person, then the Contract will continue with a new Annuitant as designated by the Contract owner. If the Annuitant who is not also the Contract owner dies prior to the Payout Start Date and the Contract owner is a non-natural person, the following apply: (a) The Contract owner may elect to receive the death benefit in a lump sum; or (b) If the Contract owner does not elect the above option, then the Owner must receive the Contract Value payable within 5 years of the Annuitant's date of death. The Contract Value will equal the amount of the death benefit as determined as of the end of the Valuation Date on which we receive the complete request for settlement of the death benefit (the next Valuation Date, if we receive the request after 3:00 p.m. Central Time). Unless otherwise instructed by the Contract owner, the excess, if any, of the death benefit over the Contract Value will be allocated to the Money Market Variable Sub-Account. The Contract owner may then exercise all rights as set forth in the TRANSFERS section during this 5 year period. No additional purchase payments may be added to the Contract under this election. Withdrawal Charges will be waived during this 5 year period. We reserve the right to offer additional options upon Death of Annuitant. The Contract Owner has 60 days from the date the Company receives Due Proof of Death to select an Income Plan without incurring a tax on the entire gain in the Contract. If the Contract Owner elects to continue the Contract they will be taxed on the entire gain in the Contract computed on the date of continuance. We are required to report such gain to the IRS as income to the Contract Owner. An additional 10% federal tax penalty may apply if the Contract Owner is under age 59 1/2. Any amount included in the Contract Owner's gross income as a result of a Contract continuance will increase the investment in the Contract for future distributions. 28 PROSPECTUS MORE INFORMATION - ------------------------------------------------------------------- NORTHBROOK Northbrook is the issuer of the Contract. Northbrook is a stock life insurance company organized under the laws of the State of Arizona in 1998. Previously, from 1978 to 1998, Northbrook was organized under the laws of the State of Illinois. Northbrook is currently licensed to operate in all states (except New York), the District of Columbia, and Puerto Rico. Our headquarters are located at 3100 Sanders Road, Northbrook, Illinois, 60062. Northbrook is a wholly owned subsidiary of Allstate Life Insurance Company ("Allstate Life"), an Illinois stock life insurance company. Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, an Illinois stock property-liability insurance company. All of the outstanding capital stock of Allstate Insurance Company is owned by The Allstate Corporation. Northbrook and Allstate Life entered into a reinsurance agreement effective December 31, 1987. Under the reinsurance agreement, Allstate Life reinsures all of Northbrook's liabilities under the Contracts. The reinsurance agreement provides us with financial backing from Allstate Life. However, it does not create a direct contractual relationship between Allstate Life and you. In other words, the obligations of Allstate Life under the reinsurance agreement are to Northbrook; Northbrook remains the sole obligor under the Contract to you. Independent rating agencies regularly evaluate life insurers' claims-paying ability, quality of investments, and overall stability. A.M. Best Company assigns an A+ (Superior) financial strength rating to Allstate Life, which results in an A+r rating to Northbrook due to the reinsurance agreement with Allstate Life mentioned above. Standard & Poor's assigns an AA+ (Very Strong) financial strength rating and Moody's Investors Service assigns an Aa2 (Excellent) financial strength rating to Northbrook, sharing the same ratings of its parent, Allstate Life. These ratings do not reflect the investment performance of the Variable Account. We may from time to time advertise these ratings in our sales literature. THE VARIABLE ACCOUNT Northbrook established the Northbrook Variable Annuity Account II on May 8, 1990. We have registered the Variable Account with the SEC as a unit investment trust. The SEC does not supervise the management of the Variable Account or Northbrook. We own the assets of the Variable Account. The Variable Account is a segregated asset account under Arizona insurance law. That means we account for the Variable Account's income, gains, and losses separately from the results of our other operations. It also means that only the assets of the Variable Account that are in excess of the reserves and other Contract liabilities with respect to the Variable Account are subject to liabilities relating to our other operations. Our obligations arising under the Contracts are general corporate obligations of Northbrook. The Variable Account consists of multiple Variable Sub-Accounts, each of which invests in a corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one or more of them, if we believe marketing, tax, or investment conditions so warrant. We do not guarantee the investment performance of the Variable Account, its Sub-Accounts or the Portfolios. We may use the Variable Account to fund our other annuity contracts. We will account separately for each type of annuity contract funded by the Variable Account. THE PORTFOLIOS DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. We automatically reinvest all dividends and capital gains distributions from the Portfolios in shares of the distributing Portfolio at their net asset value. VOTING PRIVILEGES. As a general matter, you do not have a direct right to vote the shares of the Portfolios held by the Variable Sub-Accounts to which you have allocated your Contract Value. Under current law, however, you are entitled to give us instructions on how to vote those shares on certain matters. Based on our present view of the law, we will vote the shares of the Portfolios that we hold directly or indirectly through the Variable Account in accordance with instructions that we receive from Contract owners entitled to give such instructions. As a general rule, before the Payout Start Date, the Contract owner or anyone with a voting interest is the person entitled to give voting instructions. The number of shares that a person has a right to instruct will be determined by dividing the Contract Value allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. After the Payout Start Date the person receiving income payments has the voting interest. The payee's number of votes will be determined by dividing the reserves for such Contract allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. The votes decrease as income payments are made and as the reserves for the Contract decrease. We will vote shares attributable to Contracts for which we have not received instructions, as well as shares attributable to us, in the same proportion as we vote shares for which we have received instructions, unless we determine that we may vote such shares in our own discretion. We will apply voting instructions to abstain 29 PROSPECTUS on any item to be voted upon on a pro rata basis to reduce the votes eligible to be cast. We reserve the right to vote Portfolio shares as we see fit without regard to voting instructions to the extent permitted by law. If we disregard voting instructions, we will include a summary of that action and our reasons for that action in the next semi-annual financial report we send to you. CHANGES IN PORTFOLIOS. We reserve the right, subject to any applicable law, to make additions to, deletions from or substitutions for the Portfolio shares held by any Variable Sub-Account. If the shares of any of the Portfolios are no longer available for investment by the Variable Account or if, in our judgment, further investment in such shares is no longer desirable in view of the purposes of the Contract, we may eliminate that Portfolio and substitute shares of another eligible investment fund. Any substitution of securities will comply with the requirements of the Investment Company Act of 1940. We also may add new Variable Sub-Accounts that invest in additional mutual funds. We will notify you in advance of any change. CONFLICTS OF INTEREST. Certain of the Portfolios sell their shares to separate accounts underlying both variable life insurance and variable annuity contracts. It is conceivable that in the future it may be unfavorable for variable life insurance separate accounts and variable annuity separate accounts to invest in the same Portfolio. The boards of directors or trustees of these Portfolios monitor for possible conflicts among separate accounts buying shares of the Portfolios. Conflicts could develop for a variety of reasons. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, a Portfolio's board of directors or trustees may require a separate account to withdraw its participation in a Portfolio. A Portfolio's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account withdrawing because of a conflict. THE CONTRACT The Contracts are distributed exclusively by their principal underwriter, Morgan Stanley Inc., Morgan StanleyDW, a wholly owned subsidiary of Morgan Stanley Dean Witter & Co., is located at 1585 Broadway, New York, New York 10036. Morgan Stanley DW is a member of the New York Stock Exchange and the National Association of Securities Dealers. We may pay up to a maximum sales commission of 2.0% of purchase payments and an annual sales administration expense of up to 1.5% of the average net assets of the Contracts to Morgan Stanley DW. In addition, Morgan Stanley DW may pay annually to its representatives, from its profits a persistency bonus that will take into account among other things, the length of time purchase payments have been held under the Contract and Contract Values. ADMINISTRATION. We have primary responsibility for all administration of the Contracts and the Variable Account. We provide the following administrative services, among others: - - issuance of the Contracts; - - maintenance of Contract owner records; - - Contract owner services; - - calculation of unit values; - - maintenance of the Variable Account; and - - preparation of Contract owner reports. We will send you Contract statements at least annually prior to the Payout Start Date. Contract statements are currently being sent on a quarterly basis. You should notify us promptly in writing of any address change. You should read your statements and confirmations carefully and verify their accuracy. You should contact us promptly if you have a question about a periodic statement. We will investigate all complaints and make any necessary adjustments retroactively, but you must notify us of a potential error within a reasonable time after the date of the questioned statement. If you wait too long, we will make the adjustment as of the date that we receive notice of the potential error. We also will also provide you with additional periodic and other reports, information and prospectuses as may be required by federal securities laws. QUALIFIED PLANS If you use the Contract with a qualified plan, the plan may impose different or additional conditions or limitations on withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates, income payments, and other Contract features. In addition, adverse tax consequences may result if qualified plan limits on distributions and other conditions are not met. Please consult your qualified plan administrator for more information. LEGAL MATTERS Foley & Lardner, Washington, D.C., has advised Northbrook on certain federal securities law matters. All matters of state law pertaining to the Contracts, including the validity of the Contracts and Northbrook's right to issue such Contracts under state insurance law, have been passed upon by Michael J. Velotta, General Counsel of Northbrook. 30 PROSPECTUS TAXES - ------------------------------------------------------------------- THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. NORTHBROOK MAKES 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 your individual circumstances. 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. 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. TAXATION OF ANNUITIES IN GENERAL TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value until a distribution occurs. This rule applies only where: 1. the Contract Owner is a natural person, 2. the investments of the Variable Account are "adequately diversified" according to Treasury Department regulations, and 3. Northbrook is considered the owner of the Variable Account assets for federal income tax purposes. NON-NATURAL OWNERS. As a general rule, annuity contracts owned by non-natural persons such as corporations, trusts, or other entities are not treated as annuity contracts for federal income tax purposes. The income on such contracts does not enjoy tax deferral and is taxed as ordinary income received or accrued by the owner during the taxable year. 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) immediate annuity 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. DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an annuity for federal income tax purposes, the investments in the Variable Account must be "ADEQUATELY DIVERSIFIED" consistent with standards under Treasury Department regulations. If the investments in the Variable Account are not adequately diversified, the Contract will not be treated as an annuity contract for federal income tax purposes. As a result, the income on the Contract will be taxed as ordinary income received or accrued by the Contract Owner during the taxable year. Although Northbrook does not have control over the Portfolios or their investments, we expect the Portfolios to meet the diversification requirements. OWNERSHIP TREATMENT. The IRS has stated that a contract owner will be considered the owner of separate account assets if he possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. At the time the diversification regulations were issued, the Treasury Department announced that the regulations do not provide guidance concerning circumstances in which investor control of the separate account investments may cause a contract owner to be treated as the owner of the separate account. The Treasury Department also stated that future guidance would be issued regarding the extent that owners could direct sub-account investments without being treated as owners of the underlying assets of the separate account. Your rights under the Contract are different than those described by the IRS in rulings in which it found that contract owners were not owners of separate account assets. For example, you have the choice to allocate premiums and Contract Values among a broader 31 PROSPECTUS selection of investment alternatives. Also, you may be able to transfer among investment alternatives more frequently than in such rulings. These differences could result in you being treated as the owner of the Variable Account. If this occurs, income and gain from the Variable Account assets would be includible in your gross income. Northbrook does not know what standards will be set forth in any regulations or rulings which the Treasury Department may issue. It is possible that future standards announced by the Treasury Department could adversely affect the tax treatment of your Contract. We reserve the right to modify the Contract as necessary to attempt to prevent you from being considered the federal tax owner of the assets of the Variable Account. However, we make no guarantee that such modification to the Contract will be successful. TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal under a non-qualified Contract, amounts received are taxable to the extent the Contract Value, without regard to surrender charges, exceeds the investment in the Contract. The investment in the Contract is the gross premium paid for the contract minus any amounts previously received from the Contract if such amounts were properly excluded from your gross income. If you make a full withdrawal under a non-Qualified Contract, the amount received will be taxable only to the extent it exceeds the investment in the Contract. TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of annuity payments received from a non-qualified Contract provides for the return of your investment in the Contract in equal tax-free amounts over the payment period. The balance of each payment received is taxable. For fixed annuity payments, the amount excluded from income is determined by multiplying the payment by the ratio of the investment in the Contract (adjusted for any refund feature or period certain) to the total expected value of annuity payments for the term of the Contract. If you elect variable annuity payments, the amount excluded from taxable income is determined by dividing the investment in the Contract by the total number of expected payments. The annuity payments will be fully taxable after the total amount of the investment in the Contract is excluded using these ratios. The Federal tax treatment of annuity payments is unclear in some respects. As a result, if the IRS should provide further guidance, it is possible that the amount we calculate and report to the IRS as taxable could be different. If you die, and annuity payments cease before the total amount of the investment in the Contract is recovered, the unrecovered amount will be allowed as a deduction for your last taxable year. WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding the taxation of any additional withdrawal received after the Payout Start Date. It is possible that a greater or lesser portion of such a payment could be taxable than the amount we determine. DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for federal income tax purposes, the Contract must provide: 1. if any Contract Owner dies on or after the Payout 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 Contract Owner's death; 2. if any Contract Owner dies prior to the Payout Start Date, the entire interest in the Contract will be distributed within 5 years after the date of the Contract Owner's death. These requirements are satisfied if any portion of the Contract Owner's interest that 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 1 year of the Contract Owner's death. If the Contract Owner's designated Beneficiary is the surviving spouse of the Contract Owner, the Contract may be continued with the surviving spouse as the new Contract Owner. 3. if the Contract Owner is a non-natural person, then the Annuitant will be treated as the Contract 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 Contract Owner. TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in income as follows: 1. if distributed in a lump sum, the amounts are taxed in the same manner as a full withdrawal, or 2. if distributed under an Income Plan, the amounts are taxed in the same manner as annuity payments. PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the taxable amount of any premature distribution from a non-Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions: 1. made on or after the date the Contract Owner attains age 59 1/2, 2. made as a result of the Contract Owner's death or becoming totally disabled, 3. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the 32 PROSPECTUS joint lives or joint life expectancies of the Contract Owner and the Beneficiary, 4. made under an immediate annuity, or 5. attributable to investment in the Contract before August 14, 1982. You should consult a competent tax advisor to determine how these exceptions may apply to your situation. SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts using substantially equal periodic payments or immediate annuity payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the Contract Owner's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. You should consult a competent tax advisor prior to taking a withdrawal. TAX FREE EXCHANGES UNDER IRC SECTION 1035. A 1035 exchange is a tax-free exchange of a non-qualified life insurance contract, endowment contract or annuity contract for a new non-qualified annuity contract. The Contract Owner(s) must be the same on the old and new contract. Basis from the old contract carries over to the new contract so long as we receive that information from the relinquishing company. If basis information is never received, we will assume that all exchanged funds represent earnings and will allocate no cost basis to them. TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without full and adequate consideration to a person other than your spouse (or to a former spouse incident to a divorce), you will be taxed on the difference between the Contract Value and the investment in the Contract at the time of transfer. Except for certain Qualified Contracts, any amount you receive as a loan under a Contract, and any assignment or pledge (or agreement to assign or pledge) of the Contract Value is taxed as a withdrawal of such amount or portion and may also incur the 10% penalty tax. Currently we do not allow assignments. AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-qualified deferred annuity contracts issued by Northbrook (or its affiliates) to the same Contract Owner during any calendar year be aggregated and treated as one annuity contract for purposes of determining the taxable amount of a distribution. INCOME TAX WITHHOLDING Generally, Northbrook is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% of the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Northbrook is required to withhold federal income tax using the wage withholding rates for all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory. Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number. QUALIFIED CONTRACTS The income on qualified plan and IRA investments is tax deferred, and the income on variable annuities held by such plans does not receive any additional tax deferral. You should review the annuity features, including all benefits and expenses, prior to purchasing a variable annuity in a qualified plan or IRA. Contracts may be used as investments with certain qualified plans such as: - - Individual Retirement Annuities or Accounts (IRAs) under Section 408 of the Code; - - Roth IRAs under Section 408A of the Code; - - Simplified Employee Pension Plans under Section 408(k) of the Code; - - Savings Incentive Match Plans for Employees (SIMPLE) Plans under Section 408(p) of the Code; - - Tax Sheltered Annuities under Section 403(b) of the Code; - - Corporate and Self Employed Pension and Profit Sharing Plans under Sections 401 and 403; and - - State and Local Government and Tax-Exempt Organization Deferred Compensation Plans under Section 457. Northbrook reserves the right to limit the availability of the Contract for use with any of the Qualified Plans listed above or to modify the Contract to conform with tax requirements. 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 certain 33 PROSPECTUS transactions such as excess contributions, premature distributions, and, distributions that do not conform to specified commencement and minimum distribution rules. In the case of certain qualified plans, the terms of the plans may govern the right to benefits, regardless of the terms of the Contract. TAXATION OF WITHDRAWALS FROM A QUALIFIED CONTRACT. If you make a partial withdrawal under a Qualified Contract other than a Roth IRA, the portion of the payment that bears the same ratio to the total payment that the investment in the Contract (i.e., nondeductible IRA contributions, after tax contributions to qualified plans) bears to the Contract Value, is excluded from your income. We do not keep track of nondeductible contributions, and all tax reporting of distributions from Qualified Contracts other than Roth IRAs will indicate that the distribution is fully taxable. "QUALIFIED DISTRIBUTIONS" from Roth IRAs are not included in gross income. "Qualified distributions" are any distributions made more than five taxable years after the taxable year of the first contribution to any Roth IRA and which are: - - made on or after the date the Contract Owner attains age 59 1/2, - - made to a beneficiary after the Contract Owner's death, - - attributable to the Contract Owner being disabled, or - - made for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000). "NONQUALIFIED DISTRIBUTIONS" from Roth IRAs are treated as made from contributions first and are included in gross income only to the extent that distributions exceed contributions. All tax reporting of distributions from Roth IRAs will indicate that the taxable amount is not determined. REQUIRED MINIMUM DISTRIBUTIONS. Generally, qualified plans require minimum distributions upon reaching age 70 1/2. Failure to withdraw the required minimum distribution will result in a 50% tax penalty on the shortfall not withdrawn from the Contract. Not all income plans offered under the Contract satisfy the requirements for minimum distributions. Because these distributions are required under the Code and the method of calculation is complex, please see a competent tax advisor. THE DEATH BENEFIT AND QUALIFIED CONTRACTS. Pursuant to the Code and IRS regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA) may not invest in life insurance contracts. However, an IRA may provide a death benefit that equals the greater of the purchase payments or the Contract Value. The Contract offers a death benefit that in certain circumstances may exceed the greater of the purchase payments or 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 satisfy the requirements of an IRA. We believe that these regulations do not prohibit all forms of optional death benefits. Northbrook reserves the right to limit the availability of the Contract for use with any of the qualified plans listed above. PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM QUALIFIED CONTRACTS. A 10% penalty tax applies to the taxable amount of any premature distribution from a Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions: 1. made on or after the date the Contract Owner attains age 59 1/2, 2. made as a result of the Contract Owner's death or total disability, 3. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary, 4. made pursuant to an IRS levy, 5. made for certain medical expenses, 6. made to pay for health insurance premiums while unemployed (only applies for IRAs), 7. made for qualified higher education expenses (only applies for IRAs), and 8. made for a first time home purchase (up to a $10,000 lifetime limit and only applies for IRAs). During the first 2 years of the individual's participation in a SIMPLE IRA, distributions that are otherwise subject to the premature distribution penalty, will be subject to a 25% penalty tax. You should consult a competent tax advisor to determine how these exceptions may apply to your situation. SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON QUALIFIED CONTRACTS. With respect to Qualified Contracts using substantially equal periodic payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to a 34 PROSPECTUS 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. You should consult a competent tax advisor prior to taking a withdrawal. INCOME TAX WITHHOLDING ON QUALIFIED CONTRACTS. Generally, Northbrook is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions that are not considered "ELIGIBLE ROLLOVER DISTRIBUTIONS." The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% from the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Northbrook is required to withhold federal income tax at a rate of 20% on all "ELIGIBLE ROLLOVER DISTRIBUTIONS" unless you elect to make a "DIRECT ROLLOVER" of such amounts to an IRA or eligible retirement plan. Eligible rollover distributions generally include all distributions from Qualified Contracts, excluding IRAs, with the exception of: 1. required minimum distributions, or 2. a series of substantially equal periodic payments made over a period of at least 10 years, or, 3. a series of substantially equal periodic payments made over the life (joint lives) of the participant (and beneficiary), or, 4. hardship distributions. For all annuitized distributions that are not subject to the 20% withholding requirement, Northbrook is required to withhold federal income tax using the wage withholding rates from all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory. Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number. INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity (IRA). Individual Retirement Annuities 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 Individual Retirement Annuity. ROTH INDIVIDUAL RETIREMENT ANNUITIES. Section 408A of the Code permits eligible individuals to make nondeductible contributions to an individual retirement program known as a Roth Individual Retirement Annuity. Roth Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence. Subject to certain limitations, a traditional Individual Retirement Account or Annuity may be converted or "ROLLED OVER" to a Roth Individual Retirement Annuity. The income portion of a conversion or rollover distribution is taxable currently, but is exempted from the 10% penalty tax on premature distributions. SIMPLIFIED EMPLOYEE PENSION PLANS. Section 408(k) of the Code allows eligible employers to establish simplified employee pension plans for their employees using individual retirement annuities. Under these plans the employer may, within specified limits, make deductible contributions on behalf of the employees to the individual retirement annuities. Employers intending to use the Contract in connection with such plans should seek competent tax advice. SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE PLANS). Sections 408(p) and 401(k) of the Code allow eligible 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 IRA 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. TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS (TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND YOUR COMPETENT TAX ADVISOR. TAX SHELTERED ANNUITIES. Section 403(b) of the Tax Code provides tax-deferred retirement savings plans for employees of certain non-profit and educational organizations. Under Section 403(b), any contract used for a 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 35 PROSPECTUS - - incurs a hardship (earnings on salary reduction contributions may not be distributed on account of 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. Self-employed individuals may establish tax favored retirement plans for themselves and their employees. Such retirement plans (commonly referred to as "H.R.10" or "KEOGH") may permit the purchase of annuity contracts. 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. In eligible governmental plans, all assets and income must be held in a trust/custodial account/annuity contract for the exclusive benefit of the participants and their beneficiaries. To the extent the Contracts are used in connection with a non-governmental 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. Under eligible 457 plans, contributions made for the benefit of the employees will not be includible in the employees' gross income until distributed from the plan. PERFORMANCE INFORMATION - ------------------------------------------------------------------- We may advertise the performance of the Variable Sub-Accounts, including yield and total return information. Yield refers to the income generated by an investment in a Variable Sub-Account over a specified period. Total return represents the change, over a specified period of time, in the value of an investment in a Variable Sub-Account after reinvesting all income distributions. All performance advertisements will include, as applicable, standardized yield and total return figures that reflect the deduction of insurance charges, the contract maintenance charge, and withdrawal charge. Performance advertisements also may include total return figures that reflect the deduction of insurance charges, but not the contract maintenance or withdrawal charges. The deduction of such charges would reduce the performance shown. In addition, performance advertisements may include aggregate, average, year-by-year, or other types of total return figures. Performance information for periods prior to the inception date of the Variable Sub-Accounts will be based on the historical performance of the corresponding Portfolios for the periods beginning with the inception dates of the Portfolios and adjusted to reflect current Contract expenses. You should not interpret these figures to reflect actual historical performance of the Variable Account. We may include in advertising and sales materials tax deferred compounding charts and other hypothetical illustrations that compare currently taxable and tax deferred investment programs based on selected tax brackets. Our advertisements also may compare the performance of our Variable Sub-Accounts with: (a) certain unmanaged market indices, including but not limited to the Dow Jones Industrial Average, the Standard & Poor's 500, and the Shearson Lehman Bond Index; and/or (b) other management investment companies with investment objectives similar to the underlying funds being compared. In addition, our advertisements may include the performance ranking assigned by various publications, including the Wall Street Journal, Forbes, Fortune, Money, Barron's, Business Week, USA Today, and statistical services, including Lipper Analytical Services Mutual Fund Survey, Lipper Annuity and Closed End Survey, the Variable Annuity Research Data Survey, and SEI. 36 PROSPECTUS APPENDIX A - ------------------------------------------------------------------- ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED BASE POLICY
FOR THE YEARS BEGINING JANUARY 1* AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period........... -- $10.000 $14.450 $13.980 Accumulation Unit Value, End of Period................. -- $14.450 $13.980 $9.842 Number of Units Outstanding, End of Period............... -- 11,455 98,550 78,751 CAPITAL GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.710 $12.738 $12.699 Accumulation Unit Value, End of Period................. $9.710 $12.738 $12.699 $9.209 Number of Units Outstanding, End of Period............. 6,192 27,471 64,471 48,786 COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period........... $10.000 $9.568 $11.948 $9.716 Accumulation Unit Value, End of Period................. $9.568 $11.948 $9.716 $7.331 Number of Units Outstanding, End of Period............. 17,570 59,367 137,800 87,826 DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $10.101 $9.704 $10.058 Accumulation Unit Value, End of Period................. $10.101 $9.704 $10.058 $9.384 Number of Units Outstanding, End of Period............. 147,314 441,792 586,657 491,889 EQUITY Accumulation Unit Value, Beginning of Period........... $10.000 $10.273 $16.035 $13.834 Accumulation Unit Value, End of Period................. $10.273 $16.035 $13.834 $9.957 Number of Units Outstanding, End of Period............. 34,510 277,235 534,869 404,495 EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.014 $11.454 $10.720 Accumulation Unit Value, End of Period................. $9.014 $11.454 $10.720 $8.676 Number of Units Outstanding, End of Period............. 22,053 84,846 162,560 103,507 GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.886 $11.156 $10.707 Accumulation Unit Value, End of Period................. $9.886 $11.156 $10.707 $9.879 Number of Units Outstanding, End of Period............. 15,232 80,482 79,995 61,921 HIGH YIELD Accumulation Unit Value, Beginning of Period........... $10.000 $8.866 $8.610 $5.744 Accumulation Unit Value, End of Period................. $8.866 $8.610 $5.744 $3.745 Number of Units Outstanding, End of Period............. 93,600 183,538 124,910 82,977 INCOME BUILDER Accumulation Unit Value, Beginning of Period........... $10.000 $9.685 $10.205 $10.062 Accumulation Unit Value, End of Period................. $9.685 $10.205 $10.062 $10.131 Number of Units Outstanding, End of Period............. 18,227 38,046 46,861 40,016 INFORMATION Accumulation Unit Value, Beginning of Period........... -- -- $10.000 $9.289 Accumulation Unit Value, End of Period................. -- -- $9.289 $5.222 Number of Units Outstanding, End of Period............. -- -- 54,105 1,393
A-1
FOR THE YEARS BEGINING JANUARY 1* AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- LIMITED DURATION Accumulation Unit Value, Beginning of Period........... -- $10.000 $10.050 $10.470 Accumulation Unit Value, End of Period................. -- $10.050 $10.470 $10.996 Number of Units Outstanding, End of Period............. -- 11,170 8,768 12,780 MONEY MARKET Accumulation Unit Value, Beginning of Period........... $10.000 $10.153 $10.470 $10.931 Accumulation Unit Value, End of Period................. $10.153 $10.470 $10.931 $11.177 Number of Units Outstanding, End of Period............. 81,705 326,539 267,768 306,856 PACIFIC GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $10.994 $17.972 $11.771 Accumulation Unit Value, End of Period................. $10.994 $17.972 $11.771 $8.407 Number of Units Outstanding, End of Period............. 1,450 16,849 25,984 16,616 QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period........... $10.000 $10.359 $9.775 $10.667 Accumulation Unit Value, End of Period................. $10.359 $9.755 $10.667 $11.502 Number of Units Outstanding, End of Period............. 178,028 353,126 432,406 397,468 S&P 500 INDEX Accumulation Unit Value, Beginning of Period........... $10.000 $10.382 $12.286 $10.959 Accumulation Unit Value, End of Period................. $10.382 $12.286 $10.959 $9.465 Number of Units Outstanding, End of Period............. 35,394 167,065 328,022 251,684 STRATEGIST Accumulation Unit Value, Beginning of Period........... $10.000 $10.343 $11.946 $11.952 Accumulation Unit Value, End of Period................. $10.343 $11.946 $11.952 $10.565 Number of Units Outstanding, End of Period............. 70,036 198,638 324,724 269,136 UTILITIES Accumulation Unit Value, Beginning of Period........... $10.000 $10.904 $12.096 $12.268 Accumulation Unit Value, End of Period................. $10.904 $12.096 $12.268 $8.965 Number of Units Outstanding, End of Period............. 46,349 137,439 237,119 155,258 THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period........... $10.000 $8.119 $15.558 $9.356 Accumulation Unit Value, End of Period................. $8.119 $15.558 $9.356 $8.610 Number of Units Outstanding, End of Period............. 123 8,933 28,385 18,419 MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.883 $13.564 $11.783 Accumulation Unit Value, End of Period................. $9.883 $13.564 $11.783 $9.844 Number of Units Outstanding, End of Period............. 14,358 48,641 123,037 98,680 MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period........... $10.000 $8.763 $10.797 $9.307 Accumulation Unit Value, End of Period................. $8.763 $10.797 $9.307 $7.392 Number of Units Outstanding, End of Period............. 6,589 25,209 68,164 47,852 MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- --
A-2
FOR THE YEARS BEGINING JANUARY 1* AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- $12.096 Number of Units Outstanding, End of Period............. -- -- -- -- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period........... $10.000 $9.115 $8.839 $11.247 Accumulation Unit Value, End of Period................. $9.115 $8.839 $11.247 $12.158 Number of Units Outstanding, End of Period............. 3,294 13,344 27,787 39,100 VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK , CLASS I Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period -- -- -- -- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period........... $10.000 $10.510 $21.141 $18.696 Accumulation Unit Value, End of Period................. $10.510 $21.141 $18.696 $12.605 Number of Units Outstanding, End of Period............. 10,947 90,139 245,349 211,770 AIM VARIABLE INVESTMENT FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- ALLIANCE VARIABLE PRODUCTS SERIES (CLASS B SHARES) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- --
A-3
FOR THE YEARS BEGINING JANUARY 1* AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VARIABLE TRUST (CLASS IB SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- --
* The Contracts were first offered on July 20, 1998. All of the Variable Sub-Accounts were first offered under the Contracts on July 20, 1998, except the Limited Duration and Aggressive Equity Variable Sub-Accounts, which commenced operations on May 3, 1999, the Information Sub-Account which commenced operations on November 6, 2000 and the Sub-Accounts with underlying portfolios of the AIM Variable Insurance Funds, Alliance Variable Products Series Fund and Putnam Variable Trust, and the Morgan Stanley UIF Mid Cap Growth, Morgan Stanley UIF Mid Cap Value, Van Kampen LIT Comstock and LSA Aggressive Growth Sub-Accounts which were first offered under the Contracts on May 1, 2002. The Accumulation Unit Valus in this table reflect a mortality and expense risk charge of 1.49% and an administrative expense charge of 0.10%. A-4 ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED DEATH BENEFIT, PERFORMANCE DEATH BENEFIT OR PERFORMANCE INCOME BENEFIT OPTION
FOR THE YEARS BEGINING JANUARY 1* AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period........... -- $10.000 $14.440 $13.950 Accumulation Unit Value, End of Period................. -- $14.440 $13.950 $9.808 Number of Units Outstanding, End of Period............. -- 40,515 169,792 146,885 CAPITAL GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.704 $12.714 $12.659 Accumulation Unit Value, End of Period................. $9.704 $12.714 $12.659 $9.168 Number of Units Outstanding, End of Period............. 5,153 30,798 71,626 69,062 COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period........... $10.000 $9.562 $11.926 $9.686 Accumulation Unit Value, End of Period................. $9.652 $11.926 $9.686 $7.299 Number of Units Outstanding, End of Period............. 24,807 72,820 186,984 126,986 DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $10.095 $9.685 $10.026 Accumulation Unit Value, End of Period................. $10.095 $9.685 $10.026 $9.342 Number of Units Outstanding, End of Period............. 165,990 662,841 676,030 595,066 EQUITY Accumulation Unit Value, Beginning of Period........... $10.000 $10.267 $16.005 $13.790 Accumulation Unit Value, End of Period................. $10.267 $16.005 $13.790 $9.912 Number of Units Outstanding, End of Period............. 80,117 471,331 719,408 593,026 EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.008 $11.432 $10.686 Accumulation Unit Value, End of Period................. $9.008 $11.432 $10.686 $8.638 Number of Units Outstanding, End of Period............. 206,430 194,903 317,816 219,597 GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.881 $11.135 $10.673 Accumulation Unit Value, End of Period................. $9.881 $11.135 $10.673 $9.835 Number of Units Outstanding, End of Period............. 39,311 128,434 151,997 123,727 HIGH YIELD Accumulation Unit Value, Beginning of Period........... $10.000 $8.861 $8.593 $5.726 Accumulation Unit Value, End of Period................. $8.861 $8.593 $5.726 $3.728 Number of Units Outstanding, End of Period............. 38,215 123,235 97,153 95,027 INCOME BUILDER Accumulation Unit Value, Beginning of Period........... $10.000 $9.679 $10.186 $10.030 Accumulation Unit Value, End of Period................. $9.679 $10.186 $10.030 $10.085 Number of Units Outstanding, End of Period............. 16,832 52,500 44,355 41,961 INFORMATION Accumulation Unit Value, Beginning of Period............. -- -- -- $10.000 Accumulation Unit Value, End of Period................. -- -- -- $5.214 Number of Units Outstanding, End of Period............. -- -- -- 5,812
A-5
FOR THE YEARS BEGINING JANUARY 1* AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- LIMITED DURATION Accumulation Unit Value, Beginning of Period........... -- $10.000 $10.040 $10.447 Accumulation Unit Value, End of Period................. -- $10.040 $10.447 $10.958 Number of Units Outstanding, End of Period............. -- 11,485 17,362 54,309 MONEY MARKET Accumulation Unit Value, Beginning of Period........... $10.000 $10.147 $10.450 $10.896 Accumulation Unit Value, End of Period................. $10.147 $10.450 $10.896 $11.127 Number of Units Outstanding, End of Period............. 85,827 436,501 507,405 390,317 PACIFIC GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $10.987 $17.938 $11.733 Accumulation Unit Value, End of Period................. $10.987 $17.938 $11.733 $8.369 Number of Units Outstanding, End of Period............. 1,623 38,449 53,153 33,317 QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period........... $10.000 $10.353 $9.737 $10.633 Accumulation Unit Value, End of Period................. $10.353 $9.737 $10.633 $11.451 Number of Units Outstanding, End of Period............. 52,778 249,824 240,877 253,101 S&P 500 INDEX Accumulation Unit Value, Beginning of Period........... $10.000 $10.376 $12.263 $10.924 Accumulation Unit Value, End of Period................. $10.376 $12.263 $10.924 $9.423 Number of Units Outstanding, End of Period............. 104,952 349,707 461,674 370,671 STRATEGIST Accumulation Unit Value, Beginning of Period........... $10.000 $10.337 $11.920 $11.914 Accumulation Unit Value, End of Period................. $10.337 $11.920 $11.914 $10.518 Number of Units Outstanding, End of Period............. 24,056 162,824 255,791 232,782 UTILITIES Accumulation Unit Value, Beginning of Period........... $10.000 $10.898 $12.073 $12.229 Accumulation Unit Value, End of Period................. $10.898 $12.073 $12.229 $8.925 Number of Units Outstanding, End of Period............. 33,289 165,102 237,119 165,598 THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period........... $10.000 $8.114 $15.529 $9.326 Accumulation Unit Value, End of Period................. $8.114 $15.529 $9.326 $8.572 Number of Units Outstanding, End of Period............. 3,925 16,698 23,245 15,996 MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.877 $13.539 $11.746 Accumulation Unit Value, End of Period................. $9.877 $13.539 $11.746 $9.800 Number of Units Outstanding, End of Period............. 17,925 104,259 160,415 117,282 MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period........... $10.000 $8.758 $10.777 $9.278 Accumulation Unit Value, End of Period................. $8.758 $10.777 $9.278 $7.359 Number of Units Outstanding, End of Period............. 9,575 30,807 54,387 60,763 MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- --
A-6
FOR THE YEARS BEGINING JANUARY 1* AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- $12.092 Number of Units Outstanding, End of Period............. -- -- -- -- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period........... $10.000 $9.110 $8.822 $11.211 Accumulation Unit Value, End of Period................. $9.110 $8.822 $11.211 $12.104 Number of Units Outstanding, End of Period............. 17,463 33,042 36.603 34,032 VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period........... $10.000 $10.504 $21.101 $18.637 Accumulation Unit Value, End of Period................. $10.504 $21.101 $18.637 $12.548 Number of Units Outstanding, End of Period............. 31,051 108,684 215,874 356,106 AIM VARIABLE INVESTMENT FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- ALLIANCE VARIABLE PRODUCTS SERIES (CLASS B SHARES) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- --
A-7
FOR THE YEARS BEGINING JANUARY 1* AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VARIABLE TRUST (CLASS IB SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- --
* The Contracts including the Enhanced Death Benefit Option, the Performance Death Benefit Option, and the Performance Income Benefit Option were first offered on July 20, 1998. All of the Variable Sub-Accounts were first offered under the Contracts on July 20, 1998, except the Limited Duration and Aggressive Equity Variable Sub-Accounts, which commenced operations on May 3, 1999, the Information Sub-Account which commenced operations on November 6, 2000 and the Sub-Accounts with underlying portfolios of the AIM Variable Insurance Funds, Alliance Variable Products Series Fund and Putnam Variable Trust, and the Morgan Stanley UIF Mid Cap Growth, Morgan Stanley UIF Mid Cap Value, Van Kampen LIT Comstock and LSA Aggressive Growth Sub-Accounts which were first offered under the Contracts on May 1, 2002. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.62% and an administrative expense charge of 0.10%. A-8 ACCUMULATION UNIT VALUE AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH VARIABLE SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE PERFORMANCE BENEFIT COMBINATION OPTION OR THE DEATH BENEFIT COMBINATION OPTION
FOR THE YEARS BEGINING JANUARY* 1 AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS X) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period........... -- $10.000 $14.430 $13.924 Accumulation Unit Value, End of Period................. -- $14.430 $13.924 $9.779 Number of Units Outstanding, End of Period............. -- 44,292 268,946 166,074 CAPITAL GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9 699 $12.694 $12.625 Accumulation Unit Value, End of Period................. $9.699 $12.694 $12.625 $9.133 Number of Units Outstanding, End of Period............. 12,464 27,483 127,643 82,875 COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period........... $10.000 $9.557 $11.906 $9.659 Accumulation Unit Value, End of Period................. $9.557 $11.906 $9.659 $7.270 Number of Units Outstanding, End of Period............. 12,369 23,894 131,742 114,726 DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period........... 10.000 $10.090 $9.670 $9.999 Accumulation Unit Value, End of Period................. $10.090 $9.670 $9.999 $9.306 Number of Units Outstanding, End of Period............. 58,954 256,374 519,014 548,030 EQUITY Accumulation Unit Value, Beginning of Period........... $10.000 $10.262 $15.980 $13.753 Accumulation Unit Value, End of Period................. $10.262 $15.980 $13.753 $9.874 Number of Units Outstanding, End of Period............. 30,606 323,544 649,397 516,235 EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.004 $11.414 $10.657 Accumulation Unit Value, End of Period................. $9.004 $11.414 $10.657 $8.605 Number of Units Outstanding, End of Period............. 10,221 75,890 289,934 193,593 GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.876 $11.117 $10.645 Accumulation Unit Value, End of Period................. $9.876 $11.117 $10.645 $9.797 Number of Units Outstanding, End of Period............. 14,652 62,965 93,823 77,053 HIGH YIELD Accumulation Unit Value, Beginning of Period........... $10.000 $8.857 $8.580 $5.710 Accumulation Unit Value, End of Period................. $8.857 $8.580 $5.710 $3.714 Number of Units Outstanding, End of Period............. 11,399 38,054 67,992 139,822 INCOME BUILDER Accumulation Unit Value, Beginning of Period........... $10.000 $9.674 $10.169 $10.003 Accumulation Unit Value, End of Period................. $9.674 $10.169 $10.003 $10.047 Number of Units Outstanding, End of Period............. 3,158 20,223 24,882 34,139 INFORMATION Accumulation Unit Value, Beginning of Period........... -- -- $10.000 $9.285 Accumulation Unit Value, End of Period................. -- -- $9.285 $5.207 Number of Units Outstanding, End of Period............. -- -- 4,195 9,925
A-9
FOR THE YEARS BEGINING JANUARY* 1 AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- LIMITED DURATION Accumulation Unit Value, Beginning of Period........... -- $10.000 $10.030 $10.428 Accumulation Unit Value, End of Period................. -- $10030 $10.428 $10.926 Number of Units Outstanding, End of Period............. -- 5,436 13,362 13,643 MONEY MARKET Accumulation Unit Value, Beginning of Period........... $10.000 $10.142 $10.440 $10.867 Accumulation Unit Value, End of Period................. $10.142 $10.440 $10.867 $11.085 Number of Units Outstanding, End of Period............. 15,056 123,921 280,898 385,744 PACIFIC GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $10.982 $17.910 $11.702 Accumulation Unit Value, End of Period................. $10.982 $17.910 $11.702 $8.338 Number of Units Outstanding, End of Period............. 4,550 73,243 119,400 128,210 QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period........... $10.000 $10.348 $9.721 $10.605 Accumulation Unit Value, End of Period................. $10.348 $9.721 $10.605 $11.408 Number of Units Outstanding, End of Period............. 81,071 172,419 276,236 458,288 S&P 500 INDEX Accumulation Unit Value, Beginning of Period........... $10.000 $10.371 $12.242 $10.894 Accumulation Unit Value, End of Period................. $10.371 $12.242 $10.894 $9.386 Number of Units Outstanding, End of Period............. 41,697 168,103 293,639 276,666 STRATEGIST Accumulation Unit Value, Beginning of Period........... $10.000 $10.332 $11.904 $11.882 Accumulation Unit Value, End of Period................. $10.332 $11.904 $11.882 $10.478 Number of Units Outstanding, End of Period............. 18,089 68,969 218,043 207,846 UTILITIES Accumulation Unit Value, Beginning of Period........... $10.000 $10.892 $12.054 $12.197 Accumulation Unit Value, End of Period................. $10.892 $12.054 $12.197 $8.891 Number of Units Outstanding, End of Period............. 19,644 100,464 217,451 185,573 THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period........... $10.000 $8.109 $15.503 $9.300 Accumulation Unit Value, End of Period................. $8.109 $15.503 $9.300 $8.538 Number of Units Outstanding, End of Period............. 4,235 51,240 113,031 111,255 MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period........... $10.000 $9.872 $13.516 $11.713 Accumulation Unit Value, End of Period................. $9.872 $13.516 $11.713 $9.762 Number of Units Outstanding, End of Period............. -- 16,474 129,313 85,598 MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period........... $10.000 $8.753 $10.759 $9.252 Accumulation Unit Value, End of Period................. $8.753 $10.759 $9.252 $7.331 Number of Units Outstanding, End of Period............. -- 21,796 55,354 65,898 MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- $12.088 Number of Units Outstanding, End of Period -- -- -- --
A-10
FOR THE YEARS BEGINING JANUARY* 1 AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period........... $10.000 $9.105 $8.807 $11.180 Accumulation Unit Value, End of Period................. $9.105 $8.807 $11.180 $12.057 Number of Units Outstanding, End of Period............. -- 30,211 67,341 75,343 VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period........... $10.000 $10.498 $21.066 $18.585 Accumulation Unit Value, End of Period................. $10.498 $21.066 $18.585 $12.500 Number of Units Outstanding, End of Period............. 27,030 129,629 388,197 300,357 AIM VARIABLE INVESTMENT FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- ALLIANCE VARIABLE PRODUCTS SERIES (CLASS B SHARES) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- --
A-11
FOR THE YEARS BEGINING JANUARY* 1 AND ENDING DECEMBER 31, ----------------------------------------------- 1998 1999 2000 2001 -------- ---------- ---------- ---------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period -- -- -- -- PUTNAM VARIABLE TRUST (CLASS IB SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- -- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period........... -- -- -- -- Accumulation Unit Value, End of Period................. -- -- -- -- Number of Units Outstanding, End of Period............. -- -- -- --
* The Contracts including the Performance Benefit Combination Option were first offered July 20, 1998. The Contracts including the Death Benefit Combination Option were first offered on May 3, 1999. All of the Variable Sub-Accounts were first offered under the Contracts on July 20, 1998, except the Limited Duration and Aggressive Equity Variable Sub-Accounts, which commenced operations on May 3, 1999, the Information Sub-Account which commenced operations on November 6, 2000 and the Sub-Accounts with underlying portfolios of the AIM Variable Insurance Funds, Alliance Variable Products Series Fund and Putnam Variable Trust, and the Morgan Stanley UIF Mid Cap Growth, Morgan Stanley UIF Mid Cap Value, Van Kampen LIT Comstock and LSA Aggressive Growth Sub-Accounts which were first offered under the Contracts on May 1, 2002. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.73% and an administrative expense charge of 0.10%. A-12 STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS - -------------------------------------------------------------------
PAGE - ---------------------------------------------------------------------------- ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS - ---------------------------------------------------------------------------- THE CONTRACT - ---------------------------------------------------------------------------- Purchases - ---------------------------------------------------------------------------- Tax-free Exchanges (1035 Exchanges, Rollovers and Transfers) - ---------------------------------------------------------------------------- PERFORMANCE INFORMATION - ---------------------------------------------------------------------------- CALCULATION OF ACCUMULATION UNIT VALUES - ---------------------------------------------------------------------------- CALCULATION OF VARIABLE INCOME PAYMENTS - ----------------------------------------------------------------------------
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PAGE GENERAL MATTERS - ---------------------------------------------------------------------------- Incontestability - ---------------------------------------------------------------------------- Settlements - ---------------------------------------------------------------------------- Safekeeping of the Variable Account's Assets - ---------------------------------------------------------------------------- Premium Taxes - ---------------------------------------------------------------------------- Tax Reserves - ---------------------------------------------------------------------------- EXPERTS - ---------------------------------------------------------------------------- FINANCIAL STATEMENTS - ----------------------------------------------------------------------------
------------------------ THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS. B-1 MORGAN STANLEY VARIABLE ANNUITY 3 NORTHBROOK LIFE INSURANCE COMPANY 300 N. MILWAUKEE AVENUE VERNON HILLS, IL 60061 TELEPHONE NUMBER: 1-800-654-2397 PROSPECTUS DATED MAY 1, 2002 - -------------------------------------------------------------------------------- Northbrook Life Insurance Company ("NORTHBROOK") is offering the Morgan Stanley Variable Annuity 3, an individual and group flexible premium deferred variable annuity contract ("CONTRACT"). This prospectus contains information about the Contract that you should know before investing. Please keep it for future reference. The Contract offers 39 investment alternatives ("INVESTMENT ALTERNATIVES"). The investment alternatives include 3 fixed account options ("FIXED ACCOUNT OPTIONS") and 36 variable sub-accounts ("VARIABLE SUB-ACCOUNTS") of the Northbrook Variable Annuity Account II ("VARIABLE ACCOUNT"). Each Variable Sub-Account invests exclusively in shares of portfolios ("PORTFOLIOS") of the following mutual funds ("FUNDS"): MORGAN STANLEY VARIABLE INVESTMENT AIM VARIABLE INSURANCE FUNDS (SERIES I) SERIES (CLASS Y SHARES) ALLIANCE VARIABLE PRODUCTS SERIES FUND, THE UNIVERSAL INSTITUTIONAL FUNDS, INC. (CLASS B SHARES) INC. LSA VARIABLE SERIES TRUST VAN KAMPEN LIFE INVESTMENT TRUST PUTNAM VARIABLE TRUST (CLASS IB SHARES)
WE (Northbrook) have filed a Statement of Additional Information, dated May 1, 2002, with the Securities and Exchange Commission ("SEC"). It contains more information about the Contract and is incorporated herein by reference, which means that it is legally a part of this prospectus. Its table of contents appears on page C-1 of this prospectus. For a free copy, please write or call us at the address or telephone number above, or go to the SEC's Web site (http://www.sec.gov). You can find other information and documents about us, including documents that are legally a part of this prospectus, at the SEC's Web site. - -------------------------------------------------------------------------------- THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR IMPORTANT DISAPPROVED THE SECURITIES DESCRIBED IN THIS PROSPECTUS, NOR NOTICES HAS IT PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANYONE WHO TELLS YOU OTHERWISE IS COMMITTING A FEDERAL CRIME. INVESTMENT IN THE CONTRACTS INVOLVES INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL.
PROSPECTUS 1 TABLE OF CONTENTS - -------------------------------------------------------------------
PAGE - ---------------------------------------------------------------------------- OVERVIEW - ---------------------------------------------------------------------------- Important Terms 3 - ---------------------------------------------------------------------------- The Contract at a Glance 4 - ---------------------------------------------------------------------------- How the Contract Works 6 - ---------------------------------------------------------------------------- Expense Table 7 - ---------------------------------------------------------------------------- Financial Information 13 - ---------------------------------------------------------------------------- CONTRACT FEATURES - ---------------------------------------------------------------------------- The Contract 14 - ---------------------------------------------------------------------------- Purchase of Contracts 15 - ---------------------------------------------------------------------------- Contract Value 16 - ---------------------------------------------------------------------------- Investment Alternatives 17 - ---------------------------------------------------------------------------- The Variable Sub-Accounts 17 - ---------------------------------------------------------------------------- The Fixed Account Options 19 - ---------------------------------------------------------------------------- Transfers 20 - ---------------------------------------------------------------------------- Expenses 22 - ---------------------------------------------------------------------------- PAGE - ---------------------------------------------------------------------------- Access To Your Money 24 - ---------------------------------------------------------------------------- Income Payments 25 - ---------------------------------------------------------------------------- Death Benefits 28 - ---------------------------------------------------------------------------- OTHER INFORMATION - ---------------------------------------------------------------------------- More Information: 32 - ---------------------------------------------------------------------------- Northbrook 32 - ---------------------------------------------------------------------------- The Variable Account 33 - ---------------------------------------------------------------------------- The Portfolio 33 - ---------------------------------------------------------------------------- The Contract 34 - ---------------------------------------------------------------------------- Qualified Plans 34 - ---------------------------------------------------------------------------- Legal Matters 34 - ---------------------------------------------------------------------------- Taxes 34 - ---------------------------------------------------------------------------- Performance Information 40 - ---------------------------------------------------------------------------- APPENDIX A -- CALCULATION OF ENHANCED EARNINGS DEATH BENEFIT PLUS A-1 - ---------------------------------------------------------------------------- APPENDIX B -- ACCUMULATION UNIT VALUES B-1 - ---------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS C-1 - ----------------------------------------------------------------------------
2 PROSPECTUS IMPORTANT TERMS - ------------------------------------------------------------------- This prospectus uses a number of important terms that you may not be familiar with. The index below identifies the page that describes each term. The first use of each term in this prospectus appears in highlights.
PAGE - ---------------------------------------------------------------------------- Accumulation Phase - ---------------------------------------------------------------------------- Accumulation Unit - ---------------------------------------------------------------------------- Accumulation Unit Value - ---------------------------------------------------------------------------- Annuitant - ---------------------------------------------------------------------------- Automatic Additions Program - ---------------------------------------------------------------------------- Automatic Portfolio Rebalancing Program - ---------------------------------------------------------------------------- Beneficiary - ---------------------------------------------------------------------------- Cancellation Period - ---------------------------------------------------------------------------- Contract* - ---------------------------------------------------------------------------- Contract Anniversary - ---------------------------------------------------------------------------- Contract Owner ("You") - ---------------------------------------------------------------------------- Contract Value - ---------------------------------------------------------------------------- Contract Year - ---------------------------------------------------------------------------- Death Benefit Anniversary - ---------------------------------------------------------------------------- Death Benefit Combination Option - ---------------------------------------------------------------------------- Dollar Cost Averaging - ---------------------------------------------------------------------------- Dollar Cost Averaging Fixed Account Options - ---------------------------------------------------------------------------- Due Proof of Death - ---------------------------------------------------------------------------- Enhanced Earnings Death Benefit Plus Option - ---------------------------------------------------------------------------- Excess of Earnings Withdrawals - ---------------------------------------------------------------------------- Fixed Account Options - ---------------------------------------------------------------------------- PAGE - ---------------------------------------------------------------------------- Funds - ---------------------------------------------------------------------------- Income and Death Benefit Combination Option 2 - ---------------------------------------------------------------------------- Income Benefit Combination Option 2 - ---------------------------------------------------------------------------- In-Force Premium - ---------------------------------------------------------------------------- In-Force Earnings - ---------------------------------------------------------------------------- Income Plans - ---------------------------------------------------------------------------- Investment Alternatives - ---------------------------------------------------------------------------- Issue Date - ---------------------------------------------------------------------------- Northbrook ("We") - ---------------------------------------------------------------------------- Payout Phase - ---------------------------------------------------------------------------- Payout Start Date - ---------------------------------------------------------------------------- Performance Death Benefit Option - ---------------------------------------------------------------------------- Portfolios - ---------------------------------------------------------------------------- Qualified Contracts - ---------------------------------------------------------------------------- Right to Cancel - ---------------------------------------------------------------------------- SEC - ---------------------------------------------------------------------------- Settlement Value - ---------------------------------------------------------------------------- Systematic Withdrawal Program - ---------------------------------------------------------------------------- Valuation Date - ---------------------------------------------------------------------------- Variable Account - ---------------------------------------------------------------------------- Variable Sub-Account - ----------------------------------------------------------------------------
*In certain states the Contract is available only as a group Contract. In these states, we will issue you a certificate that represents your ownership and that summarizes the provisions of the group Contract. References to "Contract" in this prospectus include certificates unless the context requires otherwise. 3 PROSPECTUS THE CONTRACT AT A GLANCE - ------------------------------------------------------------------- The following is a snapshot of the Contract. Please read the remainder of this prospectus for more information. FLEXIBLE PAYMENTS You can purchase a Contract with an initial purchase payment of $1,000 or more. You can add to your Contract as often and as much as you like, but each payment must be at least $100. You must maintain a minimum account size of $500. - -------------------------------------------------------------------------------------------------------- RIGHT TO CANCEL You may cancel your Contract within 20 days of receipt or any longer period as your state may require ("CANCELLATION PERIOD"). Upon cancellation, we will return your purchase payments adjusted, to the extent state and federal law permit, to reflect the investment experience of any amounts allocated to the Variable Account including the deduction of mortality and expense risk charges and administrative expense charges. - -------------------------------------------------------------------------------------------------------- EXPENSES You will bear the following expenses: - Total Variable Account annual fees equal to 1.35% of average daily net assets (1.48% if you select the PERFORMANCE DEATH BENEFIT OPTION or 1.59% if you select the DEATH BENEFIT COMBINATION OPTION, or 1.65% if you select the INCOME BENEFIT COMBINATION OPTION 2 or 1.85% if you select the INCOME AND DEATH BENEFIT COMBINATION OPTION 2) - If you select the Enhanced Earnings Death Benefit Plus Option, you will pay an additional mortality and expense risk charge of 0.15%, 0.25% or 0.35% (depending on the age of the oldest Contract owner (or Annuitant, if the Contract owner is a non-natural person) on the date we receive the completed application or written request to add the Option, whichever is later ("Rider Application Date")) - Annual contract maintenance charge of $35 (waived in certain cases) - Withdrawal charges ranging from 0% to 6% of purchase payment(s) withdrawn (with certain exceptions) - Transfer fee of $25 after the 12th transfer in any CONTRACT YEAR (fee currently waived) - State premium tax (if your state imposes one). In addition, each Portfolio pays expenses that you will bear indirectly if you invest in a Variable Sub-Account. - -------------------------------------------------------------------------------------------------------- INVESTMENT ALTERNATIVES The Contract offers 39 investment alternatives including: - 3 Fixed Account Options (which credit interest at rates we guarantee) - 36 Variable Sub-Accounts investing in Portfolios offering professional money management by these investment advisers: - A I M Advisors, Inc. - Alliance Capital Management, L.P. - LSA Asset Management LLC - Morgan Stanley Investments, L.P.
4 PROSPECTUS - Morgan Stanley Investment Advisors, Inc. - Morgan Stanley Investment Management, Inc. - Putnam Investment Management, Inc. - Van Kampen Asset Management Inc. To find out current rates being paid on the Fixed Account Options, or to find out how the Variable Sub-Accounts have performed, call us at 1-800-654-2397. - -------------------------------------------------------------------------------------------------------- SPECIAL SERVICES For your convenience, we offer these special services: - AUTOMATIC ADDITIONS PROGRAM - AUTOMATIC PORTFOLIO REBALANCING PROGRAM - DOLLAR COST AVERAGING PROGRAM - SYSTEMATIC WITHDRAWAL PROGRAM - -------------------------------------------------------------------------------------------------------- INCOME PAYMENTS You can choose fixed income payments, variable income payments, or a combination of the two. You can receive your income payments in one of the following ways: - life income with payments guaranteed for 120 months - joint and survivor life income - guaranteed payments for a specified period - -------------------------------------------------------------------------------------------------------- DEATH BENEFITS If you die before the PAYOUT START DATE, we will pay the death benefit described in the Contract. We also offer death benefit options. - -------------------------------------------------------------------------------------------------------- TRANSFERS Before the Payout Start Date, you may transfer your Contract value ("CONTRACT VALUE") among the investment alternatives, with certain restrictions. Transfers must be at least $100 or the total amount in the investment alternative, whichever is less. Transfers to the Standard Fixed Account Option for any Guarantee Period must be at least $500. We do not currently impose a fee upon transfers. However, we reserve the right to charge $25 per transfer after the 12th transfer in each "CONTRACT YEAR," which we measure from the date we issue your Contract or a Contract anniversary ("CONTRACT ANNIVERSARY"). - -------------------------------------------------------------------------------------------------------- WITHDRAWALS You may withdraw some or all of your Contract Value at any time during the Accumulation Phase and during the Payout Phase in certain cases. In general, you must withdraw at least $500 at a time or the total amount in the investment alternative, if less. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. A withdrawal charge also may apply.
5 PROSPECTUS HOW THE CONTRACT WORKS - ------------------------------------------------------------------- The Contract basically works in two ways. First, the Contract can help you (we assume you are the "CONTRACT OWNER") save for retirement because you can invest in up to 39 Investment Alternatives and generally pay no federal income taxes on any earnings until you withdraw them. You do this during what we call the "ACCUMULATION PHASE" of the Contract. The Accumulation Phase begins on the date we issue your Contract (we call that date the "ISSUE DATE") and continues until the Payout Start Date, which is the date we apply your money to provide income payments. During the Accumulation Phase you may allocate your purchase payments to any combination of the Variable Sub-Accounts and/or the Fixed Account Options. If you invest in any of the Fixed Account Options you will earn a fixed rate of interest that we declare periodically. If you invest in any of the Variable Sub-Accounts your investment return will vary up or down depending on the performance of the corresponding Portfolios. Second, the Contract can help you plan for retirement because you can use it to receive retirement income for life, and/or for a pre-set number of years, by selecting one of the income payment options (we call these "INCOME PLANS") described on page . You receive income payments during what we call the "PAYOUT PHASE" of the Contract, which begins on the Payout Start Date and continues until we make the last payment required by the Income Plan you select. During the Payout Phase, if you select a fixed amount income payment option, we guarantee the amount of your payments, which will remain fixed. If you select a variable amount income payment option, based on one or more of the Variable Sub-Accounts, the amount of your payments will vary up or down depending on the performance of the corresponding Portfolios. The amount of money you accumulate under your Contract during the Accumulation Phase and apply to an Income Plan will determine the amount of your income payments during the Payout Phase. The timeline below illustrates how you might use your Contract.
ISSUE ACCUMULATION PHASE PAYOUT PAYOUT DATE START PHASE DATE --------------------------------------------------------------------------------------------------------------------------- You buy You save for retirement You elect to receive income You can receive Or you can a Contract payments or receive a lump sum income payments receive income payment for a set period payments for life
As the Contract owner you exercise all of the rights and privileges provided by the Contract. If you die, any surviving Contract owner or, if there is none, the BENEFICIARY, will exercise the rights and privileges provided by the Contract. SEE "The Contract." In addition, if you die before the Payout Start Date, we will pay a death benefit to any surviving Contract owner or, if there is none, to your Beneficiary. SEE "Death Benefits." Please call us at 1-800-654-2397 if you have any question about how the Contract works. 6 PROSPECTUS EXPENSE TABLE - ------------------------------------------------------------------- The table below lists the expenses that you will bear directly or indirectly when you buy a Contract. The table and the examples that follow do not reflect premium taxes that may be imposed by the state where you reside. For more information about Variable Account expenses, see "Expenses", below. For more information about Portfolio expenses, please refer to the accompanying prospectuses for the Funds. CONTRACT OWNER TRANSACTION EXPENSES Withdrawal Charge (as a percentage of purchase payments withdrawn)*
Number of Complete Years Since We Received the Payment Being Withdrawn 0 1 2 3 4 5 6+ - -------------------------------------------------------------------------------------------------- Applicable Charge 6% 5% 5% 4% 3% 2% 0% - -------------------------------------------------------------------------------------------------- Annual Contract Maintenance Charge $35.00** - -------------------------------------------------------------------------------------------------- Transfer Fee $25*** - --------------------------------------------------------------------------------------------------
*During each Contract Year you may withdraw up to 15% of the aggregate amount of purchase payments as of the beginning of the Contract Year without incurring a withdrawal charge. **If your Contract Value equals or exceeds $40,000, we will waive the charge for the remaining time your Contract is in force. ***Applies solely to the thirteenth and all subsequent transfers within a Contract Year excluding transfers due to dollar cost averaging and automatic portfolio rebalancing. We are currently waiving the transfer fee. VARIABLE ACCOUNT ANNUAL EXPENSES (AS A PERCENTAGE OF DAILY NET ASSET VALUE DEDUCTED FROM EACH VARIABLE SUB-ACCOUNT)
With the With the With the With the Income Performance Death Income and Death Death Benefit Benefit Benefit Base Benefit Combination Combination Combination Contract Option Option Option 2 Option 2+ - -------------------------------------------------------------------------------------------- Mortality and Expense Risk Charge 1.25% 1.38% 1.49% 1.55% 1.75% - -------------------------------------------------------------------------------------------- Administrative Expense Charge 0.10% 0.10% 0.10% 0.10% 0.10% - -------------------------------------------------------------------------------------------- Total Variable Account Annual Expense 1.35% 1.48% 1.59% 1.65% 1.85% - -------------------------------------------------------------------------------------------- If the Enhanced Earnings Death Benefit Plus Option is elected with the Base Contract or with one of the Options listed above (assuming age is between 66 and 75 on Rider Application Date)* - -------------------------------------------------------------------------------------------- Mortality and Expense Risk Charge 1.60% 1.73% 1.84% 1.90% 2.10% - -------------------------------------------------------------------------------------------- Administrative Expense Charge 0.10% 0.10% 0.10% 0.10% 0.10% - -------------------------------------------------------------------------------------------- Total Variable Account Annual Expense 1.70% 1.83% 1.94% 2.00% 2.20% - --------------------------------------------------------------------------------------------
*The mortality and expense risk charge shown for the Enhanced Earnings Death Benefit Plus Option reflects a charge of 0.35% for the Option, assuming the age of the oldest Owner (or Annuitant if the Contract owner is a non-natural person) is between 66 and 75 on the Rider Application Date. If the age of the oldest Owner (or Annuitant if the Contract owner is a non-natural person) is between 56 and 65 on the Rider Application Date, the charge for the Option is 0.25%. If the age of the oldest Owner (or Annuitant if the Contract owner is a non-natural person) is 55 or younger on the Rider Application Date, the charge for the Option is 0.15%. +For Contracts issued in the state of Washington, this Rider is replaced by the Income and Performance Death Benefit Option. This Option is available on or about July 1, 2002 and carries a mortality and expense risk charge of 1.68%. PORTFOLIO ANNUAL EXPENSES (After Voluntary Reductions and Reimbursements) (as a percentage of Portfolio average daily net assets)(1)
Rule Management 12b-1 Other Total Annual Portfolio Fees Fees Expenses Fund Expenses - ------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS Y SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Aggressive Equity Portfolio 0.75% 0.25% 0.09% 1.09% - ------------------------------------------------------------------------------------------------------------------------------ Capital Growth Portfolio 0.65% 0.25% 0.05% 0.95% - ------------------------------------------------------------------------------------------------------------------------------ Competitive Edge Portfolio 0.65% 0.25% 0.10% 1.00% - ------------------------------------------------------------------------------------------------------------------------------ Dividend Growth Portfolio 0.54% 0.25% 0.01% 0.80% - ------------------------------------------------------------------------------------------------------------------------------
PROSPECTUS 7
Rule Management 12b-1 Other Total Annual Portfolio Fees Fees Expenses Fund Expenses - ------------------------------------------------------------------------------------------------------------------------------ Equity Portfolio 0.49% 0.25% 0.02% 0.76% - ------------------------------------------------------------------------------------------------------------------------------ European Growth Portfolio 0.95% 0.25% 0.07% 1.27% - ------------------------------------------------------------------------------------------------------------------------------ Global Dividend Growth Portfolio 0.75% 0.25% 0.05% 1.05% - ------------------------------------------------------------------------------------------------------------------------------ High Yield Portfolio 0.50% 0.25% 0.09% 0.84% - ------------------------------------------------------------------------------------------------------------------------------ Income Builder Portfolio 0.75% 0.25% 0.06% 1.06% - ------------------------------------------------------------------------------------------------------------------------------ Information Portfolio (2) 0.75% 0.25% 0.87% 1.87% - ------------------------------------------------------------------------------------------------------------------------------ Limited Duration Portfolio (3) 0.45% 0.25% 0.20% 0.90% - ------------------------------------------------------------------------------------------------------------------------------ Money Market Portfolio 0.50% 0.25% 0.01% 0.76% - ------------------------------------------------------------------------------------------------------------------------------ Pacific Growth Portfolio 0.95% 0.25% 0.78% 1.98% - ------------------------------------------------------------------------------------------------------------------------------ Quality Income Plus Portfolio 0.50% 0.25% 0.03% 0.78% - ------------------------------------------------------------------------------------------------------------------------------ S&P 500 Index Portfolio 0.40% 0.25% 0.06% 0.71% - ------------------------------------------------------------------------------------------------------------------------------ Strategist Portfolio 0.50% 0.25% 0.02% 0.77% - ------------------------------------------------------------------------------------------------------------------------------ Utilities Portfolio 0.65% 0.25% 0.02% 0.92% - ------------------------------------------------------------------------------------------------------------------------------ THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Emerging Markets Equity Portfolio (4) 1.25% N/A 0.87% 2.12% - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Equity Growth Portfolio (4) 0.55% N/A 0.36% 0.91% - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF International Magnum Portfolio (4) 0.80% N/A 0.54% 1.34% - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Growth Portfolio (4) 0.75% N/A 0.64% 1.39% - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Value Portfolio (4) 0.75% N/A 0.35% 1.10% - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF U.S. Real Estate Portfolio (4) 0.80% N/A 0.35% 1.15% - ------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIFE INVESTMENT TRUST - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Comstock Portfolio, Class II 0.60% 0.25% 0.21% 1.06% - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Emerging Growth Portfolio, Class I (5) 0.70% N/A 0.06% 0.76% - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Emerging Growth Portfolio, Class II (5) 0.70% 0.25% 0.06% 1.01% - ------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation Fund -- Series I 0.61% N/A 0.24% 0.85% - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Growth Fund -- Series I 0.62% N/A 0.26% 0.88% - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Premier Equity Fund -- Series I (6) 0.60% N/A 0.25% 0.85% - ------------------------------------------------------------------------------------------------------------------------------ ALLIANCE VARIABLE PRODUCTS SERIES FUND (CLASS B SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth Portfolio 0.75% 0.25% 0.11% 1.11% - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth and Income Portfolio 0.63% 0.25% 0.04% 0.92% - ------------------------------------------------------------------------------------------------------------------------------ Alliance Premier Growth Portfolio 1.00% 0.25% 0.04% 1.29% - ------------------------------------------------------------------------------------------------------------------------------ LSA VARIABLE SERIES TRUST - ------------------------------------------------------------------------------------------------------------------------------ LSA Aggressive Growth Fund (7) 0.95% N/A 0.30% 1.25% - ------------------------------------------------------------------------------------------------------------------------------ PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Growth and Income Fund (8) 0.46% 0.25% 0.05% 0.76% - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT International Growth Fund (8) 0.76% 0.25% 0.18% 1.19% - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Small Cap Value Fund (8) 0.80% 0.25% 0.14% 1.19% - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Voyager Fund (8) 0.53% 0.25% 0.04% 0.82% - ------------------------------------------------------------------------------------------------------------------------------
1. Figures shown in the Table are for the year ended December 31, 2001 (except as otherwise noted). 2. The Investment Manager had agreed to assume all operating expenses (except for 12b-1 fees) and to waive the compensation provided for in its Investment Management Agreement until such time as the Portfolio had $50 million of net assets or December 31, 2001, whichever occurred first. With these assumptions and expense waivers in effect, "Management Fees", "Rule 12b-1 Fees", "Other Expenses" and "Total Portfolio Annual 8 PROSPECTUS Expenses" were 0.00%, 0.25%, 0.00% and 0.25%, respectively. The Investment Manager will not continue these expense waivers in 2002. Therefore, expenses in the above Table are estimated for 2002. 3. Effective May 1, 2002, the Short-Term Bond Portfolio changed its name to the Limited Duration Portfolio. For the period June 1, 2001 through December 31, 2001, the Investment Manager had agreed to waive its fee and reimburse operating expenses (except for 12b-1 fees) to the extent they exceeded 0.50% of daily net assets. With these expense waivers and reimbursements in effect, "Management Fees", "Rule 12b-1 Fees", "Other Expenses" and "Total Portfolio Annual Expenses" were 0.41%, 0.25%, 0.20% and 0.86%, respectively. "Other Expenses" do not include the effect of an expense offset of 0.06%. The Investment Manager will not continue these expense waivers in 2002. Therefore, expenses in the above Table are estimated for 2002. 4. "Total Portfolio Annual Expenses" listed in the table above reflect gross ratios prior to any voluntary waivers/ reimbursements of expenses by the adviser. For the year ended December 31, 2001, the management fee was reduced to reflect the voluntary waiver of a portion or all of the management fee and the reimbursement by the Portfolios' adviser to the extent "Total Portfolio Annual Expenses" exceed the following percentages: Emerging Markets Equity Portfolio 1.75%; Equity Growth Portfolio 0.85%; International Magnum Portfolio 1.15%; Mid Cap Growth Portfolio 1.05%; Mid Cap Value Portfolio 1.05%; U.S. Real Estate Portfolio 1.10%. The adviser may terminate this voluntary waiver at any time at its sole discretion. After such reductions, the "Management Fees", "Rule 12b-1 Fees", "Other Expenses" and "Total Portfolio Annual Expenses" were as follows:
Rule Management 12b-1 Other Total Annual Portfolio Fees Fees Expenses Fund Expenses -------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Emerging Markets Equity Portfolio 0.98% N/A 0.87% 1.85% -------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Equity Growth Portfolio 0.49% N/A 0.36% 0.85% -------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF International Magnum Portfolio 0.62% N/A 0.54% 1.16% -------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Mid Cap Growth Portfolio 0.41% N/A 0.64% 1.05% -------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF Mid Cap Value Portfolio 0.70% N/A 0.35% 1.05% -------------------------------------------------------------------------------------------------------------------- Morgan Stanley UIF U.S. Real Estate Portfolio 0.75% N/A 0.35% 1.10% --------------------------------------------------------------------------------------------------------------------
Additionally, in determining the actual amount of voluntary management fee waiver and/or expense reimbursement for a Portfolio, if any, the adviser excludes from total annual operating expenses certain investment related expenses, such as foreign country tax expense and interest expense on borrowing. Included in "Other Expenses" of the Emerging Markets Equity Portfolio and International Magnum Portfolio are 0.10% and 0.01% of such investment related expenses, respectively. 5. The Van Kampen LIT Emerging Growth Variable Sub-Account (Class II) that invests in the Van Kampen LIT Emerging Growth Fund (Class II shares or "12b-1 class") is available for all Contracts issued on or after May 17, 2001. Only owners of Contracts issued before May 17, 2001 may invest in the Van Kampen LIT Emerging Growth Variable Sub-Account (Class I) that invests in the non-12b-1 class of the Van Kampen LIT Emerging Growth Fund. For more information about the distribution or "12b-1 plan" for the Class II shares, please read the Fund's prospectus. 6. Effective May 1, 2002, the AIM V.I. Value Fund changed its name to the AIM V.I. Premier Equity Fund. 7. Figures shown are based on estimates for the current fiscal year. Under an expense limitation agreement ("Agreement"), the manager has agreed to reduce its fees or reimburse the Portfolio for expenses incurred above certain limits. Currently, this limit is set so that the Portfolio will not incur expenses (including interest, taxes, brokerage commissions and extraordinary expenses) that exceed the amount of its management fee plus 0.30% of its average daily net assets. Without these fee reductions or expense reimbursements, "Other Expenses" and "Total Portfolio Annual Expenses" for 2002 are expected to be 7.65% and 8.60%. These reductions and reimbursements will remain in effect until at least April 30, 2003. Under certain circumstances, the Agreement provides that, commencing June 1, 2002 and continuing for three years thereafter, the manager may recoup a certain amount of its fee reductions and reimbursements. The total 9 PROSPECTUS amount of reimbursement, if any, paid in any year to the manager may not, however, cause "Total Portfolio Annual Expenses" to exceed the percentages listed in the table. 8. "Rule 12b-1 Fees" are restated to reflect an increase in Rule 12b-1 Fees effective April 30, 2001. Actual Rule 12b-1 Fees during the most recent fiscal year were 0.22%. See the Funds' prospectus for more information about Rule 12b-1 Fees payable under the Funds' distribution plan. EXAMPLE 1 The example below shows the dollar amount of expenses that you would bear directly or indirectly if you: - - invested $1,000 in a Variable Sub-Account, - - earned a 5% annual return on your investment, - - surrendered your Contract or you began receiving income payments for a specified period of less than 120 months at the end of each time period, and - - elected the Income and Death Benefit Combination Option 2. - - elected the Enhanced Earnings Death Benefit Plus Option (assuming age of oldest Contract owner (or Annuitant, if the Contract owner is a non-natural person) is between 66 and 75 on the Rider Application Date. The examples are based on the expenses shown in the Portfolio Annual Expenses table, which reflects certain waiver and reimbursement arrangements as explained in the footnotes to the table. The examples assume those arrangements remain in effect for the periods presented. THE EXAMPLE DOES NOT INCLUDE ANY TAXES OR TAX PENALTIES YOU MAY BE REQUIRED TO PAY IF YOU SURRENDER YOUR CONTRACT.
Variable Sub-Account 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS Y SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Aggressive Equity $77 $140 $196 $371 - ------------------------------------------------------------------------------------------------------------------------------ Capital Growth $76 $135 $189 $358 - ------------------------------------------------------------------------------------------------------------------------------ Competitive Edge $76 $137 $191 $363 - ------------------------------------------------------------------------------------------------------------------------------ Dividend Growth $74 $131 $181 $344 - ------------------------------------------------------------------------------------------------------------------------------ Equity $74 $130 $179 $340 - ------------------------------------------------------------------------------------------------------------------------------ European Growth $79 $145 $205 $388 - ------------------------------------------------------------------------------------------------------------------------------ Global Dividend Growth $77 $138 $194 $368 - ------------------------------------------------------------------------------------------------------------------------------ High Yield $75 $132 $183 $348 - ------------------------------------------------------------------------------------------------------------------------------ Income Builder $77 $139 $194 $369 - ------------------------------------------------------------------------------------------------------------------------------ Information $85 $163 $234 $441 - ------------------------------------------------------------------------------------------------------------------------------ Limited Duration $75 $134 $186 $354 - ------------------------------------------------------------------------------------------------------------------------------ Money Market $74 $130 $179 $340 - ------------------------------------------------------------------------------------------------------------------------------ Pacific Growth $86 $166 $239 $450 - ------------------------------------------------------------------------------------------------------------------------------ Quality Income Plus $74 $130 $180 $342 - ------------------------------------------------------------------------------------------------------------------------------ S&P 500 Index $73 $128 $177 $335 - ------------------------------------------------------------------------------------------------------------------------------ Strategist $74 $130 $180 $341 - ------------------------------------------------------------------------------------------------------------------------------ Utilities $75 $135 $187 $355 - ------------------------------------------------------------------------------------------------------------------------------ THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Emerging Markets Equity $88 $170 $245 $462 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Equity Growth $75 $134 $187 $354 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF International Magnum $80 $147 $208 $394 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Growth $80 $149 $210 $399 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Value $77 $140 $196 $372 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF U.S. Real Estate $78 $142 $199 $377 - ------------------------------------------------------------------------------------------------------------------------------
PROSPECTUS 10
Variable Sub-Account 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIFE INVESTMENT TRUST - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Comstock, Class II $77 $139 $194 $369 - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Emerging Growth, Class I $74 $130 $179 $340 - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Emerging Growth, Class II $76 $137 $192 $364 - ------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS (SERIES I) - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation $75 $132 $184 $349 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Growth $75 $133 $185 $352 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Premier Equity $75 $132 $184 $349 - ------------------------------------------------------------------------------------------------------------------------------ ALLIANCE VARIABLE PRODUCTS SERIES FUNDS (CLASS B SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth $77 $140 $197 $373 - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth and Income $75 $135 $187 $355 - ------------------------------------------------------------------------------------------------------------------------------ Alliance Premier Growth $79 $146 $206 $390 - ------------------------------------------------------------------------------------------------------------------------------ LSA VARIABLE SERIES TRUST - ------------------------------------------------------------------------------------------------------------------------------ LSA Aggressive Growth $79 $145 $204 $386 - ------------------------------------------------------------------------------------------------------------------------------ PUTNAM VARIABLE TRUST (CLASS IB SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Growth and Income $74 $130 $179 $340 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT International Growth $78 $143 $201 $381 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Small Cap Value $78 $143 $201 $381 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Voyager $74 $132 $182 $346 - ------------------------------------------------------------------------------------------------------------------------------
EXAMPLE 2 THE EXAMPLE DOES NOT INCLUDE ANY TAXES OR TAX PENALTIES YOU MAY BE REQUIRED TO PAY ON INCOME WITHDRAWN FROM THE CONTRACT. Same assumptions as Example 1 above, except that you decided not to surrender your Contract, or you began receiving income payments (for at least 120 months if under an Income Plan with a specified period), at the end of each period.
Variable Sub-Account 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS Y SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Aggressive Equity $35 $106 $179 $371 - ------------------------------------------------------------------------------------------------------------------------------ Capital Growth $33 $101 $172 $358 - ------------------------------------------------------------------------------------------------------------------------------ Competitive Edge $34 $103 $174 $363 - ------------------------------------------------------------------------------------------------------------------------------ Dividend Growth $32 $ 97 $164 $344 - ------------------------------------------------------------------------------------------------------------------------------ Equity $31 $ 96 $162 $340 - ------------------------------------------------------------------------------------------------------------------------------ European Growth $37 $111 $188 $388 - ------------------------------------------------------------------------------------------------------------------------------ Global Dividend Growth $34 $104 $177 $368 - ------------------------------------------------------------------------------------------------------------------------------ High Yield $32 $ 98 $166 $348 - ------------------------------------------------------------------------------------------------------------------------------ Income Builder $34 $105 $177 $369 - ------------------------------------------------------------------------------------------------------------------------------ Information $43 $129 $217 $441 - ------------------------------------------------------------------------------------------------------------------------------ Limited Duration $33 $100 $169 $354 - ------------------------------------------------------------------------------------------------------------------------------ Money Market $31 $ 96 $162 $340 - ------------------------------------------------------------------------------------------------------------------------------ Pacific Growth $44 $132 $222 $450 - ------------------------------------------------------------------------------------------------------------------------------ Quality Income Plus $32 $ 96 $163 $342 - ------------------------------------------------------------------------------------------------------------------------------ S&P 500 Index $31 $ 94 $160 $335 - ------------------------------------------------------------------------------------------------------------------------------ Strategist $31 $ 96 $163 $341 - ------------------------------------------------------------------------------------------------------------------------------ Utilities $33 $101 $170 $355 - ------------------------------------------------------------------------------------------------------------------------------
PROSPECTUS 11
Variable Sub-Account 1 Year 3 Years 5 Years 10 Years - ------------------------------------------------------------------------------------------------------------------------------ THE UNIVERSAL INSTITUTIONAL FUNDS, INC. - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Emerging Markets Equity $45 $136 $228 $462 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Equity Growth $33 $100 $170 $354 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF International Magnum $37 $113 $191 $394 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Growth $38 $115 $193 $399 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF Mid Cap Value $35 $106 $179 $372 - ------------------------------------------------------------------------------------------------------------------------------ Morgan Stanley UIF U.S. Real Estate $35 $108 $182 $377 - ------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIFE INVESTMENT TRUST - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Comstock, Class II $34 $105 $177 $369 - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Emerging Growth Class I $31 $ 96 $162 $340 - ------------------------------------------------------------------------------------------------------------------------------ Van Kampen LIT Emerging Growth Class II $34 $103 $175 $364 - ------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS (SERIES I) - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Capital Appreciation $32 $ 98 $167 $349 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Growth $33 $ 99 $168 $352 - ------------------------------------------------------------------------------------------------------------------------------ AIM V.I. Premier Equity $32 $ 98 $167 $349 - ------------------------------------------------------------------------------------------------------------------------------ ALLIANCE VARIABLE PRODUCTS SERIES FUNDS (CLASS B SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth $35 $106 $180 $373 - ------------------------------------------------------------------------------------------------------------------------------ Alliance Growth and Income $33 $101 $170 $355 - ------------------------------------------------------------------------------------------------------------------------------ Alliance Premier Growth $37 $112 $189 $390 - ------------------------------------------------------------------------------------------------------------------------------ LSA VARIABLE SERIES TRUST - ------------------------------------------------------------------------------------------------------------------------------ LSA Aggressive Growth $36 $111 $187 $386 - ------------------------------------------------------------------------------------------------------------------------------ PUTNAM VARIABLE TRUST (CLASS IB SHARES) - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Growth and Income $31 $ 96 $162 $340 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT International Growth $36 $109 $184 $381 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Small Cap Value $36 $109 $184 $381 - ------------------------------------------------------------------------------------------------------------------------------ Putnam VT Voyager $32 $ 98 $165 $346 - ------------------------------------------------------------------------------------------------------------------------------
PLEASE REMEMBER THAT YOU ARE LOOKING AT EXAMPLES AND NOT A REPRESENTATION OF PAST OR FUTURE EXPENSES. YOUR ACTUAL EXPENSES MAY BE LOWER OR GREATER THAN THOSE SHOWN ABOVE. SIMILARLY, YOUR RATE OF RETURN MAY BE LOWER OR GREATER THAN 5%, WHICH IS NOT GUARANTEED. THE ABOVE EXAMPLES ASSUME THE ELECTION OF BOTH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION AND THE INCOME AND DEATH BENEFIT COMBINATION 2 WITH A MORTALITY AND EXPENSE RISK CHARGE OF 2.10% IF ANY OR ALL OF THESE OPTIONS WERE NOT ELECTED, THE EXPENSE FIGURES SHOWN ABOVE WOULD BE SLIGHTLY LOWER. TO REFLECT THE CONTRACT MAINTENANCE CHARGE IN THE EXAMPLES, WE ESTIMATED AN EQUIVALENT PERCENTAGE CHARGE, BASED UPON AN ASSUMED AVERAGE CONTRACT SIZE OF $54,628. 12 PROSPECTUS FINANCIAL INFORMATION - ------------------------------------------------------------------- To measure the value of your investment in the Variable Sub-Accounts during the Accumulation Phase we use a unit of measure we call the "ACCUMULATION UNIT." Each Variable Sub-Account has a separate value for its Accumulation Units we call the "ACCUMULATION UNIT VALUE." Accumulation Unit Value is analogous to, but not the same as, the share price of a mutual fund. Attached as Appendix B to this prospectus are tables showing the Accumulation Unit Values through December 31, 2001 for each Variable Sub-Account since the date we first offered the Contracts. To obtain additional detail on each of the Variable Sub-Account's financial statements, please refer to the Variable Account's financial statements contained in the Statement of Additional Information. The financial statements of Northbrook appear in the Statement of Additional Information. 13 PROSPECTUS THE CONTRACT - ------------------------------------------------------------------- CONTRACT OWNER The Variable Annuity 3 is a contract between you, the Contract owner, and Northbrook, a life insurance company. As the Contract owner, you may exercise all of the rights and privileges provided to you by the Contract. That means it is up to you to select or change (to the extent permitted): - - the investment alternatives during the Accumulation and Payout Phases, - - the amount and timing of your purchase payments and withdrawals, - - the programs you want to use to invest or withdraw money, - - the income payment plan you want to use to receive retirement income, - - the owner, while the Annuitant is alive, - - the Annuitant (either yourself or someone else) on whose life the income payments will be based, - - the Beneficiary or Beneficiaries who will receive the benefits that the Contract provides when the last surviving Contract owner dies, and - - any other rights that the Contract provides. If you die, any surviving Contract owner or, if none, the Beneficiary will exercise the rights and privileges provided to them by the Contract. The Contract cannot be jointly owned by both a non-natural person and a natural person. If the Contract owner is a Grantor Trust, the Contract owner will be considered a non-living person for purposes of this section and the Death Benefits section. The age of the oldest Contract Owner and Annuitant cannot exceed 90 as of the date we receive the completed application or request to select a new Contract owner. Changing ownership of this Contract may cause adverse tax consequences and may not be allowed under qualified plans. Please consult with a competent tax advisor prior to making a request for a change of Contract Owner. You can use the Contract with or without a qualified plan. A "qualified plan" is a retirement savings plan, such as an IRA or tax-sheltered annuity, that meets the requirements of the Internal Revenue Code. Qualified plans may limit or modify your rights and privileges under the Contract. We use the term "Qualified Contract" to refer to a Contract used with a qualified plan. See "Tax Qualified Contracts" on page . ANNUITANT The Annuitant is the individual whose life determines the amount and duration of income payments (other than under Income Plans with guaranteed payments for a specified period). The Annuitant must be a natural person. The age of the oldest Annuitant cannot exceed 90 as of the date we receive the completed application. You initially designate an Annuitant in your application. If the Contract owner is a natural person, you may change the Annuitant at any time prior to the Payout Start Date. Once we receive your change request, any change will be effective at the time you sign the written notice. We are not liable for any payment we make or other action we take before receiving any written request from you. Before the Payout Start Date, you may designate a joint Annuitant, who is a second person on whose life income payments depend. If the Annuitant dies prior to the Payout Start Date, the new Annuitant will be the youngest Contract owner, otherwise, the youngest Beneficiary, unless the Contract owner names a different Annuitant. BENEFICIARY The Beneficiary is the person who may, in accordance with the terms of the Contract, elect to receive the death benefit or become the new Contract owner if the sole surviving Contract owner dies before the Payout Start Date. If the sole surviving Contract owner dies after the Payout Start Date, the Beneficiary will receive any guaranteed income payments scheduled to continue. You may name one or more Beneficiaries when you apply for a Contract. You may also name one or more contingent Beneficiaries who will receive any death benefit or guaranteed income benefit if there are no surviving primary Beneficiaries upon the death of the sole surviving Contract owner. You may change or add Beneficiaries at any time by writing to us, unless you have designated an irrevocable Beneficiary. We will provide a "Change of Beneficiary" form to be signed and filed with us. Any change will be effective at the time you sign the written notice, whether or not the Annuitant is living when we receive the notice. Until we receive your written notice to change a Beneficiary, we are entitled to rely on the most recent Beneficiary information in our files. We will not be liable as to any payment or settlement made prior to receiving the written notice. Accordingly, if you wish to change your Beneficiary, you should deliver your written notice to us promptly. 14 PROSPECTUS If you did not name a Beneficiary or, if the named Beneficiary is no longer living and there are no other surviving Beneficiaries, the new Beneficiary will be: - - your spouse, if he or she is still alive, otherwise - - your surviving children equally, or if you have no surviving children, - - your estate. If more than one Beneficiary survives you, (or the Annuitant, if the Contract owner is not a natural person) we will divide the death benefit among your Beneficiaries according to your most recent written instructions. If you have not given us written instructions, we will pay the death benefit in equal amounts to the surviving Beneficiaries. You may restrict income payments to Beneficiaries by providing us a written request. Once we accept the written request, the change or restriction will take effect as of the date you signed the request. Any change will not affect any payment we make or other action we take before we accept the change. MODIFICATION OF THE CONTRACT Only a Northbrook officer may approve a change in or waive any provision of the Contract. Any change or waiver must be in writing. None of our agents has the authority to change or waive the provisions of the Contract. We may not change the terms of the Contract without your consent, except to conform the Contract to applicable law or changes in the law. If a provision of the Contract is inconsistent with state law, we will follow state law. ASSIGNMENT No owner has a right to assign any interest in a Contract as collateral or security for a loan. However, you may assign periodic income payments under the Contract prior to the Payout Start Date. No Beneficiary may assign benefits under the Contract until they are payable to the Beneficiary. We will not be bound by any assignment until the assignor signs it and files it with us. We are not responsible for the validity of any assignment. Federal law prohibits or restricts the assignment of benefits under many types of retirement plans and the terms of such plans may themselves contain restrictions on assignments. An assignment may also result in taxes or tax penalties. YOU SHOULD CONSULT WITH YOUR ATTORNEY BEFORE TRYING TO ASSIGN YOUR CONTRACT. PURCHASES - ------------------------------------------------------------------- MINIMUM PURCHASE PAYMENTS Your initial purchase payment must be at least $1,000. We may increase or decrease this minimum in the future. You may make additional purchase payments of at least $100 at any time prior to the Payout Start Date. We reserve the right to lower the minimum and limit the maximum amount of purchase payments we will accept. We also reserve the right to reject any application. AUTOMATIC ADDITIONS PROGRAM You may make subsequent purchase payments of at least $25 by automatically transferring amounts from your bank account or your Morgan Stanley Active Assets-TM- Account. Please consult your Morgan Stanley Financial Advisor for details. ALLOCATION OF PURCHASE PAYMENTS At the time you apply for a Contract, you must decide how to allocate your purchase payments among the investment alternatives. The allocation you specify on your application will be effective immediately. All allocations must be in whole percentages that total 100% or in whole dollars. The minimum you may allocate to any investment alternative is $100. The minimum amount that you may allocate to the Guarantee Periods is $500. You can change your allocations by notifying us in writing. We will allocate your purchase payments to the investment alternatives according to your most recent instructions on file with us. Unless you notify us in writing otherwise, we will allocate subsequent purchase payments according to the allocation for the previous purchase payment. We will effect any change in allocation instructions at the time we receive written notice of the change in good order. We will credit the initial purchase payment that accompanies your completed application to your Contract within 2 business days after we receive the payment at our headquarters. If your application is incomplete, we will ask you to complete your application within 5 business days. If you do so, we will credit your initial purchase payment to your Contract within that 5 business day period. If you do not, we will return your purchase payment at the end of the 5 business day 15 PROSPECTUS period unless you expressly allow us to hold it until you complete the application. We will credit subsequent purchase payments to the Contract on the business day that we receive the purchase payment at our headquarters. We use the term "BUSINESS DAY" to refer to each day Monday through Friday that the New York Stock Exchange is open for business. We also refer to these days as "VALUATION DATES." If we receive your purchase payment after 3 p.m. Central Time on any Valuation Date, we will credit your purchase payment using the Accumulation Unit Values computed on the next Valuation Date. RIGHT TO CANCEL You may cancel the Contract within the Cancellation Period, which is the 20-day period after you receive the Contract or such longer period as your state may require. If you exercise this "RIGHT TO CANCEL," the Contract terminates and we will pay you the full amount of your purchase payments allocated to the Fixed Account Options. We also will return your purchase payments allocated to the Variable Account after an adjustment, to the extent state or federal law permits, to reflect the investment gain or loss, including the deduction of mortality and expense risk charges and administrative expense charges, that occurred from the date of allocation through the date of cancellation. Some states may require us to return a greater amount to you. If your Contract is qualified under Section 408 of the Internal Revenue Code, we will refund the greater of any purchase payments or the Contract Value. CONTRACT VALUE - ------------------------------------------------------------------- Your Contract Value at any time during the Accumulation Phase is equal to the sum of the value of your Accumulation Units in the Variable Sub-Accounts you have selected, plus the value of your investment in the Fixed Account Options. ACCUMULATION UNITS To determine the number of Accumulation Units of each Variable Sub-Account to allocate to your Contract, we divide (i) the amount of the purchase payment or transfer you have allocated to a Variable Sub-Account by (ii) the Accumulation Unit Value of that Variable Sub-Account next computed after we receive your payment or transfer. For example, if we receive a $10,000 purchase payment allocated to a Variable Sub-Account when the Accumulation Unit Value for the Sub-Account is $10, we would credit 1,000 Accumulation Units of that Variable Sub-Account to your Contract. Withdrawals and transfers from a Variable Sub-Account would, of course, reduce the number of Accumulation Units of that Sub-Account allocated to your Contract. ACCUMULATION UNIT VALUE As a general matter, the Accumulation Unit Value for each Variable Sub-Account will rise or fall to reflect: - - changes in the share price of the Portfolio in which the Variable Sub-Account invests, and - - the deduction of amounts reflecting the mortality and expense risk charge, administrative expense charge, and any provision for taxes that have accrued since we last calculated the Accumulation Unit Value. We determine contract maintenance charges, withdrawal charges, and transfer fees (currently waived) separately for each Contract. They do not affect Accumulation Unit Value. Instead, we obtain payment of those charges and fees by redeeming Accumulation Units. For details on how we calculate Accumulation Unit Value, please refer to the Statement of Additional Information. We determine a separate Accumulation Unit Value for each Variable Sub-Account on each Valuation Date. We also determine a second set of Accumulation Unit Values that reflect the cost of each optional benefit, or available combination thereof, offered under the Contract. YOU SHOULD REFER TO THE PROSPECTUSES FOR THE FUNDS THAT ACCOMPANY THIS PROSPECTUS FOR A DESCRIPTION OF HOW THE ASSETS OF EACH PORTFOLIO ARE VALUED, SINCE THAT DETERMINATION DIRECTLY BEARS ON THE ACCUMULATION UNIT VALUE OF THE CORRESPONDING VARIABLE SUB-ACCOUNT AND, THEREFORE, YOUR CONTRACT VALUE. 16 PROSPECTUS INVESTMENT ALTERNATIVES: THE VARIABLE SUB-ACCOUNTS - ------------------------------------------------------------------- You may allocate your purchase payments to up to 36 Variable Sub-Accounts. Each Variable Sub-Account invests in the shares of a corresponding Portfolio. Each Portfolio has its own investment objective(s) and policies. We briefly describe the Portfolios below. For more complete information about each Portfolio, including the investment objective(s), expenses and risks associated with the Portfolio, please refer to the accompanying prospectuses for the Funds. You should carefully review the Fund prospectuses before allocating amounts to the Variable Sub-Accounts. PORTFOLIO: EACH PORTFOLIO SEEKS: INVESTMENT ADVISER: MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS Y) Aggressive Equity Portfolio Capital Growth Morgan Stanley Investment Advisors, Inc. Capital Growth Portfolio Long-term capital growth Competitive Edge Portfolio Long-term capital growth Dividend Growth Portfolio Reasonable current income and long-term growth of income and capital Equity Portfolio Growth of capital and, as a secondary objective, income when consistent with its primary objective. European Growth Portfolio To maximize the capital appreciaiton on its investments Global Dividend Growth Portfolio Reasonable current income and long-term growth of income and capital High Yield Portfolio High current income and, as a secondary objective, capital appreciation when consistent with its primary objective Income Builder Portfolio Reasonable income and, as a secondary objective, growth of capital Information Portfolio Long-term capital appreciation Limited Duration Portfolio High current income consistent with preservation of capital Money Market Portfolio High current income, preservation of capital, and liquidity Pacific Growth Portfolio To maximize the capital appreciation on its investments Quality Income Plus Portfolio High current income and, as a secondary objective, capital appreciation when consistent with its primary objective S&P 500 Index Portfolio Investment results that, before expenses, correspond to the total return of the Standard and Poor's 500 Composite Stock Price Index Strategist Portfolio High total investment return Utilities Portfolio Capital appreciation and current income
17 PROSPECTUS PORTFOLIO: EACH PORTFOLIO SEEKS: INVESTMENT ADVISER: THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Morgan Stanley UIF Emerging Markets Long-term capital apreciation Morgan Stanley Investment Management Equity Portfolio Inc. Morgan Stanley UIF Equity Growth Long-term capital appreciation Portfolio Morgan Stanley UIF International Magnum Long-term capital appreciation Portfolio Morgan Stanley UIF Mid Cap Growth Long-term capital growth Portfolio Morgan Stanley UIF U.S. Real Estate Above-average current income and Portfolio long-term capital appreciation Morgan Stanley UIF Mid Cap Value Above-average total return over a market Morgan Stanley Investments, L.P. Portfolio cycle of three to five years VAN KAMPEN LIFE INVESTMENT TRUST Van Kampen LIT Comstock Portfolio, Capital growth and income Van Kampen Asset Management Inc. Class II Van Kampen LIT Emerging Growth Capital appreciation Portfolio, Class I Van Kampen LIT Emerging Growth Capital appreciation Portfolio, Class II AIM VARIABLE INSURANCE FUNDS* AIM V.I. Capital Appreciation Fund -- Growth of capital A I M Advisors, Inc. Series I AIM V.I. Growth Fund -- Series I Growth of capital AIM V.I. Premier Equity Fund -- Series I Long-term growth of capital. Income is a secondary objective ALLIANCE VARIABLE PRODUCTS SERIES FUND Alliance Growth Portfolio -- Class B Long-term growth of capital. Current Alliance Capital Management, L.P. income is incidental to the Portfolio's objective Alliance Growth and Income Portfolio -- Reasonable current income and reasonable Class B opportunity for appreciation Alliance Premier Growth Portfolio -- Growth of capital by pursuing aggressive Class B investment policies LSA VARIABLE SERIES TRUST LSA Aggressive Growth Fund** Long-term capital growth LSA Asset Management LLC PUTNAM VARIABLE TRUST Putnam VT Growth and Income Fund -- Capital growth and current income Putnam Investment Management, LLC Class IB Putnam VT International Growth Fund -- Capital appreciation Class IB Putnam VT Small Cap Value Fund -- Capital appreciation Class IB Putnam VT Voyager Fund -- Class IB Capital appreciation
*A Portfolio's investment objective may be changed by the Fund's Board of Trustees without shareholder approval. **Sub-advised by Van Kampen Asset Management Inc. AMOUNTS YOU ALLOCATE TO VARIABLE SUB-ACCOUNTS MAY GROW IN VALUE, DECLINE IN VALUE, OR GROW LESS THAN YOU EXPECT, DEPENDING ON THE INVESTMENT PERFORMANCE OF THE PORTFOLIOS IN WHICH THOSE VARIABLE SUB-ACCOUNTS INVEST. YOU BEAR THE INVESTMENT RISK THAT THE PORTFOLIOS MIGHT NOT MEET THEIR INVESTMENT OBJECTIVES. SHARES OF THE PORTFOLIOS ARE NOT DEPOSITS, OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY ANY BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER AGENCY. 18 PROSPECTUS INVESTMENT ALTERNATIVES: THE FIXED ACCOUNT OPTIONS - ------------------------------------------------------------------- You may allocate all or a portion of your purchase payments to the Fixed Account Options. We currently offer the Standard Fixed Account Option. We also currently offer the 6 and 12 month Dollar Cost Averaging options described below. The Basic Dollar Cost Averaging Option is currently not available, but we may offer it in the future. Please consult with your Morgan Stanley Financial Advisor for current information. The Fixed Account supports our insurance and annuity obligations. The Fixed Account consists of our general assets other than those in segregated asset accounts. We have sole discretion to invest the assets in the Fixed Accounts subject to applicable law. Any money you allocate to a Fixed Account Option does not entitle you to share in the investment experience of the Fixed Account. DOLLAR COST AVERAGING FIXED ACCOUNT OPTIONS BASIC DOLLAR COST AVERAGING OPTION. The Basic Dollar Cost Averaging Option is closed to new purchase payments, including automatic additions. In the future, we may offer the Basic Dollar Cost Averaging Option. Under this option, you may establish a Dollar Cost Averaging Program, as described on page 21, by allocating purchase payments to the Basic Dollar Cost Averaging Option. Purchase payments that you allocate to the Basic Dollar Cost Averaging Option will earn interest for a 1 year period at the current rate in effect at the time of allocation. We will credit interest daily at a rate that will compound over the year to the annual interest rate we guaranteed at the time of allocation. Rates may be different than those available for the Guarantee Periods described below. After the one year period, we will declare a renewal rate which we guarantee for a full year. Subsequent renewal dates will be every twelve months for each purchase payment. Renewal rates will not be less than the minimum guaranteed rate found in the Contract. You may not transfer funds from other investment alternatives to the Basic Dollar Cost Averaging Option. 6 AND 12 MONTH DOLLAR COST AVERAGING OPTIONS. Under these options, you may establish a Dollar Cost Averaging Program by allocating purchase payments to the Fixed Account either for 6 months (the "6 Month Dollar Cost Averaging Option") or for 12 months (the "12 Month Dollar Cost Averaging Option"). Your purchase payments will earn interest for the period you select at the current rates in effect at the time of allocation. Rates may differ from those available for the Guarantee Periods described below. However, the crediting rates for the 6 and 12 Month Dollar Cost Averaging Options will never be less than the minimum guaranteed. You must transfer all of your money out of the 6 or 12 Month Dollar Cost Averaging Options to the Variable Sub-Accounts in equal monthly installments. If we do not receive an allocation from you within one month of the date of payment, the payment plus associated interest will be transferred to the Money Market Variable Sub-Account in substantially equal monthly installments using the longest transfer period being offered at the time the purchase payment is made. If you discontinue a 6 or 12 Month Dollar Cost Averaging Option prior to last scheduled transfer, we will transfer any remaining money immediately to the Money Market Variable Sub-Account, unless you request a different Variable Sub-Account. At the end of the transfer period, any residual amount in the Six-Month Dollar Cost Averaging Fixed Account or the Twelve-Month Dollar Cost Averaging Fixed Account will be automatically transferred to the Money Market Variable Sub-Account. For each purchase payment, the first transfer from the Six or Twelve-Month Dollar Cost Averaging Fixed Account will begin within 30 days after the date we receive the payment. If we do not receive an allocation instruction from you within 30 days of when we receive payment, the purchase payment plus associated interest will be transferred to the Money Market Variable Sub-Account in equal monthly installments within the selected transfer period until we receive a different allocation instruction. You may not transfer funds from other investment alternatives to the 6 or 12 Month Dollar Cost Averaging Options. Transfers out of the Dollar Cost Averaging Fixed Account Options do not count towards the 12 transfers you can make without paying a transfer fee. We may declare more than one interest rate for different monies based upon the date of allocation to the Dollar Cost Averaging Fixed Account Options. STANDARD FIXED ACCOUNT OPTION You may allocate purchase payments or transfers to one or more Guarantee Periods of the Standard Fixed Account Option. Each payment or transfer allocated to a Guarantee Period earns interest at a specified rate that we guarantee for a period of years. We currently offer a 6 year Guarantee Period. We offer additional Guarantee Periods at our sole discretion. INTEREST RATES. We will tell you what interest rates and Guarantee Periods we are offering at a particular time. We will not change the interest rate that we credit to a particular allocation until the end of the relevant Guarantee Period. We may declare different interest 19 PROSPECTUS rates for Guarantee Periods of the same length that begin at different times. We have no specific formula for determining the rate of interest that we will declare initially or in the future. We will set those interest rates based on investment returns available at the time of the determination. In addition, we may consider various other factors in determining interest rates including regulatory and tax requirements, our sales commission and administrative expenses, general economic trends, and competitive factors. WE DETERMINE THE INTEREST RATES TO BE DECLARED IN OUR SOLE DISCRETION. WE CAN NEITHER PREDICT NOR GUARANTEE WHAT THOSE RATES WILL BE IN THE FUTURE. For availability and current interest rate information, please contact your financial adivsor or Northbrook at 1-800-654-2397. The interest rate will never be less than the minimum guaranteed rate stated in the Contract. After the Guarantee Period, we will declare a renewal rate. Subsequent renewal dates will be on anniversaries of the first renewal date. On or about each renewal date, we will notify the owner of the interest rate(s) for the Contract Year then starting. INVESTMENT ALTERNATIVES: TRANSFERS - ------------------------------------------------------------------- TRANSFERS DURING THE ACCUMULATION PHASE During the Accumulation Phase, you may transfer the Contract Value among the investment alternatives. You may not transfer Contract Value into any of the Dollar Cost Averaging Fixed Account Options. You may request transfers in writing on a form that we provide or by telephone according to the procedure described below. The minimum amount that you may transfer is $100 or the total amount in the investment alternative, whichever is less. Transfers to any Guarantee Period of the Standard Fixed Account Option must be at least $500. We currently do not assess, but reserve the right to assess, a $25 charge on each transfer in excess of 12 per Contract Year. We will notify you at least 30 days before we begin imposing the transfer charge. We treat transfers to or from more than one Portfolio on the same day as one transfer. We limit the amount you may transfer from the Standard Fixed Account Option to the Variable Account or between Guarantee Periods of the Standard Fixed Account Option in any Contract Year to the greater of: 1. 25% of the aggregate value in the Standard Fixed Account Option as of the most recent Contract Anniversary (if the amount is less than $1,000, then up to $1,000 may be transferred); or 2. 25% of the sum of all purchase payments and transfers allocated to the Standard Fixed Account Option as of the most recent Contract Anniversary. These restrictions do not apply to transfers pursuant to dollar cost averaging. If the first renewal interest rate is less than the rate that was in effect at the time money was allocated or transferred to the Standard Fixed Account Option, we will waive the transfer restriction for that money and the accumulated interest thereon during the 60-day period following the first renewal date. We will process transfer requests that we receive before 3:00 p.m. Central Time on any Valuation Date using the Accumulation Unit Values for that Date. We will process requests received after 3:00 p.m. on any Valuation Date using the Accumulation Unit Values for the next Valuation Date. The Contract permits us to defer transfers from the Fixed Account Options for up to 6 months from the date we receive your request. If we decide to postpone transfers for 30 days or more, we will pay interest as required by applicable law. Any interest would be payable from the date we receive the transfer request to the date we make the transfer. LIMITATIONS ON EXCESSIVE TRANSFERS We reserve the right to limit transfers among the Variable Sub-Accounts if we determine, in our sole discretion, that transfers by one or more Contract owners would be to the disadvantage of other Contract owners. We may limit transfers by taking such steps as: - - imposing a minimum time period between each transfer, - - refusing to accept transfer requests of an agent acting under a power of attorney on behalf of more than one Contract owner, or - - limiting the dollar amount that a Contract owner may transfer among the Variable Sub-Accounts and the Fixed Account Options at any one time. We may apply the restrictions in any manner reasonably designed to prevent transfers that we consider disadvantageous to other Contract owners. We reserve the right to waive any transfer restrictions. 20 PROSPECTUS TRANSFERS DURING THE PAYOUT PHASE During the Payout Phase, you may make transfers among the Variable Sub-Accounts so as to change the relative weighting of the Variable Sub-Accounts on which your variable amount income payments will be based. In addition, you will have a limited ability to make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed amount income payments. You may not, however, convert any portion of your right to receive fixed amount income payments into variable amount income payments. You may not make any transfers for the first 6 months after the Payout Start Date. Thereafter, you may make transfers among the Variable Sub-Accounts or make transfers from the Variable Sub-Accounts to increase fixed amount income payments. Your transfers must be at least 6 months apart. TELEPHONE TRANSFERS You may make transfers by telephone by calling 1-800-654-2397 if you have on file a completed authorization form. The cut off time for telephone transfer requests is 3:00 p.m. Central Time. In the event that the New York Stock Exchange closes early, i.e., before 3:00 p.m. Central Time, or in the event that the Exchange closes early for a period of time but then reopens for trading on the same day, we will process telephone transfer requests as of the close of the Exchange on that particular day. We will not accept telephone requests received at any telephone number other than the number that appears in this paragraph or received after the close of trading on the Exchange. We may suspend, modify or terminate the telephone transfer privilege at any time without notice. We use procedures that we believe provide reasonable assurance that the telephone transfers are genuine. For example, we tape telephone conversations with persons purporting to authorize transfers and request identifying information. Accordingly, we disclaim any liability for losses resulting from allegedly unauthorized telephone transfers. However, if we do not take reasonable steps to help ensure that a telephone authorization is valid, we may be liable for such losses. DOLLAR COST AVERAGING PROGRAM Through our Dollar Cost Averaging Program, you may automatically transfer a set amount every month (or other intervals we may offer) during the Accumulation Phase from any Variable Sub-Account or the Dollar Cost Averaging Fixed Account Options to any Variable Sub-Account. Transfers made through dollar cost averaging must be $100 or more. We will not charge a transfer fee for transfers made under this Program, nor will such transfers count against the 12 transfers you can make each Contract Year without paying a transfer fee. The theory of dollar cost averaging is that if purchases of equal dollar amounts are made at fluctuating prices, the aggregate average cost per unit will be less than the average of the unit prices on the same purchase dates. However, participation in this Program does not assure you of a greater profit from your purchases under the Program nor will it prevent or necessarily reduce losses in a declining market. Call or write us for information on how to enroll. AUTOMATIC PORTFOLIO REBALANCING PROGRAM Once you have allocated your money among the Variable Sub-Accounts, the performance of each Sub-Account may cause a shift in the percentage you allocated to each Sub-Account. If you select our Automatic Portfolio Rebalancing Program, we will automatically rebalance the Contract Value in each Variable Sub-Account and return it to the desired percentage allocations. We will not include money you allocate to the Fixed Account Options in the Automatic Portfolio Rebalancing Program. We will rebalance your account each quarter (or other intervals that we may offer) according to your instructions. We will transfer amounts among the Variable Sub-Accounts to achieve the percentage allocations you specify. You can change your allocations at any time by contacting us in writing or by telephone. The new allocation will be effective with the first rebalancing that occurs after we receive your requests. We are not responsible for rebalancing that occurs prior to receipt of your request. Example: Assume that you want your initial purchase payment split among 2 Variable Sub-Accounts. You want 40% to be in the High Yield Variable Sub-Account and 60% to be in the Equity Growth Variable Sub-Account. Over the next 2 months the bond market does very well while the stock market performs poorly. At the end of the first quarter, the High Yield Variable Sub-Account now represents 50% of your holdings because of its increase in value. If you choose to have your holdings rebalanced quarterly, on the first day of the next quarter, we would sell some of your units in the High Yield Variable Sub-Account and use the money to buy more units in the Equity Growth Variable Sub-Account so that the percentage allocations would again be 40% and 60% respectively. 21 PROSPECTUS The Automatic Portfolio Rebalancing Program is available only during the Accumulation Phase. The transfers made under the Program do not count towards the 12 transfers you can make without paying a transfer fee, and are not subject to a transfer fee. Portfolio rebalancing is consistent with maintaining your allocation of investments among market segments, although it is accomplished by reducing your Contract Value allocated to the better performing segments. EXPENSES - ------------------------------------------------------------------- As a Contract owner, you will bear, directly or indirectly, the charges and expenses described below. CONTRACT MAINTENANCE CHARGE During the Accumulation Phase, on each Contract Anniversary, we will deduct a $35 contract maintenance charge from your Contract Value. The charge will be deducted from each Variable Sub-Account in the proportion that your investment in each bears to your Contract Value. We also will deduct a full contract maintenance charge if you withdraw your entire Contract Value. During the Payout Phase, we will deduct the charge proportionately from each variable income payment. We will waive the charge for the remaining time your contract is in force if the Contract Value is $40,000 or more on or after the Issue Date. The charge is to compensate us for the cost of administering the Contracts and the Variable Account. Maintenance costs include expenses we incur in billing and collecting purchase payments; keeping records; processing death claims, cash withdrawals, and policy changes; proxy statements; calculating Accumulation Unit Values and income payments; and issuing reports to Contract owners and regulatory agencies. We cannot increase the charge. MORTALITY AND EXPENSE RISK CHARGE We deduct a mortality and expense risk charge daily at an annual rate of 1.25% of the average daily net assets you have invested in the Variable Sub-Accounts (1.38% if you select the Performance Death Benefit Option, 1.49% if you select the Death Benefit Combination Option, 1.55% if you select the Income Benefit Combination Option 2, 1.68% if you select the Income and Performance Death Benefit Option (Washington only) and 1.75% if you select the Income and Death Benefit Combination Option 2). The mortality and expense risk charge is for all the insurance benefits available with your Contract (including our guarantee of annuity rates and the death benefits), for certain expenses of the Contract, and for assuming the risk (expense risk) that the current charges will not be sufficient in the future to cover the cost of administering the Contract. If the charges under the Contract are not sufficient, then we will bear the loss. We charge an additional amount for the Performance Death Benefit Option, the Death Benefit Combination Option, the Income Benefit Combination Option 2, Income and Performance Death Benefit Option and the Income and Death Benefit Combination Option 2 to compensate us for the additional risk that we accept by providing these Options If you select the Enhanced Earnings Death Benefit Plus Option, the mortality and expense risk charge will include an additional 0.15% for the option if, on the Rider Application Date, the oldest Contract owner ( or Annuitant if the Contract owner is a non-natural person) is age 55 or younger, and an additional 0.25% if on the Rider Application Date, the oldest Owner (or Annuitant if the Contract owner is a non-natural person) is between the ages of 56 and 65, and an additional 0.35% if, on the Rider Application Date, the oldest Contract owner (or Annuitant if the Contract owner is a non-natural person) is between the ages of 66 and 75. We charge the additional fees for the Enhanced Earnings Death Benefit Plus Option to compensate us for the additional risk that we accept by providing the option. We will not increase the mortality and expense risk charge for the life of the Contract. We assess the mortality and expense risk charge during both the Accumulation Phase and the Payout Phase. ADMINISTRATIVE EXPENSE CHARGE We deduct an administrative expense charge daily at an annual rate of 0.10% of the average daily net assets you have invested in the Variable Sub-Accounts. We will not increase the administrative expense charge for the life of the Contract. We intend this charge to cover actual administrative expenses that exceed the revenues from the contract maintenance charge. There is no necessary relationship between the amount of administrative charge imposed on a given Contract and the amount of expenses that may be attributed to that Contract. We assess this charge each day during the Accumulation Phase and the Payout Phase. 22 PROSPECTUS TRANSFER FEE We do not currently impose a fee upon transfers among the investment alternatives. However, we reserve the right to charge $25 per transfer after the 12th transfer in each Contract Year. We will not charge a transfer fee on transfers that are part of a Dollar Cost Averaging or Automatic Portfolio Rebalancing Program. WITHDRAWAL CHARGE We may assess a withdrawal charge of up to 6% of the purchase payment(s) you withdraw. This charge declines to 0% after the expiration of 6 years from the day we receive the purchase payment being withdrawn. A schedule showing how the withdrawal charge declines over the 6-year period is shown on page 7. During each Contract Year, you can withdraw all remaining purchase payments beyond the withdrawal charge period or up to 15% of the aggregate amount of your purchase payments as of the beginning of the Contract Year, whichever is greater, without paying the charge. Unused portions of this Free Withdrawal Amount are not carried forward to future Contract Years. We will deduct withdrawal charges, if applicable, from the amount paid, unless you instruct otherwise. For purposes of the withdrawal charge, we will treat withdrawals as coming from the oldest purchase payments first and then from earnings. Therefore, additional purchase payments may reduce your ability to withdraw earnings without incurring a withdrawal charge. However, for federal income tax purposes, please note that withdrawals are considered to have come first from earnings, which means you pay taxes on the earnings portion of your withdrawal. We do not apply a withdrawal charge in the following situations: - - on the Payout Start Date (a withdrawal charge may apply if you elect to receive income payments for a specified period of less than 120 months); - - the death of the Contract owner or Annuitant (unless the Settlement Value is used); and - - withdrawals taken to satisfy IRS minimum distribution rules for the Contract. We use the amounts obtained from the withdrawal charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts. To the extent that the withdrawal charge does not cover all sales commissions and other promotional or distribution expenses, we may use any of our corporate assets, including potential profit which may arise from the mortality and expense risk charge or any other charges or fee described above, to make up any difference. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. PREMIUM TAXES Some states and other governmental entities (e.g., municipalities) charge premium taxes or similar taxes. We are responsible for paying these taxes and will deduct them from your Contract Value. Some of these taxes are due when the Contract is issued, others are due when income payments begin or upon surrender. Our current practice is not to charge anyone for these taxes until income payments begin or when a total withdrawal occurs including payment upon death. At our discretion, we may discontinue this practice and deduct premium taxes from the purchase payments. Premium taxes generally range form 0% to 4%, depending on the state. At the Payout Start Date, if applicable, we deduct the charge for premium taxes from each investment alternative in the proportion that the Contract owner's value in the investment alternative bears to the total Contract Value. DEDUCTION FOR VARIABLE ACCOUNT INCOME TAXES We are not currently making a provision for such taxes. In the future, however, we may make a provision for taxes if we determine, in our sole discretion, that we will incur a tax as a result of the operation of the Variable Account. We will deduct for any taxes we incur as a result of the operation of the Variable Account, whether or not we previously made a provision for taxes and whether or not it was sufficient. Our status under the Internal Revenue Code is briefly described in the "Taxes" section. OTHER EXPENSES Each Portfolio deducts advisory fees and other expenses from its assets. You indirectly bear the charges and expenses of the Portfolios whose shares are held by the Variable Sub-Accounts. These fees and expenses are described in the accompanying prospectuses for the Funds. For a summary of current estimates of those charges and expenses, see pages and above. We may receive compensation from the investment advisers or administrators of the Portfolios for administrative services we provide to the Portfolios. 23 PROSPECTUS ACCESS TO YOUR MONEY - ------------------------------------------------------------------- You can withdraw some or all of your Contract Value at any time during the Accumulation Phase. Withdrawals also are available under limited circumstances on or after the Payout Start Date. See "Income Plans" on page 25. You can withdraw money from the Variable Account and/or the Fixed Account Options. The amount payable upon withdrawal is the Contract Value (or portion thereof) next computed after we receive the request for a withdrawal at our headquarters, less any withdrawal charges, contract maintenance charges, income tax withholding, and any premium taxes. To complete a partial withdrawal from the Variable Account, we will cancel Accumulation Units in an amount equal to the withdrawal and any applicable charges and taxes. We will pay withdrawals from the Variable Account within 7 days of receipt of the request, subject to postponement in certain circumstances. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. You have the opportunity to name the investment alternative(s) from which you are taking the withdrawal. If none are named, then we will withdraw the amount proportionately from the investment alternatives according to the value of your investments therein. In general, you must withdraw at least $500 at a time. You may also withdraw a lesser amount if you are withdrawing your entire interest in a Variable Sub-Account. The total amount paid at surrender may be more or less than the total purchase payments due to prior withdrawals, any deductions, and investment performance. POSTPONEMENT OF PAYMENTS We may postpone the payment of any amounts due from the Variable Account under the Contract if: 1. The New York Stock Exchange is closed for other than usual weekends or holidays, or trading on the Exchange is otherwise restricted; 2. An emergency exists as defined by the SEC; or 3. The SEC permits delay for your protection. In addition, we may delay payments or transfers from the Fixed Account Options for up to 6 months or shorter period if required by law. If we delay payment or transfer for 30 days or more, we will pay interest as required by applicable law. Any interest would be payable from the date we receive the withdrawal request to the date we make the payment or transfer. SYSTEMATIC WITHDRAWAL PROGRAM You may choose to receive systematic withdrawal payments on a monthly basis at any time prior to the Payout Start Date. The minimum amount of each systematic withdrawal is $100. We will deposit systematic withdrawal payments into the Contract owner's bank account or Morgan Stanley Account. Please consult with your Morgan Stanley Financial Advisor for details. Depending on fluctuations in the value of the Variable Sub-Accounts and the value of the Fixed Account Options, systematic withdrawals may reduce or even exhaust the Contract Value. Withdrawals of earnings are taxed as ordinary income and, if taken prior to age 59 1/2, may be subject to an additional 10% federal tax penalty. Please consult your tax advisor before taking any withdrawal. We may modify or suspend the Systematic Withdrawal Program and charge a processing fee for the service. If we modify or suspend the Systematic Withdrawal Program, existing systematic withdrawal payments will not be affected. MINIMUM CONTRACT VALUE If the amount you withdraw reduces your Contract Value to less than $500, we may treat it as a request to withdraw your entire Contract Value. Your Contract will terminate if you withdraw all of your Contract Value. We will, however, ask you to confirm your withdrawal request before terminating your Contract. Before terminating any Contract whose value has been reduced by withdrawals to less than $500, we would inform you in writing of our intention to terminate your Contract and give you at least 30 days in which to make an additional purchase payment to restore your Contract's value to the contractual minimum of $500. If we terminate your Contract, we will distribute to you its Contract Value, less withdrawals and other charges and applicable taxes. 24 PROSPECTUS INCOME PAYMENTS - ------------------------------------------------------------------- PAYOUT START DATE The Payout Start Date is the day that we apply your Contract Value to an Income Plan. The Payout Start Date must be no later than: - - the Annuitant's 90th Birthday, or - - the 10th Contract Anniversary, if later. You may change the Payout Start Date at any time by notifying us in writing of the change at least 30 days before the scheduled Payout Start Date. Absent a change, we will use the Payout Start Date stated in your Contract. INCOME PLANS An "Income Plan" is a series of scheduled payments to you or someone you designate. You may choose and change your choice of Income Plan until 30 days before the Payout Start Date. If you do not select an Income Plan, we will make income payments in accordance with Income Plan 1 with guaranteed payments for 10 years unless changed by the Contract owner. After the Payout Start Date, you may not make withdrawals (except as described below) or change your choice of Income Plan. Three Income Plans are available under the Contract. Each is available to provide: - - fixed amount income payments; - - variable amount income payments; or - - a combination of the two. The three Income Plans are: INCOME PLAN 1 -- LIFE INCOME WITH PAYMENTS GUARANTEED FOR 120 MONTHS. Under this plan, we make monthly income payments for at least as long as the Annuitant lives. If the Annuitant dies before we have made all of the 120 months guaranteed income payments, we will continue to pay the remainder of the guaranteed income payments as required by the Contract. INCOME PLAN 2 -- JOINT AND SURVIVOR LIFE INCOME. Under this plan, we make periodic income payments for as long as either the Annuitant or the joint Annuitant is alive. No income payments will be made after the death of both the Annuitant and the joint Annuitant. INCOME PLAN 3 -- GUARANTEED PAYMENTS FOR A SPECIFIED PERIOD. Under this plan, we make periodic income payments for the period you have chosen. These payments do not depend on the Annuitant's life. A withdrawal charge may apply if the specified period is less than 10 years. We will deduct the mortality and expense risk charge from the assets of the Variable Account supporting this Income Plan even though we may not bear any mortality risk. The length of any guaranteed payment period under your selected Income Plan generally will affect the dollar amounts of each income payment. As a general rule, longer guaranteed periods result in lower income payments, all other things being equal. For example, if you choose an Income Plan with payments that depend on the life of the Annuitant but with no minimum specified period for guaranteed payments, the income payments generally will be greater than the income payments made under the same Income Plan with a minimum specified period for guaranteed payments. We deduct applicable premium taxes from the contract value at the Payout Start Date. We may make other Income Plans available including ones that you and we agree upon. You may obtain information about them by writing or calling us. If you choose Income Plan 1 or 2, or, if available, another Income Plan with payments that continue for the life of the Annuitant or joint Annuitant, we may require proof of age and sex of the Annuitant or joint Annuitant before starting income payments, and proof that the Annuitant or joint Annuitant is still alive before we make each payment. Please note that under these Income Plans, if you elect to take no minimum guaranteed payments, it is possible that the payee could receive only 1 income payment if the Annuitant and any joint Annuitant both die before the second income payment, or only 2 income payments if they die before the third income payment, and so on. Generally, you may not make withdrawals after the Payout Start Date. One exception to this rule applies if you are receiving income payments that do not depend on the life of the Annuitant (such as under Income Plan 3). In that case you may terminate all or part of the Variable Account portion of the income payments at any time and receive a lump sum equal to the present value of the remaining variable payments associated with the amount withdrawn. To determine the present value of any remaining variable income payments being withdrawn, we use a discount rate equal to the assumed annual investment rate that we use to compute such variable income payments. The minimum amount you may withdraw under this feature is $1,000. A withdrawal charge may apply. You may apply your Contract Value to an Income Plan. If you elected the Income Benefit Combination Option 2 or the Income and Death Benefit Combination Option 2 you may be able to apply an amount greater than your Contract Value to an Income Plan. You must apply at least the Contract Value in the Fixed Account Options on the Payout Start Date to fixed amount 25 PROSPECTUS income payments. If you wish to apply any portion of your Fixed Account Options balance to provide variable amount income payments, you should plan ahead and transfer that amount to the Variable Sub-Accounts prior to the Payout Start Date. If you do not tell us how to allocate your Contract Value among fixed and variable amount income payments, we will apply your Contract Value in the Variable Account to variable amount income payments and your Contract Value in the Fixed Account Options to fixed amount income payments. We will apply your Contract Value, less applicable taxes, to your Income Plan on the Payout Start Date. If the amount available to apply under an Income Plan is less than $2,000, or not enough to provide an initial payment of at least $20, and state law permits, we may: - - terminate the Contract and pay you the Contract Value, less any applicable taxes, in a lump sum instead of the periodic payments you have chosen, or - - we may reduce the frequency of your payments so that each payment will be at least $20. VARIABLE AMOUNT INCOME PAYMENTS The amount of your variable amount income payments depends upon the investment results of the Variable Sub-Accounts you select, the premium taxes you pay, the age and sex of the Annuitant, and the Income Plan you choose. We guarantee that the payments will not be affected by (a) actual mortality experience and (b) the amount of our administration expenses. We cannot predict the total amount of your variable amount income payments. Your variable amount income payments may be more or less than your total purchase payments because (a) variable amount income payments vary with the investment results of the underlying Portfolios, and (b) the Annuitant could live longer or shorter than we expect based on the tables we use. In calculating the amount of the periodic payments in the annuity tables in the Contract, we assumed an annual investment rate of 3%. If the actual net investment return of the Variable Sub-Accounts you choose is less than this assumed investment rate, then the dollar amount of your variable amount income payments will decrease. The dollar amount of your variable amount income payments will increase, however, if the actual net investment return exceeds the assumed investment rate. The dollar amount of the variable amount income payments stays level if the net investment return equals the assumed investment rate. Please refer to the Statement of Additional Information for more detailed information as to how we determine variable amount income payments. FIXED AMOUNT INCOME PAYMENTS We guarantee income payment amounts derived from any Fixed Account Option for the duration of the Income Plan. We calculate the fixed amount income payments by: 1. deducting any applicable premium tax; and 2. applying the resulting amount to the greater of (a) the appropriate value from the income payment table in your Contract or (b) such other value as we are offering at that time. We may defer making fixed amount income payments for a period of up to 6 months or such shorter time state law may require. If we defer payments for 30 days or more, we will pay interest as required by law from the date we receive the withdrawal request to the date we make payment. INCOME BENEFIT COMBINATION OPTION 2 You have the option to add Income Benefit Combination Option 2 to your Contract. Please note that once you have selected an optional income benefit your ability to select a different option may be limited. Please consult with your Financial Advisor concerning any such limitations before selecting any option. Further, if you select another option, the benefits under the new option on the date we issue the new option will equal the Contract Value. You will not retain or transfer the benefits of the earlier option. Please consult with your Financial Advisor concerning the effect of selecting a different option before doing so. We may discontinue offering these options at any time. This Option guarantees that the amount you apply to an Income Plan will not be less than the income base ("Income Base") (which is the greater of Income Base A or Income Base B), described below. We also refer to this as the "Best of the Best Income Benefit". ELIGIBILITY. If you select the Income Benefit Combination Option 2, the highest age of any Contract owner and Annuitant as of the date we receive the completed application or the date we receive the written request to add the rider, whichever is later, cannot exceed age 75. To qualify for this benefit, you must meet the following conditions as of the Payout Start Date: - - You must elect a payout Start Date that is on or after the 10th anniversary of the date we issued the rider for this Option (the "Rider Date"); - - The Payout Start Date must occur during the 30 day period following a Contract Anniversary; and - - You must apply the Income Base to fixed income payments or variable income payments as we may permit from time to time. Currently, you must elect to receive fixed income payments, which will be 26 PROSPECTUS calculated using the appropriate Guaranteed Income Payments Table provided in your Contract; and - - The Income Plan you have selected must provide for payments guaranteed for either a single life or joint lives with a specified period of at least: 1. 10 years, if the youngest Annuitant's age is 80 or less on the date the amount is applied; or 2. 5 years, if the youngest Annuitant's age is greater than 80 on the date the amount is applied. If your current Contract Value is higher than the value calculated under Income Benefit Combination Option 2, you can apply the Contract Value to any Income Plan. The Income Benefit Combination Option 2 may not be available in all states. INCOME BASE The Income Base is the greater of Income Base A or Income Base B. The Income Base is used solely for the purpose of calculating the guaranteed income benefit under this Option ("guaranteed income benefit") and does not provide a Contract Value or guarantee performance of any investment option. INCOME BASE A. On the Rider Date, Income Base A is equal to the Contract Value. After the Rider Date, we recalculate Income Base A as follows on the Contract Anniversary and when a purchase payment or withdrawal is made. For purchase payments, Income Base A is equal to the most recently calculated Income Base A plus the purchase payment. For withdrawals, Income Base A is equal to the most recently calculated Income Base A reduced by a withdrawal adjustment (described below). On each Contract Anniversary, Income Base A is equal to the greater of the Contract Value or the most recently calculated Income Base A. In the absence of any withdrawals or purchase payments, Income Base A will be the greatest of the Contract Value on the Rider Date and all Contract Anniversary Contract Values between the Rider Date and the Payout Start Date. We will recalculate Income Base A as described above until the first Contract Anniversary after the 85th birthday of the oldest Contract owner or Annuitant (if the Contract owner is not a natural person). After age 85, we will only recalculate Income Base A to reflect additional purchase payments and withdrawals. INCOME BASE B. On the Rider Date, Income Base B is equal to the Contract Value. After the Rider Date, Income Base B plus any subsequent purchase payments and less a withdrawal adjustment (described below) for any subsequent withdrawals will accumulate daily at a rate equivalent to 5% per year until the first Contract Anniversary after the 85th birthday of the oldest Contract owner or Annuitant (if the Contract owner is not a natural person). WITHDRAWAL ADJUSTMENT. The withdrawal adjustment is equal to (1) divided by (2), with the result multiplied by (3) where: 1) = the withdrawal amount 2) = the Contract Value immediately prior to the withdrawal, and 3) = the most recently calculated Income Base The guaranteed income benefit amount is determined by applying the Income Base less any applicable taxes to the guaranteed rates for the Income Plan you elect. The Income Plan you elect must satisfy the conditions described above. You may also elect the Income and Death Benefit Combination Option 2 which combines the features of the Income Benefit Combination Option 2 with the features of the Death Benefit Combination Option (described below). CERTAIN EMPLOYEE BENEFIT PLANS The Contracts offered by this prospectus contain income payment tables that provide for different payments to men and women of the same age, except in states that require unisex tables. We reserve the right to use income payment tables that do not distinguish on the basis of sex to the extent permitted by law. In certain employment-related situations, employers are required by law to use the same income payment tables for men and women. Accordingly, if the Contract is to be used in connection with an employment-related retirement or benefit plan and we do not offer unisex annuity tables in your state, you should consult with legal counsel as to whether the purchase of a Contract is appropriate. 27 PROSPECTUS DEATH BENEFITS - ------------------------------------------------------------------- We will pay a death benefit if, prior to the Payout Start Date, any Contract owner (or Annuitant, if the Contract owner is a non-natural person) dies. We will pay the death benefit to the new Contract owner ("New Owner") who is determined immediately after the death. The new Contract owner would be the surviving Contract owner(s) or, if none, the Beneficiary(ies). A request for payment of the death benefit must include "DUE PROOF OF DEATH." We will accept the following documentation as Due Proof of Death: - - a certified copy of a death certificate, - - a certified copy of a decree of a court of competent jurisdiction as to the finding of death, or - - any other proof acceptable to us. DEATH BENEFIT AMOUNT Prior to the Payout Start Date, if we receive a complete request for payment of the death benefit within 180 days of the date of death, the death benefit is equal to the greatest of: 1. the Contract Value as of the date we determine the death benefit, or 2. the sum of all purchase payments made less any withdrawals, and less any amounts deducted in connection with partial withdrawals (including any withdrawal charges or applicable premium taxes), or 3. the Contract Value on the most recent DEATH BENEFIT ANNIVERSARY prior to the date we determine the death benefit, plus any purchase payments and less any withdrawals, and less any amounts deducted in connection with any partial withdrawals since that Death Benefit Anniversary. If we do not receive a complete request for payment of the death benefit within 180 days of the date of death, the death benefit is equal to the Contract Value as of the date we determine the death benefit. We reserve the right to waive the 180 day limit on a non-discriminatory basis. A "Death Benefit Anniversary" is every 6th Contract Anniversary beginning with the 6th Contract Anniversary. For example, the 6th, 12th and 18th Contract Anniversaries are the first three Death Benefit Anniversaries. We will determine the value of the death benefit as of the end of the Valuation Date on which we receive a complete request for payment of the death benefit. If we receive a request after 3:00 p.m. Central Time on a Valuation Date, we will process the request as of the end of the following Valuation Date. DEATH BENEFIT OPTIONS The Performance Death Benefit Option, Death Benefit Combination Option and Income and Death Benefit Combination Option 2 are optional benefits that you may elect. Please note, once you have selected an optional income or death benefit (each an "option"), your ability to select a different option may be limited. Please consult with your financial advisor concerning any such limitations before selecting any option. Further, if you select another option, the benefit(s) under the new option on the date we issue the new option will equal the Contract Value. You will not retain or transfer the benefits of the earlier option. Please consult with your Financial Advisor concerning the effect of selecting a different option before doing so. We may discontinue offering these options at any time. We may discontinue the offering of these options at any time. The Enhanced Earnings Death Benefit Plus Option is not available to owners of any IRA at this time. If the Contract owner is a natural person, these death benefit options apply only on the death of the Contract owner. If the Contract owner is not a natural person, these options apply only on the death of the Annuitant. For Contracts with a death benefit option, the death benefit will be the greater of (1) through (3) above, or (4) the death benefit option you selected. If we do not receive a complete request for settlement of the death benefit within 180 days of the date of death, the death benefit option will not apply and the death benefit will be equal to the Contract Value as of the date we determine the death benefit. The death benefit options may not be available in all states. PERFORMANCE DEATH BENEFIT OPTION. The Performance Death Benefit on the date we issue the rider for this option ("Rider Date") is equal to the Contract Value. On each Contract Anniversary, we will recalculate your Performance Death Benefit to equal the greater of your Contract Value on that date, or the most recently calculated Performance Death Benefit. We also will recalculate your Performance Death Benefit whenever you make an additional purchase payment or a partial withdrawal. Additional purchase payments will increase the Performance Death Benefit dollar-for-dollar. Withdrawals will reduce the Performance Death Benefit by an amount equal to: (i) the Performance Death Benefit immediately before the withdrawal, multiplied by (ii) the ratio of the withdrawal amount to the Contract Value just before the withdrawal. In the absence of any withdrawals or purchase payments, the Performance Death Benefit will be the greatest of the Contract Value on the Rider Date and 28 PROSPECTUS all Contract Anniversary Contract Values on or before the date we calculate the death benefit. We will recalculate the Performance Death Benefit as described above until the oldest Contract owner (the Annuitant, if the owner is not a natural person), attains age 85. After age 85, we will recalculate the Performance Death Benefit only to reflect additional purchase payments and withdrawals. If you select the Performance Death Benefit Option, the highest age of any Contract owner and Annuitant as of the date we receive the completed application, or the date we receive the written request to add the rider, whichever is later, cannot exceed age 80. DEATH BENEFIT COMBINATION OPTION. If you select the Death Benefit Combination Option, the death benefit payable will be the greater of the death benefits provided by Death Benefit A or Death Benefit B. Death Benefit B is the Performance Death Benefit Option described above. Death Benefit A is only available through the Death Benefit Combination options. We sometimes refer to the Death Benefit Combination Option as the "Best of the Best" death benefit option. DEATH BENEFIT A. Death Benefit A on the date we issue the rider for this option ("Rider Date") is equal to the Contract Value. On the first Contract Anniversary after the Rider Date, Death Benefit A is equal to the Contract Value on the Rider Date plus interest which will accumulate daily at a rate equivalent to 5% per year for the portion of the year since the Rider Date. On each subsequent Contract Anniversary, we will multiply Death Benefit A as of the prior Contract Anniversary by 1.05. This results in an increase of 5% annually. We will recalculate Death Benefit A as described above, but not beyond the Contract Anniversary preceding the oldest Contract owner's (the Annuitant, if the owner is not a natural person), 85th birthday. For all ages, we will recalculate Death Benefit A on each Contract Anniversary, or upon receipt of a death claim, as follows: - - We will reduce the Death Benefit A by a withdrawal adjustment (as described above under Performance Death Benefit Option) for any withdrawals since the prior Contract Anniversary; and - - We will increase Death Benefit A by any additional purchase payments since the prior Contract Anniversary. If you select the Death Benefit Combination Option, the highest age of any Contract owner and Annuitant as of the date we receive the completed application, or the date we receive the written request to add the rider, whichever is later, cannot exceed age 80. INCOME AND DEATH BENEFIT COMBINATION OPTION 2. You may also elect the Income and Death Benefit Combination Option 2 which combines the features of the Income Benefit Combination (described on page ) with the features of the Death Benefit Combination Option. We sometimes refer to this as the "Best of the Best Income and Death Benefit Combo". If you select the Income and Death Benefit Combination Option 2, the highest age of any Contract owner and Annuitant as of the date we receive the completed application, or the date we receive the written request to add the rider, whichever is later, cannot exceed age 75. The Income and Death Benefit Combination Option 2 is not available in the state of Washington. On or about July 1, 2002, in the state of Washington only, we will offer the Income and Performance Death Benefit Combination Option which combines the features of the Income Benefit Combination Option 2 with the features of the Performance Death Benefit Option. The mortality and expense risk charge for the Income and Death Benefit Combination Option is an additional 0.43% which reflects an additional 0.30% for the Income Benefit Combination portion and 0.13% for the Performance Death Benefit portion. If you select the Income and Performance Death Benefit Combination Option, the highest age of any owner and Annuitant as of the date we receive the completed application, or the date we receive a written request to add the rider, whichever is later, cannot exceed age 75. ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION You may elect the Enhanced Earnings Death Benefit Plus Option alone or together with any other death and/or income benefit option offered under the Contract. The Enhanced Earnings Death Benefit Rider is not available for purchase with any IRA at this time. If the oldest Contract owner (or Annuitant if the Contract owner is a non-natural person) is age 75 or younger as of the Rider Application Date, you may elect the Enhanced Earnings Death Benefit Plus Option. The Enhanced Earnings Death Benefit Plus Option may not be available in all states. We may discontinue offering this option at any time. The Enhanced Earnings Death Benefit Plus Option and the charge for this option will terminate upon the change of Contract owner (or Annuitant if the Contract owner is a non-natural person) for reasons other than death. Under the Enhanced Earnings Death Benefit Plus Option, if the oldest Contract owner (or Annuitant if the Contract owner is a non-natural person) is age 55 or younger on 29 PROSPECTUS the Rider Application Date, the death benefit is increased by - - the lesser of 100% of In-Force Premium, excluding purchase payments made after the Rider Date and in the twelve month period immediately preceding the date of death of the Contract owner (or Annuitant if the Contract owner is a non-natural person) or 50% of In-Force Earnings. If the oldest Contract owner (or the Annuitant if the Contract owner is a non-natural person) is between the ages of 56 and 65 on the date we receive the completed application or the date we receive the written request to add this option, whichever is later, the death benefit is increased by: - - the lesser of 80% of In-Force Premium, excluding purchase payments made after the Rider Date and in the twelve month period immediately preceding the date of death of the Contract owner ( or Annutitant if the Contract owner is a non-natural person) or 40% of In-Force Earnings. If the oldest Contract owner (or the Annuitant if the Contract owner is a non-natural person) is between the ages of 66 and 75 on the date we receive the completed application or the date we receive the written request to add this option, whichever is later, the death benefit is increased by: - - the lesser of 50% of In-Force Premium, excluding purchase payments made after the Rider Date and in the twelve month period immediately preceding the date of death of the Contract owner (or Annuitant if the Contract owner is a non-natural person) or 25% of In-Force Earnings. For purpose of calculating the Enhanced Earnings Death Benefit Plus, the following definitions apply: In-Force Premium equals the Contract Value on the date the Enhanced Earnings Death Benefit Plus Option is made part of your Contract ("Rider Date") plus all purchase payments made after the Rider Date less the sum of all Excess-of-Earnings Withdrawals after the Rider Date. If the Rider Date is the same as the Issue Date, then the Contract Value on the Rider Date is equal to your initial purchase payment. In-Force Earnings equal the Contract Value minus the In-Force Premium. The In-Force Earnings amount will never be less than zero. An Excess-of-Earnings Withdrawal is the amount of a withdrawal in excess of the In-Force Earnings in the Contract immediately prior to the withdrawal. We will calculate the Enhanced Earnings Death Benefit Option as of the date we receive Due Proof of Death. We will pay the Enhanced Earnings Death Benefit Plus with the death benefit as described under "Death Benefit Payments" below. The value of the Enhanced Earnings Death Benefit Plus largely depends on the amount of earnings that accumulate under your Contract. If you expect to withdraw the earnings from your Contract Value, electing the Enhanced Earnings Death Benefit Plus Option may not be appropriate. For purposes of calculating the Enhanced Earnings Death Benefit Plus, earnings are considered to be withdrawn first before purchase payments. Your Financial Advisor can help you decide if the Enhanced Earnings Death Benefit Plus Option is right for you. For examples of how the death benefit is calculated under the Enhanced Earnings Death Benefit Plus Option, see Appendix A. DEATH BENEFIT PAYMENTS If the New Owner is your spouse, the New Owner may: 1. elect to receive the death benefit in a lump sum, or 2. elect to apply the death benefit to an Income Plan. Payments from the Income Plan must begin within one year of the date of death and must be payable throughout: - - the life of the New Owner; - - for a guaranteed number of payments from 5 to 50 years, but not to exceed the life expectancy of the New Owner; or - - over the life of the New Owner with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of the New Owner. If your spouse does not elect one of the options above, the Contract will continue in the Accumulation Phase as if the death had not occurred. If the contract is continued in the Accumulation Phase, the following restrictions apply: On the date the Contract is continued, the Contract Value will equal the amount of the death benefit as determined as of the Valuation Date on which we receive the complete request for settlement of the death benefit (the next Valuation Date, if we receive the complete request for settlement of the death benefit after 3:00 p.m. Central Time). Unless otherwise instructed by the continuing spouse, the excess, if any, of the death benefit over the Contract Value will be allocated to the Sub-Accounts of the Variable Account. This excess will be allocated in proportion to your 30 PROSPECTUS Contract Value in those Sub-Accounts as of the end of the Valuation Date during which we receive the complete request for settlement of the death benefit except that any portion of this excess attributable to the Fixed Account Options will be allocated to the Money Market Variable Sub-Account. Within 30 days of the date the Conract is continued, your surviving spouse may choose one of the following transfer alternatives without incurring a transfer fee: (i) transfer all or a portion of the excess among the Variable Sub-Accounts; (ii) transfer all or a portion of the excess into the Standard Fixed Account and begin a new Guarantee Period; or (iii) transfer all or a portion of the excess into a combination of Variable Sub-Accounts and the Standard Fixed Account. Any such transfer does not count as one of the free transfers allowed each Contract Year and is subject to any minimum allocation amount specified in your Contract. The surviving spouse may make a single withdrawal of any amount within one year of the date of your death without incurring a withdrawal charge. If you elected the Enhanced Earnings Death Benefit Plus Option, and your spouse continues the Contract as described above, the Enhanced Earnings Death Benefit Plus Option and the daily charge for this Option will terminate if your spouse is over age 75 on the date the Contract is continued, or if your spouse elects to terminate the Option. If the Enhanced Earnings Death Benefit Plus Option is not terminated, on the date the Contract is continued, the Rider Date for this Option will be reset to the date the Contract is continued ("new Rider Date"). The age of the oldest Contract owner on the new Rider Date will be used to determine Enhanced Earnings Death Benefit Plus after the new Rider Date. Also, the age of the oldest Contract owner on the new Rider Date will be used to determine the mortality and expense risk charge for the Option after the new Rider Date. If the Contract is continued in the Accumulation Phase, the surviving spouse may make a single withdrawal of any amount within one year of the date of death without incurring a withdrawal charge. Only one spousal continuation is allowed under this Contract. If the New Owner is a natural person, and not your spouse, or if there are multiple natural person New Owners, the New Owner may: 1. elect to receive the death benefit in a lump sum, or 2. elect to apply the death benefit to an Income Plan. Payments from the Income Plan must begin within one of the date of death and must be payable throughout: - - the life of the New Owner; - - for a guaranteed number of payments from 5 to 50 years, but not to exceed the life expectancy of the New Owner; or - - over the life of the New Owner with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of the New Owner. If the New Owner does not elect one of the options above, then the New Owner must receive the Contract Value payable within 5 years of your date of death. The Contract Value will equal the amount of the death benefit as determined as of the Valuation Date on which we received the complete request for settlement of the death benefit (the next Valuation Date, if we receive the complete request for settlement of the death benefit after 3:00 p.m. Central Time). Unless otherwise instructed by the New Owner, the excess, if any, of the death benefit over the Contract Value will be allocated to the Money Market Variable Sub-Account. The New Owner may exercise all rights as set forth in the TRANSFERS section during this 5 year period. No additional purchase payments may be added to the Contract under this election. Withdrawal Charges will be waived for any withdrawals made during this 5 year period. If the New Owner dies prior to the receiving all of the Contract Value, then the New Owner's named beneficiary(ies) will receive the remaining Contract Value. This amount must be received as a lump sum within 5 years of the date of the original Owner's death. We reserve the right to offer additional options upon the death of Owner. If the New Owner is a corporation, trust, or other non-natural person: (a) The New Owner may elect to receive the death benefit in a lump sum; or (b) If the New Owner does not elect the option above, then the New Owner must receive the Contract Value payable within 5 years of your date of death. The Contract Value will equal the amount of the death benefit as determined as of the end of the Valuation Date on which we receive the complete request for settlement of the death benefit (the next Valuation Date, if we receive the request after 3:00 p.m. Central Time). Unless otherwise instructed by the New Owner, the excess, if any, of the death benefit over the Contract Value will be allocated to the Money Market Variable Sub-Account. The New Owner may exercise all rights as set forth in the TRANSFERS provision during this 5 year period. 31 PROSPECTUS No additional purchase payments may be added to the Contract under this election. Withdrawal Charges will be waived during this 5 year period. We reserve the right to offer additional options upon the death of Owner. If any New Owner is a non-living person, all New Owners will be considered to be non-living persons for the above purposes. Under any of these options, all ownership rights, subject to any restrictions previously placed upon the Beneficiary, are available to the New Owner from the date of your death to the date on which the death proceeds are paid. DEATH OF ANNUITANT If the Annuitant who is not also the Contract owner dies prior to the Payout Start Date and the Contract owner is a living person, then the Contract will continue with a new Annuitant as designated by the Contract owner. If the Annuitant who is not also the Contract owner dies prior to the Payout Start Date and the Contract owner is a non-natural person, the following apply: (a) The Contract owner may elect to receive the death benefit in a lump sum; or (b) If the Contract owner does not elect the above option, then the Owner must receive the Contract Value payable within 5 years of the Annuitant's date of death. On the date we receive the complete request for settlement of the death benefit, the Contract Value under this option will be the death benefit. Unless otherwise instructed by the Contract owner, the excess, if any, of the death benefit over the Contract Value will be allocated to the Money Market Variable Sub-Account. The Contract owner may then exercise all rights as set forth in the TRANSFERS section during this 5 year period. No additional purchase payments may be added to the Contract under this election. Withdrawal charges will be waived during this 5 year period. We reserve the right to offer additional options upon Death of Annuitant. The Contract Owner has 60 days from the date the company receives Due Proof of Death to select an Income Plan without incurring a tax on the entire gain in the Contract. If the Contract Owner (other than a surviving spouse) elects to continue the Contract, they will be taxed on the entire gain in the Contract computed on the date of continuance. We are required to report such gain to the IRS as income to the Contract Owner. An additional 10% federal tax penalty may apply if the Contract Owner is under age 59 1/2. Any amount included in the Contract Owner's gross income as a result of a Contract continuance will increase the investment in the Contract for future distributions. MORE INFORMATION - ------------------------------------------------------------------- NORTHBROOK Northbrook is the issuer of the Contract. Northbrook is a stock life insurance company organized under the laws of the State of Arizona in 1998. Previously, from 1978 to 1998, Northbrook was organized under the laws of the State of Illinois. Northbrook is currently licensed to operate in all states (except New York), the District of Columbia, and Puerto Rico. We intend to offer the Contract in those jurisdictions in which we are licensed. Our headquarters are located at 3100 Sanders Road, Northbrook, Illinois, 60062. Northbrook is a wholly owned subsidiary of Allstate Life Insurance Company ("Allstate Life"), an Illinois stock life insurance company. Allstate Life is a wholly owned subsidiary of Allstate Insurance Company, an Illinois stock property-liability insurance company. All of the outstanding capital stock of Allstate Insurance Company is owned by The Allstate Corporation. Northbrook and Allstate Life entered into a reinsurance agreement effective December 31, 1987. Under the reinsurance agreement, Allstate Life reinsures all of Northbrook's liabilities under the Contracts. The reinsurance agreement provides us with financial backing from Allstate Life. However, it does not create a direct contractual relationship between Allstate Life and you. In other words, the obligations of Allstate Life under the reinsurance agreement are to Northbrook; Northbrook remains the sole obligor under the Contract to you. Independent rating agencies regularly evaluate life insurers' claims-paying ability, quality of investments, and overall stability. A.M. Best Company assigns an A+ (Superior) financial strength rating to Allstate Life, 32 PROSPECTUS which results in an A+r rating to Northbrook due to the reinsurance agreement with Allstate Life mentioned above. Standard & Poor's assigns an AA+ (Very Strong) financial strength rating and Moody's Investors Service assigns an Aa2 (Excellent) financial strength ratings to Northbrook, sharing the same ratings of its parent, Allstate Life. These ratings do not reflect the investment performance of the Variable Account. We may from time to time advertise these ratings in our sales literature. THE VARIABLE ACCOUNT Northbrook established the Northbrook Variable Annuity Account II on May 8, 1990. We have registered the Variable Account with the SEC as a unit investment trust. The SEC does not supervise the management of the Variable Account or Northbrook. We own the assets of the Variable Account. The Variable Account is a segregated asset account under Arizona insurance law. That means we account for the Variable Account's income, gains, and losses separately from the results of our other operations. It also means that only the assets of the Variable Account that are in excess of the reserves and other Contract liabilities with respect to the Variable Account are subject to liabilities relating to our other operations. Our obligations arising under the Contracts are general corporate obligations of Northbrook. The Variable Account consists of multiple Variable Sub-Accounts, each of which invests in a corresponding Portfolio. We may add new Variable Sub-Accounts or eliminate one or more of them, if we believe marketing, tax, or investment conditions so warrant. We do not guarantee the investment performance of the Variable Account, its Sub-Accounts or the Portfolios. We may use the Variable Account to fund our other annuity contracts. We will account separately for each type of annuity contract funded by the Variable Account. THE PORTFOLIOS DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS. We automatically reinvest all dividends and capital gains distributions from the Portfolios in shares of the distributing Portfolio at their net asset value. VOTING PRIVILEGES. As a general matter, you do not have a direct right to vote the shares of the Portfolios held by the Variable Sub-Accounts to which you have allocated your Contract Value. Under current law, however, you are entitled to give us instructions on how to vote those shares on certain matters. Based on our present view of the law, we will vote the shares of the Portfolios that we hold directly or indirectly through the Variable Account in accordance with instructions that we receive from Contract owners entitled to give such instructions. As a general rule, before the Payout Start Date, the Contract owner or anyone with a voting interest is the person entitled to give voting instructions. The number of shares that a person has a right to instruct will be determined by dividing the Contract Value allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. After the Payout Start Date the person receiving income payments has the voting interest. The payee's number of votes will be determined by dividing the reserves for such Contract allocated to the applicable Variable Sub-Account by the net asset value per share of the corresponding Portfolio as of the record date of the meeting. The votes decrease as income payments are made and as the reserves for the Contract decrease. We will vote shares attributable to Contracts for which we have not received instructions, as well as shares attributable to us, in the same proportion as we vote shares for which we have received instructions, unless we determine that we may vote such shares in our own discretion. We will apply voting instructions to abstain on any item to be voted upon on a pro rata basis to reduce the votes eligible to be cast. We reserve the right to vote Portfolio shares as we see fit without regard to voting instructions to the extent permitted by law. If we disregard voting instructions, we will include a summary of that action and our reasons for that action in the next semi-annual financial report we send to you. CHANGES IN PORTFOLIOS. We reserve the right, subject to any applicable law, to make additions to, deletions from or substitutions for the Portfolio shares held by any Variable Sub-Account. If the shares of any of the Portfolios are no longer available for investment by the Variable Account or if, in our judgment, further investment in such shares is no longer desirable in view of the purposes of the Contract, we may eliminate that Portfolio and substitute shares of another eligible investment fund. Any substitution of securities will comply with the requirements of the Investment Company Act of 1940. We also may add new Variable Sub-Accounts that invest in additional mutual funds. We will notify you in advance of any change. CONFLICTS OF INTEREST. Certain of the Portfolios sell their shares to separate accounts underlying both variable life insurance and variable annuity contracts. It is conceivable that in the future it may be unfavorable for variable life insurance separate accounts and variable annuity separate accounts to invest in the same Portfolio. The boards of directors or trustees of these Portfolios 33 PROSPECTUS monitor for possible conflicts among separate accounts buying shares of the Portfolios. Conflicts could develop for a variety of reasons. For example, differences in treatment under tax and other laws or the failure by a separate account to comply with such laws could cause a conflict. To eliminate a conflict, a Portfolio's board of directors or trustees may require a separate account to withdraw its participation in a Portfolio. A Portfolio's net asset value could decrease if it had to sell investment securities to pay redemption proceeds to a separate account withdrawing because of a conflict. THE CONTRACT The Contracts are distributed exclusively by their principal underwriter, Morgan Stanley DW Inc. Morgan Stanley DW, a wholly owned subsidiary of Morgan Stanley Dean Witter & Co., is located at 1585 Broadway, New York, New York 10036. Morgan Stanley DW is a member of the New York Stock Exchange and the National Association of Securities Dealers. We may pay up to a maximum sales commission of 6.0% of purchase payments and an annual sales administration expense of up to 0.20% of the average net assets of the Fixed Account Options to Morgan Stanley DW. In addition, Morgan Stanley DW may pay annually to its representatives, from its profits, a persistency bonus that will take into account, among other things, the length of time purchase payments have been held under the Contract and Contract Value. ADMINISTRATION. We have primary responsibility for all administration of the Contracts and the Variable Account. We provide the following administrative services, among others: - - issuance of the Contracts; - - maintenance of Contract owner records; - - Contract owner services; - - calculation of unit values; - - maintenance of the Variable Account; and - - preparation of Contract owner reports. We will send you Contract statements at least annually prior to the Payout Start Date. You should notify us promptly in writing of any address change. You should read your statements and confirmations carefully and verify their accuracy. You should contact us promptly if you have a question about a periodic statement. We will investigate all complaints and make any necessary adjustments retroactively, but you must notify us of a potential error within a reasonable time after the date of the questioned statement. If you wait too long, we will make the adjustment as of the date that we receive notice of the potential error. We also will provide you with additional periodic and other reports, information and prospectuses as may be required by federal securities laws. QUALIFIED PLANS If you use the Contract with a qualified plan, the plan may impose different or additional conditions or limitations on withdrawals, waivers of withdrawal charges, death benefits, Payout Start Dates, income payments, and other Contract features. In addition, adverse tax consequences may result if qualified plan limits on distributions and other conditions are not met. Please consult your qualified plan administrator for more information. LEGAL MATTERS Foley & Lardner, Washington, D.C., has advised Northbrook on certain federal securities law matters. All matters of state law pertaining to the Contracts, including the validity of the Contracts and Northbrook's right to issue such Contracts under state insurance law, have been passed upon by Michael J. Velotta, General Counsel of Northbrook. TAXES - ------------------------------------------------------------------- THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. NORTHBROOK MAKES 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 your individual circumstances. 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. Investment 34 PROSPECTUS 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. TAXATION OF ANNUITIES IN GENERAL TAX DEFERRAL. Generally, you are not taxed on increases in the Contract Value until a distribution occurs. This rule applies only where: 1. the Contract Owner is a natural person, 2. the investments of the Variable Account are "adequately diversified" according to Treasury Department regulations, and 3. Northbrook is considered the owner of the Variable Account assets for federal income tax purposes. NON-NATURAL OWNERS. As a general rule, annuity contracts owned by non-natural persons such as corporations, trusts, or other entities are not treated as annuity contracts for federal income tax purposes. The income on such contracts does not enjoy tax deferral and is taxed as ordinary income received or accrued by the owner during the taxable year. 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) immediate annuity 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. DIVERSIFICATION REQUIREMENTS. For a Contract to be treated as an annuity for federal income tax purposes, the investments in the Variable Account must be "ADEQUATELY DIVERSIFIED" consistent with standards under Treasury Department regulations. If the investments in the Variable Account are not adequately diversified, the Contract will not be treated as an annuity contract for federal income tax purposes. As a result, the income on the Contract will be taxed as ordinary income received or accrued by the Contract Owner during the taxable year. Although Northbrook does not have control over the Portfolios or their investments, we expect the Portfolios to meet the diversification requirements. OWNERSHIP TREATMENT. The IRS has stated that a contract owner will be considered the owner of separate account assets if he possesses incidents of ownership in those assets, such as the ability to exercise investment control over the assets. At the time the diversification regulations were issued, the Treasury Department announced that the regulations do not provide guidance concerning circumstances in which investor control of the separate account investments may cause a contract owner to be treated as the owner of the separate account. The Treasury Department also stated that future guidance would be issued regarding the extent that owners could direct sub-account investments without being treated as owners of the underlying assets of the separate account. Your rights under the Contract are different than those described by the IRS in rulings in which it found that contract owners were not owners of separate account assets. For example, you have the choice to allocate premiums and Contract Values among a broader selection of investment alternatives. Also, you may be able to transfer among investment alternatives more frequently than in such rulings. These differences could result in you being treated as the owner of the Variable Account. If this occurs, income and gain from the Variable Account assets would be includible in your gross income. Northbrook does not know what standards will be set forth in any regulations or rulings which the Treasury Department may issue. It is possible that future standards announced by the Treasury Department could adversely affect the tax treatment of your Contract. We reserve the right to modify the Contract as necessary to attempt to prevent you from being considered the federal tax owner of the assets of the Variable Account. However, we make no guarantee that such modification to the Contract will be successful. TAXATION OF PARTIAL AND FULL WITHDRAWALS. If you make a partial withdrawal under a non-qualified Contract, 35 PROSPECTUS amounts received are taxable to the extent the Contract Value, without regard to surrender charges, exceeds the investment in the Contract. The investment in the Contract is the gross premium paid for the contract minus any amounts previously received from the Contract if such amounts were properly excluded from your gross income. If you make a full withdrawal under a non-Qualified Contract, the amount received will be taxable only to the extent it exceeds the investment in the Contract. TAXATION OF ANNUITY PAYMENTS. Generally, the rule for income taxation of annuity payments received from a non qualified contract provides for the return of your investment in the Contract in equal tax-free amounts over the payment period. The balance of each payment received is taxable. For fixed annuity payments, the amount excluded from income is determined by multiplying the payment by the ratio of the investment in the Contract (adjusted for any refund feature or period certain) to the total expected value of annuity payments for the term of the Contract. If you elect variable annuity payments, the amount excluded from taxable income is determined by dividing the investment in the Contract by the total number of expected payments. The annuity payments will be fully taxable after the total amount of the investment in the Contract is excluded using these ratios. The Federal tax treatment of annuity payments is unclear in some respects. As a result, if the IRS should provide further guidance, it is possible that the amount we calculate and report to the IRS as taxable could be different. If you die, and annuity payments cease before the total amount of the investment in the Contract is recovered, the unrecovered amount will be allowed as a deduction for your last taxable year. WITHDRAWALS AFTER THE PAYOUT START DATE. Federal tax law is unclear regarding the taxation of any additional withdrawal received after the Payout Start Date. It is possible that a greater or lesser portion of such a payment could be taxable than the amount we determine. DISTRIBUTION AT DEATH RULES. In order to be considered an annuity contract for federal income tax purposes, the Contract must provide: 1. if any Contract Owner dies on or after the Payout 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 Contract Owner's death; 2. if any Contract Owner dies prior to the Payout Start Date, the entire interest in the Contract will be distributed within 5 years after the date of the Contract Owner's death. These requirements are satisfied if any portion of the Contract Owner's interest that 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 1 year of the Contract Owner's death. If the Contract Owner's designated Beneficiary is the surviving spouse of the Contract Owner, the Contract may be continued with the surviving spouse as the new Contract Owner. 3. if the Contract Owner is a non-natural person, then the Annuitant will be treated as the Contract 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 Contract Owner. TAXATION OF ANNUITY DEATH BENEFITS. Death Benefit amounts are included in income as follows: 1. if distributed in a lump sum, the amounts are taxed in the same manner as a full withdrawal, or 2. if distributed under an Income Plan, the amounts are taxed in the same manner as annuity payments. PENALTY TAX ON PREMATURE DISTRIBUTIONS. A 10% penalty tax applies to the taxable amount of any premature distribution from a non-Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions: 1. made on or after the date the Contract Owner attains age 59 1/2, 2. made as a result of the Contract Owner's death or becoming totally disabled, 3. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary, 4. made under an immediate annuity, or 5. attributable to investment in the Contract before August 14, 1982. You should consult a competent tax advisor to determine how these exceptions may apply to your situation. SUBSTANTIALLY EQUAL PERIODIC PAYMENTS. With respect to non-Qualified Contracts using substantially equal periodic payments or immediate annuity payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the Contract Owner's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception 36 PROSPECTUS to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. You should consult a competent tax advisor prior to taking a withdrawal. TAX FREE EXCHANGES UNDER IRC SECTION 1035. A 1035 exchange is a tax-free exchange of a non-qualified life insurance contract, endowment contract or annuity contract for a new non-qualified annuity contract. The Contract Owner(s) must be the same on the old and new contract. Basis from the old contract carries over to the new contract so long as we receive that information from the relinquishing company. If basis information is never received, we will assume that all exchanged funds represent earnings and will allocate no cost basis to them. TAXATION OF OWNERSHIP CHANGES. If you transfer a non-Qualified Contract without full and adequate consideration to a person other than your spouse (or to a former spouse incident to a divorce), you will be taxed on the difference between the Contract Value and the investment in the Contract at the time of transfer. Except for certain Qualified Contracts, any amount you receive as a loan under a Contract, and any assignment or pledge (or agreement to assign or pledge) of the Contract Value is taxed as a withdrawal of such amount or portion and may also incur the 10% penalty tax. Currently we do not allow assignments. AGGREGATION OF ANNUITY CONTRACTS. The Code requires that all non-qualified deferred annuity contracts issued by Northbrook (or its affiliates) to the same Contract Owner during any calendar year be aggregated and treated as one annuity contract for purposes of determining the taxable amount of a distribution. INCOME TAX WITHHOLDING Generally, Northbrook is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% of the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Northbrook is required to withhold federal income tax using the wage withholding rates for all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory. Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number. QUALIFIED CONTRACTS The income on qualified plan and IRA investments is tax deferred, and the income on variable annuities held by such plans does not receive any additional tax deferral. You should review the annuity features, including all benefits and expenses, prior to purchasing a variable annuity in a qualified plan or IRA. Contracts may be used as investments with certain qualified plans such as: - - Individual Retirement Annuities or Accounts (IRAs) under Section 408 of the Code; - - Roth IRAs under Section 408A of the Code; - - Simplified Employee Pension Plans under Section 408(k) of the Code; - - Savings Incentive Match Plans for Employees (SIMPLE) Plans under Section 408(p) of the Code; - - Tax Sheltered Annuities under Section 403(b) of the Code; - - Corporate and Self Employed Pension and Profit Sharing Plans under Sections 401 and 403; and - - State and Local Government and Tax-Exempt Organization Deferred Compensation Plans under Section 457. Northbrook reserves the right to limit the availability of the Contract for use with any of the Qualified Plans listed above or to modify the Contract to conform with tax requirements. 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 certain transactions such as excess contributions, premature distributions, and distributions that do not conform to specified commencement and minimum distribution rules. In the case of certain qualified plans, the terms of the plans may govern the right to benefits, regardless of the terms of the Contract. TAXATION OF WITHDRAWALS FROM A QUALIFIED CONTRACT. If you make a partial withdrawal under a Qualified Contract other than a Roth IRA, the portion of the payment that bears the same ratio to the total payment that the investment in the Contract (i.e., nondeductible IRA contributions, after tax contributions to qualified plans) bears to the Contract Value, is excluded from your income. We do not keep track of nondeductible contributions, and all tax reporting of distributions from 37 PROSPECTUS Qualified Contracts other than Roth IRAs will indicate that the distribution is fully taxable. "QUALIFIED DISTRIBUTIONS" from Roth IRAs are not included in gross income. "Qualified distributions" are any distributions made more than five taxable years after the taxable year of the first contribution to any Roth IRA and which are: - - made on or after the date the Contract Owner attains age 59 1/2, - - made to a beneficiary after the Contract Owner's death, - - attributable to the Contract Owner being disabled, or - - made for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000). "NONQUALIFIED DISTRIBUTIONS" from Roth IRAs are treated as made from contributions first and are included in gross income only to the extent that distributions exceed contributions. All tax reporting of distributions from Roth IRAs will indicate that the taxable amount is not determined. REQUIRED MINIMUM DISTRIBUTIONS. Generally, qualified plans require minimum distributions upon reaching age 70 1/2. Failure to withdraw the required minimum distribution will result in a 50% tax penalty on the shortfall not withdrawn from the Contract. Not all income plans offered under this Contract satisfy the requirements for minimum distributions. Because these distributions are required under the Code and the method of calculation is complex, please see a competent tax advisor. THE DEATH BENEFIT AND QUALIFIED CONTRACTS. Pursuant to the Code and IRS regulations, an IRA (e.g., traditional IRA, Roth IRA, SEP IRA and SIMPLE IRA) may not invest in life insurance contracts. However, an IRA may provide a death benefit that equals the greater of the purchase payments or the Contract Value. The Contract offers a death benefit that in certain circumstances may exceed the greater of the purchase payments or 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 satisfy the requirements of an IRA. We believe that these regulations do not prohibit all forms of optional death benefits; however, at this time we are not allowing the Enhanced Earnings Death Benefit Plus Option to be sold with an IRA. It is also possible that the certain death benefits that offer enhanced earnings could be characterized as an incidental death benefit. If the death benefit were so characterized, this could result in current taxable income to a Contract Owner. In addition, there are limitations on the amount of incidental death benefits that may be provided under qualified plans, such as in connection with a 403(b) plan. Northbrook reserves the right to limit the availability of the Contract for use with any of the qualified plans listed above. PENALTY TAX ON PREMATURE DISTRIBUTIONS FROM QUALIFIED CONTRACTS. A 10% penalty tax applies to the taxable amount of any premature distribution from a Qualified Contract. The penalty tax generally applies to any distribution made prior to the date you attain age 59 1/2. However, no penalty tax is incurred on distributions: 1. made on or after the date the Contract Owner attains age 59 1/2, 2. made as a result of the Contract Owner's death or total disability, 3. made in substantially equal periodic payments over the Contract Owner's life or life expectancy, or over the joint lives or joint life expectancies of the Contract Owner and the Beneficiary, 4. made pursuant to an IRS levy, 5. made for certain medical expenses, 6. made to pay for health insurance premiums while unemployed (only applies for IRAs), 7. made for qualified higher education expenses (only applies for IRAs), and 8. made for a first time home purchase (up to a $10,000 lifetime limit and only applies for IRAs). During the first 2 years of the individual's participation in a SIMPLE IRA, distributions that are otherwise subject to the premature distribution penalty, will be subject to a 25% penalty tax. You should consult a competent tax advisor to determine how these exceptions may apply to your situation. SUBSTANTIALLY EQUAL PERIODIC PAYMENTS ON QUALIFIED CONTRACTS. With respect to Qualified Contracts using substantially equal periodic payments as an exception to the penalty tax on premature distributions, any additional withdrawal or other modification of the payment stream would violate the requirement that payments must be substantially equal. Failure to meet this requirement would mean that the income portion of each payment received prior to the later of 5 years or the taxpayer's attaining age 59 1/2 would be subject to a 10% penalty tax unless another exception to the penalty tax applied. The tax for the year of the modification is increased by the penalty tax that would have been imposed without the exception, plus interest for the years in which the exception was used. You should consult a competent tax advisor prior to taking a withdrawal. 38 PROSPECTUS INCOME TAX WITHHOLDING ON QUALIFIED CONTRACTS. Generally, Northbrook is required to withhold federal income tax at a rate of 10% from all non-annuitized distributions that are not considered "ELIGIBLE ROLLOVER DISTRIBUTIONS." The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold the required 10% from the taxable amount. In certain states, if there is federal withholding, then state withholding is also mandatory. Northbrook is required to withhold federal income tax at a rate of 20% on all "ELIGIBLE ROLLOVER DISTRIBUTIONS" unless you elect to make a "DIRECT ROLLOVER" of such amounts to an IRA or eligible retirement plan. Eligible rollover distributions generally include all distributions from Qualified Contracts, excluding IRAs, with the exception of: 1. required minimum distributions, or 2. a series of substantially equal periodic payments made over a period of at least 10 years, or, 3. a series of substantially equal periodic payments made over the life (joint lives) of the participant (and beneficiary), or, 4. hardship distributions. For all annuitized distributions that are not subject to the 20% withholding requirement, Northbrook is required to withhold federal income tax using the wage withholding rates from all annuitized distributions. The customer may elect out of withholding by completing and signing a withholding election form. If no election is made, we will automatically withhold using married with three exemptions as the default. In certain states, if there is federal withholding, then state withholding is also mandatory. Election out of withholding is valid only if the customer provides a U.S. residence address and taxpayer identification number. INDIVIDUAL RETIREMENT ANNUITIES. Section 408 of the Code permits eligible individuals to contribute to an individual retirement program known as an Individual Retirement Annuity (IRA). Individual Retirement Annuities 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 Individual Retirement Annuity. ROTH INDIVIDUAL RETIREMENT ANNUITIES. Section 408A of the Code permits eligible individuals to make nondeductible contributions to an individual retirement program known as a Roth Individual Retirement Annuity. Roth Individual Retirement Annuities are subject to limitations on the amount that can be contributed and on the time when distributions may commence. Subject to certain limitations, a traditional Individual Retirement Account or Annuity may be converted or "ROLLED OVER" to a Roth Individual Retirement Annuity. The income portion of a conversion or rollover distribution is taxable currently, but is exempted from the 10% penalty tax on premature distributions. SIMPLIFIED EMPLOYEE PENSION PLANS. Section 408(k) of the Code allows eligible employers to establish simplified employee pension plans for their employees using individual retirement annuities. Under these plans the employer may, within specified limits, make deductible contributions on behalf of the employees to the individual retirement annuities. Employers intending to use the Contract in connection with such plans should seek competent tax advice. SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE PLANS). Sections 408(p) and 401(k) of the Code allow eligible 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 IRA 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. TO DETERMINE IF YOU ARE ELIGIBLE TO CONTRIBUTE TO ANY OF THE ABOVE LISTED IRAS (TRADITIONAL, ROTH, SEP, OR SIMPLE), PLEASE REFER TO IRS PUBLICATION 590 AND YOUR COMPETENT TAX ADVISOR. TAX SHELTERED ANNUITIES. Section 403(b) of the Tax Code provides tax-deferred retirement savings plans for employees of certain non-profit and educational organizations. Under Section 403(b), any contract used for a 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 - - incurs a hardship (earnings on salary reduction contributions may not be distributed on account of hardship). 39 PROSPECTUS 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. Self-employed individuals may establish tax favored retirement plans for themselves and their employees. Such retirement plans (commonly referred to as "H.R.10" or "KEOGH") may permit the purchase of annuity contracts. 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. In eligible governmental plans, all assets and income must be held in a trust/ custodial account/annuity contract for the exclusive benefit of the participants and their beneficiaries. To the extent the Contracts are used in connection with a non-governmental 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. Under eligible 457 plans, contributions made for the benefit of the employees will not be includible in the employees' gross income until distributed from the plan. PERFORMANCE INFORMATION - ------------------------------------------------------------------- We may advertise the performance of the Variable Sub-Accounts, including yield and total return information. Yield refers to the income generated by an investment in a Variable Sub-Account over a specified period. Total return represents the change, over a specified period of time, in the value of an investment in a Variable Sub-Account after reinvesting all income distributions. All performance advertisements will include, as applicable, standardized yield and total return figures that reflect the deduction of insurance charges, the contract maintenance charge, and withdrawal charge. Performance advertisements also may include total return figures that reflect the deduction of insurance charges, but not the contract maintenance or withdrawal charges. The deduction of such charges would reduce the performance shown. Performance advertisements may include aggregate, average, year-by-year, or other types of total return figures. Performance information for periods prior to the inception date of the Variable Sub-Accounts will be based on the historical performance of the corresponding Portfolios for the periods beginning with the inception dates of the Portfolios and adjusted to reflect current Contract expenses. You should not interpret these figures to reflect actual historical performance of the Variable Account. We may include in advertising and sales materials tax deferred compounding charts and other hypothetical illustrations that compare currently taxable and tax deferred investment programs based on selected tax brackets. Our advertisements also may compare the performance of our Variable Sub-Accounts with: (a) certain unmanaged market indices, including but not limited to the Dow Jones Industrial Average, the Standard & Poor's 500, and the Shearson Lehman Bond Index; and/or (b) other management investment companies with investment objectives similar to the underlying funds being compared. In addition, our advertisements may include the performance ranking assigned by various publications, including the Wall Street Journal, Forbes, Fortune, Money, Barron's, Business Week, USA Today, and statistical services, including Lipper Analytical Services Mutual Fund Survey, Lipper Annuity and Closed End Survey, the Variable Annuity Research Data Survey, and SEI. 40 PROSPECTUS APPENDIX A CALCULATION OF ENHANCED EARNINGS DEATH BENEFIT PLUS AMOUNT - ------------------------------------------------------------------- EXAMPLE 1: Assume that the oldest Owner (or Annuitant if the Contract owner is a non-natural person) is age 55 on the Rider Application Date and elects the Enhanced Earnings Death Benefit Plus Option when the Contract is issued. The Owner makes an initial purchase payment of $100,000. After four years, the Owner dies. On the date Northbrook receives Due Proof of Death, the Contract Value is $125,000. Prior to his death, the Owner did not make any additional purchase payments or take any withdrawals. The calculation is: (A) Contract Value: $125,000.00 (B) Total Purchase Payments $100,000.00 (C) Total Excess-of-Earnings Withdrawals: $0.00 (D) In-Force Premium: (D) = (B) - (C) $100,000.00 (E) In-Force Earnings: (E) = (A) - (D) $25,000.00 (F) Cap: (F) = 100% X (D) $100,000.00 - ------------------------------------------------------------------------------------------------------- (G) Enhanced Earnings Death Benefit Plus*: (G) = MIN [50% X (E); (F)] $12,500.00 - -------------------------------------------------------------------------------------------------------
* If the oldest Owner (or Annuitant if the Contract owner is a non-natural person) had been between the ages of 56 and 65 on the Rider Application Date, the Enhanced Earnings Death Benefit Plus benefit would be 40% of the In-Force Earnings ($10,000.00). If the oldest Owner (or Annuitant if the Contract owner is a non-natural person) had been between the ages of 66 and 75 on the Rider Application Date, the Enhanced Earnings Death Benefit Plus benefit would be 25% of the In-Force Earnings ($6,250.00). EXAMPLE 2: Assume the same facts as above, except that the Owner has taken a withdrawal of $10,000 during the second year of the Contract. Immediately prior to withdrawal, the Contract Value is $105,000. The Contract Value on the date Northbrook receives Due Proof of Death will be assumed to be $114,000. The calculation of the Total Excess-of-Earnings Withdrawals is: (1) Contract Value: $105,000.00 (2) Total Purchase Payments: $100,000.00 (3) Prior Excess-of-Earnings Withdrawals: $0.00 (4) In-Force Premium: $100.000.00 (5) In-Force Earnings: (5) = (1) - (4) $5,000.00 (6) Withdrawal Amount: $10,000.00 (7) Excess-of Earnings Withdrawal: (7) = (6) - (5) and cannot be negative $5,000.00 (8) Total Excess-of-Earnings Withdrawals: (8) = (3) + (7) $5,000.00
The calculation of the Enhanced Earnings Death Benefit Plus is: (A) Contract Value: $114,000.00 (B) In-Force Premium (before withdrawal): $100,000.00 (C) Total Excess-of-Earnings Withdrawals: $5,000.00 (D) In-Force Premium (after withdrawal): (D) = (B) - (C) $95,000.00 (E) In-Force Earnings: (E) = (A) - (D) $19,000.00 (F) Cap: (F) = 100% X (D) $95,000.00 - ------------------------------------------------------------------------------------------------------- (G) Enhanced Earnings Death Benefit Plus*: (G) = MIN [50% X (E); (F)] $9,500.00 - -------------------------------------------------------------------------------------------------------
* If the oldest Owner (or Annuitant if the Contract owner is a non-natural person) had been between the ages of 56 and 65 on the Rider Application Date, the Enhanced Earnings Death Benefit Plus benefit would be 40% of the In-Force Earnings ($7,600.00). If the oldest Owner (or Annuitant if the Contract owner is a non-natural A-1 person) had been between the ages of 66 and 75 on the Rider Application Date, the Enhanced Earnings Death Benefit Plus benefit would be 25% of the In-Force Earnings ($4,750.00). EXAMPLE 3: This example is intended to illustrate the effect of adding the Enhanced Earnings Death Benefit Plus Rider after the Contract has been issued and the effect of later purchase payments. Assume that the oldest Owner (or Annuitant if the Contract owner is a non-natural person) is age 70 on the Rider Application Date. At the time the Contract is issued, the Owner makes a purchase payment of $100,000. After two years pass, the Owner elects to add the Enhanced Earnings Death Benefit Plus Rider. On the date this Rider is added, the Contract Value is $110,000. Two years later, the Owner withdraws $50,000. Immediately prior to the withdrawal, the Contract Value is $130,000. Another two years later, the Owner makes an additional purchase payment of $40,000. Two years later, the Owner dies with a Contract Value of $140,000 on the date Northbrook receives Due Proof of Death. The calculation of the Total Excess-of-Earnings Withdrawals is: (1) Contract Value: $130,000.00 (2) Contract Value on Rider Date: $110,000.00 (3) Prior Excess-of-Earnings Withdrawals: $0.00 (4) In-Force Premium: $110,000.00 (5) In-Force Earnings: (5) = (1) - (4) $20,000.00 (6) Withdrawal Amount: $50,000.00 (7) Excess-of Earnings Withdrawal: (7) = (6) - (5) and cannot be negative $30,000.00 (8) Total Excess-of-Earnings Withdrawals: (8) = (3) + (7) $30,000.00
The calculation of the Enhanced Earnings Death Benefit Plus is: (A) Contract Value: $140,000.00 (B) In-Force Premium (before withdrawal and purchase payment): $110,000.00 (C) Total Excess-of-Earnings Withdrawals: $30,000.00 (D) Additional Purchase Payment: $40,000.00 (E) In-Force Premium (after withdrawal and purchase payment): $120,000.00 (F) In-Force Earnings: (F) = (A) - (E) $20,000.00 (G) Cap: (G) = 50% X (E) $60,000.00 - ------------------------------------------------------------------------------------------------------- (H) Enhanced Earnings Death Benefit Plus*: (H) = MIN [25% X (F); (G)] $5,000.00 - -------------------------------------------------------------------------------------------------------
* If the oldest Owner (or Annuitant if the Conract owner is a non-natural person) had been age 55 or younger on the Rider Application Date, the Enhanced Earnings Death Benefit Plus benefit would be 50% of the In-Force Earnings ($10,000.00). If the oldest Owner (or Annuitant if the Contract owner is a non-natural person) had been between the ages of 56 and 65 on the Rider Application Date, the Enhanced Earnings Death Benefit Plus benefit would be 40% of the In-Force Earnings ($8,000.00). A-2 APPENDIX B - ------------------------------------------------------------------- Appendix B presents the Accumulation Unit Value and number of Accumulation Units outstanding for each Variable Sub-Account since the Contracts were first offered. This Appendix includes Accumulation Unit Values representing the highest and lowest available Contract charge combinations. The Statement of Additional Information, which is available upon request without charge, contains the Accumulation Unit Values for all other available combinations of charges. Please contact us at 1-800-654-2397 to obtain a copy of the Statement of Additional Information. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED (BASE CONTRACT)
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------------------- 2000 2001 ---------- ------------ VARIABLE SUB-ACCOUNT MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS Y SHARES) Aggressive Equity Accumulation Unit Value, Beginning of Period.............. $10.000 $9.677 Accumulation Unit Value, End of Period.................... $9.677 $6.815 Number of Units Outstanding, End of Period................ 198,351 316,721 Capital Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $9.701 Accumulation Unit Value, End of Period.................... $9.701 $7.035 Number of Units Outstanding, End of Period................ 64,349 100,606 Competitive Edge Accumulation Unit Value, Beginning of Period.............. $10.00 $8.414 Accumulation Unit Value, End of Period.................... $8.414 $6.347 Number of Units Outstanding, End of Period................ 83,033 111,943 Dividend Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $10.683 Accumulation Unit Value, End of Period.................... $10.683 $9.968 Number of Units Outstanding, End of Period................ 251,851 1,048,759 Equity Accumulation Unit Value, Beginning of Period.............. $10.000 $9.528 Accumulation Unit Value, End of Period.................... $9.528 $6.855 Number of Units Outstanding, End of Period................ 675,279 1,600,336 European Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $9.190 Accumulation Unit Value, End of Period.................... $9.190 $7.442 Number of Units Outstanding, End of Period................ 244,691 511,559 Global Dividend Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $9.931 Accumulation Unit Value, End of Period.................... $9.931 $9.166 Number of Units Outstanding, End of Period................ 33,924 100,886 High Yield Accumulation Unit Value, Beginning of Period.............. $10.000 $6.944 Accumulation Unit Value, End of Period.................... $6.944 $4.527 Number of Units Outstanding, End of Period................ 33,813 224,510
B-1
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------------------- 2000 2001 ---------- ------------ Income Builder Accumulation Unit Value, Beginning of Period.............. $10.000 $10.030 Accumulation Unit Value, End of Period.................... $10.030 $10.103 Number of Units Outstanding, End of Period................ 27,433 103,772 Information Accumulation Unit Value, Beginning of Period.............. $10.000 $9.292 Accumulation Unit Value, End of Period.................... $9.292 $5.226 Number of Units Outstanding, End of Period................ 27,581 197,903 Limited Duration Accumulation Unit Value, Beginning of Period.............. $10.000 $10.303 Accumulation Unit Value, End of Period.................... $10.303 $10.824 Number of Units Outstanding, End of Period................ 22,608 196,418 Money Market Accumulation Unit Value, Beginning of Period.............. $10.000 $10.262 Accumulation Unit Value, End of Period.................... $10.262 $10.492 Number of Units Outstanding, End of Period................ 272,169 1,063,770 Pacific Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $7.272 Accumulation Unit Value, End of Period.................... $7.272 $5.218 Number of Units Outstanding, End of Period................ 7,527 20,370 Quality Income Plus Accumulation Unit Value, Beginning of Period.............. $10.000 $10.748 Accumulation Unit Value, End of Period.................... $10.748 $11.593 Number of Units Outstanding, End of Period................ 176,424 967,824 S&P 500 Index Accumulation Unit Value, Beginning of Period.............. $10.000 $8.959 Accumulation Unit Value, End of Period.................... $8.959 $7.731 Number of Units Outstanding, End of Period................ 301,630 975,139 Strategist Accumulation Unit Value, Beginning of Period.............. $10.000 $9.922 Accumulation Unit Value, End of Period.................... $9.922 $8.770 Number of Units Outstanding, End of Period................ 426,068 1,061,403 Utilities Accumulation Unit Value, Beginning of Period.............. $10.000 $10.130 Accumulation Unit Value, End of Period.................... $10.130 $7.396 Number of Units Outstanding, End of Period................ 337,753 773,382 THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Morgan Stanley UIF Emerging Markets Equity Accumulation Unit Value, Beginning of Period.............. $10.000 $6.386 Accumulation Unit Value, End of Period.................... $6.386 $5.891 Number of Units Outstanding, End of Period................ 61,310 73,439 Morgan Stanley UIF Equity Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $8.335 Accumulation Unit Value, End of Period.................... $8.335 $6.980 Number of Units Outstanding, End of Period................ 182,173 206,607
B-2
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------------------- 2000 2001 ---------- ------------ Morgan Stanley UIF International Magnum Accumulation Unit Value, Beginning of Period.............. $10.000 $9.054 Accumulation Unit Value, End of Period.................... $9.054 $7.209 Number of Units Outstanding, End of Period................ 41,665 75,869 Morgan Stanley UIF Mid Cap Growth Accumulation Unit Value, Beginning of Period.............. -- -- Accumulation Unit Value, End of Period.................... -- -- Number of Units Outstanding, End of Period................ -- -- Morgan Stanley UIF Mid Cap Value Accumulation Unit Value, Beginning of Period.............. $10.000 $10.231 Accumulation Unit Value, End of Period.................... $10.231 $9.775 Number of Units Outstanding, End of Period................ 54,051 274,260 Morgan Stanley UIF U.S. Real Estate Accumulation Unit Value, Beginning of Period.............. $10.000 $11.503 Accumulation Unit Value, End of Period.................... $11.503 $12.465 Number of Units Outstanding, End of Period................ 20,901 83,055 VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I AND II SHARES) Van Kampen LIT Comstock, Class II Accumulation Unit Value, Beginning of Period.............. -- -- Accumulation Unit Value, End of Period.................... -- -- Number of Units Outstanding, End of Period................ -- -- Van Kampen LIT Emerging Growth, Class I Accumulation Unit Value, Beginning of Period.............. $10.000 $8.129 Accumulation Unit Value, End of Period.................... $8.129 $5.494 Number of Units Outstanding, End of Period................ 472,104 722,796 Van Kampen LIT Emerging Growth, Class II Accumulation Unit Value, Beginning of Period.............. -- -- Accumulation Unit Value, End of Period.................... -- $8.106 Number of Units Outstanding, End of Period................ -- 175,128 AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. Capital Appreciation Accumulation Unit Value, Beginning of Period.............. $10.000 $8.285 Accumulation Unit Value, End of Period.................... $8.285 $6.270 Number of Units Outstanding, End of Period................ 90,817 201,850 AIM V.I. Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $7.400 Accumulation Unit Value, End of Period.................... $7.400 $4.826 Number of Units Outstanding, End of Period................ 110,925 231,070 AIM V.I. Premier Equity Accumulation Unit Value, Beginning of Period.............. $10.000 $8.321 Accumulation Unit Value, End of Period.................... $8.321 $7.178 Number of Units Outstanding, End of Period................ 312,033 611,786 ALLIANCE VARIABLE PRODUCTS SERIES (CLASS B SHARES) Alliance Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $8.000 Accumulation Unit Value, End of Period.................... $8.000 $6.026 Number of Units Outstanding, End of Period................ 119,976 269,657
B-3
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------------------- 2000 2001 ---------- ------------ Alliance Growth and Income Accumulation Unit Value, Beginning of Period.............. $10.000 $10.242 Accumulation Unit Value, End of Period.................... $10.242 $10.119 Number of Units Outstanding, End of Period................ 102,708 642,105 Alliance Premier Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $7.978 Accumulation Unit Value, End of Period.................... $7.978 $6.501 Number of Units Outstanding, End of Period................ 304,578 358,857 LSA VARIABLE SERIES TRUST LSA Aggressive Growth Accumulation Unit Value, Beginning of Period.............. -- -- Accumulation Unit Value, End of Period.................... -- -- Number of Units Outstanding, End of Period................ -- -- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) Putnam VT Growth and Income Accumulation Unit Value, Beginning of Period.............. $10.000 $10.564 Accumulation Unit Value, End of Period.................... $10.564 $9.755 Number of Units Outstanding, End of Period................ 73,374 366,952 Putnam VT International Growth Accumulation Unit Value, Beginning of Period.............. $10.000 $9.016 Accumulation Unit Value, End of Period.................... $9.016 $7.061 Number of Units Outstanding, End of Period................ 187,566 474,491 Putnam VT Small Cap Value Accumulation Unit Value, Beginning of Period.............. -- -- Accumulation Unit Value, End of Period.................... -- -- Number of Units Outstanding, End of Period................ -- -- Putnam VT Voyager Accumulation Unit Value, Beginning of Period.............. $10.000 $8.117 Accumulation Unit Value, End of Period.................... $8.117 $6.213 Number of Units Outstanding, End of Period................ 211,436 340,965
*Contracts were first offered on June 5, 2000. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock, LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.25%. B-4 ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED (WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION {AGE 66-75} PLUS THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------ 2000 ------------ VARIABLE SUB-ACCOUNT MORGAN STANLEY VARIABLE INVESTMENT SERIES (CLASS Y SHARES) Aggressive Equity Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.157 Number of Units Outstanding, End of Period................ 3,625 Capital Growth Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $8.797 Number of Units Outstanding, End of Period................ 1,878 Competitive Edge Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $8.948 Number of Units Outstanding, End of Period................ 2,373 Dividend Growth Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.282 Number of Units Outstanding, End of Period................ 66,076 Equity Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.190 Number of Units Outstanding, End of Period................ 42,655 European Growth Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.526 Number of Units Outstanding, End of Period................ 7,447 Global Dividend Growth Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.656 Number of Units Outstanding, End of Period................ 15,650 High Yield Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $7.694 Number of Units Outstanding, End of Period................ 11,886
B-5
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------ 2000 ------------ Income Builder Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.597 Number of Units Outstanding, End of Period................ 11,722 Information Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $8.906 Number of Units Outstanding, End of Period................ 6,671 Limited Duration Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $10.247 Number of Units Outstanding, End of Period................ 32,220 Money Market Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $10.022 Number of Units Outstanding, End of Period................ 59,819 Pacific Growth Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $8.140 Number of Units Outstanding, End of Period................ 1,854 Quality Income Plus Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $10.389 Number of Units Outstanding, End of Period................ 83,474 S&P 500 Index Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.419 Number of Units Outstanding, End of Period................ 24,696 Strategist Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.503 Number of Units Outstanding, End of Period................ 36,980 Utilities Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $8.283 Number of Units Outstanding, End of Period................ 17,626 THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Morgan Stanley UIF Emerging Markets Equity Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.736 Number of Units Outstanding, End of Period................ 3,571 Morgan Stanley UIF Equity Growth Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.604 Number of Units Outstanding, End of Period................ 4,178
B-6
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------ 2000 ------------ Morgan Stanley UIF International Magnum Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.069 Number of Units Outstanding, End of Period................ 5,001 Morgan Stanley UIF Mid Cap Growth Accumulation Unit Value, Beginning of Period.............. -- Accumulation Unit Value, End of Period.................... -- Number of Units Outstanding, End of Period................ -- Morgan Stanley UIF Mid Cap Value Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.826 Number of Units Outstanding, End of Period................ 34,561 Morgan Stanley UIF U.S. Real Estate Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $10.225 Number of Units Outstanding, End of Period................ 16,325 VAN KAMPEN LIFE INVESTMENT TRUST (CLASS I AND II SHARES) Van Kampen LIT Comstock, Class II Accumulation Unit Value, Beginning of Period.............. -- Accumulation Unit Value, End of Period.................... -- Number of Units Outstanding, End of Period................ -- Van Kampen LIT Emerging Growth, Class I Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.241 Number of Units Outstanding, End of Period................ 0 Van Kampen LIT Emerging Growth, Class II Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $8.740 Number of Units Outstanding, End of Period................ 33,708 AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. Capital Appreciation Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.206 Number of Units Outstanding, End of Period................ 13,272 AIM V.I. Growth Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $8.804 Number of Units Outstanding, End of Period................ 6,555 AIM V.I. Premier Equity Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.339 Number of Units Outstanding, End of Period................ 48,549
B-7
FOR THE PERIOD BEGINNING JANUARY 1* AND ENDING DECEMBER 31, ------------ 2000 ------------ ALLIANCE VARIABLE PRODUCTS SERIES (CLASS B SHARES) Alliance Growth Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.101 Number of Units Outstanding, End of Period................ 1,281 Alliance Growth and Income Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.490 Number of Units Outstanding, End of Period................ 73,305 Alliance Premier Growth Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.288 Number of Units Outstanding, End of Period................ 17,059 LSA VARIABLE SERIES TRUST LSA Aggressive Growth Accumulation Unit Value, Beginning of Period.............. -- Accumulation Unit Value, End of Period.................... -- Number of Units Outstanding, End of Period................ -- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) Putnam VT Growth and Income Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.424 Number of Units Outstanding, End of Period................ 21,590 Putnam VT International Growth Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.150 Number of Units Outstanding, End of Period................ 12,096 Putnam VT Small Cap Value Accumulation Unit Value, Beginning of Period.............. -- Accumulation Unit Value, End of Period.................... -- Number of Units Outstanding, End of Period................ -- Putnam VT Voyager Accumulation Unit Value, Beginning of Period.............. $10.000 Accumulation Unit Value, End of Period.................... $9.087 Number of Units Outstanding, End of Period................ 25,087
*Contracts with the Enhanced Earnings Death Benefit Plus and the Income and Death Benefit Combination Option 2 (age 66-75) were first offered under the Contracts on May 1, 2001. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect mortality and expense risk charge of 2.10%. B-8 STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS - -------------------------------------------------------------------
PAGE - ---------------------------------------------------------------------------- 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 AMOUNT INCOME PAYMENTS - ---------------------------------------------------------------------------- PAGE - ---------------------------------------------------------------------------- GENERAL MATTERS - ---------------------------------------------------------------------------- Incontestability - ---------------------------------------------------------------------------- Settlements - ---------------------------------------------------------------------------- Safekeeping of the Variable Account's Assets - ---------------------------------------------------------------------------- Premium Taxes - ---------------------------------------------------------------------------- Tax Reserves - ---------------------------------------------------------------------------- EXPERTS - ---------------------------------------------------------------------------- ACCUMULATION UNIT VALUES - ---------------------------------------------------------------------------- FINANCIAL STATEMENTS - ----------------------------------------------------------------------------
------------------------------ THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH SUCH OFFERING MAY NOT LAWFULLY BE MADE. WE DO NOT AUTHORIZE ANYONE TO PROVIDE ANY INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS. C-1 THE MORGAN STANLEY VARIABLE ANNUITY II MORGAN STANLEY VARIABLE ANNUITY II ASSETMANAGER Northbrook Life Insurance Company Statement of Additional Information Northbrook Variable Annuity Account II dated May 1, 2002 300 N. Milwaukee Avenue Vernon Hills, IL. 60061 1 (800) 654-2397 This Statement of Additional Information supplements the information in the prospectus for the Morgan Stanley Variable Annuity II Contracts ("VA II Contracts") and the Morgan Stanley Variable Annuity II AssetManager Contracts ("AssetManager Contracts"). This Statement of Additional Information is not a prospectus. You should read it in conjunction with the prospectus, dated May 1, 2002, for each form of 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 Financial Advisor. Except as otherwise noted, this Statement of Additional Information uses the same defined terms as the prospectus for each form of Contract described above. TABLE OF CONTENTS Description Page Additions, Deletions or Substitutions of Investments The Contract Purchases 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 Experts Accumulation Unit Values A-1 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. PURCHASES Morgan Stanley DW Inc. is the principal underwriter and distributor of the Contracts. We are no longer offering the Contracts in all states. Please check with your Morgan Stanley Financial Advisor for availability. For the Variable Account, we paid underwriting commissions to Morgan Stanley DW of $49,879,046.98, $37, 586,872.81 and $24,601,167.63 for the years 1999, 2000 and 2001, respectively. 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 When factoring in the withdrawal charge assessed upon redemption, we exclude the Free Withdrawal Amount, which is the amount you can withdraw from the Contract without paying a withdrawal charge. We also use the withdrawal charge that would apply upon redemption at the end of each period. Thus, for example, when factoring in the withdrawal charge for a one year standardized total return calculation, we would use the withdrawal charge that applies to a withdrawal of a purchase payment made one year prior. When factoring in the contract maintenance charge, we pro rate the charge by dividing (i) the contract maintenance charge by (ii) the average contract size of $56,196. We then multiply the resulting percentage by a hypothetical $1,000 investment. The standardized total returns for the Variable Sub-Accounts available under each form of Contract for the periods ended December 31, 2001 are set out below. No standardized total returns are shown for the Money Market Variable Sub-Account. The AssetManager Contracts were first offered to the public on July 20, 1998. Accordingly, performance figures for certain Variable Sub-Accounts prior to July 20, 1998, reflects 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 AssetManager Contracts, as well as the withdrawal and contract maintenance charges described above. In addition, performance figures for periods prior to the availability of any income benefit, death benefit or combination thereof that we offer have been adjusted to reflect the current charge for such features as if they had been available throughout the periods shown. Variable Sub-Account Inception Dates: The Money Market, Quality Income Plus, High Yield, Utilities, Dividend Growth, Equity and Strategist Variable Sub-Accounts commenced operations on October 25, 1990. The Capital Growth and European Growth Variable Sub-Accounts commenced operations on March 1, 1991. The Global Dividend Growth and Pacific Growth Variable Sub-Accounts commenced operations on February 23, 1994. The Income Builder Variable Sub-Account commenced operation on January 21, 1997. The Equity Growth, International Magnum, Emerging Markets Equity, and Emerging Growth Variable Sub-Accounts commenced operation on March 16, 1998. The S&P 500 Index, Competitive Edge ("Best Ideas") and U.S. Real Estate Variable Sub-Accounts commenced operations of May 18, 1998. The Limited Duration and Aggressive Equity Variable Sub-Accounts commenced operations on May 3, 1999. The Mid-Cap Value Sub-Account, the AIM V.I. Capital Appreciation, Growth and Premier Equity Variable Sub-Accounts, the Alliance Growth, Growth and Income, and Premier Growth Variable Sub-Accounts, and the Putnam VT Growth and Income, International Growth and Voyager Variable Sub-Accounts, which are available under Variable Annuity II Contracts only, commenced operations on January 31, 2000. The Information Sub-Account commenced operations on November 6, 2000. No standardized or non-standardized performance is shown for the LSA Aggressive Growth, Van Kampen LIT Comstock, Morgan Stanley UIF Mid Cap Growth and Putnam VT Small Cap Value which commenced operations on May 1, 2002. VARIABLE ANNUITY II CONTRACTS (WITHOUT AN OPTIONAL DEATH BENEFIT OR INCOME BENEFIT)
10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -33.74% N/A -1.71% Capital Growth -31.62% 6.56% 5.95% Competitive Edge -28.68% N/A -8.55% Dividend Growth -10.80% 5.31% 9.43% Equity -32.17% 11.09% 11.22% European Growth -23.18% 6.13% 12.64% Global Dividend Growth -11.83% 4.11% 7.01% High Yield -38.96% -15.77% -2.88% Income Builder -3.39% N/A 5.05% Information -47.97% N/A -47.15% Limited Duration 0.97% N/A 2.59% Money Market -1.78% 3.42% 3.13% Pacific Growth -32.72% -16.43% -10.74% Quality Income Plus 3.77% 5.42% 5.84% S&P 500 Index -17.74% N/A -0.17% Strategist -15.71% 7.40% 7.58% Utilities -31.07% 4.68% 6.95% Morgan Stanley UIF Emerging Markets Equity -12.07% -4.96% -5.21% Morgan Stanley UIF Equity Growth -20.57% N/A 8.88% Morgan Stanley UIF International Magnum -24.70% N/A -1.15% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -8.77% N/A 14.23% Morgan Stanley UIF U.S. Real Estate 4.05% N/A 6.01% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -36.73% 14.12% 15.84% AIM V.I. Capital Appreciation -28.63% 4.39% 10.20% AIM V.I. Growth -39.09% 2.28% 7.31% AIM V.I. Premier Equity -18.04% 8.05% 11.84% Alliance Growth -28.99% 5.39% 12.14% Alliance Growth and Income -5.51% 12.70% 13.04% Alliance Premier Growth -22.82% 10.66% 13.81% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -11.97% 6.30% 10.26% Putnam VT International Growth -26.00% N/A 7.80% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -27.77% 8.29% 11.30% (WITH THE ENHANCED DEATH BENEFIT OPTION, PERFORMANCE DEATH BENEFIT OPTION OR PERFORMANCE INCOME BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -33.84% N/A -1.85% Capital Growth -31.72% 6.42% 5.82% Competitive Edge -28.78% N/A -8.68% Dividend Growth -10.92% 5.18% 9.29% Equity -32.27% 10.95% 11.08% European Growth -23.29% 5.99% 12.49% Global Dividend Growth -11.95% 3.98% 6.88% High Yield -39.05% -15.88% -3.01% Income Builder -3.52% N/A 4.91% Information -48.04% N/A -47.23% Limited Duration 0.83% N/A 2.45% Money Market -1.91% 3.29% 3.00% Pacific Growth -32.82% -16.54% -10.86% Quality Income Plus 3.63% 5.29% 5.70% S&P 500 Index -17.85% N/A -0.30% Strategist -15.83% 7.26% 7.44% Utilities -31.16% 4.54% 6.81% Morgan Stanley UIF Emerging Markets Equity -12.19% N/A -8.18% Morgan Stanley UIF Equity Growth -20.68% N/A -0.51% Morgan Stanley UIF International Magnum -24.80% N/A -5.80% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -8.90% N/A 2.69% Morgan Stanley UIF U.S. Real Estate 3.90% N/A 4.05% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -36.82% N/A 9.56% AIM V.I. Capital Appreciation -28.73% N/A -21.26% AIM V.I. Growth -39.18% N/A -31.17% AIM V.I. Premier Equity -18.15% N/A -16.97% Alliance Growth -29.09% N/A -23.69% Alliance Growth and Income -5.64% N/A 5.42% Alliance Premier Growth -22.93% N/A -19.48% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.09% N/A -1.49% Putnam VT International Growth -26.10% N/A -17.65% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -27.87% N/A -23.08%
(WITH PERFORMANCE BENEFIT COMBINATION OPTION OR DEATH BENEFIT COMBINATION OPTION)
10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -33.91% N/A -1.96% Capital Growth -31.80% 6.30% 5.70% Competitive Edge -28.86% N/A -8.78% Dividend Growth -11.02% 5.06% 9.17% Equity -32.35% 10.82% 10.95% European Growth -23.38% 5.87% 12.37% Global Dividend Growth -12.05% 3.86% 6.76% High Yield -39.12% -15.97% -3.11% Income Builder -3.64% N/A 4.80% Information -48.10% N/A -47.29% Limited Duration 0.71% N/A 2.34% Money Market -2.03% 3.17% 2.89% Pacific Growth -32.90% -16.64% -10.96% Quality Income Plus 3.51% 5.17% 5.59% S&P 500 Index -17.94% N/A -0.42% Strategist -15.92% 7.15% 7.32% Utilities -31.24% 4.43% 6.69% Morgan Stanley UIF Emerging Markets Equity -12.29% N/A -8.29% Morgan Stanley UIF Equity Growth -20.78% N/A -0.62% Morgan Stanley UIF International Magnum -24.89% N/A -5.91% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.00% N/A 2.57% Morgan Stanley UIF U.S. Real Estate 3.78% N/A 3.93% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -36.90% N/A 9.44% AIM V.I. Capital Appreciation -28.82% N/A -21.35% AIM V.I. Growth -39.25% N/A -31.25% AIM V.I. Premier Equity -18.24% N/A -17.06% Alliance Growth -29.17% N/A -23.78% Alliance Growth and Income -5.74% N/A 5.30% Alliance Premier Growth -23.02% N/A -19.57% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.19% N/A -1.60% Putnam VT International Growth -26.19% N/A -17.75% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -27.96% N/A -23.17% (WITH THE INCOME BENEFIT COMBINATION OPTION 2) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -33.96% N/A -2.02% Capital Growth -31.84% 6.24% 5.64% Competitive Edge -28.91% N/A -8.84% Dividend Growth -11.08% 5.00% 9.10% Equity -32.39% 10.76% 10.89% European Growth -23.43% 5.81% 12.30% Global Dividend Growth -12.11% 3.80% 6.70% High Yield -39.16% -16.02% -3.17% Income Builder -3.70% N/A 4.73% Information -48.14% N/A -47.32% Limited Duration 0.65% N/A 2.27% Money Market -2.09% 3.11% 2.82% Pacific Growth -32.94% -16.69% -11.02% Quality Income Plus 3.45% 5.11% 5.52% S&P 500 Index -18.00% N/A -0.48% Strategist -15.98% 7.08% 7.26% Utilities -31.29% 4.37% 6.63% Morgan Stanley UIF Emerging Markets Equity -12.34% N/A -8.34% Morgan Stanley UIF Equity Growth -20.83% N/A -0.68% Morgan Stanley UIF International Magnum -24.94% N/A -5.96% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.06% N/A 2.51% Morgan Stanley UIF U.S. Real Estate 3.72% N/A 3.87% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -36.94% N/A 9.37% AIM V.I. Capital Appreciation -28.86% N/A -21.40% AIM V.I. Growth -39.29% N/A -31.30% AIM V.I. Premier Equity -18.30% N/A -17.12% Alliance Growth -29.21% N/A -23.83% Alliance Growth and Income -5.80% N/A 5.23% Alliance Premier Growth -23.07% N/A -19.62% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.25% N/A -1.66% Putnam VT International Growth -26.24% N/A -17.80% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -28.00% N/A -23.22% (WITH THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -34.10% N/A -2.22% Capital Growth -31.99% 6.02% 5.42% Competitive Edge -29.06% N/A -9.03% Dividend Growth -11.26% 4.79% 8.88% Equity -32.53% 10.53% 10.67% European Growth -23.59% 5.60% 12.08% Global Dividend Growth -12.29% 3.59% 6.48% High Yield -39.29% -16.20% -3.37% Income Builder -3.90% N/A 4.52% Information -48.25% N/A -47.44% Limited Duration 0.44% N/A 2.06% Money Market -2.30% 2.90% 2.62% Pacific Growth -33.08% -16.86% -11.19% Quality Income Plus 3.23% 4.89% 5.31% S&P 500 Index -18.17% N/A -0.68% Strategist -16.15% 6.87% 7.04% Utilities -31.43% 4.16% 6.41% Morgan Stanley UIF Emerging Markets Equity -12.53% N/A -8.53% Morgan Stanley UIF Equity Growth -20.99% N/A -0.88% Morgan Stanley UIF International Magnum -25.10% N/A -6.16% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.25% N/A 2.29% Morgan Stanley UIF U.S. Real Estate 3.50% N/A 3.66% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -37.07% N/A 9.15% AIM V.I. Capital Appreciation -29.01% N/A -21.57% AIM V.I. Growth -39.42% N/A -31.45% AIM V.I. Premier Equity -18.47% N/A -17.29% Alliance Growth -29.36% N/A -24.00% Alliance Growth and Income -6.00% N/A 5.01% Alliance Premier Growth -23.23% N/A -19.80% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.43% N/A -1.87% Putnam VT International Growth -26.39% N/A -17.97% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -28.16% N/A -23.38% (WITH THE ENHANCED EARNINGS DEATH BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -33.89% N/A -1.92% Capital Growth -31.77% 6.35% 5.74% Competitive Edge -28.83% N/A -8.74% Dividend Growth -10.98% 5.10% 9.21% Equity -32.32% 10.87% 11.00% European Growth -23.35% 5.92% 12.41% Global Dividend Growth -12.02% 3.90% 6.80% High Yield -39.09% -15.94% -3.08% Income Builder -3.60% N/A 4.84% Information -48.08% N/A -47.27% Limited Duration 0.76% N/A 2.38% Money Market -1.99% 3.22% 2.93% Pacific Growth -32.87% -16.60% -10.93% Quality Income Plus 3.56% 5.21% 5.63% S&P 500 Index -17.91% N/A -0.38% Strategist -15.89% 7.19% 7.37% Utilities -31.21% 4.47% 6.73% Morgan Stanley UIF Emerging Markets Equity -12.25% N/A -8.25% Morgan Stanley UIF Equity Growth -20.74% N/A -0.58% Morgan Stanley UIF International Magnum -24.86% N/A -5.87% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -8.96% N/A 2.61% Morgan Stanley UIF U.S. Real Estate 3.83% N/A 3.97% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -36.87% N/A 9.48% AIM V.I. Capital Appreciation -28.78% N/A -21.32% AIM V.I. Growth -39.23% N/A -31.22% AIM V.I. Premier Equity -18.21% N/A -17.03% Alliance Growth -29.14% N/A -23.75% Alliance Growth and Income -5.71% N/A 5.34% Alliance Premier Growth -22.99% N/A -19.54% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.16% N/A -1.56% Putnam VT International Growth -26.16% N/A -17.71% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -27.93% N/A -23.13% (WITH THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2 AND ENHANCED EARNINGS DEATH BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -34.24% N/A -2.43% Capital Growth -32.13% 5.81% 5.21% Competitive Edge -29.21% N/A -9.21% Dividend Growth -11.45% 4.57% 8.66% Equity -32.68% 10.31% 10.44% European Growth -23.75% 5.38% 11.85% Global Dividend Growth -12.48% 3.38% 6.27% High Yield -39.42% -16.37% -3.56% Income Builder -4.10% N/A 4.31% Information -48.36% N/A -47.55% Limited Duration 0.23% N/A 1.85% Money Market -2.50% 2.70% 2.41% Pacific Growth -33.23% -17.03% -11.37% Quality Income Plus 3.02% 4.68% 5.10% S&P 500 Index -18.34% N/A -0.89% Strategist -16.33% 6.65% 6.83% Utilities -31.58% 3.95% 6.20% Morgan Stanley UIF Emerging Markets Equity -12.71% N/A -8.72% Morgan Stanley UIF Equity Growth -21.16% N/A -1.09% Morgan Stanley UIF International Magnum -25.26% N/A -6.35% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.44% N/A 2.08% Morgan Stanley UIF U.S. Real Estate 3.29% N/A 3.44% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -37.21% N/A 8.93% AIM V.I. Capital Appreciation -29.16% N/A -21.74% AIM V.I. Growth -39.55% N/A -31.60% AIM V.I. Premier Equity -18.64% N/A -17.47% Alliance Growth -29.51% N/A -24.16% Alliance Growth and Income -6.20% N/A 4.79% Alliance Premier Growth -23.39% N/A -19.97% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.62% N/A -2.07% Putnam VT International Growth -26.55% N/A -18.15% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -28.31% N/A -23.54%
ASSETMANAGER CONTRACTS (WITHOUT AN OPTIONAL DEATH BENEFIT OR INCOME BENEFIT OPTION)
10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.67% N/A -0.67% Capital Growth -27.56% 6.43% 5.69% Competitive Edge -24.62% N/A -7.91% Dividend Growth -6.78% 5.19% 9.16% Equity -28.11% 10.93% 10.95% European Growth -19.14% 6.00% 12.36% Global Dividend Growth -7.81% 4.00% 6.75% High Yield -34.88% -15.65% -3.12% Income Builder 0.60% N/A 5.07% Information -43.86% N/A -43.26% Limited Duration 4.95% N/A 3.54% Money Market 2.21% 3.31% 2.88% Pacific Growth -28.66% -16.30% -10.98% Quality Income Plus 7.75% 5.30% 5.58% S&P 500 Index -13.71% N/A 0.28% Strategist -11.68% 7.27% 7.31% Utilities -27.00% 4.56% 6.68% Morgan Stanley UIF Emerging Markets Equity -8.05% N/A -7.45% Morgan Stanley UIF Equity Growth -16.54% N/A 0.05% Morgan Stanley UIF International Magnum -20.65% N/A -5.13% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.76% N/A 4.70% Morgan Stanley UIF U.S. Real Estate 8.02% N/A 4.55% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.66% N/A 9.95% AIM V.I. Capital Appreciation -24.58% N/A -18.65% AIM V.I. Growth -35.01% N/A -28.20% AIM V.I. Premier Equity -14.03% N/A -14.49% Alliance Growth -24.93% N/A -21.00% Alliance Growth and Income -1.51% N/A 7.38% Alliance Premier Growth -18.78% N/A -16.92% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.96% N/A 0.61% Putnam VT International Growth -21.95% N/A -15.14% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.72% N/A -20.40% (WITH THE ENHANCED DEATH BENEFIT OPTION, PERFORMANCE DEATH BENEFIT OPTION, OR PERFORMANCE INCOME BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.77% N/A -0.79% Capital Growth -27.65% 6.29% 5.55% Competitive Edge -24.72% N/A -8.03% Dividend Growth -6.90% 5.05% 9.02% Equity -28.20% 10.78% 10.80% European Growth -19.25% 5.86% 12.22% Global Dividend Growth -7.94% 3.86% 6.61% High Yield -34.96% -15.76% -3.25% Income Builder 0.47% N/A 4.94% Information -43.94% N/A -43.34% Limited Duration 4.82% N/A 3.41% Money Market 2.08% 3.18% 2.74% Pacific Growth -28.75% -16.41% -11.09% Quality Income Plus 7.61% 5.16% 5.44% S&P 500 Index -13.82% N/A 0.15% Strategist -11.80% 7.13% 7.17% Utilities -27.10% 4.43% 6.54% Morgan Stanley UIF Emerging Markets Equity -8.17% N/A -7.57% Morgan Stanley UIF Equity Growth -16.65% N/A -0.08% Morgan Stanley UIF International Magnum -20.75% N/A -5.25% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.89% N/A 4.57% Morgan Stanley UIF U.S. Real Estate 7.88% N/A 4.41% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.75% N/A 9.80% AIM V.I. Capital Appreciation -24.68% N/A -18.75% AIM V.I. Growth -35.10% N/A -28.30% AIM V.I. Premier Equity -14.14% N/A -14.60% Alliance Growth -25.03% N/A -21.10% Alliance Growth and Income -1.63% N/A 7.24% Alliance Premier Growth -18.89% N/A -17.03% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.08% N/A 0.48% Putnam VT International Growth -22.05% N/A -15.25% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.82% N/A -20.51% (WITH PERFORMANCE BENEFIT COMBINATION OPTION OR DEATH BENEFIT COMBINATION OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.84% N/A -0.90% Capital Growth -27.73% 6.17% 5.44% Competitive Edge -24.81% N/A -8.13% Dividend Growth -7.01% 4.94% 8.90% Equity -28.28% 10.66% 10.68% European Growth -19.34% 5.74% 12.09% Global Dividend Growth -8.04% 3.75% 6.50% High Yield -35.04% -15.85% -3.36% Income Builder 0.36% N/A 4.82% Information -44.00% N/A -43.40% Limited Duration 4.70% N/A 3.29% Money Market 1.96% 3.07% 2.63% Pacific Growth -28.83% -16.51% -11.19% Quality Income Plus 7.49% 5.04% 5.32% S&P 500 Index -13.91% N/A 0.04% Strategist -11.90% 7.01% 7.06% Utilities -27.18% 4.31% 6.43% Morgan Stanley UIF Emerging Markets Equity -8.27% N/A -7.68% Morgan Stanley UIF Equity Growth -16.74% N/A -0.19% Morgan Stanley UIF International Magnum -20.84% N/A -5.36% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.99% N/A 4.45% Morgan Stanley UIF U.S. Real Estate 7.76% N/A 4.30% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.82% N/A 9.68% AIM V.I. Capital Appreciation -24.76% N/A -18.84% AIM V.I. Growth -35.17% N/A -28.38% AIM V.I. Premier Equity -14.24% N/A -14.70% Alliance Growth -25.11% N/A -21.19% Alliance Growth and Income -1.74% N/A 7.12% Alliance Premier Growth -18.98% N/A -17.12% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.18% N/A 0.37% Putnam VT International Growth -22.14% N/A -15.35% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.90% N/A -20.59%
NON-STANDARDIZED TOTAL RETURNS From time to time, we also may quote rates of return that reflect changes in the values of each Variable Sub-Account's accumulation units. We may quote these "non-standardized total returns" on an annualized, cumulative, year-by-year, or other basis. These rates of return take into account asset-based charges, such as the mortality and expense risk charge and administration charge. However, these rates of return do not reflect withdrawal charges, contract maintenance charges, or any taxes. Such charges, if reflected, would reduce the performance shown. Annualized returns reflect the rate of return that, when compounded annually, would equal the cumulative rate of return for the period shown. We compute annualized returns according to the following formula: Annualized Return = (1 = r)1/n - 1 where r = cumulative rate of return for the period shown, and n = number of years in period. The method of computing annualized rates of return is similar to that for computing standardized performance, described above, except that rather than using a hypothetical $1,000 investment and the ending redeemable value thereof, we use the changes in value of an accumulation unit. Cumulative rates of return reflect the cumulative change in value of an accumulation unit over a period shown. Year-by-year rates of return reflect the change in value of accumulation unit during the course of each year shown. We compute these returns by dividing the accumulation unit value at the end of each period shown, by the accumulation unit value at the beginning of that period, and subtracting one. We compute other total returns on a similar basis. We may quote non-standardized total returns for 1, 3, 5 and 10 year periods, or period since inception of the Variable Sub-Account's operations, as well as other periods, such as "year-to-date" (prior calendar year end to the day stated in the advertisement); "year to most recent quarter" (prior calendar year end to the end of the most recent quarter); the prior calendar year; and the "n" most recent calendar years. The non-standardized annualized total returns for the Variable Sub-Accounts for the period ended December 31, 2001 are set out below. The AssetManager Contracts were first offered to the public on July 20, 1998. Accordingly, performance figures for certain Variable Sub-Accounts prior to those dates reflect the historical performance of the Variable Sub-Accounts, adjusted to reflect the current asset-based charges (but not the withdrawal charge, contract maintenance charge, or taxes) under the AssetManager Contracts that would have applied had it been available during the period shown. In addition, performance figures for periods prior to the availability of an optional income benefit, death benefit or combination thereof have been adjusted to reflect the current charge for such features as if they had been available throughout the periods shown. The inception date of each Variable Sub-Account appears under "Standardized Total Returns," above. VARIABLE ANNUITY II CONTRACTS (WITHOUT AN OPTIONAL DEATH BENEFIT PROVISION OR INCOME BENEFIT)
10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.43% N/A -0.36% Capital Growth -27.30% 6.74% 6.01% Competitive Edge -24.36% N/A -7.60% Dividend Growth -6.48% 5.51% 9.47% Equity -27.86% 11.24% 11.26% European Growth -18.87% 6.31% 12.67% Global Dividend Growth -7.51% 4.31% 7.07% High Yield -34.64% -15.35% -2.83% Income Builder 0.92% N/A 5.39% Information -43.65% N/A -43.01% Limited Duration 5.29% N/A 3.88% Money Market 2.54% 3.63% 3.19% Pacific Growth -28.41% -15.99% -10.66% Quality Income Plus 8.09% 5.62% 5.89% S&P 500 Index -13.42% N/A 0.59% Strategist -11.39% 7.58% 7.63% Utilities -26.75% 4.87% 6.99% Morgan Stanley UIF Emerging Markets Equity -7.75% N/A -7.14% Morgan Stanley UIF Equity Growth -16.26% N/A 0.36% Morgan Stanley UIF International Magnum -20.38% N/A -4.82% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.46% N/A 5.03% Morgan Stanley UIF U.S. Real Estate 8.36% N/A 4.89% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.42% N/A 10.27% AIM V.I. Capital Appreciation -24.32% N/A -18.36% AIM V.I. Growth -34.78% N/A -27.94% AIM V.I. Premier Equity -13.72% N/A -14.19% Alliance Growth -24.67% N/A -20.72% Alliance Growth and Income -1.19% N/A 7.71% Alliance Premier Growth -18.51% N/A -16.63% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.65% N/A 0.93% Putnam VT International Growth -21.68% N/A -14.86% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.46% N/A -20.12% (WITH THE ENHANCED DEATH BENEFIT OPTION, PERFORMANCE DEATH BENEFIT OPTION, OR THE PERFORMANCE INCOME BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.52% N/A -0.49% Capital Growth -27.40% 6.60% 5.87% Competitive Edge -24.46% N/A -7.72% Dividend Growth -6.60% 5.37% 9.33% Equity -27.95% 11.10% 11.12% European Growth -18.97% 6.17% 12.53% Global Dividend Growth -7.63% 4.18% 6.93% High Yield -34.73% -15.46% -2.96% Income Builder 0.79% N/A 5.25% Information -43.72% N/A -43.08% Limited Duration 5.15% N/A 3.74% Money Market 2.40% 3.50% 3.06% Pacific Growth -28.50% -16.10% -10.77% Quality Income Plus 7.95% 5.48% 5.76% S&P 500 Index -13.53% N/A 0.46% Strategist -11.51% 7.44% 7.49% Utilities -26.84% 4.73% 6.85% Morgan Stanley UIF Emerging Markets Equity -7.87% N/A -7.26% Morgan Stanley UIF Equity Growth -16.37% N/A 0.23% Morgan Stanley UIF International Magnum -20.48% N/A -4.95% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.58% N/A 4.90% Morgan Stanley UIF U.S. Real Estate 8.22% N/A 4.76% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.51% N/A 10.12% AIM V.I. Capital Appreciation -24.41% N/A -18.47% AIM V.I. Growth -34.86% N/A -28.03% AIM V.I. Premier Equity -13.83% N/A -14.30% Alliance Growth -24.77% N/A -20.82% Alliance Growth and Income -1.32% N/A 7.57% Alliance Premier Growth -18.61% N/A -16.74% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.78% N/A 0.80% Putnam VT International Growth -21.79% N/A -14.97% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.56% N/A -20.23% (WITH THE PERFORMANCE DEATH BENEFIT OPTION OR DEATH BENEFIT COMBINATION OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.60% N/A -0.60% Capital Growth -27.48% 6.48% 5.75% Competitive Edge -24.55% N/A -7.82% Dividend Growth -6.70% 5.25% 9.21% Equity -28.03% 10.98% 11.00% European Growth -19.06% 6.06% 12.40% Global Dividend Growth -7.74% 4.06% 6.81% High Yield -34.80% -15.56% -3.07% Income Builder 0.68% N/A 5.14% Information -43.79% N/A -43.15% Limited Duration 5.03% N/A 3.63% Money Market 2.29% 3.39% 2.95% Pacific Growth -28.58% -16.19% -10.87% Quality Income Plus 7.83% 5.37% 5.64% S&P 500 Index -13.63% N/A 0.35% Strategist -11.61% 7.33% 7.37% Utilities -26.93% 4.62% 6.73% Morgan Stanley UIF Emerging Markets Equity -7.97% N/A -7.36% Morgan Stanley UIF Equity Growth -16.46% N/A 0.12% Morgan Stanley UIF International Magnum -20.57% N/A -5.05% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.69% N/A 4.78% Morgan Stanley UIF U.S. Real Estate 8.10% N/A 4.64% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.58% N/A 10.00% AIM V.I. Capital Appreciation -24.50% N/A -18.56% AIM V.I. Growth -34.93% N/A -28.11% AIM V.I. Premier Equity -13.93% N/A -14.39% Alliance Growth -24.85% N/A -20.91% Alliance Growth and Income -1.43% N/A 7.46% Alliance Premier Growth -18.70% N/A -16.83% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.88% N/A 0.69% Putnam VT International Growth -21.87% N/A -15.06% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.64% N/A -20.31% (WITH THE INCOME BENEFIT COMBINATION OPTION 2) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.64% N/A -0.65% Capital Growth -27.52% 6.42% 5.69% Competitive Edge -24.59% N/A -7.88% Dividend Growth -6.76% 5.19% 9.14% Equity -28.07% 10.91% 10.93% European Growth -19.11% 5.99% 12.34% Global Dividend Growth -7.79% 4.00% 6.75% High Yield -34.84% -15.61% -3.12% Income Builder 0.62% N/A 5.07% Information -43.82% N/A -43.18% Limited Duration 4.97% N/A 3.57% Money Market 2.23% 3.32% 2.88% Pacific Growth -28.62% -16.24% -10.92% Quality Income Plus 7.76% 5.30% 5.58% S&P 500 Index -13.68% N/A 0.29% Strategist -11.66% 7.26% 7.31% Utilities -26.97% 4.56% 6.67% Morgan Stanley UIF Emerging Markets Equity -8.03% N/A -7.42% Morgan Stanley UIF Equity Growth -16.51% N/A 0.06% Morgan Stanley UIF International Magnum -20.62% N/A -5.11% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.74% N/A 4.72% Morgan Stanley UIF U.S. Real Estate 8.04% N/A 4.58% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.62% N/A 9.94% AIM V.I. Capital Appreciation -24.54% N/A -18.61% AIM V.I. Growth -34.97% N/A -28.16% AIM V.I. Premier Equity -13.98% N/A -14.45% Alliance Growth -24.90% N/A -20.96% Alliance Growth and Income -1.49% N/A 7.39% Alliance Premier Growth -18.75% N/A -16.88% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.93% N/A 0.63% Putnam VT International Growth -21.92% N/A -15.11% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.69% N/A -20.36% (WITH THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.78% N/A -0.85% Capital Growth -27.67% 6.21% 5.48% Competitive Edge -24.74% N/A -8.06% Dividend Growth -6.95% 4.98% 8.92% Equity -28.22% 10.69% 10.71% European Growth -19.27% 5.78% 12.11% Global Dividend Growth -7.98% 3.79% 6.53% High Yield -34.97% -15.78% -3.32% Income Builder 0.42% N/A 4.87% Information -43.93% N/A -43.30% Limited Duration 4.76% N/A 3.36% Money Market 2.02% 3.12% 2.68% Pacific Growth -28.77% -16.41% -11.10% Quality Income Plus 7.55% 5.09% 5.36% S&P 500 Index -13.85% N/A 0.09% Strategist -11.84% 7.05% 7.09% Utilities -27.12% 4.35% 6.46% Morgan Stanley UIF Emerging Markets Equity -8.21% N/A -7.60% Morgan Stanley UIF Equity Growth -16.68% N/A -0.14% Morgan Stanley UIF International Magnum -20.78% N/A -5.30% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.93% N/A 4.51% Morgan Stanley UIF U.S. Real Estate 7.82% N/A 4.37% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.76% N/A 9.72% AIM V.I. Capital Appreciation -24.70% N/A -18.77% AIM V.I. Growth -35.11% N/A -28.30% AIM V.I. Premier Equity -14.15% N/A -14.62% Alliance Growth -25.05% N/A -21.12% Alliance Growth and Income -1.68% N/A 7.18% Alliance Premier Growth -18.91% N/A -17.05% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.12% N/A 0.43% Putnam VT International Growth -22.08% N/A -15.28% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.84% N/A -20.52% (WITH ENHANCED EARNINGS DEATH BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.57% N/A -0.56% Capital Growth -27.45% 6.52% 5.79% Competitive Edge -24.52% N/A -7.79% Dividend Growth -6.67% 5.29% 9.25% Equity -28.00% 11.02% 11.04% European Growth -19.03% 6.10% 12.45% Global Dividend Growth -7.70% 4.11% 6.85% High Yield -34.78% -15.52% -3.03% Income Builder 0.72% N/A 5.18% Information -43.76% N/A -43.12% Limited Duration 5.07% N/A 3.67% Money Market 2.33% 3.43% 2.99% Pacific Growth -28.55% -16.16% -10.83% Quality Income Plus 7.87% 5.41% 5.68% S&P 500 Index -13.59% N/A 0.39% Strategist -11.57% 7.37% 7.41% Utilities -26.90% 4.66% 6.78% Morgan Stanley UIF Emerging Markets Equity -7.94% N/A -7.33% Morgan Stanley UIF Equity Growth -16.43% N/A 0.16% Morgan Stanley UIF International Magnum -20.54% N/A -5.01% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.65% N/A 4.82% Morgan Stanley UIF U.S. Real Estate 8.14% N/A 4.68% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.55% N/A 10.05% AIM V.I. Capital Appreciation -24.47% N/A -18.53% AIM V.I. Growth -34.91% N/A -28.08% AIM V.I. Premier Equity -13.89% N/A -14.36% Alliance Growth -24.82% N/A -20.88% Alliance Growth and Income -1.39% N/A 7.50% Alliance Premier Growth -18.67% N/A -16.80% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.84% N/A 0.73% Putnam VT International Growth -21.84% N/A -15.03% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.61% N/A -20.28%
(WITH THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2 AND ENHANCED EARNINGS DEATH BENEFIT OPTION)
10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.92% N/A -1.05% Capital Growth -27.81% 5.99% 5.27% Competitive Edge -24.89% N/A -8.25% Dividend Growth -7.14% 4.77% 8.71% Equity -28.36% 10.47% 10.49% European Growth -19.44% 5.57% 11.89% Global Dividend Growth -8.16% 3.59% 6.32% High Yield -35.10% -15.95% -3.51% Income Builder 0.22% N/A 4.66% Information -44.05% N/A -43.41% Limited Duration 4.55% N/A 3.15% Money Market 1.82% 2.91% 2.47% Pacific Growth -28.91% -16.58% -11.28% Quality Income Plus 7.33% 4.88% 5.15% S&P 500 Index -14.03% N/A -0.11% Strategist -12.01% 6.83% 6.88% Utilities -27.26% 4.14% 6.24% Morgan Stanley UIF Emerging Markets Equity -8.40% N/A -7.79% Morgan Stanley UIF Equity Growth -16.84% N/A -0.34% Morgan Stanley UIF International Magnum -20.94% N/A -5.49% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -5.13% N/A 4.30% Morgan Stanley UIF U.S. Real Estate 7.60% N/A 4.16% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.89% N/A 9.50% AIM V.I. Capital Appreciation -24.85% N/A -18.93% AIM V.I. Growth -35.24% N/A -28.44% AIM V.I. Premier Equity -14.33% N/A -14.79% Alliance Growth -25.20% N/A -21.27% Alliance Growth and Income -1.88% N/A 6.96% Alliance Premier Growth -19.08% N/A -17.21% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.30% N/A 0.23% Putnam VT International Growth -22.23% N/A -15.45% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.99% N/A -20.68%
ASSETMANAGER CONTRACTS (WITHOUT AN OPTIONAL DEATH BENEFIT OR INCOME BENEFIT)
10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.60% N/A -0.60% Capital Growth -27.48% 6.48% 5.75% Competitive Edge -24.55% N/A -7.82% Dividend Growth -6.70% 5.25% 9.21% Equity -28.03% 10.98% 11.00% European Growth -19.06% 6.06% 12.40% Global Dividend Growth -7.74% 4.06% 6.81% High Yield -34.80% -15.56% -3.07% Income Builder 0.68% N/A 5.14% Information -43.79% N/A -43.15% Limited Duration 5.03% N/A 3.63% Money Market 2.29% 3.39% 2.95% Pacific Growth -28.58% -16.19% -10.87% Quality Income Plus 7.83% 5.37% 5.64% S&P 500 Index -13.63% N/A 0.35% Strategist -11.61% 7.33% 7.37% Utilities -26.93% 4.62% 6.73% Morgan Stanley UIF Emerging Markets Equity -7.97% N/A -7.36% Morgan Stanley UIF Equity Growth -16.46% N/A 0.12% Morgan Stanley UIF International Magnum -20.57% N/A -5.05% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.69% N/A 4.78% Morgan Stanley UIF U.S. Real Estate 8.10% N/A 4.64% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.58% N/A 10.00% AIM V.I. Capital Appreciation -24.50% N/A -18.56% AIM V.I. Growth -34.93% N/A -28.11% AIM V.I. Premier Equity -13.95% N/A -14.41% Alliance Growth -24.85% N/A -20.91% Alliance Growth and Income -1.43% N/A 7.46% Alliance Premier Growth -18.70% N/A -16.83% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.88% N/A 0.69% Putnam VT International Growth -21.87% N/A -15.06% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.64% N/A -20.31% (WITH THE ENHANCED DEATH BENEFIT OPTION, PERFORMANCE INCOME BENEFIT OPTION OR THE PERFORMANCE DEATH BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.69% N/A -0.72% Capital Growth -27.57% 6.34% 5.61% Competitive Edge -24.64% N/A -7.94% Dividend Growth -6.83% 5.12% 9.07% Equity -28.12% 10.83% 10.85% European Growth -19.17% 5.92% 12.26% Global Dividend Growth -7.86% 3.93% 6.67% High Yield -34.89% -15.67% -3.19% Income Builder 0.55% N/A 5.00% Information -43.86% N/A -43.22% Limited Duration 4.89% N/A 3.49% Money Market 2.15% 3.25% 2.81% Pacific Growth -28.67% -16.30% -10.99% Quality Income Plus 7.69% 5.23% 5.50% S&P 500 Index -13.74% N/A 0.22% Strategist -11.72% 7.19% 7.23% Utilities -27.02% 4.48% 6.60% Morgan Stanley UIF Emerging Markets Equity -8.09% N/A -7.48% Morgan Stanley UIF Equity Growth -16.57% N/A -0.01% Morgan Stanley UIF International Magnum -20.68% N/A -5.17% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.81% N/A 4.64% Morgan Stanley UIF U.S. Real Estate 7.96% N/A 4.51% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.67% N/A 9.86% AIM V.I. Capital Appreciation -24.60% N/A -18.67% AIM V.I. Growth -35.02% N/A -28.21% AIM V.I. Premier Equity -14.06% N/A -14.52% Alliance Growth -24.95% N/A -21.01% Alliance Growth and Income -1.56% N/A 7.32% Alliance Premier Growth -18.81% N/A -16.94% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.00% N/A 0.56% Putnam VT International Growth -21.98% N/A -15.17% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.74% N/A -20.42% (WITH PERFORMANCE BENEFIT COMBINATION OPTION OR DEATH BENEFIT COMBINATION OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.77% N/A -0.83% Capital Growth -27.65% 6.23% 5.50% Competitive Edge -24.73% N/A -8.05% Dividend Growth -6.93% 5.00% 8.95% Equity -28.20% 10.71% 10.73% European Growth -19.26% 5.80% 12.14% Global Dividend Growth -7.96% 3.81% 6.55% High Yield -34.96% -15.76% -3.30% Income Builder 0.44% N/A 4.89% Information -43.92% N/A -43.28% Limited Duration 4.78% N/A 3.38% Money Market 2.04% 3.14% 2.70% Pacific Growth -28.75% -16.39% -11.08% Quality Income Plus 7.57% 5.12% 5.39% S&P 500 Index -13.84% N/A 0.11% Strategist -11.82% 7.07% 7.11% Utilities -27.10% 4.37% 6.48% Morgan Stanley UIF Emerging Markets Equity -8.19% N/A -7.59% Morgan Stanley UIF Equity Growth -16.66% N/A -0.12% Morgan Stanley UIF International Magnum -20.76% N/A -5.28% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.92% N/A 4.53% Morgan Stanley UIF U.S. Real Estate 7.84% N/A 4.39% Van Kampen LIT Comstock, Class I N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.74% N/A 9.74% AIM V.I. Capital Appreciation -24.68% N/A -18.75% AIM V.I. Growth -35.09% N/A -28.29% AIM V.I. Premier Equity -14.16% N/A -14.61% Alliance Growth -25.03% N/A -21.10% Alliance Growth and Income -1.66% N/A 7.20% Alliance Premier Growth -18.90% N/A -17.03% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.10% N/A 0.45% Putnam VT International Growth -22.06% N/A -15.26% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.83% N/A -20.51%
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 as well as the contract maintenance charge and the withdrawal charge. The adjusted historical total returns for the Variable Sub-Accounts for the periods ended December 31, 2001 are set out below. No adjusted historical total returns are shown for the Money Market Variable Sub-Account, the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock, LSA Aggressive Growth, or Putnam VT Small Cap Value. Where the returns included in the following tables give effect to the optional income benefits, death benefits, or combinations thereof. the performance figures have been adjusted to reflect the current charge for the feature as if that feature had been available throughout the periods shown. The following list provides the inception date for the Portfolio corresponding to each of the Variable Sub-Accounts included in the tables. Variable Annuity II and AssetManager Contracts Inception Date of Corresponding Variable Sub-Account Portfolio Aggressive Equity May 1, 1999 Capital Growth March 1, 1991 Competitive Edge May 18, 1998 Dividend Growth March 1, 1990 Equity March 9, 1984 European Growth March 1, 1991 Global Dividend Growth February 24, 1994 High Yield March 9, 1984 Income Builder January 21, 1997 Information November 6, 2000 Limited Duration May 2, 1999 Money Market October 25, 1990 Pacific Growth February 24, 1994 Quality Income Plus March 1, 1987 S&P 500 Index May 18, 1998 Strategist March 1, 1987 Utilities March 1, 1990 Morgan Stanley UIF Emerging Markets Equity October 1,1996 Morgan Stanley UIF Equity Growth January 2, 1997 Morgan Stanley UIF International Magnum January 2, 1997 Morgan Stanley UIF U.S. Real Estate March 4, 1997 Van Kampen LIT Comstock April 30, 1999 Van Kampen LIT Emerging Growth July 3, 1995 Variable Annuity II Contracts Only Morgan Stanley UIF Mid Cap Growth January 2, 1997 AIM V.I. Capital Appreciation May 5, 1993 AIM V.I. Growth May 5, 1993 AIM V.I Premier Equity May 5, 1993 Alliance Growth* September 15, 1994 Alliance Growth and Income* January 14, 1991 Alliance Premier Growth* July 14, 1999 LSA Aggressive Growth August 14, 2001 Putnam VT Growth and Income** February 1, 1988 Putnam VT International Growth** January 2, 1997 Putnam VT Small Cap Value April 30, 1999 Putnam VT Voyager** February 1, 1988 * The Portfolios' Class B shares ("12b-1 class") corresponding to the Alliance Growth, Alliance Growth and Income and Alliance Premier Growth Variable Sub-Accounts were first offered on May 3, 1999. For periods prior to this date, 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 IB shares ("12b-1 class") corresponding to the Putnam VT Growth and Income, International Growth, 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. VARIABLE ANNUITY II CONTRACTS (WITHOUT AN OPTIONAL DEATH BENEFIT OR INCOME BENEFIT)
10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -33.74% N/A -1.71% Capital Growth -31.62% 6.56% 5.95% Competitive Edge -28.68% N/A -8.55% Dividend Growth -10.80% 5.31% 9.43% Equity -32.17% 11.09% 11.22% European Growth -23.18% 6.13% 12.64% Global Dividend Growth -11.83% 4.11% 7.01% High Yield -38.96% -15.77% -2.88% Income Builder -3.39% N/A 5.05% Information -47.97% N/A -47.15% Limited Duration 0.97% N/A 2.59% Money Market -1.78% 3.42% 3.13% Pacific Growth -32.72% -16.43% -10.74% Quality Income Plus 3.77% 5.42% 5.84% S&P 500 Index -17.74% N/A -0.17% Strategist -15.71% 7.40% 7.58% Utilities -31.07% 4.68% 6.95% Morgan Stanley UIF Emerging Markets Equity -12.07% -4.96% -5.21% Morgan Stanley UIF Equity Growth -20.57% N/A 8.88% Morgan Stanley UIF International Magnum -24.70% N/A -1.15% Morgan Stanley UIF Mid Cap Growth -34.58% N/A -7.38% Morgan Stanley UIF Mid Cap Value -8.77% N/A 14.23% Morgan Stanley UIF U.S. Real Estate 4.05% N/A 6.01% Van Kampen LIT Comstock, Class I -8.09% N/A 4.24%% Van Kampen LIT Emerging Growth, Class I -36.73% 14.12% 15.84% AIM V.I. Capital Appreciation -28.63% 4.39% 10.20% AIM V.I. Growth -39.09% 2.28% 7.31% AIM V.I. Premier Equity -18.04% 8.05% 11.84% Alliance Growth* -28.99% 5.39% 12.14% Alliance Growth and Income* -5.51% 12.70% 13.04% Alliance Premier Growth* -22.82% 10.66% 13.81% LSA Aggressive Growth** N/A N/A -11.95% Putnam VT Growth and Income* -11.97% 6.30% 10.26% Putnam VT International Growth* -26.00% N/A 7.80% Putnam VT Small Cap Value 12.22% N/A 14.52% Putnam VT Voyager* -27.77% 8.29% 11.30% +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. **Performance shown is not annualized. (WITH THE ENHANCED DEATH BENEFIT OPTION, PERFORMANCE INCOME BENEFIT OPTION OR PERFORMANCE DEATH BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -33.84% N/A -1.85% Capital Growth -31.72% 6.42% 5.82% Competitive Edge -28.78% N/A -8.68% Dividend Growth -10.92% 5.18% 9.29% Equity -32.27% 10.95% 11.08% European Growth -23.29% 5.99% 12.49% Global Dividend Growth -11.95% 3.98% 6.88% High Yield -39.05% -15.88% -3.01% Income Builder -3.52% N/A 4.91% Information -48.04% N/A -47.23% Limited Duration 0.83% N/A 2.45% Money Market -1.91% 3.29% 3.00% Pacific Growth -32.82% -16.54% -10.86% Quality Income Plus 3.63% 5.29% 5.70% S&P 500 Index -17.85% N/A -0.30% Strategist -15.83% 7.26% 7.44% Utilities -31.16% 4.54% 6.81% Morgan Stanley UIF Emerging Markets Equity -12.19% -5.09% -5.34% Morgan Stanley UIF Equity Growth -20.68% N/A 8.74% Morgan Stanley UIF International Magnum -24.80% N/A -1.28% Morgan Stanley UIF Mid Cap Growth -34.67% N/A -7.51% Morgan Stanley UIF Mid Cap Value -8.90% N/A 14.08% Morgan Stanley UIF U.S. Real Estate 3.90% N/A 5.87% Van Kampen LIT Comstock, Class I -8.22% N/A 4.10% Van Kampen LIT Emerging Growth, Class I -36.82% 13.98% 15.69% AIM V.I. Capital Appreciation -28.73% 4.25% 10.06% AIM V.I. Growth -39.18% 2.15% 7.17% AIM V.I. Premier Equity -18.15% 7.91% 11.70% Alliance Growth* -29.09% 5.25% 11.99% Alliance Growth and Income* -5.64% 12.55% 12.89% Alliance Premier Growth* -22.93% 10.52% 13.66% LSA Aggressive Growth** N/A N/A -11.99% Putnam VT Growth and Income* -12.09% 6.16% 10.11% Putnam VT International Growth* -26.10% N/A 7.65% Putnam VT Small Cap Value 12.07% N/A 14.37% Putnam VT Voyager* -27.87% 8.15% 11.16% +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. **Performance shown is not annualized. (WITH PERFORMANCE BENEFIT COMBINATION OPTION OR DEATH BENEFIT COMBINATION OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -33.91% N/A -1.96% Capital Growth -31.80% 6.30% 5.70% Competitive Edge -28.86% N/A -8.78% Dividend Growth -11.02% 5.06% 9.17% Equity -32.35% 10.82% 10.95% European Growth -23.38% 5.87% 12.37% Global Dividend Growth -12.05% 3.86% 6.76% High Yield -39.12% -15.97% -3.11% Income Builder -3.64% N/A 4.80% Information -48.10% N/A -47.29% Limited Duration 0.71% N/A 2.34% Money Market -2.03% 3.17% 2.89% Pacific Growth -32.90% -16.64% -10.96% Quality Income Plus 3.51% 5.17% 5.59% S&P 500 Index -17.94% N/A -0.42% Strategist -15.92% 7.15% 7.32% Utilities -31.24% 4.43% 6.69% Morgan Stanley UIF Emerging Markets Equity -12.29% -5.19% -5.44% Morgan Stanley UIF Equity Growth -20.78% N/A 8.62% Morgan Stanley UIF International Magnum -24.89% N/A -1.39% Morgan Stanley UIF Mid Cap Growth -34.75% N/A -7.61% Morgan Stanley UIF Mid Cap Value -9.00% N/A 13.95% Morgan Stanley UIF U.S. Real Estate 3.78% N/A 5.75% Van Kampen LIT Comstock, Class I -8.32% N/A 3.98% Van Kampen LIT Emerging Growth, Class I -36.90% 13.85% 15.56% AIM V.I. Capital Appreciation -28.82% 4.14% 9.94% AIM V.I. Growth -39.25% 2.03% 7.05% AIM V.I. Premier Equity -18.24% 7.79% 11.57% Alliance Growth* -29.17% 5.13% 11.87% Alliance Growth and Income* -5.74% 12.43% 12.77% Alliance Premier Growth* -23.02% 10.40% 13.53% LSA Aggressive Growth** N/A N/A -12.03% Putnam VT Growth and Income* -12.19% 6.05% 9.99% Putnam VT International Growth* -26.19% N/A 7.53% Putnam VT Small Cap Value 11.94% N/A 14.24% Putnam VT Voyager* -27.96% 8.03% 11.04% +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. **Performance shown is not annualized. (WITH THE INCOME BENEFIT COMBINATION OPTION 2) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -33.96% N/A -2.02% Capital Growth -31.84% 6.24% 5.64% Competitive Edge -28.91% N/A -8.84% Dividend Growth -11.08% 5.00% 9.10% Equity -32.39% 10.76% 10.89% European Growth -23.43% 5.81% 12.30% Global Dividend Growth -12.11% 3.80% 6.69% High Yield -39.16% -16.02% -3.17% Income Builder -3.70% N/A 4.73% Information -48.14% N/A -47.32% Limited Duration 0.65% N/A 2.27% Money Market -2.09% 3.11% 2.82% Pacific Growth -32.94% -16.69% -11.01% Quality Income Plus 3.45% 5.11% 5.52% S&P 500 Index -18.00% N/A -0.48% Strategist -15.98% 7.08% 7.26% Utilities -31.29% 4.37% 6.63% Morgan Stanley UIF Emerging Markets Equity -12.34% -5.25% -5.50% Morgan Stanley UIF Equity Growth -20.83% N/A 8.55% Morgan Stanley UIF International Magnum -24.94% N/A -1.45% Morgan Stanley UIF Mid Cap Growth -34.79% N/A -7.67% Morgan Stanley UIF Mid Cap Value -9.06% N/A 13.88% Morgan Stanley UIF U.S. Real Estate 3.72% N/A 5.68% Van Kampen LIT Comstock, Class I -8.38% N/A 3.92% Van Kampen LIT Emerging Growth, Class I -36.94% 13.78% 15.49% AIM V.I. Capital Appreciation -28.86% 4.07% 9.87% AIM V.I. Growth -39.29% 1.97% 6.98% AIM V.I. Premier Equity -18.30% 7.72% 11.51% Alliance Growth* -29.21% 5.07% 11.80% Alliance Growth and Income* -5.80% 12.36% 12.70% Alliance Premier Growth* -23.07% 10.33% 13.47% LSA Aggressive Growth** N/A N/A -12.05% Putnam VT Growth and Income* -12.25% 5.98% 9.93% Putnam VT International Growth* -26.24% N/A 7.47% Putnam VT Small Cap Value 11.87% N/A 14.17% Putnam VT Voyager* -28.00% 7.96% 10.97% +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. **Performance shown is not annualized. (WITH THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.10% N/A -2.22% Capital Growth -31.99% 6.02% 5.42% Competitive Edge -29.06% N/A -9.03% Dividend Growth -11.26% 4.79% 8.88% Equity -32.53% 10.53% 10.67% European Growth -23.59% 5.60% 12.08% Global Dividend Growth -12.29% 3.59% 6.48% High Yield -39.29% -16.20% -3.37% Income Builder -3.90% N/A 4.52% Information -48.25% N/A -47.44% Limited Duration 0.44% N/A 2.06% Money Market -2.30% 2.90% 2.62% Pacific Growth -33.08% -16.86% -11.19% Quality Income Plus 3.23% 4.89% 5.31% S&P 500 Index -18.17% N/A -0.68% Strategist -16.15% 6.87% 7.04% Utilities -31.43% 4.16% 6.41% Morgan Stanley UIF Emerging Markets Equity -12.53% -5.44% -5.69% Morgan Stanley UIF Equity Growth -20.99% N/A 8.33% Morgan Stanley UIF International Magnum -25.10% N/A -1.65% Morgan Stanley UIF Mid Cap Growth -34.93% N/A -7.86% Morgan Stanley UIF Mid Cap Value -9.25% N/A 13.65% Morgan Stanley UIF U.S. Real Estate 3.50% N/A 5.47% Van Kampen LIT Comstock, Class I -8.57% N/A 3.70% Van Kampen LIT Emerging Growth, Class I -37.07% 13.55% 15.26% AIM V.I. Capital Appreciation -29.01% 3.86% 9.65% AIM V.I. Growth -39.42% 1.77% 6.77% AIM V.I. Premier Equity -18.47% 7.51% 11.28% Alliance Growth* -29.36% 4.86% 11.58% Alliance Growth and Income* -6.00% 12.13% 12.48% Alliance Premier Growth* -23.23% 10.11% 13.24% LSA Aggressive Growth** N/A N/A -12.13% Putnam VT Growth and Income* -12.43% 5.77% 9.71% Putnam VT International Growth* -26.39% N/A 7.25% Putnam VT Small Cap Value 11.64% N/A 13.93% Putnam VT Voyager* -28.16% 7.75% 10.75% +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. **Performance shown is not annualized. (WITH ENHANCED EARNINGS DEATH BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -33.89% N/A -1.92% Capital Growth -31.77% 6.35% 5.74% Competitive Edge -28.83% N/A -8.74% Dividend Growth -10.98% 5.10% 9.21% Equity -32.32% 10.87% 11.00% European Growth -23.35% 5.92% 12.41% Global Dividend Growth -12.02% 3.90% 6.80% High Yield -39.09% -15.94% -3.08% Income Builder -3.60% N/A 4.84% Information -48.08% N/A -47.27% Limited Duration 0.76% N/A 2.38% Money Market -1.99% 3.22% 2.93% Pacific Growth -32.87% -16.60% -10.92% Quality Income Plus 3.56% 5.21% 5.63% S&P 500 Index -17.91% N/A -0.38% Strategist -15.89% 7.19% 7.37% Utilities -31.21% 4.47% 6.73% Morgan Stanley UIF Emerging Markets Equity -12.25% -5.15% -5.40% Morgan Stanley UIF Equity Growth -20.74% N/A 8.66% Morgan Stanley UIF International Magnum -24.86% N/A -1.35% Morgan Stanley UIF Mid Cap Growth -34.72% N/A -7.57% Morgan Stanley UIF Mid Cap Value -8.96% N/A 14.00% Morgan Stanley UIF U.S. Real Estate 3.83% N/A 5.79% Van Kampen LIT Comstock, Class I -8.28% N/A 4.03% Van Kampen LIT Emerging Growth, Class I -36.87% 13.90% 15.61% AIM V.I. Capital Appreciation -28.78% 4.18% 9.98% AIM V.I. Growth -39.23% 2.07% 7.09% AIM V.I. Premier Equity -18.21% 7.83% 11.62% Alliance Growth* -29.14% 5.17% 11.91% Alliance Growth and Income* -5.71% 12.47% 12.81% Alliance Premier Growth* -22.99% 10.44% 13.58% LSA Aggressive Growth** N/A N/A -12.02% Putnam VT Growth and Income* -12.16% 6.09% 10.04% Putnam VT International Growth* -26.16% N/A 7.58% Putnam VT Small Cap Value 11.99% N/A 14.28% Putnam VT Voyager* -27.93% 8.07% 11.08% +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. **Performance shown is not annualized. (WITH THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2 AND ENHANCED EARNINGS DEATH BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.24% N/A -2.43% Capital Growth -32.13% 5.81% 5.21% Competitive Edge -29.21% N/A -9.21% Dividend Growth -11.45% 4.57% 8.66% Equity -32.68% 10.31% 10.44% European Growth -23.75% 5.38% 11.85% Global Dividend Growth -12.48% 3.38% 6.27% High Yield -39.42% -16.37% -3.56% Income Builder -4.10% N/A 4.31% Information -48.36% N/A -47.55% Limited Duration 0.23% N/A 1.85% Money Market -2.50% 2.70% 2.41% Pacific Growth -33.23% -17.03% -11.37% Quality Income Plus 3.02% 4.68% 5.10% S&P 500 Index -18.34% N/A -0.89% Strategist -16.33% 6.65% 6.83% Utilities -31.58% 3.95% 6.20% Morgan Stanley UIF Emerging Markets Equity -12.71% -5.63% -5.88% Morgan Stanley UIF Equity Growth -21.16% N/A 8.11% Morgan Stanley UIF International Magnum -25.26% N/A -1.85% Morgan Stanley UIF Mid Cap Growth -35.07% N/A -8.05% Morgan Stanley UIF Mid Cap Value -9.44% N/A 13.43% Morgan Stanley UIF U.S. Real Estate 3.29% N/A 5.26% Van Kampen LIT Comstock, Class I -8.77% N/A 3.49% Van Kampen LIT Emerging Growth, Class I -37.21% 13.32% 15.03% AIM V.I. Growth -39.55% 1.56% 6.56% AIM V.I. Premier Equity -18.64% 7.29% 11.06% Alliance Growth* -29.51% 4.65% 11.36% Alliance Growth and Income* -6.20% 11.91% 12.25% Alliance Premier Growth* -23.39% 9.89% 13.01% LSA Aggressive Growth** N/A N/A -12.20% Putnam VT Growth and Income* -12.62% 5.56% 9.49% Putnam VT International Growth* -26.55% N/A 7.04% Putnam VT Small Cap Value 11.41% N/A 13.70% Putnam VT Voyager* -28.31% 7.53% 10.53% +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. **Performance shown is not annualized.
ASSETMANAGER CONTRACTS (WITHOUT AN OPTIONAL DEATH BENEFIT OR INCOME BENEFIT OPTION)
10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -29.67% N/A -0.67% Capital Growth -27.56% 6.43% 5.69% Competitive Edge -24.62% N/A -7.91% Dividend Growth -6.78% 5.19% 9.16% Equity -28.11% 10.93% 10.95% European Growth -19.14% 6.00% 12.36% Global Dividend Growth -7.81% 4.00% 6.75% High Yield -34.88% -15.65% -3.12% Income Builder 0.60% N/A 5.07% Information -43.86% N/A -43.26% Limited Duration 4.95% N/A 3.54% Money Market 2.21% 3.31% 2.88% Pacific Growth -28.66% -16.30% -10.97% Quality Income Plus 7.75% 5.30% 5.58% S&P 500 Index -13.71% N/A 0.28% Strategist -11.68% 7.27% 7.31% Utilities -27.00% 4.56% 6.68% Morgan Stanley UIF Emerging Markets Equity -8.05% -4.99% -5.25% Morgan Stanley UIF Equity Growth -16.54% N/A 8.85% Morgan Stanley UIF International Magnum -20.65% N/A -1.04% Morgan Stanley UIF Mid Cap Growth -30.51% N/A -5.95% Morgan Stanley UIF Mid Cap Value -4.76% N/A 14.15% Morgan Stanley UIF U.S. Real Estate 8.02% N/A 6.02% Van Kampen LIT Comstock, Class I -4.08% N/A 5.15% Van Kampen LIT Emerging Growth, Class I -32.66% 13.94% 15.56% AIM V.I. Capital Appreciation -24.58% 4.27% 9.93% AIM V.I. Growth -35.01% 2.18% 7.04% AIM V.I. Premier Equity -14.03% 7.90% 11.56% Alliance Growth* -24.93% 5.26% 11.86% Alliance Growth and Income* -1.51% 12.53% 12.76% Alliance Premier Growth* -18.78% 10.50% 13.53% LSA Aggressive Growth** N/A N/A -7.79% Putnam VT Growth and Income* -7.96% 6.17% 9.99% Putnam VT International Growth* -21.95% N/A 7.78% Putnam VT Small Cap Value 16.18% N/A 15.24% Putnam VT Voyager* -23.72% 8.14% 11.03% +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. **Performance shown is not annualized. (WITH THE ENHANCED DEATH BENEFIT OPTION, PERFORMANCE DEATH BENEFIT OPTION OR PERFORMANCE INCOME BENEFIT OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -29.77% N/A -0.79% Capital Growth -27.65% 6.29% 5.55% Competitive Edge -24.72% N/A -8.03% Dividend Growth -6.90% 5.05% 9.02% Equity -28.20% 10.78% 10.80% European Growth -19.25% 5.86% 12.22% Global Dividend Growth -7.94% 3.86% 6.61% High Yield -34.96% -15.76% -3.25% Income Builder 0.47% N/A 4.94% Information -43.94% N/A -43.34% Limited Duration 4.82% N/A 3.41% Money Market 2.08% 3.18% 2.74% Pacific Growth -28.75% -16.41% -11.09% Quality Income Plus 7.61% 5.16% 5.44% S&P 500 Index -13.82% N/A 0.15% Strategist -11.80% 7.13% 7.17% Utilities -27.10% 4.43% 6.54% Morgan Stanley UIF Emerging Markets Equity -8.17% -5.12% -5.37% Morgan Stanley UIF Equity Growth -16.65% N/A 8.71% Morgan Stanley UIF International Magnum -20.75% N/A -1.17% Morgan Stanley UIF Mid Cap Growth -30.60% N/A -6.07% Morgan Stanley UIF Mid Cap Value -4.89% N/A 14.00% Morgan Stanley UIF U.S. Real Estate 7.88% N/A 5.88% Van Kampen LIT Comstock, Class I -4.21% N/A 5.01% Van Kampen LIT Emerging Growth, Class I -32.75% 13.80% 15.41% AIM V.I. Capital -35.10% 2.05% 6.90% AIM V.I. Premier Equity -14.14% 7.76% 11.42% Alliance Growth* -25.03% 5.13% 11.72% Alliance Growth and Income* -1.63% 12.38% 12.62% Alliance Premier Growth* -18.89% 10.36% 13.38% LSA Aggressive Growth** N/A N/A -7.84% Putnam VT Growth and Income* -8.08% 6.03% 9.84% Putnam VT International Growth* -22.05% N/A 7.64% Putnam VT Small Cap Value 16.03% N/A 15.09% Putnam VT Voyager* -23.82% 8.00% 10.89% +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. **Performance shown is not annualized. (WITH PERFORMANCE BENEFIT COMBINATION OPTION OR DEATH BENEFIT COMBINATION OPTION) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -29.84% N/A -0.90% Capital Growth -27.73% 6.17% 5.44% Competitive Edge "Best Ideas" -24.81% N/A -8.13% Dividend Growth -7.01% 4.94% 8.90% Equity -28.28% 10.66% 10.68% European Growth -19.34% 5.74% 12.09% Global Dividend Growth -8.04% 3.75% 6.49% High Yield -35.04% -15.85% -3.36% Income Builder 0.36% N/A 4.82% Information -44.00% N/A -43.40% Limited Duration 4.70% N/A 3.29% Money Market 1.96% 3.07% 2.63% Pacific Growth -28.83% -16.51% -11.19% Quality Income Plus 7.49% 5.04% 5.32% S&P 500 Index -13.91% N/A 0.04% Strategist -11.90% 7.01% 7.06% Utilities -27.18% 4.31% 6.43% Morgan Stanley UIF Emerging Markets Equity -8.27% -5.22% -5.48% Morgan Stanley UIF Equity Growth -16.74% N/A 8.59% Morgan Stanley UIF International Magnum -20.84% N/A -1.28% Morgan Stanley UIF Mid Cap Growth -30.67% N/A -6.17% Morgan Stanley UIF Mid Cap Value -4.99% N/A 13.87% Morgan Stanley UIF U.S. Real Estate 7.76% N/A 5.77% Van Kampen LIT Comstock, Class I -4.31% N/A 4.90% Van Kampen LIT Emerging Growth, Class I -32.82% 13.67% 15.28% AIM V.I. Capital Appreciation -24.76% 4.02% 9.66% AIM V.I. Growth -35.17% 1.94% 6.78% AIM V.I. Premier Equity -14.24% 7.64% 11.30% Alliance Growth* -25.11% 5.01% 11.59% Alliance Growth and Incom* -1.74% 12.26% 12.49% Alliance Premier Growth* -18.98% 10.24% 13.26% LSA Aggressive Growth** N/A N/A -7.88% Putnam VT Growth and Income* -8.18% 5.92% 9.72% Putnam VT International Growth* -22.14% N/A 7.52% Putnam VT Small Cap Value* 15.90% N/A 14.96% Putnam VT Voyager* -23.90% 7.89% 10.76% +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. **Performance shown is not annualized.
CALCULATION OF ACCUMULATION 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. EXPERTS The financial statements of Northbrook as of December 31, 2001 and 2000 and for each of the three years in the period ended December 31, 2001 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, 2001, 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. The principal business address of Deloitte & Touche LLP is, Two Prudential Plaza, 180 N. Stetson Avenue, Chicago, Illinois 60601. FINANCIAL STATEMENTS The financial statements of the Variable Account as of December 31, 2001 and for each of the periods in the two years then ended, as well as the financial statements of Northbrook as of December 31, 2001 and 2000 and for each of the three years in the period ended December 31, 2001 and related financial statement schedule and the accompanying Independent Auditors' Reports appear in the pages that follow. The financial statements Northbrook included herein should be considered only as bearing upon the ability of Northbrook to meet its obligations under the Contracts. APPENDIX A ACCUMULATION UNIT VALUES Morgan Stanley Variable Annuity II Contracts The Accumulation Unit Values reflecting the highest and lowest combination of Contract charges are contained in the prospectus. The following tables show the Accumulation Unit Values for all other classes of Accumulation Units available under the Morgan Stanley Variable Annuity II Contracts. Accumulation Unit Values are shown since inception of the Variable Sub-Accounts or since the Contracts were first offered with the applicable Option(s), if later. The inception dates for the Variable Sub-Accounts are as follows: The Money Market, Quality Income Plus, High Yield, Utilities, Dividend Growth, Equity and Strategist Variable Sub-Accounts commenced operations on October 25, 1990. The Capital Growth and European Growth Variable Sub-Accounts commenced operations on March 1, 1991. The Global Dividend Growth and Pacific Growth Variable Sub-Accounts commenced operations on February 23, 1994. The Income Builder Variable Sub-Account commenced operation on January 21, 1997. The Equity Growth, International Magnum, Emerging Markets Equity and Emerging Growth Variable Sub-Accounts commenced operation on March 16, 1998. The S&P 500 Index, Competitive Edge ("Best Ideas") and U.S. Real Estate Variable Sub-Accounts commenced operations on May 18, 1998. The Limited Duration and Aggressive Equity Variable Sub-Accounts commenced operations on May 3, 1999. The Mid Cap Value Sub-Account, the AIM V.I. Capital Appreciation, Growth and Premier Equity Variable Sub-Accounts, the Alliance Growth, Growth and Income, and Premier Growth Variable Sub-Accounts, and the Putnam VT Growth and Income, International Growth and Voyager Variable Sub-Accounts commenced operations on January 31, 2000. The Information Sub-Account commenced operations on November 6, 2001. No Accumulation Unit Values are shown for the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class I), LSA Aggressive Growth, or Putnam VT Small Cap Value Variable Sub-Accounts which were first offered under the Contracts on May 1, 2002. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED DEATH BENEFIT, THE PERFORMANCE INCOME BENEFIT, OR THE PERFORMANCE DEATH BENEFIT OPTION
For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1995 1996 1997 1998 - ----------------------------------------------------------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $13.895 $14.920 $16.397 $20.121 Accumulation Unit Value, End of Period $14.920 $16.397 $20.121 $23.717 Number of Units Outstanding, End of Period 36,005 509,094 1,365,427 1,687,847 - ------------------------------------------------------------------------------------------------------------------------------------ COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period - - - $10.000 Accumulation Unit Value, End of Period - - - $ 9.720 Number of Units Outstanding, End of Period - - - 1,965,368 - ------------------------------------------------------------------------------------------------------------------------------------ DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $20.068 $21.500 $26.259 $32.498 Accumulation Unit Value, End of Period $21.500 $26.259 $32.498 $36.593 Number of Units Outstanding, End of Period 366,928 4,586,699 13,973,141 19,936,437 - ------------------------------------------------------------------------------------------------------------------------------------ EQUITY Accumulation Unit Value, Beginning of Period $24.677 $25.858 $28.626 $38.764 Accumulation Unit Value, End of Period $25.858 $28.626 $38.764 $49.825 Number of Units Outstanding, End of Period 215,961 2,302,720 5,454,409 7,931,260 - ------------------------------------------------------------------------------------------------------------------------------------ EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $18.486 $18.972 $24.298 $27.792 Accumulation Unit Value, End of Period $18.972 $24.298 $27.792 $33.944 Number of Units Outstanding, End of Period 62,011 1,143,635 3,091,981 4,668,539 - ------------------------------------------------------------------------------------------------------------------------------------ GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $11.250 $11.932 $13.824 $15.260 Accumulation Unit Value, End of Period $11.932 $13.824 $15.260 $16.921 Number of Units Outstanding, End of Period 155,023 2,364,163 7,789,952 8,929,904 - ------------------------------------------------------------------------------------------------------------------------------------ HIGH YIELD Accumulation Unit Value, Beginning of Period $21.462 $21.855 $24.112 $26.577 Accumulation Unit Value, End of Period $21.855 $24.112 $26.577 $24.563 Number of Units Outstanding, End of Period 66,987 1,462,866 8,797,892 5,304,510 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME BUILDER Accumulation Unit Value, Beginning of Period - - $10.000 $12.069 Accumulation Unit Value, End of Period - - $12.069 $12.274 Number of Units Outstanding, End of Period - - 2,024,851 3,652,211 - ------------------------------------------------------------------------------------------------------------------------------------ For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1995 1996 1997 1998 - ------------------------------------------------------------------------------------------------------------------------------------ INFORMATION Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ MONEY MARKET Accumulation Unit Value, Beginning of Period $11.579 $11.651 $12.065 $12.511 Accumulation Unit Value, End of Period $11.651 $12.065 $12.511 $12.963 Number of Units Outstanding, End of Period 511,096 3,424,292 5,406,175 8,938,860 - ------------------------------------------------------------------------------------------------------------------------------------ PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $ 9.352 $ 9.617 $ 9.843 $ 6.042 Accumulation Unit Value, End of Period $ 9.617 $ 9.843 $ 6.042 $ 5.334 Number of Units Outstanding, End of Period 97,952 1,411,508 2,105,514 2,456,851 - ------------------------------------------------------------------------------------------------------------------------------------ QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $15.746 $16.370 $16.379 $17.932 Accumulation Unit Value, End of Period $16.370 $16.379 $17.932 $19.200 Number of Units Outstanding, End of Period 142,004 1,095,796 3,843,253 5,109,593 - ------------------------------------------------------------------------------------------------------------------------------------ LIMITED DURATION Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ STRATEGIST Accumulation Unit Value, Beginning of Period $16.490 $16.915 $19.170 $21.479 Accumulation Unit Value, End of Period $16.915 $19.170 $21.479 $26.783 Number of Units Outstanding, End of Period 91,983 903,817 3,529,096 - - ------------------------------------------------------------------------------------------------------------------------------------ S&P 500 INDEX Accumulation Unit Value, Beginning of Period - - - $10.000 Accumulation Unit Value, End of Period - - - $11.117 Number of Units Outstanding, End of Period - - - 2,003,301 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES Accumulation Unit Value, Beginning of Period $16.972 $17.995 $19.268 $24.140 Accumulation Unit Value, End of Period $17.995 $19.268 $24.140 $29.438 Number of Units Outstanding, End of Period 165,046 822,723 1,753,743 3,510,503 - ------------------------------------------------------------------------------------------------------------------------------------ THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period - - - $10.000 Accumulation Unit Value, End of Period - - - $ 7.095 Number of Units Outstanding, End of Period - - - 94,600 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period - - - $10.000 Accumulation Unit Value, End of Period - - - $10.094 Number of Units Outstanding, End of Period - - - 1,530,819 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period - - - $10.000 Accumulation Unit Value, End of Period - - - $ 9.780 Number of Units Outstanding, End of Period - - - 170,897 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1995 1996 1997 1998 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period - - - $10.000 Accumulation Unit Value, End of Period - - - $ 9.054 Number of Units Outstanding, End of Period - - - 80,782 - ------------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period - - - $10.000 Accumulation Unit Value, End of Period - - - $11.985 Number of Units Outstanding, End of Period - - - 402,082 - ------------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1999 2000 2001 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $14.465 $14.005 Accumulation Unit Value, End of Period $14.465 $14.005 $ 9.871 Number of Units Outstanding, End of Period 1,122,012 4,013,767 2,725,210 - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $23.717 $31.150 $31.087 Accumulation Unit Value, End of Period $31.150 $31.087 $22.570 Number of Units Outstanding, End of Period 1,636,053 1,882,380 1,461,013 - ------------------------------------------------------------------------------------------------------------------------------------ COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $ 9.720 $12.152 $ 9.893 Accumulation Unit Value, End of Period $12.152 $ 9.893 $ 7.473 Number of Units Outstanding, End of Period 2,481,411 2,978,593 2,262,652 - ------------------------------------------------------------------------------------------------------------------------------------ DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $36.593 $35.192 $36.516 Accumulation Unit Value, End of Period $35.192 $36.516 $34.106 Number of Units Outstanding, End of Period 20,053,835 14,630,929 12,948,190 - ------------------------------------------------------------------------------------------------------------------------------------ EQUITY Accumulation Unit Value, Beginning of Period $49.825 $77.861 $67.245 Accumulation Unit Value, End of Period $77.861 $67.245 $48.450 Number of Units Outstanding, End of Period 10,374,793 10,575,220 8,138,160 - ------------------------------------------------------------------------------------------------------------------------------------ EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $33.944 $43.185 $40.461 Accumulation Unit Value, End of Period $43.185 $40.461 $32.784 Number of Units Outstanding, End of Period 4,444,148 4,301,593 3,317,658 - ------------------------------------------------------------------------------------------------------------------------------------ GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $16.291 $19.115 $18.366 Accumulation Unit Value, End of Period $19.115 $18.366 $16.964 Number of Units Outstanding, End of Period 8,775,455 6,909,685 5,770,297 - ------------------------------------------------------------------------------------------------------------------------------------ HIGH YIELD Accumulation Unit Value, Beginning of Period $24.563 $23.879 $15.948 Accumulation Unit Value, End of Period $23.879 $15.948 $10.409 Number of Units Outstanding, End of Period 4,203,079 2,849,935 2,178,760 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME BUILDER Accumulation Unit Value, Beginning of Period $12.274 $12.947 $12.780 Accumulation Unit Value, End of Period $12.947 $12.780 $12.881 Number of Units Outstanding, End of Period 3,133,231 2,229,410 2,367,507 - ------------------------------------------------------------------------------------------------------------------------------------ INFORMATION Accumulation Unit Value, Beginning of Period - $10.000 $ 9.290 Accumulation Unit Value, End of Period - $ 9.290 $ 5.228 Number of Units Outstanding, End of Period - 112,286 362,163 - ------------------------------------------------------------------------------------------------------------------------------------ MONEY MARKET Accumulation Unit Value, Beginning of Period $12.963 $13.390 $13.989 Accumulation Unit Value, End of Period $13.390 $13.989 $14.320 Number of Units Outstanding, End of Period 10,276,270 8,280,928 11,669,438 - ------------------------------------------------------------------------------------------------------------------------------------ PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $ 5.334 $ 8.730 $ 5.724 Accumulation Unit Value, End of Period $ 8.730 $ 5.724 $ 4.093 Number of Units Outstanding, End of Period 4,058,485 3,391,224 2,397,512 - ------------------------------------------------------------------------------------------------------------------------------------ For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1999 2000 2001 - ------------------------------------------------------------------------------------------------------------------------------------ QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $19.200 $18.101 $19.815 Accumulation Unit Value, End of Period $18.101 $19.815 $21.390 Number of Units Outstanding, End of Period 5,167,349 4,441,671 5,113,210 - ------------------------------------------------------------------------------------------------------------------------------------ LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.056 $10.490 Accumulation Unit Value, End of Period $10.056 $10.490 $11.029 Number of Units Outstanding, End of Period 121,549 243,983 822,746 - ------------------------------------------------------------------------------------------------------------------------------------ STRATEGIST Accumulation Unit Value, Beginning of Period $26.783 $30.968 $31.017 Accumulation Unit Value, End of Period $30.968 $31.017 $27.448 Number of Units Outstanding, End of Period 6,559,093 6,719,790 5,764,581 - ------------------------------------------------------------------------------------------------------------------------------------ S&P 500 INDEX Accumulation Unit Value, Beginning of Period $11.117 $13.170 $11.760 Accumulation Unit Value, End of Period $13.170 $11.760 $10.169 Number of Units Outstanding, End of Period 6,209,831 7,535,806 6,817,073 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES Accumulation Unit Value, Beginning of Period $29.438 $32.693 $33.193 Accumulation Unit Value, End of Period $32.693 $33.193 $24.282 Number of Units Outstanding, End of Period 4,016,659 4,175,987 3,506,974 - ------------------------------------------------------------------------------------------------------------------------------------ THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $ 7.095 $13.679 $ 8.194 Accumulation Unit Value, End of Period $13.679 $ 8.194 $ 7.549 Number of Units Outstanding, End of Period 689,216 884,729 695,767 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.094 $13.869 $12.061 Accumulation Unit Value, End of Period $13.869 $12.061 $10.087 Number of Units Outstanding, End of Period 2,952,648 4,201,929 3,084,036 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $ 9.780 $12.063 $10.410 Accumulation Unit Value, End of Period $12.063 $10.410 $ 8.278 Number of Units Outstanding, End of Period 416,818 713,739 651,537 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - - Accumulation Unit Value, End of Period - - $12.092 Number of Units Outstanding, End of Period - - - - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period - $10.000 $10.234 Accumulation Unit Value, End of Period - $10.234 $ 9.765 Number of Units Outstanding, End of Period - 119,091 1,367,293 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $ 9.054 $ 8.790 $11.197 Accumulation Unit Value, End of Period $ 8.790 $11.197 $12.117 Number of Units Outstanding, End of Period 194,964 526,895 613,092 For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1999 2000 2001 - ------------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - - Accumulation Unit Value, End of Period - - - Number of Units Outstanding, End of Period - - - - ------------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $11.985 $10.000 $21.368 Accumulation Unit Value, End of Period $24.135 $21.368 $14.422 Number of Units Outstanding, End of Period 2,522,689 5,404,064 4,150,641 - ------------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $14.447 $ 8.317 Accumulation Unit Value, End of Period $14.447 $ 8.317 $ 6.287 Number of Units Outstanding, End of Period - 403,019 510,155 - ------------------------------------------------------------------------------------------------------------------------------------ AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $14.447 $ 7.337 Accumulation Unit Value, End of Period $14.447 $ 7.337 $ 4.779 Number of Units Outstanding, End of Period - 222,089 246,997 - ------------------------------------------------------------------------------------------------------------------------------------ AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $14.447 $ 7.994 Accumulation Unit Value, End of Period $14.447 $ 7.994 $ 6.886 Number of Units Outstanding, End of Period - 867,766 1,317,408 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $14.447 $ 8.138 Accumulation Unit Value, End of Period $14.447 $ 8.138 $ 6.121 Number of Units Outstanding, End of Period - 253,019 457,425 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $14.447 $10.755 Accumulation Unit Value, End of Period $14.447 $10.755 $10.612 Number of Units Outstanding, End of Period - 756,656 3,317,724 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $14.447 $ 7.854 Accumulation Unit Value, End of Period $14.447 $ 7.854 $ 6.392 Number of Units Outstanding, End of Period - 1,370,194 1,117648 - ------------------------------------------------------------------------------------------------------------------------------------ LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - - Accumulation Unit Value, End of Period - - - Number of Units Outstanding, End of Period - - - - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period - $10.000 $10.791 Accumulation Unit Value, End of Period - $10.791 $ 9.952 Number of Units Outstanding, End of Period - 220,718 458,634 - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period - $10.000 $ 9.076 Accumulation Unit Value, End of Period - $ 9.076 $ 7.098 Number of Units Outstanding, End of Period - 562,467 605,965 For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1999 2000 2001 - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - - Accumulation Unit Value, End of Period - - - Number of Units Outstanding, End of Period - - - - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period - $10.000 $ 8.118 Accumulation Unit Value, End of Period - $ 8.118 $ 6.206 Number of Units Outstanding, End of Period - 786,759 864,153
*Contracts with the with the Enhanced Death Benefit, The Performance Income Benefit, or The Performance Death Benefit Option were first offered under the Contracts on October 30, 1995. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.38% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE PERFORMANCE BENEFIT COMBINATION OR THE DEATH BENEFIT COMBINATION OPTION
For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1998 1999 2000 2001 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period - $10.000 $14.454 $13.980 Accumulation Unit Value, End of Period - $14.454 $13.980 $ 9.842 Number of Units Outstanding, End of Period - 458,487 1,751,421 1,396,166 - ------------------------------------------------------------------------------------------------------------------------------------ CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $19.356 $23.373 $30.663 $30.565 Accumulation Unit Value, End of Period $23.373 $30.663 $30.565 $22.168 Number of Units Outstanding, End of Period 41,885 128,657 312,892 282,942 - ------------------------------------------------------------------------------------------------------------------------------------ COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.714 $12.130 $ 9.864 Accumulation Unit Value, End of Period $ 9.714 $12.130 $ 9.864 $ 7.443 Number of Units Outstanding, End of Period 178,762 489,657 810,537 635,032 - ------------------------------------------------------------------------------------------------------------------------------------ DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $32.096 $36.031 $34.614 $35.877 Accumulation Unit Value, End of Period $36.031 $34.614 $35.877 $33.471 Number of Units Outstanding, End of Period 528,141 1,434,477 1,488,899 1,469,841 - ------------------------------------------------------------------------------------------------------------------------------------ EQUITY Accumulation Unit Value, Beginning of Period $38.177 $49.060 $76.581 $55.067 Accumulation Unit Value, End of Period $49.060 $76.581 $55.067 $47.549 Number of Units Outstanding, End of Period 221,631 950,293 1,396,798 1,180,919 - ------------------------------------------------------------------------------------------------------------------------------------ EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $27.627 $33.452 $42.510 $39.785 Accumulation Unit Value, End of Period $33.452 $42.510 $39.785 $32.201 Number of Units Outstanding, End of Period 175,357 392,050 635,143 508,808 - ------------------------------------------------------------------------------------------------------------------------------------ GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $15.193 $16.794 $18.951 $18.188 Accumulation Unit Value, End of Period $16.794 $18.951 $18.188 $16.781 Number of Units Outstanding, End of Period 156,429 488,336 611,375 578,485 - ------------------------------------------------------------------------------------------------------------------------------------ HIGH YIELD Accumulation Unit Value, Beginning of Period $26.463 $24.176 $23.477 $15.662 Accumulation Unit Value, End of Period $24.176 $23.477 $15.662 $10.211 Number of Units Outstanding, End of Period 137,884 290,136 271,440 263,472 - ------------------------------------------------------------------------------------------------------------------------------------ INCOME BUILDER Accumulation Unit Value, Beginning of Period $12.036 $12.248 $12.906 $12.725 Accumulation Unit Value, End of Period $12.248 $12.906 $12.725 $12.812 Number of Units Outstanding, End of Period 164,457 270,771 228,558 316,173 - ------------------------------------------------------------------------------------------------------------------------------------ For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1998 1999 2000 2001 - ------------------------------------------------------------------------------------------------------------------------------------ INFORMATION Accumulation Unit Value, Beginning of Period - - $10.000 $ 9.289 Accumulation Unit Value, End of Period - - $ 9.289 $ 5.222 Number of Units Outstanding, End of Period - - 36,971 122,546 - ------------------------------------------------------------------------------------------------------------------------------------ MONEY MARKET Accumulation Unit Value, Beginning of Period $12.355 $12.766 $13.166 $13.743 Accumulation Unit Value, End of Period $12.766 $13.166 $13.743 $14.053 Number of Units Outstanding, End of Period 673,034 1,263,421 1,085,418 1,927,404 - ------------------------------------------------------------------------------------------------------------------------------------ PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $ 5.587 $ 5.294 $ 8.655 $ 5.669 Accumulation Unit Value, End of Period $ 5.294 $ 8.655 $ 5.669 $ 4.049 Number of Units Outstanding, End of Period 52,484 390,608 573,966 376,670 - ------------------------------------------------------------------------------------------------------------------------------------ QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $17.841 $18.906 $17.804 $19.468 Accumulation Unit Value, End of Period $18.906 $17.804 $19.468 $20.992 Number of Units Outstanding, End of Period 169,761 328,139 388,445 744,296 - ------------------------------------------------------------------------------------------------------------------------------------ LIMITED DURATION Accumulation Unit Value, Beginning of Period - $10.000 $10.049 $10.470 Accumulation Unit Value, End of Period - $10.049 $10.470 $10.996 Number of Units Outstanding, End of Period - 34,942 68,599 186,207 - ------------------------------------------------------------------------------------------------------------------------------------ STRATEGIST Accumulation Unit Value, Beginning of Period $21.497 $26.371 $30.459 $30.474 Accumulation Unit Value, End of Period $26.371 $30.459 $30.474 $26.937 Number of Units Outstanding, End of Period 472,816 1,004,838 1,334,894 1,250,916 - ------------------------------------------------------------------------------------------------------------------------------------ S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $11.110 $13.146 $11.727 Accumulation Unit Value, End of Period $11.110 $13.146 $11.727 $10.128 Number of Units Outstanding, End of Period 283,511 1,877,442 2,621,084 2,479,435 - ------------------------------------------------------------------------------------------------------------------------------------ UTILITIES Accumulation Unit Value, Beginning of Period $23.622 $28.985 $32.155 $32.612 Accumulation Unit Value, End of Period $28.985 $32.155 $32.612 $23.831 Number of Units Outstanding, End of Period 159,860 340,744 558,866 503,281 - ------------------------------------------------------------------------------------------------------------------------------------ THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 7.089 $13.584 $ 8.169 Accumulation Unit Value, End of Period $ 7.089 $13.584 $ 8.169 $ 7.518 Number of Units Outstanding, End of Period 19,500 210,592 449,505 318,648 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.370 $13.842 $12.024 Accumulation Unit Value, End of Period $10.370 $13.842 $12.024 $10.045 Number of Units Outstanding, End of Period 154,201 495,861 915,909 789,440 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $ 9.771 $12.040 $10.378 Accumulation Unit Value, End of Period $ 9.771 $12.040 $10.378 $ 8.243 Number of Units Outstanding, End of Period 31,933 172,588 359,209 352,646 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1998 1999 2000 2001 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period - - $10.000 $10.226 Accumulation Unit Value, End of Period - - $10.226 $ 9.747 Number of Units Outstanding, End of Period - - 67,804 439,613 - ------------------------------------------------------------------------------------------------------------------------------------ MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $ 9.048 $ 8.774 $11.165 Accumulation Unit Value, End of Period $ 9.048 $ 8.774 $11.165 $12.069 Number of Units Outstanding, End of Period 37,193 93,827 165,007 258,530 - ------------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $12.590 $24.088 $21.302 Accumulation Unit Value, End of Period $12.590 $24.088 $21.302 $14.362 Number of Units Outstanding, End of Period 82,427 818,855 2,158,492 1,771,972 - ------------------------------------------------------------------------------------------------------------------------------------ AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period - $10.000 $14.447 $ 8.311 Accumulation Unit Value, End of Period - $14.447 $ 8.311 $ 6.275 Number of Units Outstanding, End of Period - - 252,723 284,246 - ------------------------------------------------------------------------------------------------------------------------------------ AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period - $10.000 $14.447 $ 7.331 Accumulation Unit Value, End of Period - $14.447 $ 7.331 $ 4.770 Number of Units Outstanding, End of Period - - 112,625 178,606 - ------------------------------------------------------------------------------------------------------------------------------------ AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period - $10.000 $14.447 $ 7.988 Accumulation Unit Value, End of Period - $14.447 $ 7.988 $ 6.874 Number of Units Outstanding, End of Period - - 510,446 651,404 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period - $10.000 $14.447 $ 8.132 Accumulation Unit Value, End of Period - $14.447 $ 8.132 $ 6.110 Number of Units Outstanding, End of Period - - 145,135 131,345 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period - $10.000 $14.447 $10.747 Accumulation Unit Value, End of Period - $14.447 $10.747 $10.592 Number of Units Outstanding, End of Period - - 282,835 876,470 - ------------------------------------------------------------------------------------------------------------------------------------ ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period - $10.000 $14.447 $ 7.849 Accumulation Unit Value, End of Period - $14.447 $ 7.849 $ 6.380 Number of Units Outstanding, End of Period - - 505,325 463,774 - ------------------------------------------------------------------------------------------------------------------------------------ LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period - - $10.000 $10.783 Accumulation Unit Value, End of Period - - $10.783 $ 9.934 Number of Units Outstanding, End of Period - - 86,919 148,690 For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 1998 1999 2000 2001 - ----------------------------------------------------------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period - - $10.000 $ 9.069 Accumulation Unit Value, End of Period - - $ 9.069 $ 7.085 Number of Units Outstanding, End of Period - - 430,045 555,094 - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - - - Accumulation Unit Value, End of Period - - - - Number of Units Outstanding, End of Period - - - - - ------------------------------------------------------------------------------------------------------------------------------------ PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period - - $10.000 $ 8.112 Accumulation Unit Value, End of Period - - $ 8.112 $ 6.195 Number of Units Outstanding, End of Period - - 361,221 386,861
*Contracts with the Performance Benefit Combination Option was first offered under the Contracts on December 7, 1998 and the Death Benefit Combination Option was first offered under the Contracts on May 3, 1999. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.49% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH INCOME BENEFIT COMBINATION OPTION 2
For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.210 Accumulation Unit Value, End of Period $ 9.210 $ 6.480 Number of Units Outstanding, End of Period 0 1,833 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.872 Accumulation Unit Value, End of Period $ 9.872 $ 7.155 Number of Units Outstanding, End of Period 0 14,263 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.051 Accumulation Unit Value, End of Period $ 9.051 $ 6.826 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.423 Accumulation Unit Value, End of Period $10.423 $ 9.718 Number of Units Outstanding, End of Period 0 24,417 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.271 Accumulation Unit Value, End of Period $ 9.271 $ 6.669 Number of Units Outstanding, End of Period 0 23,789 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.330 Accumulation Unit Value, End of Period $10.330 $ 8.356 Number of Units Outstanding, End of Period 0 11,431 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.283 Accumulation Unit Value, End of Period $10.283 $ 9.482 Number of Units Outstanding, End of Period 0 1,963 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 8.358 Accumulation Unit Value, End of Period $ 8.358 $ 5.446 Number of Units Outstanding, End of Period 0 12,725 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.024 Accumulation Unit Value, End of Period $10.024 $10.253 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.288 Accumulation Unit Value, End of Period $ 9.288 $ 5.258 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.069 Accumulation Unit Value, End of Period $10.069 $10.290 Number of Units Outstanding, End of Period 0 8,224 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.560 Accumulation Unit Value, End of Period $ 8.560 $ 6.110 Number of Units Outstanding, End of Period 0 391 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.401 Accumulation Unit Value, End of Period $10.401 $11.209 Number of Units Outstanding, End of Period 0 2,626 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.090 Accumulation Unit Value, End of Period $10.090 $10.591 Number of Units Outstanding, End of Period 0 1,106 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $ 9.576 Accumulation Unit Value, End of Period $ 9.576 $ 8.459 Number of Units Outstanding, End of Period 0 31,531 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.212 Accumulation Unit Value, End of Period $ 9.212 $ 7.951 Number of Units Outstanding, End of Period 0 3,772 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.022 Accumulation Unit Value, End of Period $10.022 $ 7.319 Number of Units Outstanding, End of Period 0 11,476 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 8.387 Accumulation Unit Value, End of Period $ 8.387 $ 7.315 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.585 Accumulation Unit Value, End of Period $ 8.585 $ 7.168 Number of Units Outstanding, End of Period 0 596 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $ 9.838 Accumulation Unit Value, End of Period $ 9.838 $ 8.405 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $ 9.834 Accumulation Unit Value, End of Period $ 9.834 $ 9.368 Number of Units Outstanding, End of Period 0 334 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.749 Accumulation Unit Value, End of Period $10.749 $11.987 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 8.112 Accumulation Unit Value, End of Period $ 8.112 $ 5.466 Number of Units Outstanding, End of Period 0 946 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 8.237 Accumulation Unit Value, End of Period $ 8.237 $ 6.215 Number of Units Outstanding, End of Period 0 184 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.319 Accumulation Unit Value, End of Period $ 8.319 $ 5.793 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.407 Accumulation Unit Value, End of Period $ 9.407 $ 8.315 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.859 Accumulation Unit Value, End of Period $ 8.859 $ 6.815 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $ 9.941 Accumulation Unit Value, End of Period $ 9.941 $ 9.793 Number of Units Outstanding, End of Period 0 4,956 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.835 Accumulation Unit Value, End of Period $ 8.835 $ 7.178 Number of Units Outstanding, End of Period 0 428 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 PUTNAM VARIABLE TRUSTS (Class IB Shares) - -------------------------------------------------------------------------------- PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.074 Accumulation Unit Value, End of Period $10.074 $ 9.275 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.942 Accumulation Unit Value, End of Period $ 9.942 $ 7.763 Number of Units Outstanding, End of Period 0 597 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 7.661 Accumulation Unit Value, End of Period $ 7.661 $ 6.714 Number of Units Outstanding, End of Period 0 509 *Contracts with the Income Benefit Combination Option 2 were first offered under the Contracts on October 30, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.55% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2 For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.210 Accumulation Unit Value, End of Period $ 9.210 $ 6.465 Number of Units Outstanding, End of Period 2,135 21,622 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.870 Accumulation Unit Value, End of Period $ 9.870 $ 7.139 Number of Units Outstanding, End of Period 280 18,439 - -------------------------------------------------------------------------------- COMPETITIVE EDGE "BEST IDEAS" Accumulation Unit Value, Beginning of Period $10.000 $ 9.050 Accumulation Unit Value, End of Period $ 9.050 $ 6.810 Number of Units Outstanding, End of Period 0 7,009 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.420 Accumulation Unit Value, End of Period $10.420 $ 9.696 Number of Units Outstanding, End of Period 17,411 162,997 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.270 Accumulation Unit Value, End of Period $ 9.270 $ 6.653 Number of Units Outstanding, End of Period 44,843 275,064 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.333 Accumulation Unit Value, End of Period $10.333 $ 8.337 Number of Units Outstanding, End of Period 8,533 69,755 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.280 Accumulation Unit Value, End of Period $10.280 $ 9.460 Number of Units Outstanding, End of Period 5,147 37,562 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 8.360 Accumulation Unit Value, End of Period $ 8.360 $ 5.434 Number of Units Outstanding, End of Period 3,234 18,175 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ $10.063 Number of Units Outstanding, End of Period 0 6,190 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ $ 5.206 Number of Units Outstanding, End of Period 0 3,938 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.070 Accumulation Unit Value, End of Period $10,070 $10.266 Number of Units Outstanding, End of Period 4,189 34,948 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.559 Accumulation Unit Value, End of Period $ 8.559 $ 6.196 Number of Units Outstanding, End of Period 0 5,050 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.400 Accumulation Unit Value, End of Period $10.400 $11.183 Number of Units Outstanding, End of Period 6,003 39,929 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.088 Accumulation Unit Value, End of Period $10.088 $10.566 Number of Units Outstanding, End of Period 0 565 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $ 9.573 Accumulation Unit Value, End of Period $ 9.573 $ 8.440 Number of Units Outstanding, End of Period 314 64,590 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.210 Accumulation Unit Value, End of Period $ 9.210 $ 7.933 Number of Units Outstanding, End of Period 19,728 62,351 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.021 Accumulation Unit Value, End of Period $10.021 $ 7.303 Number of Units Outstanding, End of Period 1,268 57,623 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 8.387 Accumulation Unit Value, End of Period $ 8.387 $ 7.697 Number of Units Outstanding, End of Period 0 391 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.584 Accumulation Unit Value, End of Period $ 8.584 $ 7.151 Number of Units Outstanding, End of Period 721 16,825 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $ 9.836 Accumulation Unit Value, End of Period $ 9.836 $ 7.791 Number of Units Outstanding, End of Period 0 516 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $ 9.832 Accumulation Unit Value, End of Period $ 9.832 $ 9.346 Number of Units Outstanding, End of Period 0 16,142 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.747 Accumulation Unit Value, End of Period $10.747 $11.586 Number of Units Outstanding, End of Period 0 2,387 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 8.110 Accumulation Unit Value, End of Period $ 8.110 $ 5.453 Number of Units Outstanding, End of Period 6,591 72,989 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 8.233 Accumulation Unit Value, End of Period $ 8.233 $ 6.201 Number of Units Outstanding, End of Period 0 6,247 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.317 Accumulation Unit Value, End of Period $ 8.317 $ 5.397 Number of Units Outstanding, End of Period 0 61 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.406 Accumulation Unit Value, End of Period $ 9.406 $ 8.072 Number of Units Outstanding, End of Period 0 2,372 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.858 Accumulation Unit Value, End of Period $ 8.858 $ 6.637 Number of Units Outstanding, End of Period 0 6,281 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $ 9.940 Accumulation Unit Value, End of Period $ 9.940 $ 9.770 Number of Units Outstanding, End of Period 0 33,844 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.830 Accumulation Unit Value, End of Period $ 8.830 $ 7.162 Number of Units Outstanding, End of Period 661 3,489 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - -
For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.072 Accumulation Unit Value, End of Period $10.072 $ 9.253 Number of Units Outstanding, End of Period 0 1,873 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.940 Accumulation Unit Value, End of Period $ 9.940 $ 7.745 Number of Units Outstanding, End of Period 0 6,602 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 7.659 Accumulation Unit Value, End of Period $ 7.659 $ 6.699 Number of Units Outstanding, End of Period 0 3,663 *Contracts with the Income and Death Benefit Combination Option 2 were first offered under the Contracts on October 30, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.75% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT OPTION For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.130 Accumulation Unit Value, End of Period $10.130 $ 7.135 Number of Units Outstanding, End of Period 0 12,656 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 7.487 Number of Units Outstanding, End of Period 0 14,927 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.869 Accumulation Unit Value, End of Period $ 9.869 $ 7.450 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.496 Accumulation Unit Value, End of Period $10.496 $ 9.796 Number of Units Outstanding, End of Period 0 55,801 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.128 Accumulation Unit Value, End of Period $10.128 $ 7.292 Number of Units Outstanding, End of Period 0 109,861 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.401 Accumulation Unit Value, End of Period $10.401 $ 8.422 Number of Units Outstanding, End of Period 0 15,831 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.320 Accumulation Unit Value, End of Period $10.320 $ 9.525 Number of Units Outstanding, End of Period 0 7,798 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 9.543 Accumulation Unit Value, End of Period $ 9.543 $ 6.224 Number of Units Outstanding, End of Period 0 9,421 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.278 Accumulation Unit Value, End of Period $10.278 $10.352 Number of Units Outstanding, End of Period 0 2,625 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.593 Accumulation Unit Value, End of Period $ 9.593 $ 5.435 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.017 Accumulation Unit Value, End of Period $10.017 $10.247 Number of Units Outstanding, End of Period 0 22,571 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.500 Accumulation Unit Value, End of Period $ 9.500 $ 6.788 Number of Units Outstanding, End of Period 0 1,847 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.018 Accumulation Unit Value, End of Period $10.018 $10.807 Number of Units Outstanding, End of Period 0 34,608 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.010 Accumulation Unit Value, End of Period $10.010 $10.515 Number of Units Outstanding, End of Period 0 1,041 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $10.072 Accumulation Unit Value, End of Period $10.072 $ 8.907 Number of Units Outstanding, End of Period 0 38,063 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.979 Accumulation Unit Value, End of Period $ 9.979 $ 8.622 Number of Units Outstanding, End of Period 0 7,168 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.140 Accumulation Unit Value, End of Period $10.140 $ 7.413 Number of Units Outstanding, End of Period 0 38,052 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.538 Accumulation Unit Value, End of Period $ 9.538 $ 8.781 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.829 Accumulation Unit Value, End of Period $ 9.829 $ 8.215 Number of Units Outstanding, End of Period 0 10,841 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $10.199 Accumulation Unit Value, End of Period $10.199 $ 8.104 Number of Units Outstanding, End of Period 0 1,531 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.320 Accumulation Unit Value, End of Period $10.320 $ 9.841 Number of Units Outstanding, End of Period 0 2,487 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.025 Accumulation Unit Value, End of Period $10.025 $10.842 Number of Units Outstanding, End of Period 0 195 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 9.839 Accumulation Unit Value, End of Period $ 9.839 $ 6.636 Number of Units Outstanding, End of Period 0 9,781 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.896 Accumulation Unit Value, End of Period $ 9.896 $ 7.601 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.911 Accumulation Unit Value, End of Period $ 9.911 $ 6.451 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.159 Accumulation Unit Value, End of Period $10.159 $ 8.745 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.928 Accumulation Unit Value, End of Period $ 9.928 $ 7.642 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.359 Accumulation Unit Value, End of Period $10.359 $10.214 Number of Units Outstanding, End of Period 0 15,086 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.808 Accumulation Unit Value, End of Period $ 9.808 $ 8.110 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.226 Accumulation Unit Value, End of Period $10.226 $ 9.424 Number of Units Outstanding, End of Period 0 2,533 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.316 Accumulation Unit Value, End of Period $10.316 $ 8.063 Number of Units Outstanding, End of Period 0 1,298 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 9.818 Accumulation Unit Value, End of Period $ 9.818 $ 7.561 Number of Units Outstanding, End of Period 0 1,587
*Contracts with the Enhanced Earnings Death Benefit Option were first offered under the Contracts on December 6, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.45% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT OPTION AND THE ENHANCED DEATH BENEFIT, THE PERFORMANCE INCOME BENEFIT, OR THE PERFORMANCE DEATH BENEFIT OPTION
For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.130 Accumulation Unit Value, End of Period $10.130 $ 7.125 Number of Units Outstanding, End of Period 0 6,584 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 7.477 Number of Units Outstanding, End of Period 0 10,305 - -------------------------------------------------------------------------------- COMPETITIVE EDGE "BEST IDEAS" Accumulation Unit Value, Beginning of Period $10.000 $ 9.869 Accumulation Unit Value, End of Period $ 9.869 $ 7.440 Number of Units Outstanding, End of Period 0 6,087 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.495 Accumulation Unit Value, End of Period $10.495 $ 9.783 Number of Units Outstanding, End of Period 5,188 152,030 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.128 Accumulation Unit Value, End of Period $10.128 $ 7,283 Number of Units Outstanding, End of Period 4,354 170,453 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.401 Accumulation Unit Value, End of Period $10.401 $ 8.410 Number of Units Outstanding, End of Period 0 74,523 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.512 Number of Units Outstanding, End of Period 1,060 41,357 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 9.542 Accumulation Unit Value, End of Period $ 9.542 $ 6.216 Number of Units Outstanding, End of Period 2,053 7,045 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.277 Accumulation Unit Value, End of Period $10.277 $10.338 Number of Units Outstanding, End of Period 9,373 6,147 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.593 Accumulation Unit Value, End of Period $ 9.593 $ 5.388 Number of Units Outstanding, End of Period 0 16,803 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.017 Accumulation Unit Value, End of Period $10.017 $10.233 Number of Units Outstanding, End of Period 0 15,344 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.500 Accumulation Unit Value, End of Period $ 9.500 $ 6.779 Number of Units Outstanding, End of Period 0 26,888 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.018 Accumulation Unit Value, End of Period $10.018 $10.793 Number of Units Outstanding, End of Period 14,084 36,716 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.007 Accumulation Unit Value, End of Period $10.007 $10.501 Number of Units Outstanding, End of Period 0 92 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $10.072 Accumulation Unit Value, End of Period $10.072 $ 8.895 Number of Units Outstanding, End of Period 11,272 33,660 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.979 Accumulation Unit Value, End of Period $ 9.979 $ 8.611 Number of Units Outstanding, End of Period 0 30,583 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.139 Accumulation Unit Value, End of Period $10.139 $ 7.403 Number of Units Outstanding, End of Period 6,965 39,374 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.538 Accumulation Unit Value, End of Period $ 9.538 $ 8.770 Number of Units Outstanding, End 0 10,484 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.829 Accumulation Unit Value, End of Period $ 9.829 $ 8,204 Number of Units Outstanding, End of Period 1,183 26,681 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $10.199 Accumulation Unit Value, End of Period $10.199 $ 8.093 Number of Units Outstanding, End of Period 0 4,053 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.320 Accumulation Unit Value, End of Period $10.320 $ 9.834 Number of Units Outstanding, End of Period 0 4,883 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.025 Accumulation Unit Value, End of Period $10.025 $10.827 Number of Units Outstanding, End of Period 5,505 3,542 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 9.838 Accumulation Unit Value, End of Period $ 9.838 $ 6.627 Number of Units Outstanding, End of Period 463 20,768 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.896 Accumulation Unit Value, End of Period $ 9.896 7.464 Number of Units Outstanding, End of Period 0 5,678 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.911 Accumulation Unit Value, End of Period $ 9.911 $ 6.443 Number of Units Outstanding, End of Period 0 1,327 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.159 Accumulation Unit Value, End of Period $10.159 $ 8.734 Number of Units Outstanding, End of Period 0 6,178 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.928 Accumulation Unit Value, End of Period $ 9.928 $ 7.453 Number of Units Outstanding, End of Period 0 1,080 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.359 Accumulation Unit Value, End of Period $10.359 $10.201 Number of Units Outstanding, End of Period 0 23,723 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.808 Accumulation Unit Value, End of Period $ 9.808 $ 7.965 Number of Units Outstanding, End of Period 0 2,592 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.226 Accumulation Unit Value, End of Period $10.226 $ 9.411 Number of Units Outstanding, End of Period 0 920 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.316 Accumulation Unit Value, End of Period $10.316 $ 8.052 Number of Units Outstanding, End of Period 0 2,054 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 9.818 Accumulation Unit Value, End of Period $ 9.818 $ 7.551 Number of Units Outstanding, End of Period 0 1,684 *Contracts with the Enhanced Earnings Death Benefit Option and the Enhanced Death Benefit, the Performance Income Benefit, or the Performance Death Benefit Option were first offered under the Contracts on December 6, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.58% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT OPTION AND THE PERFORMANCE BENEFIT COMBINATION OR THE DEATH BENEFIT COMBINATION OPTION For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.129 Accumulation Unit Value, End of Period $10.129 $ 7.117 Number of Units Outstanding, End of Period 0 25,339 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 7.468 Number of Units Outstanding, End of Period 0 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.869 Accumulation Unit Value, End of Period $ 9.869 $ 7.431 Number of Units Outstanding, End of Period 0 18,778 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.496 Accumulation Unit Value, End of Period $10.496 $ 9.772 Number of Units Outstanding, End of Period 0 82,875 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.128 Accumulation Unit Value, End of Period $10.128 $ 7.274 Number of Units Outstanding, End of Period 0 139,672 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.401 Accumulation Unit Value, End of Period $10.401 $ 8.401 Number of Units Outstanding, End of Period 0 40,707 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.501 Number of Units Outstanding, End of Period 0 23,606 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 9.542 Accumulation Unit Value, End of Period $ 9.542 $ 6.209 Number of Units Outstanding, End of Period 0 2,570 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.277 Accumulation Unit Value, End of Period $10.277 $10.326 Number of Units Outstanding, End of Period 0 10.916 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.593 Accumulation Unit Value, End of Period $ 9.593 $ 5.382 Number of Units Outstanding, End of Period 0 369 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.017 Accumulation Unit Value, End of Period $10.017 $10.222 Number of Units Outstanding, End of Period 0 42,162 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.499 Accumulation Unit Value, End of Period $ 9.499 $ 6.771 Number of Units Outstanding, End of Period 0 6,692 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.018 Accumulation Unit Value, End of Period $10.018 $10.780 Number of Units Outstanding, End of Period 0 46,655 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.010 Accumulation Unit Value, End of Period $10.010 $10.489 Number of Units Outstanding, End of Period 0 4,863 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $10.072 Accumulation Unit Value, End of Period $10.072 $ 8.885 Number of Units Outstanding, End of Period 0 67,992 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.978 Accumulation Unit Value, End of Period $ 9.978 $ 8.601 Number of Units Outstanding, End of Period 0 42,471 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.139 Accumulation Unit Value, End of Period $10.139 $ 7.394 Number of Units Outstanding, End of Period 0 33,478 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.538 Accumulation Unit Value, End of Period $ 9.538 $ 8.760 Number of Units Outstanding, End of Period 0 6,110 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.829 Accumulation Unit Value, End of Period $ 9.829 $ 8.194 Number of Units Outstanding, End of Period 0 27,025 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $10.199 Accumulation Unit Value, End of Period $10.199 $ 8.084 Number of Units Outstanding, End of Period 0 3,255 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.320 Accumulation Unit Value, End of Period $10.320 $ 9.816 Number of Units Outstanding, End of Period 0 5,227 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.025 Accumulation Unit Value, End of Period $10.025 $10.815 Number of Units Outstanding, End of Period 0 2,973 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 9.838 Accumulation Unit Value, End of Period $ 9.838 $ 6.619 Number of Units Outstanding, End of Period 0 29,475 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.895 Accumulation Unit Value, End of Period $ 9.895 $ 7.456 Number of Units Outstanding, End of Period 0 2,415 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.911 Accumulation Unit Value, End of Period $ 9.911 $ 6.435 Number of Units Outstanding, End of Period 0 1,877 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.159 Accumulation Unit Value, End of Period $10.159 $ 8.724 Number of Units Outstanding, End of Period 0 13,177 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.927 Accumulation Unit Value, End of Period $ 9.927 $ 7.444 Number of Units Outstanding, End of Period 0 3,249 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.359 Accumulation Unit Value, End of Period $10.359 $10.189 Number of Units Outstanding, End of Period 0 24,208 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.808 Accumulation Unit Value, End of Period $ 9.808 $ 7.956 Number of Units Outstanding, End of Period 0 4,364 - -------------------------------------------------------------------------------- LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.225 Accumulation Unit Value, End of Period $10.225 $ 9.400 Number of Units Outstanding, End of Period 0 1,125 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.316 Accumulation Unit Value, End of Period $10.316 $ 8.043 Number of Units Outstanding, End of Period 0 3,661 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 9.817 Accumulation Unit Value, End of Period $ 9.817 $ 7.542 Number of Units Outstanding, End of Period 0 3,758 - --------------------------------------------------------------------------------
*Contracts with the Enhanced Earnings Death Benefit Option and the Performance Benefit Combination or the Death Benefit Combination Option were first offered under the Contracts on December 6, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.69% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT OPTION WITH THE INCOME BENEFIT COMBINATION OPTION 2
For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.129 Accumulation Unit Value, End of Period $10.129 $ 7.250 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 8.139 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.868 Accumulation Unit Value, End of Period $ 9.868 $ 8.018 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.495 Accumulation Unit Value, End of Period $10.495 $ 9.765 Number of Units Outstanding, End of Period 0 3,793 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.128 Accumulation Unit Value, End of Period $10.128 $ 7.270 Number of Units Outstanding, End of Period 0 5,498 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.400 Accumulation Unit Value, End of Period $10.400 $ 8.396 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.495 Number of Units Outstanding, End of Period 0 3,784 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 9.541 Accumulation Unit Value, End of Period $ 9.541 $ 6.205 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.277 Accumulation Unit Value, End of Period $10.277 $10.498 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.593 Accumulation Unit Value, End of Period $ 9.593 $ 5.424 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.016 Accumulation Unit Value, End of Period $10.016 $10.215 Number of Units Outstanding, End of Period 0 14,901 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.499 Accumulation Unit Value, End of Period $ 9.499 $ 7.581 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.017 Accumulation Unit Value, End of Period $10.017 $10.774 Number of Units Outstanding, End of Period 0 506 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.010 Accumulation Unit Value, End of Period $10.010 $10.313 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $10.071 Accumulation Unit Value, End of Period $10.071 $ 8.879 Number of Units Outstanding, End of Period ` 0 4,132 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.978 Accumulation Unit Value, End of Period $ 9.978 $10.313 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.139 Accumulation Unit Value, End of Period $10.139 $ 7.390 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.537 Accumulation Unit Value, End of Period $ 9.537 $ 8.307 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.828 Accumulation Unit Value, End of Period $ 9.828 $ 8.231 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $10.198 Accumulation Unit Value, End of Period $10.198 $ 8.702 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.935 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.025 Accumulation Unit Value, End of Period $10.025 $11.164 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 9.838 Accumulation Unit Value, End of Period $ 9.838 $ 6.976 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.895 Accumulation Unit Value, End of Period $ 9.895 $ 7.586 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.911 Accumulation Unit Value, End of Period $ 9.911 $ 6.892 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.158 Accumulation Unit Value, End of Period $10.158 $ 8.967 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.927 Accumulation Unit Value, End of Period $ 9.927 $ 7.626 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.358 Accumulation Unit Value, End of Period $10.358 $10.183 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.807 Accumulation Unit Value, End of Period $ 9.807 $ 8.093 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.225 Accumulation Unit Value, End of Period $10.225 $ 9.840 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.160 Accumulation Unit Value, End of Period $10.160 $ 8.510 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 9.817 Accumulation Unit Value, End of Period $ 9.817 $ 7.972 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- *Contracts with the Enhanced Earnings Death Benefit Option and the Income Benefit Combination Option 2 were first offered under the Contracts on December 6, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.000. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.75% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE LONGEVITY REWARD RIDER For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.695 Accumulation Unit Value, End of Period $ 9.695 $ 6.847 Number of Units Outstanding, End of Period 72,420 69,330 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.719 Accumulation Unit Value, End of Period $ 9.719 $ 7.070 Number of Units Outstanding, End of Period 139,613 250,213 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 8.434 Accumulation Unit Value, End of Period $ 8.434 $ 6.383 Number of Units Outstanding, End of Period 36,893 26,764 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.702 Accumulation Unit Value, End of Period $10.702 $10.016 Number of Units Outstanding, End of Period 996,619 1,735,966 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.543 Accumulation Unit Value, End of Period $ 9.543 $ 6.890 Number of Units Outstanding, End of Period 1,289,081 1,905,766 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.208 Accumulation Unit Value, End of Period $ 9.208 $ 7.476 Number of Units Outstanding, End of Period 434,294 649,898 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.951 Accumulation Unit Value, End of Period $ 9.951 $ 9.209 Number of Units Outstanding, End of Period 220,380 383,696 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 6.956 Accumulation Unit Value, End of Period $ 6.956 $ 4.550 Number of Units Outstanding, End of Period 94,315 39,386 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.050 Accumulation Unit Value, End of Period $10.050 $10.150 Number of Units Outstanding, End of Period 9,550 56,983 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- Accumulation Unit Value, Beginning of Period $10.000 $ 9.594 Accumulation Unit Value, End of Period $ 9.594 $ 5.240 Number of Units Outstanding, End of Period 0 3,545 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.281 Accumulation Unit Value, End of Period $10.281 $10.545 Number of Units Outstanding, End of Period 185,342 390,513 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.275 Accumulation Unit Value, End of Period $ 7.275 $ 5.212 Number of Units Outstanding, End of Period 42,478 61,584 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.774 Accumulation Unit Value, End of Period $10.774 $11.653 Number of Units Outstanding, End of Period 374,073 908,741 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.008 Accumulation Unit Value, End of Period $10.008 $10.880 Number of Units Outstanding, End of Period 0 83,420 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $ 9.940 Accumulation Unit Value, End of Period $ 9.940 $ 8.814 Number of Units Outstanding, End of Period 1,009,853 1,726,975 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 8.970 Accumulation Unit Value, End of Period $ 8.970 $ 7.771 Number of Units Outstanding, End of Period 70,626 92,819 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.142 Accumulation Unit Value, End of Period $10.142 $ 7.434 Number of Units Outstanding, End of Period 781,016 1,174,451 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 6.389 Accumulation Unit Value, End of Period $ 6.389 $ 5.898 Number of Units Outstanding, End of Period 4,827 10,560 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.339 Accumulation Unit Value, End of Period $ 8.339 $ 6.988 Number of Units Outstanding, End of Period 16,016 51,206 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $ 9.057 Accumulation Unit Value, End of Period $ 9.057 $ 7.217 Number of Units Outstanding, End of Period 1,690 35,642 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.235 Accumulation Unit Value, End of Period $10.235 $ 9.786 Number of Units Outstanding, End of Period 2,735 41,817 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $11.507 Accumulation Unit Value, End of Period $11.507 $12.478 Number of Units Outstanding, End of Period 9,341 29,381 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 8.132 Accumulation Unit Value, End of Period $ 8.132 $ 5.500 Number of Units Outstanding, End of Period 95,704 171,875 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 8.288 Accumulation Unit Value, End of Period $ 8.288 $ 6.277 Number of Units Outstanding, End of Period 18,076 55,783 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.402 Accumulation Unit Value, End of Period $ 7.402 $ 4.831 Number of Units Outstanding, End of Period 33,449 33,884 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 8.325 Accumulation Unit Value, End of Period $ 8.325 $ 7.186 Number of Units Outstanding, End of Period 33,192 105,969 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.003 Accumulation Unit Value, End of Period $ 8.003 $ 6.033 Number of Units Outstanding, End of Period 18,271 21,838 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.246 Accumulation Unit Value, End of Period $10.246 $10.131 Number of Units Outstanding, End of Period 6,267 201,245 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.982 Accumulation Unit Value, End of Period $ 7.982 $ 6.508 Number of Units Outstanding, End of Period 14,138 27,732 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.568 Accumulation Unit Value, End of Period $10.568 $ 9.766 Number of Units Outstanding, End of Period 79 19,767 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.019 Accumulation Unit Value, End of Period $ 9.019 $ 7.069 Number of Units Outstanding, End of Period 24,612 76,988 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 8.120 Accumulation Unit Value, End of Period $ 8.120 $ 6.220 Number of Units Outstanding, End of Period 25,462 59,547 *Contracts with the Longevity Reward Rider were first offered under the Contracts on June 5, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.18% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE LONGEVITY REWARD RIDER AND ENHANCED DEATH BENEFIT OPTION, PERFORMANCE DEATH BENEFIT OPTION OR PERFORMANCE INCOME BENEFIT OPTION For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.688 Accumulation Unit Value, End of Period $ 9.688 $ 6.833 Number of Units Outstanding, End of Period 32,338 29,849 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.712 Accumulation Unit Value, End of Period $ 9.712 $ 7.056 Number of Units Outstanding, End of Period 24,368 78,450 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 8.427 Accumulation Unit Value, End of Period $ 8.427 $ 6.370 Number of Units Outstanding, End of Period 5,746 12,618 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.694 Accumulation Unit Value, End of Period $10.694 $ 9.995 Number of Units Outstanding, End of Period 274,154 574,872 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.536 Accumulation Unit Value, End of Period $ 9.536 $ 6.876 Number of Units Outstanding, End of Period 323,143 548,984 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.202 Accumulation Unit Value, End of Period $ 9.202 $ 7.461 Number of Units Outstanding, End of Period 118,339 245,887 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.943 Accumulation Unit Value, End of Period $ 9.943 $ 9.191 Number of Units Outstanding, End of Period 95,817 211,641 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 6.951 Accumulation Unit Value, End of Period $ 6.951 $ 4.540 Number of Units Outstanding, End of Period 24,508 23,364 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.042 Accumulation Unit Value, End of Period $10.042 $10.129 Number of Units Outstanding, End of Period 1,966 20,197 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $10.277 Accumulation Unit Value, End of Period $10.277 $ 5.232 Number of Units Outstanding, End of Period 0 12,537 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.273 Accumulation Unit Value, End of Period $10.273 $10.524 Number of Units Outstanding, End of Period 8,043 45,902 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.270 Accumulation Unit Value, End of Period $ 7.270 $ 5.202 Number of Units Outstanding, End of Period 9,077 9,896 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.766 Accumulation Unit Value, End of Period $10.766 $11.630 Number of Units Outstanding, End of Period 108,499 245,837 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.320 Accumulation Unit Value, End of Period $10.320 $10.858 Number of Units Outstanding, End of Period 0 13,568 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $ 9.932 Accumulation Unit Value, End of Period $ 9.932 $ 8.796 Number of Units Outstanding, End of Period 326,654 560,497 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 8.963 Accumulation Unit Value, End of Period $ 8.963 $ 7.756 Number of Units Outstanding, End of Period 41,057 71,445 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.135 Accumulation Unit Value, End of Period $10.135 $ 7.419 Number of Units Outstanding, End of Period 226,311 357,307 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 6.389 Accumulation Unit Value, End of Period $ 6.389 $ 5.886 Number of Units Outstanding, End of Period 12 10 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.333 Accumulation Unit Value, End of Period $ 8.333 $ 6.974 Number of Units Outstanding, End of Period 17,488 19,987 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $ 9.051 Accumulation Unit Value, End of Period $ 9.051 $ 7.202 Number of Units Outstanding, End of Period 3,672 11,730 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.320 Accumulation Unit Value, End of Period $10.320 $ 9.766 Number of Units Outstanding, End of Period 0 19,804 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $11.499 Accumulation Unit Value, End of Period $11.499 $12.453 Number of Units Outstanding, End of Period 452 5,850 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 8.126 Accumulation Unit Value, End of Period $ 8.126 $ 5.489 Number of Units Outstanding, End of Period 49,523 58,602 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 8.282 Accumulation Unit Value, End of Period $ 8.282 $ 6.264 Number of Units Outstanding, End of Period 4,937 9,044 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.397 Accumulation Unit Value, End of Period $ 7,397 $ 4.822 Number of Units Outstanding, End of Period 5,869 5,870 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.159 Accumulation Unit Value, End of Period $10.159 $ 7.171 Number of Units Outstanding, End of Period 0 31,111 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.998 Accumulation Unit Value, End of Period $ 7.998 $ 6.020 Number of Units Outstanding, End of Period 6,857 17,963 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.239 Accumulation Unit Value, End of Period $10.239 $10.110 Number of Units Outstanding, End of Period 10,486 43,606 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.976 Accumulation Unit Value, End of Period $ 7.976 $ 6.495 Number of Units Outstanding, End of Period 5,139 9,497 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.560 Accumulation Unit Value, End of Period $10.560 $ 9.746 Number of Units Outstanding, End of Period 5,4 7,204 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.013 Accumulation Unit Value, End of Period $ 9.013 $ 7.054 Number of Units Outstanding, End of Period 3,997 15,017 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 8.114 Accumulation Unit Value, End of Period $ 8.114 $ 6.207 Number of Units Outstanding, End of Period 3,404 4,428 - -------------------------------------------------------------------------------- *Contracts with the Longevity Reward Rider and the Enhanced Death Benefit, the Performance Income Benefit, or the Performance Death Benefit Option were first offered under the Contracts on June 5, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.31% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE LONGEVITY REWARD RIDER AND THE PERFORMANCE BENEFIT COMBINATION OPTION OR DEATH BENEFIT COMBINATION OPTION For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.682 Accumulation Unit Value, End of Period $ 9.682 $ 6.821 Number of Units Outstanding, End of Period 3,790 3,592 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.706 Accumulation Unit Value, End of Period $ 9.706 $ 7.044 Number of Units Outstanding, End of Period 1,574 3,674 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.869 Accumulation Unit Value, End of Period $ 9.869 $ 6.857 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.688 Accumulation Unit Value, End of Period $10.688 $ 9.978 Number of Units Outstanding, End of Period 50,253 130,186 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.530 Accumulation Unit Value, End of Period $ 9.530 $ 6.864 Number of Units Outstanding, End of Period 55,513 122,771 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.196 Accumulation Unit Value, End of Period $ 9.196 $ 7.448 Number of Units Outstanding, End of Period 23,454 37,252 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.937 Accumulation Unit Value, End of Period $ 9.937 $ 9.175 Number of Units Outstanding, End of Period 13,949 37,059 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 6.947 Accumulation Unit Value, End of Period $ 6.947 $ 4.532 Number of Units Outstanding, End of Period 4,679 5,065 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.277 Accumulation Unit Value, End of Period $10.277 $10.112 Number of Units Outstanding, End of Period 0 30,858 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.593 Accumulation Unit Value, End of Period $ 9.593 $ 5.264 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.267 Accumulation Unit Value, End of Period $10.267 $10.506 Number of Units Outstanding, End of Period 2,122 24,050 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.265 Accumulation Unit Value, End of Period $ 7.265 $ 5.193 Number of Units Outstanding, End of Period 651 3,201 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.759 Accumulation Unit Value, End of Period $10.759 $11.609 Number of Units Outstanding, End of Period 9,069 38,761 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.310 Accumulation Unit Value, End of Period $10.310 $10.839 Number of Units Outstanding, End of Period 0 1,344 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $ 9.926 Accumulation Unit Value, End of Period $ 9.926 $ 8.780 Number of Units Outstanding, End of Period 52,247 180,367 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 8.957 Accumulation Unit Value, End of Period $ 8.957 $ 7.742 Number of Units Outstanding, End of Period 9,545 8,769 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.128 Accumulation Unit Value, End of Period $10.128 $ 7.406 Number of Units Outstanding, End of Period 30,526 72,900 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF CAPITAL PRESEVATION Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.538 Accumulation Unit Value, End of Period $ 9.538 $ 5.568 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.327 Accumulation Unit Value, End of Period $ 8.327 $ 6.961 Number of Units Outstanding, End of Period 11,936 15,170 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $ 9.045 Accumulation Unit Value, End of Period $ 9.045 $ 7.189 Number of Units Outstanding, End of Period 1,098 5,136 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.221 Accumulation Unit Value, End of Period $10.221 $ 9.749 Number of Units Outstanding, End of Period 361 11,011 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.025 Accumulation Unit Value, End of Period $10.025 $12.431 Number of Units Outstanding, End of Period 0 144 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 8.121 Accumulation Unit Value, End of Period $ 8.121 $ 5.479 Number of Units Outstanding, End of Period 14,669 16,442 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.895 Accumulation Unit Value, End of Period $ 9.895 $ 6.253 Number of Units Outstanding, End of Period 0 475 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.911 Accumulation Unit Value, End of Period $ 9.911 $ 4.813 Number of Units Outstanding, End of Period 0 662 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 8.313 Accumulation Unit Value, End of Period $ 8.313 $ 7.159 Number of Units Outstanding, End of Period 101 99 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.927 Accumulation Unit Value, End of Period $ 9.927 $ 6.153 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.359 Accumulation Unit Value, End of Period $10.359 $10.092 Number of Units Outstanding, End of Period 0 6,026 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.971 Accumulation Unit Value, End of Period $ 7.971 $ 6.484 Number of Units Outstanding, End of Period 1,954 3,244 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.225 Accumulation Unit Value, End of Period $10.225 $ 9.729 Number of Units Outstanding, End of Period 0 1,234 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.316 Accumulation Unit Value, End of Period $10.316 $ 7.042 Number of Units Outstanding, End of Period 0 820 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 8.109 Accumulation Unit Value, End of Period $ 8.109 $ 6.196 Number of Units Outstanding, End of Period 482 1,050 *Contracts with the Longevity Reward Rider with the Performance Benefit Combination or the Death Benefit Combination Option were first offered under the Contracts on June 5, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.42% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE LONGEVITY REWARD RIDER AND THE INCOME BENEFIT COMBINATION OPTION 2 For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.129 Accumulation Unit Value, End of Period $10.129 $ 6.605 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 7.802 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.87 Accumulation Unit Value, End of Period $ 9.87 $ 7.368 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.495 Accumulation Unit Value, End of Period $10.495 $ 9.726 Number of Units Outstanding, End of Period 0 1,066 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.128 Accumulation Unit Value, End of Period $10.128 $ 6.674 Number of Units Outstanding, End of Period 0 5,104 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.401 Accumulation Unit Value, End of Period $10.401 $ 8.363 Number of Units Outstanding, End of Period 0 2,012 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.925 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 9.54 Accumulation Unit Value, End of Period $ 9.54 $ 6.486 Number of Units Outstanding, End of Period 0 0 0 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.277 Accumulation Unit Value, End of Period $10.277 $10.258 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.593 Accumulation Unit Value, End of Period $ 9.593 $ 5.261 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.017 Accumulation Unit Value, End of Period $10.017 $10.264 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.499 Accumulation Unit Value, End of Period $ 9.499 $ 6.844 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.018 Accumulation Unit Value, End of Period $10.018 $11.011 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.007 Accumulation Unit Value, End of Period $10.007 $10.418 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $10.071 Accumulation Unit Value, End of Period $10.071 $ 8.466 Number of Units Outstanding, End of Period 0 2,056 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.978 Accumulation Unit Value, End of Period $ 9.978 $ 8.232 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.139 Accumulation Unit Value, End of Period $10.139 $ 7.325 Number of Units Outstanding, End of Period 0 0 - --------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.538 Accumulation Unit Value, End of Period $ 9.538 $ 7.320 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.829 Accumulation Unit Value, End of Period $ 9.829 $ 7.204 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $10.199 Accumulation Unit Value, End of Period $10.199 $ 8.410 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.486 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.025 Accumulation Unit Value, End of Period $10.025 $11.993 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 9.838 Accumulation Unit Value, End of Period $ 9.838 $ 5.763 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.895 Accumulation Unit Value, End of Period $ 9.895 $ 6.326 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.911 Accumulation Unit Value, End of Period $ 9.911 $ 5.796 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.158 Accumulation Unit Value, End of Period $10.158 $ 8.320 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.927 Accumulation Unit Value, End of Period $ 9.927 $ 6.819 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.359 Accumulation Unit Value, End of Period $10.359 $ 9.801 Number of Units Outstanding, End of Period 0 1,014 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.807 Accumulation Unit Value, End of Period $ 9.807 $ 7.305 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.225 Accumulation Unit Value, End of Period $10.225 $ 9.282 Number of Units Outstanding, End of Period 0 1,039 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.316 Accumulation Unit Value, End of Period $10.316 $ 8.217 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 9.817 Accumulation Unit Value, End of Period $ 9.817 $ 7.100 Number of Units Outstanding, End of Period 0 0 *Contracts with the Longevity Reward Rider with the Income Benefit Combination Option 2 were first offered under the Contracts on October 30, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.48% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE LONGEVITY REWARD RIDER AND THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2 For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.129 Accumulation Unit Value, End of Period $10.129 $ - 6.594 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.318 Accumulation Unit Value, End of Period $10.318 $ 7.145 Number of Units Outstanding, End of Period 0 80 - -------------------------------------------------------------------------------- COMPETITIVE EDGE BEST Accumulation Unit Value, Beginning of Period $10.000 $ 9.868 Accumulation Unit Value, End of Period $ 9.868 $ 7.356 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.494 Accumulation Unit Value, End of Period $10.494 $ 9.704 Number of Units Outstanding, End of Period 0 10,388 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.127 Accumulation Unit Value, End of Period $10.127 $ 6.659 Number of Units Outstanding, End of Period 0 6,558 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.400 Accumulation Unit Value, End of Period $10.400 $ 8.344 Number of Units Outstanding, End of Period 0 3,180 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.318 Accumulation Unit Value, End of Period $10.318 $ 9.468 Number of Units Outstanding, End of Period 0 126 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 9.541 Accumulation Unit Value, End of Period $ 9.541 $ 5.438 Number of Units Outstanding, End of Period 0 426 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.276 Accumulation Unit Value, End of Period $10.276 $10.242 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.592 Accumulation Unit Value, End of Period $ 9.592 $ 5.253 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.016 Accumulation Unit Value, End of Period $10.016 $10.274 Number of Units Outstanding, End of Period 0 1,302 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.499 Accumulation Unit Value, End of Period $ 9.499 $ 6.833 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.017 Accumulation Unit Value, End of Period $10.017 $11.192 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.006 Accumulation Unit Value, End of Period $10.006 $10.401 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $10.071 Accumulation Unit Value, End of Period $10.071 $ 8.447 Number of Units Outstanding, End of Period 0 16,545 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.978 Accumulation Unit Value, End of Period $ 9.978 $ 8.218 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.139 Accumulation Unit Value, End of Period $10.139 $ 7.308 Number of Units Outstanding, End of Period 0 2,704 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.537 Accumulation Unit Value, End of Period $ 9.537 $ 7.308 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.828 Accumulation Unit Value, End of Period $ 9.828 $ 7.192 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $10.198 Accumulation Unit Value, End of Period $10.198 $ 8.396 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.471 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.024 Accumulation Unit Value, End of Period $10.024 $11.974 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 9.837 Accumulation Unit Value, End of Period $ 9.837 $ 5.754 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.895 Accumulation Unit Value, End of Period $ 9.895 $ 6.316 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.910 Accumulation Unit Value, End of Period $ 9.910 $ 5.787 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.158 Accumulation Unit Value, End of Period $10.158 $ 8.307 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.927 Accumulation Unit Value, End of Period $ 9.927 $ 6.808 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.356 Accumulation Unit Value, End of Period $10.356 $10.108 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.807 Accumulation Unit Value, End of Period $ 9.807 $ 7.294 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.224 Accumulation Unit Value, End of Period $10.224 $ 9.697 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.315 Accumulation Unit Value, End of Period $10.315 $ 8.204 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 9.816 Accumulation Unit Value, End of Period $ 9.816 $ 7.089 Number of Units Outstanding, End of Period 0 0 *Contracts with the Longevity Reward Rider with the Income and Death Benefit Combination Option 2were first offered under the Contracts on October 30, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.68% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE LONGEVITY REWARD RIDER AND THE ENHANCED EARNINGS DEATH BENEFIT For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.00 $10.13 Accumulation Unit Value, End of Period $10.13 $ 7.140 Number of Units Outstanding, End of Period 0 8,274 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.00 $10.32 Accumulation Unit Value, End of Period $10.32 $ 7.492 Number of Units Outstanding, End of Period 0 6,556 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.00 $ 9.87 Accumulation Unit Value, End of Period $ 9.87 $ 7.455 Number of Units Outstanding, End of Period 0 2,872 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.00 $10.50 Accumulation Unit Value, End of Period $10.50 $ 9.803 Number of Units Outstanding, End of Period 0 32,767 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.00 $10.13 Accumulation Unit Value, End of Period $10.13 $ 7.298 Number of Units Outstanding, End of Period 0 42,019 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.00 $10.40 Accumulation Unit Value, End of Period $10.40 $ 8.428 Number of Units Outstanding, End of Period 0 15,632 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.00 $10.32 Accumulation Unit Value, End of Period $10.32 $ 9.532 Number of Units Outstanding, End of Period 0 10,847 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.00 $ 9.54 Accumulation Unit Value, End of Period $ 9.54 $ 6.229 Number of Units Outstanding, End of Period 0 1,095 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.00 $10.28 Accumulation Unit Value, End of Period $10.28 $10.524 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.00 $ 9.59 Accumulation Unit Value, End of Period $ 9.59 $ 5.438 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.00 $10.02 Accumulation Unit Value, End of Period $10.02 $10.217 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.00 $ 9.50 Accumulation Unit Value, End of Period $ 9.50 $ 6.793 Number of Units Outstanding, End of Period 0 648 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.00 $10.02 Accumulation Unit Value, End of Period $10.02 $10.815 Number of Units Outstanding, End of Period 0 13,397 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.00 $10.01 Accumulation Unit Value, End of Period $10.01 $10.523 Number of Units Outstanding, End of Period 0 2,790 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.00 $10.07 Accumulation Unit Value, End of Period $10.07 $ 8.913 Number of Units Outstanding, End of Period 0 16,838 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.00 $ 9.98 Accumulation Unit Value, End of Period $ 9.98 $ 8.629 Number of Units Outstanding, End of Period 0 2,300 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.00 $10.14 Accumulation Unit Value, End of Period $10.14 $ 7.418 Number of Units Outstanding, End of Period 0 15,501 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.00 $ 9.54 Accumulation Unit Value, End of Period $ 9.54 $ 8.788 Number of Units Outstanding, End of Period 0 1,255 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.00 $ 9.83 Accumulation Unit Value, End of Period $ 9.83 $ 8.252 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.00 $10.20 Accumulation Unit Value, End of Period $10.20 $ 8.110 Number of Units Outstanding, End of Period 0 5,712 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.00 $10.32 Accumulation Unit Value, End of Period $10.32 $ 9.848 Number of Units Outstanding, End of Period 0 2,318 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.00 $10.03 Accumulation Unit Value, End of Period $10.03 $11.192 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.00 $ 9.84 Accumulation Unit Value, End of Period $ 9.84 $ 6.641 Number of Units Outstanding, End of Period 0 5,649 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.00 $ 9.90 Accumulation Unit Value, End of Period $ 9.90 $ 7.605 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.00 $ 9.91 Accumulation Unit Value, End of Period $ 9.91 $ 6.909 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.00 $10.16 Accumulation Unit Value, End of Period $10.16 $ 8.752 Number of Units Outstanding, End of Period 0 2,532 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.00 $ 9.93 Accumulation Unit Value, End of Period $ 9.93 $ 7.645 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.00 $10.36 Accumulation Unit Value, End of Period $10.36 $10.222 Number of Units Outstanding, End of Period 0 8,207 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.00 $ 9.81 Accumulation Unit Value, End of Period $ 9.81 $ 7.982 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.00 $10.23 Accumulation Unit Value, End of Period $10.23 $ 9.431 Number of Units Outstanding, End of Period 0 2,347 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.00 $10.32 Accumulation Unit Value, End of Period $10.32 $ 8.069 Number of Units Outstanding, End of Period 0 2,833 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.00 $ 9.82 Accumulation Unit Value, End of Period $ 9.82 $ 7.566 Number of Units Outstanding, End of Period 0 2,587 *Contracts with the Longevity Reward Rider with the Enhanced Earnings Death Benefit were first offered under the Contracts on December 6, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.38% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE LONGEVITY REWARD RIDER, ENHANCED EARNINGS DEATH BENEFIT OPTION AND ENHANCED DEATH BENEFIT, THE PERFORMANCE DEATH BENEFIT INCOME BENEFIT, OR THE PERFORMANCE DEATH BENEFIT OPTION For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.130 Accumulation Unit Value, End of Period $10.130 $ 7.125 Number of Units Outstanding, End of Period 0 6,584 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 7.482 Number of Units Outstanding, End of Period 0 4,496 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.869 Accumulation Unit Value, End of Period $ 9.869 $ 8.031 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.495 Accumulation Unit Value, End of Period $10.495 $ 9.790 Number of Units Outstanding, End of Period 18,159 36,377 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.128 Accumulation Unit Value, End of Period $10.128 $ 7.288 Number of Units Outstanding, End of Period 31,703 49,917 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.401 Accumulation Unit Value, End of Period $10.401 $ 8.417 Number of Units Outstanding, End of Period 23,608 13,473 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.519 Number of Units Outstanding, End of Period 11,559 16,653 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 9.542 Accumulation Unit Value, End of Period $ 9.542 $ 6.220 Number of Units Outstanding, End of Period 5,110 3,793 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 9.593 Accumulation Unit Value, End of Period $ 9.593 $10.345 Number of Units Outstanding, End of Period 0 1,634 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $10.277 Accumulation Unit Value, End of Period $10.277 $ 5.433 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.017 Accumulation Unit Value, End of Period $10.017 $10.241 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.500 Accumulation Unit Value, End of Period $ 9.500 $ 6.783 Number of Units Outstanding, End of Period 0 1,517 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.018 Accumulation Unit Value, End of Period $10.018 $10.80 Number of Units Outstanding, End of Period 0 1,594 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.010 Accumulation Unit Value, End of Period $10.010 $10.330 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $10.072 Accumulation Unit Value, End of Period $10.072 $ 8.901 Number of Units Outstanding, End of Period 20,031 13,653 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.979 Accumulation Unit Value, End of Period $ 9.979 $ 8.617 Number of Units Outstanding, End of Period 0 793 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.140 Accumulation Unit Value, End of Period $10.140 $ 7.408 Number of Units Outstanding, End of Period 0 34,512 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.538 Accumulation Unit Value, End of Period $ 9.538 $ 8.326 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.829 Accumulation Unit Value, End of Period $ 9.829 $ 8.210 Number of Units Outstanding, End of Period 0 2,081 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $10.199 Accumulation Unit Value, End of Period $10.199 $ 8.099 Number of Units Outstanding, End of Period 0 2,017 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.320 Accumulation Unit Value, End of Period $10.320 $ 9.834 Number of Units Outstanding, End of Period 0 4,883 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.025 Accumulation Unit Value, End of Period $10.025 $11.182 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 9.838 Accumulation Unit Value, End of Period $ 9.838 $ 6.632 Number of Units Outstanding, End of Period 0 616 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.896 Accumulation Unit Value, End of Period $ 9.896 $ 7.464 Number of Units Outstanding, End of Period 0 5,678 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.911 Accumulation Unit Value, End of Period $ 9.911 $ 6.903 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.159 Accumulation Unit Value, End of Period $10.159 $ 8.740 Number of Units Outstanding, End of Period 0 954 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.928 Accumulation Unit Value, End of Period $ 9.928 $ 7.639 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.359 Accumulation Unit Value, End of Period $10.359 $10.208 Number of Units Outstanding, End of Period 0 2,843 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.808 Accumulation Unit Value, End of Period $ 9.808 $ 7.971 Number of Units Outstanding, End of Period 0 1,017 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.225 Accumulation Unit Value, End of Period $10.225 $ 9.856 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.316 Accumulation Unit Value, End of Period $10.316 $ 8.058 Number of Units Outstanding, End of Period 0 2,709 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 9.817 Accumulation Unit Value, End of Period $ 9.817 $ 7.556 Number of Units Outstanding, End of Period 0 858 *Contracts with the Longevity Reward Rider with the Enhanced Earnings Death Benefit Option and Enhanced Death Benefit, the Performance Death Benefit Income Benefit, or the Performance Death Benefit Option were first offered under the Contracts on December 6, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.51% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH LONGEVITY REWARD RIDER, ENHANCED EARNINGS DEATH BENEFIT OPTION AND DEATH BENEFIT COMBINATION OPTION OR PERFORMANCE BENEFIT COMBINATION OPTION For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.129 Accumulation Unit Value, End of Period $10.129 $ 7.122 Number of Units Outstanding, End of Period 0 685 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 7.474 Number of Units Outstanding, End of Period 0 1,529 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.869 Accumulation Unit Value, End of Period $ 9.869 $ 8.025 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.495 Accumulation Unit Value, End of Period $10.495 $ 9.779 Number of Units Outstanding, End of Period 11,924 26,520 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.128 Accumulation Unit Value, End of Period $10.128 $ 7.280 Number of Units Outstanding, End of Period 3,680 24,391 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.401 Accumulation Unit Value, End of Period $10.401 $ 8.407 Number of Units Outstanding, End of Period 9,466 9,998 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.508 Number of Units Outstanding, End of Period 8,932 9,555 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 9.542 Accumulation Unit Value, End of Period $ 9.542 $ 6.213 Number of Units Outstanding, End of Period 3,187 1,156 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.277 Accumulation Unit Value, End of Period $10.277 $10.334 Number of Units Outstanding, End of Period 3,460 3,291 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.593 Accumulation Unit Value, End of Period $ 9.593 $ 5.429 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.017 Accumulation Unit Value, End of Period $10.017 $10.229 Number of Units Outstanding, End of Period 0 8,819 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.499 Accumulation Unit Value, End of Period $ 9.499 $ 7.588 Number of Units Outstanding, End of Period 348 0 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.018 Accumulation Unit Value, End of Period $10.018 $10.788 Number of Units Outstanding, End of Period 0 30,313 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.010 Accumulation Unit Value, End of Period $10.010 $10.322 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $10.071 Accumulation Unit Value, End of Period $10.071 $ 8.891 Number of Units Outstanding, End of Period 1,636 20,009 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.978 Accumulation Unit Value, End of Period $ 9.978 $ 8.908 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.139 Accumulation Unit Value, End of Period $10.139 $ 7.400 Number of Units Outstanding, End of Period 1,818 2,088 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.538 Accumulation Unit Value, End of Period $ 9.538 $ 8.314 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.829 Accumulation Unit Value, End of Period $ 9.829 $ 8.200 Number of Units Outstanding, End of Period 0 272 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $10.199 Accumulation Unit Value, End of Period $10.199 $ 8.709 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.823 Number of Units Outstanding, End of Period 0 4,366 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.025 Accumulation Unit Value, End of Period $10.025 $10.823 Number of Units Outstanding, End of Period 0 1,035 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 9.838 Accumulation Unit Value, End of Period $ 9.838 $ 6.982 Number of Units Outstanding, End of Period 3,527 0 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.895 Accumulation Unit Value, End of Period $ 9.895 $ 7.592 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.911 Accumulation Unit Value, End of Period $ 9.911 $ 6.898 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.158 Accumulation Unit Value, End of Period $10.158 $ 8.975 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.927 Accumulation Unit Value, End of Period $ 9.927 $ 7.633 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.359 Accumulation Unit Value, End of Period $10.359 $10.196 Number of Units Outstanding, End of Period 0 10,100 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.810 Accumulation Unit Value, End of Period $ 9.810 $ 8.100 Number of Units Outstanding, End of Period 576 0 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.225 Accumulation Unit Value, End of Period $10.225 $ 9.407 Number of Units Outstanding, End of Period 0 1,046 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.316 Accumulation Unit Value, End of Period $10.316 $ 8.517 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 9.817 Accumulation Unit Value, End of Period $ 9.817 $ 7.979 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- *Contracts with the Longevity Reward Rider with the Enhanced Earnings Death Benefit Option and Enhanced Death Benefit, the Performance Death Benefit Income Benefit, or the Performance Death Benefit Option were first offered under the Contracts on December 6, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.62% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE LONGEVITY REWARD RIDER, ENHANCED EARNINGS DEATH BENEFIT OPTION AND INCOME BENEFIT COMBINATION OPTION 2 For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.129 Accumulation Unit Value, End of Period $10.129 $ 7.254 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 8.143 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.869 Accumulation Unit Value, End of Period $ 9.869 $ 8.021 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.495 Accumulation Unit Value, End of Period $10.495 $10.473 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.128 Accumulation Unit Value, End of Period $10.128 $ 7.242 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.401 Accumulation Unit Value, End of Period $10.401 $ 8.774 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.946 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 9.542 Accumulation Unit Value, End of Period $ 9.542 $ 7.393 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.277 Accumulation Unit Value, End of Period $10.277 $10.503 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.539 Accumulation Unit Value, End of Period $ 9.593 $ 5.426 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.017 Accumulation Unit Value, End of Period $10.017 $10.196 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.499 Accumulation Unit Value, End of Period $ 9.499 $ 7.585 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.018 Accumulation Unit Value, End of Period $10.018 $10.591 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.007 Accumulation Unit Value, End of Period $10.007 $10.318 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $10.071 Accumulation Unit Value, End of Period $10.071 $ 9.115 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.978 Accumulation Unit Value, End of Period $ 9.978 $ 8.904 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.139 Accumulation Unit Value, End of Period $10.139 $ 8.352 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.538 Accumulation Unit Value, End of Period $ 9.538 $ 8.310 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.829 Accumulation Unit Value, End of Period $ 9.829 $ 8.235 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $10.199 Accumulation Unit Value, End of Period $10.199 $ 8.706 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.940 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.025 Accumulation Unit Value, End of Period $10.025 $11.169 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 9.838 Accumulation Unit Value, End of Period $ 9.838 $ 6.979 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.895 Accumulation Unit Value, End of Period $ 9.895 $ 7.589 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.911 Accumulation Unit Value, End of Period $ 9.911 $ 6.895 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.158 Accumulation Unit Value, End of Period $10.158 $ 8.971 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.927 Accumulation Unit Value, End of Period $ 9.927 $ 7.630 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.356 Accumulation Unit Value, End of Period $10.356 $10.534 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.807 Accumulation Unit Value, End of Period $ 9.807 $ 8.097 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.225 Accumulation Unit Value, End of Period $10.225 $ 9.844 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.316 Accumulation Unit Value, End of Period $10.316 $ 8.514 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 9.817 Accumulation Unit Value, End of Period $ 9.817 $ 7.976 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- *Contracts with the Longevity Reward Rider with the Enhanced Earnings Death Benefit Option and the Income Benefit Combination Option 2 were first offered under the Contracts on December 6, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.68% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE THE CONTRACTS WERE FIRST OFFERED WITH THE LONGEVITY REWARD RIDER, ENHANCED EARNINGS DEATH BENEFIT OPTION AND INCOME AND DEATH BENEFIT COMBINATION OPTION 2 For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class X Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.129 Accumulation Unit Value, End of Period $10.129 $ 7.244 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 7.453 Number of Units Outstanding, End of Period 0 610 - -------------------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 9.869 Accumulation Unit Value, End of Period $ 9.869 $ 8.010 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.495 Accumulation Unit Value, End of Period $10.495 $ 9.752 Number of Units Outstanding, End of Period 0 13,010 - -------------------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.128 Accumulation Unit Value, End of Period $10.128 $ 7.260 Number of Units Outstanding, End of Period 0 21,280 - -------------------------------------------------------------------------------- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.401 Accumulation Unit Value, End of Period $10.401 $ 8.384 Number of Units Outstanding, End of Period 0 1,081 - -------------------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.319 Accumulation Unit Value, End of Period $10.319 $ 9.483 Number of Units Outstanding, End of Period 0 9,479 - -------------------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 9.542 Accumulation Unit Value, End of Period $ 9.542 $ 7.383 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $ 9.593 Accumulation Unit Value, End of Period $ 9.593 $10.488 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $10.277 Accumulation Unit Value, End of Period $10.277 $ 5.419 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.017 Accumulation Unit Value, End of Period $10.017 $10.183 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.499 Accumulation Unit Value, End of Period $ 9.499 $ 6.757 Number of Units Outstanding, End of Period 0 381 - -------------------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.018 Accumulation Unit Value, End of Period $10.018 $10.576 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.007 Accumulation Unit Value, End of Period $10.007 $10.304 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $10.072 Accumulation Unit Value, End of Period $10.072 $ 8.867 Number of Units Outstanding, End of Period 0 996 - -------------------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 9.978 Accumulation Unit Value, End of Period $ 9.978 $ 8.892 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.139 Accumulation Unit Value, End of Period $10.139 $ 7.380 Number of Units Outstanding, End of Period 0 13,036 - -------------------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.538 Accumulation Unit Value, End of Period $ 9.538 $ 8.299 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.829 Accumulation Unit Value, End of Period $ 9.829 $ 8.224 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $10.199 Accumulation Unit Value, End of Period $10.199 $ 8.694 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.320 Accumulation Unit Value, End of Period $10.320 $ 9.927 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $10.025 Accumulation Unit Value, End of Period $10.025 $11.154 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST VAN KAMPEN LIT COMSTOCK, CLASS I Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 9.838 Accumulation Unit Value, End of Period $ 9.838 $ 6.969 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.895 Accumulation Unit Value, End of Period $ 9.895 $ 7.579 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.911 Accumulation Unit Value, End of Period $ 9.911 $ 6.886 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $10.159 Accumulation Unit Value, End of Period $10.159 $ 8.959 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.927 Accumulation Unit Value, End of Period $ 9.927 $ 7.619 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.359 Accumulation Unit Value, End of Period $10.359 $10.519 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.807 Accumulation Unit Value, End of Period $ 9.807 $ 8.086 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31 VARIABLE SUB-ACCOUNT 2000 2001 - -------------------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (Class IB Shares) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.225 Accumulation Unit Value, End of Period $10.225 $ 9.831 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.316 Accumulation Unit Value, End of Period $10.316 $ 8.502 Number of Units Outstanding, End of Period 0 0 - -------------------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - -------------------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 9.817 Accumulation Unit Value, End of Period $ 9.817 $ 7.965 Number of Units Outstanding, End of Period 0 0
*Contracts with the Longevity Reward Rider with the Enhanced Earnings Death Benefit Option and the Income and Death Benefit Combination Option 2 were first offered under the Contracts on December 6, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.88% and an administrative expense charge of 0.10%. FINANCIAL STATEMENTS The financial statements of the Variable Account as of December 31, 2001 and for each of the periods in the two years then ended, as well as the financial statements of Northbrook as of December 31, 2001 and 2000 and for each of the three years in the period ended December 31, 2001 and related financial statement schedule and the accompanying Independent Auditors' Reports appear in the pages that follow. The financial statements and schedule of Northbrook included herein should be considered only as bearing upon the ability of Northbrook to meet its obligations under the Contracts. Northbrook Life Insurance Company Statement of Additional Information Northbrook Variable Annuity Account II Dated May 1, 2002 300 N. Milwaukee Avenue Vernon Hills, IL. 60061 1 (800) 654-2397 This Statement of Additional Information supplements the information in the prospectus for the Variable Annuity 3 Contracts that we offer. This Statement of Additional Information is not a prospectus. You should read it with the prospectus, dated May 1, 2002, 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 Financial Advisor. Except as otherwise noted, this Statement of Additional Information uses the same defined terms as the prospectus for the Morgan Stanley Variable Annuity 3 Contracts. TABLE OF CONTENTS Description Page Additions, Deletions or Substitutions of Investments The Contract Purchase of Contracts Performance Information Calculation of Accumulation Unit Values Net Investment Factor Calculation of Variable Amount Income Payments Calculation of Annuity Unit Values General Matters Incontestability Settlements Safekeeping of the Variable Account's Assets Experts Accumulation Unit Values 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 fund 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. For the Variable Account, we paid underwriting commissions to Morgan Stanley DW of $49,879,046.98, $37,586,872.81 and $24,601,167.63 for the years 1999, 2000 and 2001, respectively. 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 shown 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 When factoring in the withdrawal charge assessed upon redemption, we exclude the Free Withdrawal Amount, which is the amount you can withdraw from the Contract without paying a withdrawal charge. We also use the withdrawal charge that would apply upon redemption at the end of each period. Thus, for example, when factoring in the withdrawal charge for a one year standardized total return calculation, we would use the withdrawal charge that applies to a withdrawal of a purchase payment made one year prior. When factoring the contract maintenance charge, we pro rate the charge by dividing (a) the contract maintenance charge by (b) the average contract size of $54,628. We then multiply the resulting percentage by a hypothetical $1,000 investment. The standardized total returns for the Variable Sub-Accounts available under the Contract for the periods ended December 31, 2001 are set out below. No standardized total returns are shown for the Money Market Variable Sub-Account. The Variable Annuity 3 Contracts were first offered to the public on June 5, 2000. Accordingly, performance figures for Variable Sub-Accounts prior to June 5, 2000 reflects 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 Variable Annuity 3 Contracts as well as the withdrawal and contract maintenance charges described above. In addition, performance figures for periods prior to availability of any income benefit, death benefit or combination thereof that we offer have been adjusted to reflect the current charge for such features as if they had been available throughout the periods shown. Variable Sub-Account Inception Dates: Variable Sub-Account Date Morgan Stanley Variable Investment Series (Class Y): Aggressive Equity June 5, 2000 Capital Growth June 5, 2000 Competitive Edge June 5, 2000 Dividend Growth June 5, 2000 Equity June 5, 2000 European Growth June 5, 2000 Global Dividend Growth June 5, 2000 High Yield June 5, 2000 Income Builder June 5, 2000 Information November 6, 2000 Limited Duration June 5, 2000 Money Market June 5, 2000 Pacific Growth June 5, 2000 Quality Income Plus June 5, 2000 S&P 500 Index June 5, 2000 Strategist June 5, 2000 Utilities June 5, 2000 The Universal Institutional Funds, Inc.: Morgan Stanley UIF Emerging Markets Equity March 16, 1998 Morgan Stanley UIF Equity Growth March 16, 1998 Morgan Stanley UIF International Magnum March 16, 1998 Morgan Stanley UIF Mid Cap Growth May 1, 2002 Morgan Stanley UIF Mid Cap Value January 31, 2000 Morgan Stanley UIF U.S. Real Estate May 18, 1998 Van Kampen Life Investment Trust: Van Kampen LIT Comstock, Class II May 1, 2002 Van Kampen LIT Emerging Growth, Class I March 16, 1998 Van Kampen LIT Emerging Growth, Class II May 17, 2001 AIM Variable Insurance Funds (Series I): AIM V.I. Capital Appreciation January 31, 2000 AIM V.I. Growth January 31, 2000 AIM V.I. Premier Equity January 31, 2000 Alliance Variable Products Series Fund( Class B): Alliance Growth January 31, 2000 Alliance Growth and Income January 31, 2000 Alliance Premier Growth January 31, 2000 LSA Variable Series Trust: LSA Aggressive Growth May 1, 2002 Putnam Variable Trust (Class IB): Putnam VT Growth and Income January 31, 2000 Putnam VT International Growth January 31, 2000 Putnam VT Small Cap Value May 1, 2002 Putnam VT Voyager January 31, 2000 BASE CONTRACT
10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -33.90% N/A -24.88% Capital Growth -31.81% N/A -23.24% Competitive Edge -28.89% N/A -28.44% Dividend Growth -11.02% N/A -3.03% Equity -32.38% N/A -24.58% European Growth -23.35% N/A -20.27% Global Dividend Growth -12.03% N/A -8.30% High Yield -39.14% N/A -43.68% Income Builder -3.60% N/A -2.16% Information -48.09% N/A -47.27% Limited Duration 0.73% N/A 2.42% Money Market -2.05% N/A 0.39% Pacific Growth -32.57% N/A -37.46% Quality Income Plus 3.53% N/A 7.18% S&P 500 Index -18.03% N/A -18.20% Strategist -15.94% N/A -10.97% Utilities -31.31% N/A -20.60% Morgan Stanley UIF Emerging Markets Equity -12.08% N/A -8.35% Morgan Stanley UIF Equity Growth -20.58% N/A -0.61% Morgan Stanley UIF International Magnum -24.71% N/A -5.95% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -8.78% N/A 2.82% Morgan Stanley UIF U.S. Real Estate 4.03% N/A 3.96% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -36.75% N/A 9.52% Van Kampen LIT Emerging Growth, Class II* N/A N/A -24.12% AIM V.I. Capital Appreciation -28.64% N/A -21.16% AIM V.I. Growth -39.11% N/A -31.09% AIM V.I. Premier Equity -18.07% N/A -16.88% Alliance Growth -29.00% N/A -23.60% Alliance Growth and Income -5.52% N/A 5.55% Alliance Premier Growth -22.84% N/A -19.38% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -11.98% N/A -1.37% Putnam VT International Growth -26.01% N/A -17.55% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -27.78% N/A -22.98% +Please refer to the table at the beginning of this section for the inception dates of the Variable Sub-Account. *Not annualized.
PERFORMANCE DEATH BENEFIT 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.00% N/A -24.98% Capital Growth -31.91% N/A -23.35% Competitive Edge -28.99% N/A -28.54% Dividend Growth -11.15% N/A -3.16% Equity -32.47% N/A -24.69% European Growth -23.46% N/A -20.38% Global Dividend Growth -12.15% N/A -8.43% High Yield -39.22% N/A -43.76% Income Builder -3.73% N/A -2.30% Information -48.16% N/A -47.34% Limited Duration 0.59% N/A 2.28% Money Market -2.18% N/A 0.25% Pacific Growth -32.66% N/A -37.55% Quality Income Plus 3.38% N/A 7.03% S&P 500 Index -18.15% N/A -18.31% Strategist -16.05% N/A -11.09% Utilities -31.41% N/A -20.71% Morgan Stanley UIF Emerging Markets Equity -12.20% N/A -8.48% Morgan Stanley UIF Equity Growth -20.69% N/A -0.75% Morgan Stanley UIF International Magnum -24.81% N/A -6.08% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -8.91% N/A 2.68% Morgan Stanley UIF U.S. Real Estate 3.89% N/A 3.82% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -36.83% N/A 9.38% Van Kampen LIT Emerging Growth, Class II* N/A N/A -24.19% AIM V.I. Capital Appreciation -28.74% N/A -21.27% AIM V.I. Growth -39.19% N/A -31.19% AIM V.I. Premier Equity -18.18% N/A -16.99% Alliance Growth -29.10% N/A -23.71% Alliance Growth and Income -5.65% N/A 5.41% Alliance Premier Growth -22.94% N/A -19.49% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.10% N/A -1.50% Putnam VT International Growth -26.11% N/A -17.66% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -27.88% N/A -23.09% +Please refer to the table at the beginning of this section for the inception dates of the Variable Sub-Account. *Not annualized.
DEATH BENEFIT COMBINATION OPTION 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.07% N/A -25.07% Capital Growth -31.99% N/A -23.44% Competitive Edge -29.08% N/A -28.62% Dividend Growth -11.25% N/A -3.27% Equity -32.55% N/A -24.77% European Growth -23.55% N/A -20.48% Global Dividend Growth -12.26% N/A -8.53% High Yield -39.30% N/A -43.83% Income Builder -3.84% N/A -2.41% Information -48.22% N/A -47.40% Limited Duration 0.48% N/A 2.16% Money Market -2.30% N/A 0.14% Pacific Growth -32.74% N/A -37.62% Quality Income Plus 3.27% N/A 6.91% S&P 500 Index -18.24% N/A -18.41% Strategist -16.15% N/A -11.19% Utilities -31.49% N/A -20.80% Morgan Stanley UIF Emerging Markets Equity -12.30% N/A -8.59% Morgan Stanley UIF Equity Growth -20.79% N/A -0.86% Morgan Stanley UIF International Magnum -24.90% N/A -6.18% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.01% N/A 2.56% Morgan Stanley UIF U.S. Real Estate 3.77% N/A 3.71% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -36.91% N/A 9.25% Van Kampen LIT Emerging Growth, Class II* N/A N/A -24.24% AIM V.I. Capital Appreciation -28.83% N/A -21.37% AIM V.I. Growth -39.26% N/A -31.27% AIM V.I. Premier Equity -18.28% N/A -17.09% Alliance Growth -29.18% N/A -23.80% Alliance Growth and Income -5.76% N/A 5.29% Alliance Premier Growth -23.03% N/A -19.59% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.21% N/A -1.61% Putnam VT International Growth -26.20% N/A -17.76% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -27.97% N/A -23.18% +Please refer to the table at the beginning of this section for the inception dates of the Variable Sub-Account. *Not annualized.
INCOME BENEFIT COMBINATION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.12% N/A -25.12% Capital Growth -32.03% N/A -23.49% Competitive Edge -29.12% N/A -28.67% Dividend Growth -11.30% N/A -3.33% Equity -32.60% N/A -24.82% European Growth -23.60% N/A -20.53% Global Dividend Growth -12.31% N/A -8.59% High Yield -39.33% N/A -43.86% Income Builder -3.90% N/A -2.47% Information -48.26% N/A -47.44% Limited Duration 0.41% N/A 2.10% Money Market -2.36% N/A 0.08% Pacific Growth -32.78% N/A -37.67% Quality Income Plus 3.20% N/A 6.84% S&P 500 Index -18.29% N/A -18.46% Strategist -16.20% N/A -11.25% Utilities -31.53% N/A -20.85% Morgan Stanley UIF Emerging Markets Equity -12.36% N/A -8.64% Morgan Stanley UIF Equity Growth -20.84% N/A -0.92% Morgan Stanley UIF International Magnum -24.95% N/A -6.24% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.07% N/A 2.50% Morgan Stanley UIF U.S. Real Estate 3.71% N/A 3.64% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -36.95% N/A 9.19% Van Kampen LIT Emerging Growth, Class II* N/A N/A -24.27% AIM V.I. Capital Appreciation -28.87% N/A -21.42% AIM V.I. Growth -39.30% N/A -31.31% AIM V.I. Premier Equity -18.33% N/A -17.14% Alliance Growth -29.23% N/A -23.85% Alliance Growth and Income -5.82% N/A 5.22% Alliance Premier Growth -23.08% N/A -19.64% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.26% N/A -1.67% Putnam VT International Growth -26.25% N/A -17.81% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -28.02% N/A -23.23% +Please refer to the table at the beginning of this section for the inception dates of the Variable Sub-Account. *Not annualized.
INCOME AND DEATH BENEFIT COMBINATION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.26% N/A -25.28% Capital Growth -32.17% N/A -23.65% Competitive Edge -29.27% N/A -28.82% Dividend Growth -11.49% N/A -3.53% Equity -32.74% N/A -24.98% European Growth -23.76% N/A -20.70% Global Dividend Growth -12.50% N/A -8.78% High Yield -39.47% N/A -43.99% Income Builder -4.10% N/A -2.67% Information -48.37% N/A -47.55% Limited Duration 0.20% N/A 1.89% Money Market -2.56% N/A -0.13% Pacific Growth -32.93% N/A -37.80% Quality Income Plus 2.98% N/A 6.62% S&P 500 Index -18.47% N/A -18.63% Strategist -16.38% N/A -11.43% Utilities -31.68% N/A -21.02% Morgan Stanley UIF Emerging Markets Equity -12.54% N/A -8.83% Morgan Stanley UIF Equity Growth -21.01% N/A -1.13% Morgan Stanley UIF International Magnum -25.11% N/A -6.44% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.26% N/A 2.28% Morgan Stanley UIF U.S. Real Estate 3.49% N/A 3.43% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -37.08% N/A 8.96% Van Kampen LIT Emerging Growth, Class II* N/A N/A -24.37% AIM V.I. Capital Appreciation -29.02% N/A -21.58% AIM V.I. Growth -39.43% N/A -31.46% AIM V.I. Premier Equity -18.50% N/A -17.32% Alliance Growth -29.38% N/A -24.01% Alliance Growth and Income -6.01% N/A 5.00% Alliance Premier Growth -23.24% N/A -19.81% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.45% N/A -1.88% Putnam VT International Growth -26.40% N/A -17.98% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -28.17% N/A -23.39% +Please refer to the table at the beginning of this section for the inception dates of the Variable Sub-Account. *Not annualized.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.15% N/A -25.16% Capital Growth -32.07% N/A -23.53% Competitive Edge -29.16% N/A -28.71% Dividend Growth -11.35% N/A -3.38% Equity -32.63% N/A -24.86% European Growth -23.64% N/A -20.57% Global Dividend Growth -12.36% N/A -8.64% High Yield -39.37% N/A -43.90% Income Builder -3.95% N/A -2.52% Information -48.29% N/A -47.47% Limited Duration 0.36% N/A 2.05% Money Market -2.41% N/A 0.03% Pacific Growth -32.82% N/A -37.70% Quality Income Plus 3.15% N/A 6.79% S&P 500 Index -18.34% N/A -18.50% Strategist -16.25% N/A -11.29% Utilities -31.57% N/A -20.89% Morgan Stanley UIF Emerging Markets Equity -12.40% N/A -8.69% Morgan Stanley UIF Equity Growth -20.88% N/A -0.97% Morgan Stanley UIF International Magnum -24.99% N/A -6.29% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.12% N/A 2.44% Morgan Stanley UIF U.S. Real Estate 3.65% N/A 3.59% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -36.98% N/A 9.13% Van Kampen LIT Emerging Growth, Class II* N/A N/A -24.30% AIM V.I. Capital Appreciation -28.91% N/A -21.46% AIM V.I. Growth -39.33% N/A -31.35% AIM V.I. Premier Equity -18.37% N/A -17.18% Alliance Growth -29.26% N/A -23.89% Alliance Growth and Income -5.86% N/A 5.16% Alliance Premier Growth -23.12% N/A -19.68% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.31% N/A -1.73% Putnam VT International Growth -26.29% N/A -17.85% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -28.05% N/A -23.27% +Please refer to the table at the beginning of this section for the inception dates of the Variable Sub-Account. *Not annualized.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) WITH THE PERFORMANCE DEATH BENEFIT OPTION 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.24% N/A -25.26% Capital Growth -32.16% N/A -23.64% Competitive Edge -29.26% N/A -28.81% Dividend Growth -11.47% N/A -3.51% Equity -32.73% N/A -24.97% European Growth -23.74% N/A -20.68% Global Dividend Growth -12.48% N/A -8.76% High Yield -39.45% N/A -43.97% Income Builder -4.08% N/A -2.65% Information -48.36% N/A -47.54% Limited Duration 0.22% N/A 1.91% Money Market -2.54% N/A -0.11% Pacific Growth -32.91% N/A -37.79% Quality Income Plus 3.01% N/A 6.64% S&P 500 Index -18.45% N/A -18.61% Strategist -16.36% N/A -11.41% Utilities -31.66% N/A -21.00% Morgan Stanley UIF Emerging Markets Equity -12.52% N/A -8.82% Morgan Stanley UIF Equity Growth -20.99% N/A -1.11% Morgan Stanley UIF International Magnum -25.09% N/A -6.42% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.24% N/A 2.30% Morgan Stanley UIF U.S. Real Estate 3.51% N/A 3.45% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -37.07% N/A 8.99% Van Kampen LIT Emerging Growth, Class II* N/A N/A -24.36 AIM V.I. Capital Appreciation -29.01% N/A -21.57% AIM V.I. Growth -39.42% N/A -31.45% AIM V.I. Premier Equity -18.49% N/A -17.30% Alliance Growth -29.36% N/A -23.99% Alliance Growth and Income -5.99% N/A 5.02% Alliance Premier Growth -23.23% N/A -19.79% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.43% N/A -1.86% Putnam VT International Growth -26.39% N/A -17.97% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -28.15% N/A -23.38% +Please refer to the table at the beginning of this section for the inception dates of the Variable Sub-Account. *Not annualized.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) WITH THE DEATH BENEFIT COMBINATION OPTION 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.32% N/A -25.35% Capital Growth -32.24% N/A -23.73% Competitive Edge -29.34% N/A -28.89% Dividend Growth -11.58% N/A -3.62% Equity -32.81% N/A -25.06% European Growth -23.83% N/A -20.77% Global Dividend Growth -12.58% N/A -8.87% High Yield -39.52% N/A -44.04% Income Builder -4.20% N/A -2.76% Information -48.42% N/A -47.61% Limited Duration 0.11% N/A 1.79% Money Market -2.65% N/A -0.22% Pacific Growth -32.99% N/A -37.86% Quality Income Plus 2.89% N/A 6.52% S&P 500 Index -18.55% N/A -18.71% Strategist -16.46% N/A -11.52% Utilities -31.74% N/A -21.09% Morgan Stanley UIF Emerging Markets Equity -12.62% N/A -8.92% Morgan Stanley UIF Equity Growth -21.08% N/A -1.22% Morgan Stanley UIF International Magnum -25.18% N/A -6.53% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.35% N/A 2.19% Morgan Stanley UIF U.S. Real Estate 3.39% N/A 3.33% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -37.15% N/A 8.86% Van Kampen LIT Emerging Growth, Class II* N/A N/A -24.42% AIM V.I. Capital Appreciation -29.09% N/A -21.66% AIM V.I. Growth -39.49% N/A -31.53% AIM V.I. Premier Equity -18.58% N/A -17.39% Alliance Growth -29.44% N/A -24.08% Alliance Growth and Income -6.10% N/A 4.90% Alliance Premier Growth -23.32% N/A -19.88% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.53% N/A -1.97% Putnam VT International Growth -26.48% N/A -18.06% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -28.24% N/A -23.47% +Please refer to the table at the beginning of this section for the inception dates of the Variable Sub-Account. *Not annualized.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) WITH THE INCOME BENEFIT COMBINATION OPTION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.36% N/A -25.40% Capital Growth -32.28% N/A -23.77% Competitive Edge -29.39% N/A -28.94% Dividend Growth -11.63% N/A -3.68% Equity -32.85% N/A -25.10% European Growth -23.88% N/A -20.82% Global Dividend Growth -12.64% N/A -8.93% High Yield -39.56% N/A -44.08% Income Builder -4.26% N/A -2.82% Information -48.45% N/A -47.64% Limited Duration 0.05% N/A 1.73% Money Market -2.72% N/A -0.29% Pacific Growth -33.04% N/A -37.90% Quality Income Plus 2.82% N/A 6.45% S&P 500 Index -18.60% N/A -18.76% Strategist -16.51% N/A -11.57% Utilities -31.79% N/A -21.14% Morgan Stanley UIF Emerging Markets Equity -12.68% N/A -8.98% Morgan Stanley UIF Equity Growth -21.13% N/A -1.28% Morgan Stanley UIF International Magnum -25.23% N/A -6.58% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.41% N/A 2.12% Morgan Stanley UIF U.S. Real Estate 3.33% N/A 3.27% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -37.19% N/A 8.80% Van Kampen LIT Emerging Growth, Class II* N/A N/A -24.45% AIM V.I. Capital Appreciation -29.14% N/A -21.71% AIM V.I. Growth -39.53% N/A -31.57% AIM V.I. Premier Equity -18.63% N/A -17.45% Alliance Growth -29.49% N/A -24.13% Alliance Growth and Income -6.16% N/A 4.84% Alliance Premier Growth -23.36% N/A -19.94% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.58% N/A -2.03% Putnam VT International Growth -26.52% N/A -18.12% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -28.28% N/A -23.52% +Please refer to the table at the beginning of this section for the inception dates of the Variable Sub-Account. *Not annualized.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) AND THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity -34.50% N/A -25.56% Capital Growth -32.43% N/A -23.94% Competitive Edge -29.54% N/A -29.09% Dividend Growth -11.82% N/A -3.89% Equity -32.99% N/A -25.26% European Growth -24.04% N/A -20.99% Global Dividend Growth -12.82% N/A -9.12% High Yield -39.69% N/A -44.20% Income Builder -4.46% N/A -3.03% Information -48.57% N/A -47.75% Limited Duration -0.16% N/A 1.52% Money Market -2.92% N/A -0.49% Pacific Growth -33.18% N/A -38.04% Quality Income Plus 2.61% N/A 6.23% S&P 500 Index -18.77% N/A -18.93% Strategist -16.69% N/A -11.76% Utilities -31.93% N/A -21.31% Morgan Stanley UIF Emerging Markets Equity -12.86% N/A -9.17% Morgan Stanley UIF Equity Growth -21.30% N/A -1.48% Morgan Stanley UIF International Magnum -25.39% N/A -6.78% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -9.60% N/A 1.91% Morgan Stanley UIF U.S. Real Estate 3.11% N/A 3.06% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -37.32% N/A 8.57% Van Kampen LIT Emerging Growth, Class II* N/A N/A -24.55%* AIM V.I. Capital Appreciation -29.29% N/A -21.88% AIM V.I. Growth -39.66% N/A -31.72% AIM V.I. Premier Equity -18.80% N/A -17.62% Alliance Growth -29.64% N/A -24.29% Alliance Growth and Income -6.36% N/A 4.62% Alliance Premier Growth -23.53% N/A -20.11% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -12.77% N/A -2.24% Putnam VT International Growth -26.68% N/A -18.29% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -28.44% N/A -23.68% +Please refer to the table at the beginning of this section for the inception dates of the Variable Sub-Account. *Not annualized.
NON-STANDARDIZED TOTAL RETURNS From time to time, we also may quote rates of return that reflect changes in the values of each Variable Sub-Account's accumulation units. We may quote these "non-standardized total returns" on an annualized, cumulative, year-by-year, or other basis. These rates of return take into account asset-based charges, such as the mortality and expense risk charge and administration charge as well as the contract maintenance charge. However, these rates of return do not reflect, withdrawal charges or any taxes. Such charges, if reflected, would reduce the performance shown. Annualized returns reflect the rate of return that, when compounded annually, would equal the cumulative rate of return for the period shown. We compute annualized returns according to the following formula: Annualized Return = (1+r)1/n-1 where: r = cumulative rate of return for the period shown, and n = number of years in the period. The method of computing annualized rates of return is similar to that for computing standardized performance, described above, except that rather than using a hypothetical $1,000 investment and the ending redeemable value thereof, we use the changes in value of an accumulation unit. Cumulative rates of return reflect the cumulative change in value of an accumulation unit over the period shown. Year-by-year rates of return reflect the change in value of accumulation unit during the course of each year shown. We compute these returns by dividing the accumulation unit value at the end of each period shown, by accumulation unit value at the beginning of that period, and subtracting one. We compute other total returns on a similar basis. We may quote non-standardized total returns for 1, 3, 5, and 10 year periods, or period since inception of the Variable Sub-Account's operations, as well as other periods, such as "year-to-date" (prior calendar year end to the day stated in the advertisement); "year to most recent quarter" (prior calendar year end to the end of the most recent quarter); the prior calendar year; and the "n" most recent calendar years. The non-standardized average annual total returns for the Variable Sub-Accounts for the periods ended December 31, 2001 are set out below. No non-standardized total returns are shown for the Money Market Variable Sub-Account The Variable Annuity 3 Contracts were first offered to the public on June 5, 2000. Accordingly, performance figures for Variable Sub-Accounts prior to those dates 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 Variable Annuity 3 Contracts, excluding the withdrawal charge but including the contract maintenance charges. In addition, the performance figures for periods prior to the availability of an optional income benefit, death benefit or combination thereof have been adjusted to reflect the current charge for such features as if they had been available throughout the periods shown. The inception dates of each Variable Sub-Account appears under "Standardized Total Returns" above.
BASE CONTRACT 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.58% N/A -21.64% Capital Growth -27.48% N/A -20.04% Competitive Edge -24.57% N/A -25.11% Dividend Growth -6.70% N/A -0.20% Equity -28.05% N/A -21.35% European Growth -19.03% N/A -17.13% Global Dividend Growth -7.71% N/A -5.39% High Yield -34.81% N/A -39.59% Income Builder 0.73% N/A 0.65% Information -43.76% N/A -43.11% Limited Duration 5.06% N/A 5.16% Money Market 2.28% N/A 3.17% Pacific Growth -28.24% N/A -33.87% Quality Income Plus 7.85% N/A 9.85% S&P 500 Index -13.71% N/A -15.10% Strategist -11.61% N/A -8.01% Utilities -26.98% N/A -17.45% Morgan Stanley UIF Emerging Markets Equity -7.75% N/A -7.14% Morgan Stanley UIF Equity Growth -16.26% N/A 0.36% Morgan Stanley UIF International Magnum -20.38% N/A -4.82% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.46% N/A 5.03% Morgan Stanley UIF U.S. Real Estate 8.36% N/A 4.89% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.42% N/A 10.27% Van Kampen LIT Emerging Growth, Class II* N/A N/A -18.94% AIM V.I. Capital Appreciation -24.32% N/A -18.36% AIM V.I. Growth -34.78% N/A -27.94% AIM V.I. Premier Equity -13.74% N/A -14.20% Alliance Growth -24.67% N/A -20.72% Alliance Growth and Income -1.19% N/A 7.71% Alliance Premier Growth -18.51% N/A -16.63% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.65% N/A 0.93% Putnam VT International Growth -21.68% N/A -14.86% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.46% N/A -20.12% *Not annualized.
PERFORMANCE DEATH BENEFIT 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.67% N/A -21.74% Capital Growth -27.58% N/A -20.14% Competitive Edge -24.66% N/A -25.20% Dividend Growth -6.82% N/A -0.33% Equity -28.15% N/A -21.45% European Growth -19.13% N/A -17.24% Global Dividend Growth -7.83% N/A -5.51% High Yield -34.90% N/A -39.66% Income Builder 0.60% N/A 0.52% Information -43.83% N/A -43.18% Limited Duration 4.92% N/A 5.03% Money Market 2.15% N/A 3.03% Pacific Growth -28.33% N/A -33.96% Quality Income Plus 7.71% N/A 9.71% S&P 500 Index -13.82% N/A -15.21% Strategist -11.72% N/A -8.13% Utilities -27.08% N/A -17.56% Morgan Stanley UIF Emerging Markets Equity -7.87% N/A -7.26% Morgan Stanley UIF Equity Growth -16.37% N/A 0.23% Morgan Stanley UIF International Magnum -20.48% N/A -4.95% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.58% N/A 4.90% Morgan Stanley UIF U.S. Real Estate 8.22% N/A 4.76% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.51% N/A 10.12% Van Kampen LIT Emerging Growth, Class II* N/A N/A -19.01% AIM V.I. Capital Appreciation -24.41% N/A -18.47% AIM V.I. Growth -34.86% N/A -28.03% AIM V.I. Premier Equity -13.86% N/A -14.31% Alliance Growth -24.77% N/A -20.82% Alliance Growth and Income -1.32% N/A 7.57% Alliance Premier Growth -18.61% N/A -16.74% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.78% N/A 0.80% Putnam VT International Growth -21.79% N/A -14.97% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.56% N/A -20.23% *Not annualized.
DEATH BENEFIT COMBINATION OPTION 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.75% N/A -21.83% Capital Growth -27.66% N/A -20.23% Competitive Edge -24.75% N/A -25.29% Dividend Growth -6.92% N/A -0.44% Equity -28.23% N/A -21.53% European Growth -19.22% N/A -17.33% Global Dividend Growth -7.93% N/A -5.62% High Yield -34.97% N/A -39.73% Income Builder 0.49% N/A 0.41% Information -43.89% N/A -43.24% Limited Duration 4.81% N/A 4.91% Money Market 2.03% N/A 2.92% Pacific Growth -28.41% N/A -34.03% Quality Income Plus 7.59% N/A 9.59% S&P 500 Index -13.91% N/A -15.30% Strategist -11.82% N/A -8.23% Utilities -27.16% N/A -17.65% Morgan Stanley UIF Emerging Markets Equity -7.97% N/A -7.36% Morgan Stanley UIF Equity Growth -16.46% N/A 0.12% Morgan Stanley UIF International Magnum -20.57% N/A -5.05% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.69% N/A 4.78% Morgan Stanley UIF U.S. Real Estate 8.10% N/A 4.64% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.58% N/A 10.00% Van Kampen LIT Emerging Growth, Class II* N/A N/A -19.06% AIM V.I. Capital Appreciation -24.50% N/A -18.56% AIM V.I. Growth -34.93% N/A -28.11% AIM V.I. Premier Equity -13.95% N/A -14.41% Alliance Growth -24.85% N/A -20.91% Alliance Growth and Income -1.43% N/A 7.46% Alliance Premier Growth -18.70% N/A -16.83% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.88% N/A 0.69% Putnam VT International Growth -21.87% N/A -15.06% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.64% N/A -20.31% *Not annualized.
INCOME BENEFIT COMBINATION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.79% N/A -21.87% Capital Growth -27.70% N/A -20.28% Competitive Edge -24.79% N/A -25.33% Dividend Growth -6.98% N/A -0.50% Equity -28.27% N/A -21.58% European Growth -19.27% N/A -17.38% Global Dividend Growth -7.98% N/A -5.67% High Yield -35.01% N/A -39.77% Income Builder 0.42% N/A 0.35% Information -43.93% N/A -43.28% Limited Duration 4.74% N/A 4.85% Money Market 1.97% N/A 2.86% Pacific Growth -28.46% N/A -34.07% Quality Income Plus 7.53% N/A 9.52% S&P 500 Index -13.97% N/A -15.35% Strategist -11.87% N/A -8.28% Utilities -27.20% N/A -17.70% Morgan Stanley UIF Emerging Markets Equity -8.03% N/A -7.42% Morgan Stanley UIF Equity Growth -16.51% N/A 0.06% Morgan Stanley UIF International Magnum -20.62% N/A -5.11% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.74% N/A 4.72% Morgan Stanley UIF U.S. Real Estate 8.04% N/A 4.58% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.62% N/A 9.94% Van Kampen LIT Emerging Growth, Class II* N/A N/A -19.10% AIM V.I. Capital Appreciation -24.54% N/A -18.61% AIM V.I. Growth -34.97% N/A -28.16% AIM V.I. Premier Equity -14.00% N/A -14.46% Alliance Growth -24.90% N/A -20.96% Alliance Growth and Income -1.49% N/A 7.39% Alliance Premier Growth -18.75% N/A -16.88% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.93% N/A 0.63% Putnam VT International Growth -21.92% N/A -15.11% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.69% N/A -20.36% *Not annualized.
INCOME AND DEATH BENEFIT COMBINATION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.93% N/A -22.03% Capital Growth -27.85% N/A -20.44% Competitive Edge -24.94% N/A -25.48% Dividend Growth -7.16% N/A -0.70% Equity -28.41% N/A -21.74% European Growth -19.43% N/A -17.54% Global Dividend Growth -8.17% N/A -5.86% High Yield -35.14% N/A -39.89% Income Builder 0.22% N/A 0.15% Information -44.04% N/A -43.39% Limited Duration 4.53% N/A 4.64% Money Market 1.77% N/A 2.65% Pacific Growth -28.60% N/A -34.20% Quality Income Plus 7.31% N/A 9.31% S&P 500 Index -14.14% N/A -15.52% Strategist -12.05% N/A -8.46% Utilities -27.35% N/A -17.86% Morgan Stanley UIF Emerging Markets Equity -8.21% N/A -7.60% Morgan Stanley UIF Equity Growth -16.68% N/A -0.14% Morgan Stanley UIF International Magnum -20.78% N/A -5.30% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.93% N/A 4.51% Morgan Stanley UIF U.S. Real Estate 7.82% N/A 4.37% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.76% N/A 9.72% Van Kampen LIT Emerging Growth, Class II* N/A N/A -19.20% AIM V.I. Capital Appreciation -24.70% N/A -18.77% AIM V.I. Growth -35.11% N/A -28.30% AIM V.I. Premier Equity -14.18% N/A -14.63% Alliance Growth -25.05% N/A -21.12% Alliance Growth and Income -1.68% N/A 7.18% Alliance Premier Growth -18.91% N/A -17.05% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.12% N/A 0.43% Putnam VT International Growth -22.08% N/A -15.28% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.84% N/A -20.52% *Not annualized.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.82% N/A -21.91% Capital Growth -27.74% N/A -20.32% Competitive Edge -24.83% N/A -25.37% Dividend Growth -7.02% N/A -0.55% Equity -28.31% N/A -21.62% European Growth -19.31% N/A -17.42% Global Dividend Growth -8.03% N/A -5.72% High Yield -35.04% N/A -39.80% Income Builder 0.37% N/A 0.30% Information -43.96% N/A -43.31% Limited Duration 4.69% N/A 4.80% Money Market 1.92% N/A 2.81% Pacific Growth -28.49% N/A -34.10% Quality Income Plus 7.47% N/A 9.47% S&P 500 Index -14.01% N/A -15.39% Strategist -11.92% N/A -8.33% Utilities -27.24% N/A -17.74% Morgan Stanley UIF Emerging Markets Equity -8.07% N/A -7.47% Morgan Stanley UIF Equity Growth -16.55% N/A 0.01% Morgan Stanley UIF International Magnum -20.66% N/A -5.16% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.79% N/A 4.67% Morgan Stanley UIF U.S. Real Estate 7.98% N/A 4.53% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.66% N/A 9.88% Van Kampen LIT Emerging Growth, Class II* N/A N/A -19.12% AIM V.I. Capital Appreciation -24.58% N/A -18.65% AIM V.I. Growth -35.01% N/A -28.19% AIM V.I. Premier Equity -14.05% N/A -14.50% Alliance Growth -24.94% N/A -21.00% Alliance Growth and Income -1.54% N/A 7.34% Alliance Premier Growth -18.79% N/A -16.92% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -7.98% N/A 0.58% Putnam VT International Growth -21.96% N/A -15.15% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.73% N/A -20.40% *Not annualized.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) WITH THE PERFORMANCE DEATH BENEFIT OPTION 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.92% N/A -22.01% Capital Growth -27.83% N/A -20.42% Competitive Edge -24.93% N/A -25.47% Dividend Growth -7.14% N/A -0.68% Equity -28.40% N/A -21.72% European Growth -19.42% N/A -17.53% Global Dividend Growth -8.15% N/A -5.84% High Yield -35.12% N/A -39.88% Income Builder 0.24% N/A 0.17% Information -44.03% N/A -43.38% Limited Duration 4.55% N/A 4.66% Money Market 1.79% N/A 2.67% Pacific Growth -28.59% N/A -34.19% Quality Income Plus 7.33% N/A 9.33% S&P 500 Index -14.12% N/A -15.50% Strategist -12.03% N/A -8.45% Utilities -27.33% N/A -17.85% Morgan Stanley UIF Emerging Markets Equity -8.19% N/A -7.59% Morgan Stanley UIF Equity Growth -16.66% N/A -0.12% Morgan Stanley UIF International Magnum -20.76% N/A -5.28% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -4.92% N/A 4.53% Morgan Stanley UIF U.S. Real Estate 7.84% N/A 4.39% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.74% N/A 9.74% Van Kampen LIT Emerging Growth, Class II* N/A N/A -19.19% AIM V.I. Capital Appreciation -24.68% N/A -18.75% AIM V.I. Growth -35.09% N/A -28.29% AIM V.I. Premier Equity -14.16% N/A -14.61% Alliance Growth -25.03% N/A -21.10% Alliance Growth and Income -1.66% N/A 7.20% Alliance Premier Growth -18.90% N/A -17.03% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.10% N/A 0.45% Putnam VT International Growth -22.06% N/A -15.26% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.83% N/A -20.51% *Not annualized.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) WITH THE DEATH BENEFIT COMBINATION OPTION 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -29.99% N/A -22.10% Capital Growth -27.91% N/A -20.51% Competitive Edge -25.01% N/A -25.55% Dividend Growth -7.25% N/A -0.79% Equity -28.48% N/A -21.81% European Growth -19.51% N/A -17.62% Global Dividend Growth -8.25% N/A -5.94% High Yield -35.20% N/A -39.94% Income Builder 0.13% N/A 0.06% Information -44.09% N/A -43.44% Limited Duration 4.44% N/A 4.55% Money Market 1.67% N/A 2.56% Pacific Growth -28.67% N/A -34.26% Quality Income Plus 7.22% N/A 9.21% S&P 500 Index -14.22% N/A -15.60% Strategist -12.13% N/A -8.55% Utilities -27.42% N/A -17.94% Morgan Stanley UIF Emerging Markets Equity -8.30% N/A -7.69% Morgan Stanley UIF Equity Growth -16.75% N/A -0.23% Morgan Stanley UIF International Magnum -20.85% N/A -5.38% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -5.02% N/A 4.42% Morgan Stanley UIF U.S. Real Estate 7.72% N/A 4.28% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.82% N/A 9.62% Van Kampen LIT Emerging Growth, Class II* N/A N/A -19.24% AIM V.I. Capital Appreciation -24.76% N/A -18.84% AIM V.I. Growth -35.16% N/A -28.36% AIM V.I. Premier Equity -14.25% N/A -14.70% Alliance Growth -25.12% N/A -21.19% Alliance Growth and Income -1.77% N/A 7.08% Alliance Premier Growth -18.99% N/A -17.12% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.20% N/A 0.34% Putnam VT International Growth -22.15% N/A -15.36% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.91% N/A -20.59% *Not annualized.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) WITH THE INCOME BENEFIT COMBINATION OPTION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -30.04% N/A -22.14% Capital Growth -27.96% N/A -20.56% Competitive Edge -25.06% N/A -25.59% Dividend Growth -7.30% N/A -0.85% Equity -28.52% N/A -21.85% European Growth -19.55% N/A -17.67% Global Dividend Growth -8.31% N/A -6.00% High Yield -35.24% N/A -39.98% Income Builder 0.07% N/A 0.00% Information -44.13% N/A -43.48% Limited Duration 4.37% N/A 4.48% Money Market 1.61% N/A 2.50% Pacific Growth -28.71% N/A -34.30% Quality Income Plus 7.15% N/A 9.14% S&P 500 Index -14.27% N/A -15.65% Strategist -12.18% N/A -8.60% Utilities -27.46% N/A -17.99% Morgan Stanley UIF Emerging Markets Equity -8.35% N/A -7.74% Morgan Stanley UIF Equity Growth -16.80% N/A -0.29% Morgan Stanley UIF International Magnum -20.90% N/A -5.44% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -5.08% N/A 4.35% Morgan Stanley UIF U.S. Real Estate 7.66% N/A 4.21% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.86% N/A 9.55% Van Kampen LIT Emerging Growth, Class II* N/A N/A -19.27% AIM V.I. Capital Appreciation -24.81% N/A -18.89% AIM V.I. Growth -35.20% N/A -28.41% AIM V.I. Premier Equity -14.30% N/A -14.76% Alliance Growth -25.16% N/A -21.23% Alliance Growth and Income -1.83% N/A 7.02% Alliance Premier Growth -19.04% N/A -17.17% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.26% N/A 0.28% Putnam VT International Growth -22.19% N/A -15.41% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -23.96% N/A -20.64% *Not annualized.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) AND THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception Aggressive Equity -30.18% N/A -22.30% Capital Growth -28.10% N/A -20.72% Competitive Edge -25.21% N/A -25.74% Dividend Growth -7.49% N/A -1.05% Equity -28.67% N/A -22.01% European Growth -19.72% N/A -17.83% Global Dividend Growth -8.49% N/A -6.19% High Yield -35.37% N/A -40.10% Income Builder -0.13% N/A -0.20% Information -44.24% N/A -43.59% Limited Duration 4.16% N/A 4.27% Money Market 1.41% N/A 2.29% Pacific Growth -28.85% N/A -34.43% Quality Income Plus 6.94% N/A 8.92% S&P 500 Index -14.44% N/A -15.82% Strategist -12.36% N/A -8.78% Utilities -27.60% N/A -18.15% Morgan Stanley UIF Emerging Markets Equity -8.54% N/A -7.93% Morgan Stanley UIF Equity Growth -16.97% N/A -0.49% Morgan Stanley UIF International Magnum -21.06% N/A -5.63% Morgan Stanley UIF Mid Cap Growth N/A N/A N/A Morgan Stanley UIF Mid Cap Value -5.27% N/A 4.14% Morgan Stanley UIF U.S. Real Estate 7.44% N/A 4.01% Van Kampen LIT Comstock, Class II N/A N/A N/A Van Kampen LIT Emerging Growth, Class I -32.99% N/A 9.33% Van Kampen LIT Emerging Growth, Class II* N/A N/A -19.37% AIM V.I. Capital Appreciation -24.96% N/A -19.05% AIM V.I. Growth -35.33% N/A -28.55% AIM V.I. Premier Equity -14.48% N/A -14.93% Alliance Growth -25.31% N/A -21.39% Alliance Growth and Income -2.03% N/A 6.80% Alliance Premier Growth -19.20% N/A -17.34% LSA Aggressive Growth N/A N/A N/A Putnam VT Growth and Income -8.44% N/A 0.08% Putnam VT International Growth -22.35% N/A -15.58% Putnam VT Small Cap Value N/A N/A N/A Putnam VT Voyager -24.11% N/A -20.80% *Not annualized.
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. Where the returns included in the following tables give effect to the Enhanced Earnings Death Benefit Plus Option, the performance figures have been adjusted to reflect the current charge for the feature as if that feature had been available throughout the periods shown. The adjusted historical total returns for the Variable Sub-Accounts for the periods ended December 31, 2001 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 - -------------------- --------- Aggressive Equity* May 1, 1999 Capital Growth* March 1, 1991 Competitive Edge* May 18, 1998 Dividend Growth* March 1, 1990 Equity* March 9, 1984 European Growth* March 1, 1990 Global Dividend Growth* February 24, 1997 High Yield* March 9, 1984 Income Builder* February 24, 1997 Information November 6, 2000 Limited Duration* May 2, 1999 Money Market March 8, 1984 Pacific Growth* March 1, 1991 Quality Income Plus* March 1, 1987 S&P 500 Index* May 18, 1998 Strategist* March 1, 1987 Utilities* March 1, 1990
Morgan Stanley UIF Emerging Markets Equity January 21, 1997 Morgan Stanley UIF Equity Growth January 2, 1997 Morgan Stanley UIF International Magnum January 2, 1997 Morgan Stanley UIF Mid Cap Growth October 18, 1999 Morgan Stanley UIF Mid Cap Value January 2, 1997 Morgan Stanley UIF U.S. Real Estate March 4, 1997 Van Kampen LIT Comstock**** April 30, 1999 Van Kampen LIT Emerging Growth**** July 3, 1995 AIM V.I. Capital Appreciation May 5, 1993 AIM V.I. Growth May 5, 1993 AIM V.I. Premier Equity May 5, 1993 Alliance Growth** September 15, 1994 Alliance Growth and Income** January 14, 1991 Alliance Premier Growth** July 14, 1999 LSA Aggressive Growth August 14, 2001 Putnam VT Growth and Income*** February 1, 1988 Putnam VT International Growth*** January 2, 1997 Putnam VT Small Cap Value May 1, 2002 Putnam VT Voyager*** February 1, 1988 * The Portfolio's Class Y shares ("12b-1 class") corresponding to these Variable Sub-Accounts were first offered on June 5, 2000. For periods prior to June 5, 2000, the performance shown is based on the historical performance of the Portfolios' Class X shares ("non-12b-1 class"), adjusted to reflect the current expenses of the Portfolios' 12b-1 class. The inception dates for the Portfolios are shown above. ** The Portfolios' Class B shares ("12b-1 class") corresponding to the Alliance Growth, Alliance Growth and Income and Premier Growth Variable Sub-Accounts were first offered on June 1, 1999. For periods prior to this date, 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 IB 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. ****The Fund's Class II shares ("12b-1 class") corresponding to the Emerging Growth and Comstock Sub-Accounts were first offered on May 17, 2001 and May 1, 2002, respectively. For periods prior to that date, the performance shown is based on the historical performance of the Fund's Class I shares ("the non-12b-1 class"). The inception date for the Funds is shown above.
BASE CONTRACT 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity* -33.90% N/A -2.29% Capital Growth* -31.81% 6.15% 5.68% Competitive Edge* -28.89% N/A -9.12% Dividend Growth* -11.02% 4.91% 9.15% Equity* -32.38% 10.69% 10.94% European Growth* -23.35% 5.73% 12.36% Global Dividend Growth* -12.03% 3.70% 6.74% High Yield* -39.14% -16.34% -3.13% Income Builder* -3.60% N/A 4.64% Information* -48.09% N/A -47.27% Limited Duration* 0.73% N/A 2.00% Money Market* -2.05% 3.02% 2.87% Pacific Growth* -32.57% -16.91% -10.91% Quality Income Plus* 3.53% 5.00% 5.57% S&P 500 Index* -18.03% N/A -0.68% Strategist* -15.94% 7.00% 7.30% Utilities* -31.31% 4.27% 6.67% Morgan Stanley UIF Emerging Markets Equity -12.08% -5.18% -5.43% Morgan Stanley UIF Equity Growth -20.58% N/A 8.75% Morgan Stanley UIF International Magnum -24.71% N/A -1.34% Morgan Stanley UIF Mid Cap Growth -34.59% N/A -7.82% Morgan Stanley UIF Mid Cap Value -8.78% N/A 14.12% Morgan Stanley UIF U.S. Real Estate 4.03% N/A 5.85% Van Kampen LIT Comstock, Class II* -8.77% N/A 3.20% Van Kampen LIT Emerging Growth, Class I -36.75% 14.02% 15.83% Van Kampen LIT Emerging Growth, Class II* -36.90% 13.73% 15.55% AIM V.I. Capital Appreciation -28.64% 4.24% 10.19% AIM V.I. Growth -39.11% 2.12% 7.30% AIM V.I. Premier Equity -18.07% 7.91% 11.83% Alliance Growth* -29.00% 5.24% 12.13% Alliance Growth and Income* -5.52% 12.59% 13.03% Alliance Premier Growth* -22.84% 10.54% 13.80% LSA Aggressive Growth** N/A N/A -11.96% Putnam VT Growth and Income* -11.98% 6.16% 10.25% Putnam VT International Growth* -26.01% N/A 7.66% Putnam VT Small Cap Value 12.21% N/A 14.25% Putnam VT Voyager* -27.78% 8.16% 11.30% *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. Please refer to the table at the beginning of this section for the inception dates of the Portfolio. **Not annualized. +Please refer to the table at the beginning of this section for the inception dates of the Portfolio.
PERFORMANCE DEATH BENEFIT 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity* -34.00% N/A -2.43% Capital Growth* -31.91% 6.01% 5.54% Competitive Edge* -28.99% N/A -9.24% Dividend Growth* -11.15% 4.77% 9.01% Equity* -32.47% 10.55% 10.79% European Growth* -23.46% 5.59% 12.21% Global Dividend Growth* -12.15% 3.56% 6.60% High Yield* -39.22% -16.45% -3.26% Income Builder* -3.73% N/A 4.50% Information* -48.16% N/A -47.34% Limited Duration* 0.59% N/A 1.86% Money Market* -2.18% 2.88% 2.74% Pacific Growth* -32.66% -17.02% -11.03% Quality Income Plus* 3.38% 4.87% 5.43% S&P 500 Index* -18.15% N/A -0.82% Strategist* -16.05% 6.86% 7.17% Utilities* -31.41% 4.13% 6.53% Morgan Stanley UIF Emerging Markets Equity -12.20% -5.31% -5.56% Morgan Stanley UIF Equity Growth -20.69% N/A 8.61% Morgan Stanley UIF International Magnum -24.81% N/A -1.47% Morgan Stanley UIF Mid Cap Growth -34.68% N/A -7.94% Morgan Stanley UIF Mid Cap Value -8.91% N/A 13.97% Morgan Stanley UIF U.S. Real Estate 3.89% N/A 5.71% Van Kampen LIT Comstock, Class II* -8.90% N/A 3.06% Van Kampen LIT Emerging Growth, Class I -36.83% 13.87% 15.68% Van Kampen LIT Emerging Growth, Class II* -36.99% 13.58% 15.40% AIM V.I. Capital Appreciation -28.74% 4.10% 10.05% AIM V.I. Growth -39.19% 1.98% 7.16% AIM V.I. Premier Equity -18.18% 7.77% 11.69% Alliance Growth* -29.10% 5.10% 11.98% Alliance Growth and Income* -5.65% 12.44% 12.89% Alliance Premier Growth* -22.94% 10.40% 13.65% LSA Aggressive Growth** N/A N/A -12.00% Putnam VT Growth and Income* -12.10% 6.02% 10.11% Putnam VT International Growth* -26.11% N/A 7.52% Putnam VT Small Cap Value 12.06% N/A 14.10% Putnam VT Voyager* -27.88% 8.02% 11.15% *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. Please refer to the table at the beginning of this section for the inception dates of the Portfolio. **Not annualized. +Please refer to the table at the beginning of this section for the inception dates of the Portfolio.
DEATH BENEFIT COMBINATION OPTION 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity* -34.07% N/A -2.54% Capital Growth* -31.99% 5.89% 5.43% Competitive Edge* -29.08% N/A -9.35% Dividend Growth* -11.25% 4.65% 8.89% Equity* -32.55% 10.42% 10.67% European Growth* -23.55% 5.47% 12.09% Global Dividend Growth* -12.26% 3.45% 6.49% High Yield* -39.30% -16.55% -3.36% Income Builder* -3.84% N/A 4.39% Information* -48.22% N/A -47.40% Limited Duration* 0.48% N/A 1.75% Money Market* -2.30% 2.76% 2.62% Pacific Growth* -32.74% -17.12% -11.13% Quality Income Plus* 3.27% 4.75% 5.31% S&P 500 Index* -18.24% N/A -0.93% Strategist* -16.15% 6.74% 7.05% Utilities* -31.49% 4.01% 6.42% Morgan Stanley UIF Emerging Markets Equity -12.30% -5.42% -5.66% Morgan Stanley UIF Equity Growth -20.79% N/A 8.49% Morgan Stanley UIF International Magnum -24.90% N/A -1.58% Morgan Stanley UIF Mid Cap Growth -34.76% N/A -8.05% Morgan Stanley UIF Mid Cap Value -9.01% N/A 13.85% Morgan Stanley UIF U.S. Real Estate 3.77% N/A 5.59% Van Kampen LIT Comstock, Class II* -9.00% N/A 2.94% Van Kampen LIT Emerging Growth, Class I -36.91% 13.74% 15.56% Van Kampen LIT Emerging Growth, Class II* -37.07% 13.46% 15.27% AIM V.I. Capital Appreciation -28.83% 3.98% 9.93% AIM V.I. Growth -39.26% 1.87% 7.04% AIM V.I. Premier Equity -18.28% 7.65% 11.56% Alliance Growth* -29.18% 4.98% 11.86% Alliance Growth and Income* -5.76% 12.31% 12.76% Alliance Premier Growth* -23.03% 10.28% 13.53% LSA Aggressive Growth** N/A N/A -12.04% Putnam VT Growth and Income* -12.21% 5.90% 9.99% Putnam VT International Growth* -26.20% N/A 7.40% Putnam VT Small Cap Value 11.93% N/A 13.97% Putnam VT Voyager* -27.97% 7.90% 11.03%
*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. Please refer to the table at the beginning of this section for the inception dates of the Portfolio. **Not annualized. +Please refer to the table at the beginning of this section for the inception dates of the Portfolio.
INCOME BENEFIT COMBINATION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity* -34.12% N/A -2.60% Capital Growth* -32.03% 5.83% 5.36% Competitive Edge* -29.12% N/A -9.41% Dividend Growth* -11.30% 4.59% 8.82% Equity* -32.60% 10.36% 10.60% European Growth* -23.60% 5.41% 12.02% Global Dividend Growth* -12.31% 3.39% 6.42% High Yield* -39.33% -16.60% -3.42% Income Builder* -3.90% N/A 4.32% Information* -48.26% N/A -47.44% Limited Duration* 0.41% N/A 1.68% Money Market* -2.36% 2.70% 2.56% Pacific Growth* -32.78% -17.17% -11.18% Quality Income Plus* 3.20% 4.69% 5.25% S&P 500 Index* -18.29% N/A -0.99% Strategist* -16.20% 6.67% 6.98% Utilities* -31.53% 3.95% 6.35% Morgan Stanley UIF Emerging Markets Equity -12.36% -5.47% -5.72% Morgan Stanley UIF Equity Growth -20.84% N/A 8.42% Morgan Stanley UIF International Magnum -24.95% N/A -1.64% Morgan Stanley UIF Mid Cap Growth -34.80% N/A -8.11% Morgan Stanley UIF Mid Cap Value -9.07% N/A 13.78% Morgan Stanley UIF U.S. Real Estate 3.71% N/A 5.53% Van Kampen LIT Comstock, Class II* -9.06% N/A 2.88% Van Kampen LIT Emerging Growth, Class I -36.95% 13.67% 15.49% Van Kampen LIT Emerging Growth, Class II* -37.11% 13.39% 15.20% AIM V.I. Capital Appreciation -28.87% 3.92% 9.86% AIM V.I. Growth -39.30% 1.81% 6.98% AIM V.I. Premier Equity -18.33% 7.58% 11.50% Alliance Growth* -29.23% 4.92% 11.79% Alliance Growth and Income* -5.82% 12.24% 12.69% Alliance Premier Growth* -23.08% 10.21% 13.46% LSA Aggressive Growth** N/A N/A -12.07% Putnam VT Growth and Income* -12.26% 5.84% 9.92% Putnam VT International Growth* -26.25% N/A 7.33% Putnam VT Small Cap Value 11.86% N/A 13.90% Putnam VT Voyager* -28.02% 7.83% 10.96% *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. Please refer to the table at the beginning of this section for the inception dates of the Portfolio. **Not annualized. +Please refer to the table at the beginning of this section for the inception dates of the Portfolio.
INCOME AND DEATH COMBINATION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity* -34.26% N/A -2.80% Capital Growth* -32.17% 5.61% 5.15% Competitive Edge* -29.27% N/A -9.60% Dividend Growth* -11.49% 4.38% 8.60% Equity* -32.74% 10.13% 10.38% European Growth* -23.76% 5.19% 11.80% Global Dividend Growth* -12.50% 3.18% 6.21% High Yield* -39.47% -16.77% -3.62% Income Builder* -4.10% N/A 4.11% Information* -48.37% N/A -47.55% Limited Duration* 0.20% N/A 1.47% Money Market* -2.56% 2.49% 2.36% Pacific Growth* -32.93% -17.34% -11.36% Quality Income Plus* 2.98% 4.47% 5.04% S&P 500 Index* -18.47% N/A -1.20% Strategis* -16.38% 6.46% 6.77% Utilities* -31.68% 3.74% 6.14% Morgan Stanley UIF Emerging Markets Equity -12.54% -5.67% -5.91% Morgan Stanley UIF Equity Growth -21.01% N/A 8.20% Morgan Stanley UIF International Magnum -25.11% N/A -1.84% Morgan Stanley UIF Mid Cap Growth -34.94% N/A -8.30% Morgan Stanley UIF Mid Cap Value -9.26% N/A 13.55% Morgan Stanley UIF U.S. Real Estate 3.49% N/A 5.31% Van Kampen LIT Comstock, Class II* -9.25% N/A 2.67% Van Kampen LIT Emerging Growth, Class I -37.08% 13.44% 15.26% Van Kampen LIT Emerging Growth, Class II* -37.24% 13.16% 14.97% AIM V.I. Capital Appreciation -29.02% 3.71% 9.64% AIM V.I. Growth -39.43% 1.60% 6.76% AIM V.I. Premier Equity -18.50% 7.37% 11.27% Alliance Growth* -29.38% 4.71% 11.57% Alliance Growth and Income* -6.01% 12.02% 12.47% Alliance Premier Growth* -23.24% 9.99% 13.23% LSA Aggressive Growth** N/A N/A -12.14% Putnam VT Growth and Income* -12.45% 5.62% 9.70% Putnam VT International Growth* -26.40% N/A 7.12% Putnam VT Small Cap Value 11.63% N/A 13.67% Putnam VT Voyager* -28.17% 7.61% 10.74% *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. Please refer to the table at the beginning of this section for the inception dates of the Portfolio. **Not annualized. +Please refer to the table at the beginning of this section for the inception dates of the Portfolio.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity* -34.15% N/A -2.65% Capital Growth* -32.07% 5.78% 5.31% Competitive Edge* -29.16% N/A -9.45% Dividend Growth* -11.35% 4.53% 8.77% Equity* -32.63% 10.30% 10.55% European Growth* -23.64% 5.35% 11.96% Global Dividend Growth* -12.36% 3.33% 6.37% High Yield* -39.37% -16.64% -3.47% Income Builder* -3.95% N/A 4.27% Information* -48.29% N/A -47.47% Limited Duration* 0.36% N/A 1.63% Money Market* -2.41% 2.65% 2.51% Pacific Growth* -32.82% -17.21% -11.23% Quality Income Plus* 3.15% 4.63% 5.20% S&P 500 Index* -18.34% N/A -1.04% Strategist* -16.25% 6.62% 6.93% Utilities* -31.57% 3.90% 6.30% Morgan Stanley UIF Emerging Markets Equity -12.40% -5.52% -5.77% Morgan Stanley UIF Equity Growth -20.88% N/A 8.37% Morgan Stanley UIF International Magnum -24.99% N/A -1.69% Morgan Stanley UIF Mid Cap Growth -34.83% N/A -8.16% Morgan Stanley UIF Mid Cap Value -9.12% N/A 13.72% Morgan Stanley UIF U.S. Real Estate 3.65% N/A 5.48% Van Kampen LIT Comstock, Class II* -9.11% N/A 2.83% Van Kampen LIT Emerging Growth, Class I -36.98% 13.62% 15.43% Van Kampen LIT Emerging Growth, Class II* -37.14% 13.33% 15.14% AIM V.I. Capital Appreciation -28.91% 3.87% 9.81% AIM V.I. Growth -39.33% 1.75% 6.92% AIM V.I. Premier Equity -18.37% 7.53% 11.44% Alliance Growth* -29.26% 4.87% 11.74% Alliance Growth and Income* -5.86% 12.19% 12.64% Alliance Premier Growth* -23.12% 10.15% 13.40% LSA Aggressive Growth** N/A N/A -12.08% Putnam VT Growth and Income* -12.31% 5.79% 9.86% Putnam VT International Growth* -26.29% N/A 7.28% Putnam VT Small Cap Value 11.80% N/A 13.84% Putnam VT Voyager* -28.05% 7.77% 10.91% *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. Please refer to the table at the beginning of this section for the inception dates of the Portfolio. **Not annualized. +Please refer to the table at the beginning of this section for the inception dates of the Portfolio.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) WITH THE PERFORMANCE DEATH BENEFIT OPTION 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity* -34.24% N/A -2.78% Capital Growth* -32.16% 5.64% 5.17% Competitive Edge* -29.26% N/A -9.58% Dividend Growth* -11.47% 4.40% 8.63% Equity* -32.73% 10.16% 10.40% European Growth* -23.74% 5.21% 11.82% Global Dividend Growth* -12.48% 3.20% 6.23% High Yield* -39.45% -16.76% -3.60% Income Builder* -4.08% N/A 4.13% Information* -48.36% N/A -47.54% Limited Duration* 0.22% N/A 1.49% Money Market* -2.54% 2.51% 2.38% Pacific Growth* -32.91% -17.33% -11.34% Quality Income Plus* 3.01% 4.49% 5.06% S&P 500 Index* -18.45% N/A -1.17% Strategist* -16.36% 6.48% 6.79% Utilities* -31.66% 3.76% 6.16% Morgan Stanley UIF Emerging Markets Equity -12.52% -5.65% -5.89% Morgan Stanley UIF Equity Growth -20.99% N/A 8.22% Morgan Stanley UIF International Magnum -25.09% N/A -1.82% Morgan Stanley UIF Mid Cap Growth -34.92% N/A -8.28% Morgan Stanley UIF Mid Cap Value -9.24% N/A 13.57% Morgan Stanley UIF U.S. Real Estate 3.51% N/A 5.34% Van Kampen LIT Comstock, Class II* -9.23% N/A 2.69% Van Kampen LIT Emerging Growth, Class I -37.07% 13.47% 15.28% Van Kampen LIT Emerging Growth, Class II* -37.23% 13.18% 14.99% AIM V.I. Capital Appreciation -29.01% 3.73% 9.66% AIM V.I. Growth -39.42% 1.62% 6.78% AIM V.I. Premier Equity -18.49% 7.39% 11.30% Alliance Growth* -29.36% 4.73% 11.59% Alliance Growth and Income* -5.99% 12.04% 12.49% Alliance Premier Growth* -23.23% 10.01% 13.26% LSA Aggressive Growth** N/A N/A -12.13% Putnam VT Growth and Income* -12.43% 5.65% 9.72% Putnam VT International Growth* -26.39% N/A 7.14% Putnam VT Small Cap Value 11.65% N/A 13.69% Putnam VT Voyager* -28.15% 7.63% 10.76% *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. Please refer to the table at the beginning of this section for the inception dates of the Portfolio. **Not annualized. +Please refer to the table at the beginning of this section for the inception dates of the Portfolio.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) WITH THE DEATH BENEFIT COMBINATION OPTION 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity* -34.32% N/A -2.90% Capital Growth* -32.24% 5.52% 5.06% Competitive Edge* -29.34% N/A -9.68% Dividend Growth* -11.58% 4.28% 8.51% Equity* -32.81% 10.03% 10.28% European Growth* -23.83% 5.10% 11.69% Global Dividend Growth* -12.58% 3.08% 6.11% High Yield* -39.52% -16.85% -3.70% Income Builder* -4.20% N/A 4.01% Information* -48.42% N/A -47.61% Limited Duration* 0.11% N/A 1.38% Money Market* -2.65% 2.40% 2.26% Pacific Growth* -32.99% -17.42% -11.44% Quality Income Plus* 2.89% 4.38% 4.94% S&P 500 Index* -18.55% N/A -1.29% Strategist* -16.46% 6.36% 6.67% Utilities* -31.74% 3.64% 6.04% Morgan Stanley UIF Emerging Markets Equity -12.62% -5.75% -6.00% Morgan Stanley UIF Equity Growth -21.08% N/A 8.10% Morgan Stanley UIF International Magnum -25.18% N/A -1.94% Morgan Stanley UIF Mid Cap Growth -35.00% N/A -8.39% Morgan Stanley UIF Mid Cap Value -9.35% N/A 13.44% Morgan Stanley UIF U.S. Real Estate 3.39% N/A 5.22% Van Kampen LIT Comstock, Class II* -9.34% N/A 2.57% Van Kampen LIT Emerging Growth, Class I -37.15% 13.34% 15.15% Van Kampen LIT Emerging Growth, Class II* -37.30% 13.06% 14.87% AIM V.I. Capital Appreciation -29.09% 3.61% 9.54% AIM V.I. Growth -39.49% 1.51% 6.67% AIM V.I. Premier Equity -18.58% 7.27% 11.17% Alliance Growth* -29.44% 4.61% 11.47% Alliance Growth and Income* -6.10% 11.92% 12.37% Alliance Premier Growth* -23.32% 9.89% 13.13% LSA Aggressive Growth** N/A N/A -12.17% Putnam VT Growth and Income* -12.53% 5.53% 9.60% Putnam VT International Growth* -26.48% N/A 7.02% Putnam VT Small Cap Value 11.52% N/A 13.56% Putnam VT Voyager* -28.24% 7.51% 10.64% *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. Please refer to the table at the beginning of this section for the inception dates of the Portfolio. **Not annualized. +Please refer to the table at the beginning of this section for the inception dates of the Portfolio.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) WITH THE INCOME BENEFIT COMBINATION OPTION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity* -34.36% N/A -2.96% Capital Growth* -32.28% 5.45% 4.99% Competitive Edge* -29.39% N/A -9.74% Dividend Growth* -11.63% 4.22% 8.44% Equity* -32.85% 9.97% 10.22% European Growth* -23.88% 5.03% 11.63% Global Dividend Growth* -12.64% 3.02% 6.05% High Yield* -39.56% -16.90% -3.76% Income Builder* -4.26% N/A 3.95% Information* -48.45% N/A -47.64% Limited Duration* 0.05% N/A 1.31% Money Market* -2.72% 2.34% 2.20% Pacific Growth* -33.04% -17.47% -11.49% Quality Income Plus* 2.82% 4.31% 4.88% S&P 500 Index* -18.60% N/A -1.35% Strategist* -16.51% 6.30% 6.61% Utilities* -31.79% 3.58% 5.98% Morgan Stanley UIF Emerging Markets Equity -12.68% -5.81% -6.06% Morgan Stanley UIF Equity Growth -21.13% N/A 8.04% Morgan Stanley UIF International Magnum -25.23% N/A -2.00% Morgan Stanley UIF Mid Cap Growth -35.04% N/A -8.45% Morgan Stanley UIF Mid Cap Value -9.41% N/A 13.37% Morgan Stanley UIF U.S. Real Estate 3.33% N/A 5.15% Van Kampen LIT Comstock, Class II* -9.39% N/A 2.51% Van Kampen LIT Emerging Growth, Class I -37.19% 13.27% 15.08% Van Kampen LIT Emerging Growth, Class II* -37.34% 12.99% 14.80% AIM V.I. Capital Appreciation -29.14% 3.55% 9.48% AIM V.I. Growth -39.53% 1.44% 6.60% AIM V.I. Premier Equity -18.63% 7.20% 11.11% Alliance Growth* -29.49% 4.55% 11.41% Alliance Growth and Income* -6.16% 11.85% 12.30% Alliance Premier Growth* -23.36% 9.82% 13.06% LSA Aggressive Growth** N/A N/A -12.19% Putnam VT Growth and Income* -12.58% 5.46% 9.53% Putnam VT International Growth* -26.52% N/A 6.95% Putnam VT Small Cap Value 11.45% N/A 13.49% Putnam VT Voyager* -28.28% 7.45% 10.58% *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. Please refer to the table at the beginning of this section for the inception dates of the Portfolio. **Not annualized. +Please refer to the table at the beginning of this section for the inception dates of the Portfolio.
ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) AND THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2 10 Years or Since Variable Sub-Accounts 1 Year 5 Years Inception+ Aggressive Equity* -34.50% N/A -3.16% Capital Growth* -32.43% 5.24% 4.78% Competitive Edge* -29.54% N/A -9.93% Dividend Growth* -11.82% 4.01% 8.22% Equity* -32.99% 9.75% 10.00% European Growth* -24.04% 4.82% 11.40% Global Dividend Growth* -12.82% 2.81% 5.84% High Yield* -39.69% -17.08% -3.95% Income Builder* -4.46% N/A 3.74% Information* -48.57% N/A -47.75% Limited Duration* -0.16% N/A 1.10% Money Market* -2.92% 2.13% 2.00% Pacific Growth* -33.18% -17.65% -11.67% Quality Income Plus* 2.61% 4.10% 4.67% S&P 500 Index* -18.77% N/A -1.55% Strategist* -16.69% 6.08% 6.39% Utilities* -31.93% 3.37% 5.77% Morgan Stanley UIF Emerging Markets Equity -12.86% -6.01% -6.25% Morgan Stanley UIF Equity Growth -21.30% N/A 7.82% Morgan Stanley UIF International Magnum -25.39% N/A -2.20% Morgan Stanley UIF Mid Cap Growth -35.18% N/A -8.64% Morgan Stanley UIF Mid Cap Value -9.60% N/A 13.14% Morgan Stanley UIF U.S. Real Estate 3.11% N/A 4.94% Van Kampen LIT Comstock, Class II* -9.58% N/A 2.29% Van Kampen LIT Emerging Growth, Class I -37.32% 13.04% 14.85% Van Kampen LIT Emerging Growth, Class II* -37.48% 12.76% 14.57% AIM V.I. Capital Appreciation -29.29% 3.34% 9.26% AIM V.I. Growth -39.66% 1.24% 6.39% AIM V.I. Premier Equity -18.80% 6.99% 10.88% Alliance Growth* -29.64% 4.34% 11.18% Alliance Growth and Income* -6.36% 11.62% 12.08% Alliance Premier Growth* -23.53% 9.60% 12.84% LSA Aggressive Growth** N/A N/A -12.26% Putnam VT Growth and Income* -12.77% 5.25% 9.32% Putnam VT International Growth* -26.68% N/A 6.73% Putnam VT Small Cap Value 11.22% N/A 13.26% Putnam VT Voyager* -28.44% 7.23% 10.35% *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. Please refer to the table at the beginning of this section for the inception dates of the Portfolio. **Not annualized. +Please refer to the table at the beginning of this section for the inception dates of the Portfolio.
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 AMOUNT 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. EXPERTS - -------------------------------------------------------------------------------- The financial statements of Northbrook as of December 31, 2001 and 2000 and for each of the three years in the period ended December 31, 2001 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, 2001, 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. The principal business address of Deloitte & Touche LLP is, Two Prudential Plaza, 180 N. Stetson Avenue, Chicago, Illinois 60601. - ----------------------------------------------------------------------------- FINANCIAL STATEMENTS The financial statements of the Variable Account as of December 31, 2001 and for each of the periods in the two years then ended, as well as the financial statements of Northbrook as of December 31, 2001 and 2000 and for each of the three years in the period ended December 31, 2001 and related financial statement schedule and the accompanying Independent Auditors' Reports appear in the pages that follow. The financial statements Northbrook included herein should be considered only as bearing upon the ability of Northbrook to meet its obligations under the Contracts. APPENDIX A ACCUMULATION UNIT VALUES The Accumulation Unit Values reflecting the highest and lowest combination of Contract charges are contained in the prospectus. Attached as Appendix A to this SAI are tables showing the Accumulation Unit Values for all other classes of accumulation units available under the Contract. Accumulation Unit Values are shown since inception of the Variable Sub-Accounts or since the Contracts were first offered with the applicable Option(s), if later. All of the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, or Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations on May 1, 2002. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE PERFORMANCE DEATH BENEFIT OPTION
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares)) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.670 Accumulation Unit Value, End of Period $ 9.670 $ 6.801 Number of Units Outstanding, End of Period 383,413 454,677 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.694 Accumulation Unit Value, End of Period $ 9.694 $ 7.021 Number of Units Outstanding, End of Period 114,072 215,869 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 8.407 Accumulation Unit Value, End of Period $ 8.407 $ 6.334 Number of Units Outstanding, End of Period 181,032 227,577 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.675 Accumulation Unit Value, End of Period $10.675 $ 9.948 Number of Units Outstanding, End of Period 438,718 1,236,410 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.521 Accumulation Unit Value, End of Period $ 9.521 $ 6.841 Number of Units Outstanding, End of Period 1,035,141 1,706,161 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.183 Accumulation Unit Value, End of Period $ 9.183 $ 7.426 Number of Units Outstanding, End of Period 284,828 418,373 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.924 Accumulation Unit Value, End of Period $ 9.924 $ 9.147 Number of Units Outstanding, End of Period 73,926 176,270 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 6.939 Accumulation Unit Value, End of Period $ 6.939 $ 4.518 Number of Units Outstanding, End of Period 40,393 179,817 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.022 Accumulation Unit Value, End of Period $10.022 $10.082 Number of Units Outstanding, End of Period 17,095 108,292 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.290 Accumulation Unit Value, End of Period $ 9.290 $ 5.218 Number of Units Outstanding, End of Period 57,578 146,827 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.295 Accumulation Unit Value, End of Period $10.295 $10.802 Number of Units Outstanding, End of Period 32,340 200,505 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.254 Accumulation Unit Value, End of Period $10.254 $10.471 Number of Units Outstanding, End of Period 333,297 951,781 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.267 Accumulation Unit Value, End of Period $ 7.267 $ 5.208 Number of Units Outstanding, End of Period 12,627 26,055 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.741 Accumulation Unit Value, End of Period $10.741 $11.569 Number of Units Outstanding, End of Period 106,629 644,029 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 8.952 Accumulation Unit Value, End of Period $ 8.952 $ 7.715 Number of Units Outstanding, End of Period 424,465 ,051,174 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $ 9.915 Accumulation Unit Value, End of Period $ 9.915 $ 8.752 Number of Units Outstanding, End of Period 474,436 917,051 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.122 Accumulation Unit Value, End of Period $10.122 $ 7.381 Number of Units Outstanding, End of Period 377,975 647,789 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 6.381 Accumulation Unit Value, End of Period $ 6.381 $ 5.879 Number of Units Outstanding, End of Period 31,762 66,955 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.329 Accumulation Unit Value, End of Period $ 8.329 $ 6.966 Number of Units Outstanding, End of Period 441,371 657,405 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $ 9.047 Accumulation Unit Value, End of Period $ 9.047 $ 7.194 Number of Units Outstanding, End of Period 38,115 134,109 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.224 Accumulation Unit Value, End of Period $10.224 $ 9.755 Number of Units Outstanding, End of Period 88,818 432,708 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $11.494 Accumulation Unit Value, End of Period $11.494 $12.439 Number of Units Outstanding, End of Period 25,524 72,958 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 8.123 Accumulation Unit Value, End of Period $ 8.123 $ 5.483 Number of Units Outstanding, End of Period 788,781 840,217 - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period - $10.000 Accumulation Unit Value, End of Period - $ 8.099 Number of Units Outstanding, End of Period - 172,187 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 8.279 Accumulation Unit Value, End of Period $ 8.279 $ 6.257 Number of Units Outstanding, End of Period 255,570 334,318 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.394 Accumulation Unit Value, End of Period $ 7.394 $ 4.816 Number of Units Outstanding, End of Period 213,188 309,959 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 8.315 Accumulation Unit Value, End of Period $ 8.315 $ 7.163 Number of Units Outstanding, End of Period 473,796 920,110 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.994 Accumulation Unit Value, End of Period $ 7.994 $ 6.014 Number of Units Outstanding, End of Period 132,881 228,473 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.235 Accumulation Unit Value, End of Period $10.235 $10.099 Number of Units Outstanding, End of Period 146,820 1,033,578 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.973 Accumulation Unit Value, End of Period $ 7.973 $ 6.488 Number of Units Outstanding, End of Period 403,783 539,301 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 - ---------------------------------------------------------------------- ---- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.556 Accumulation Unit Value, End of Period $10.556 $ 9.735 Number of Units Outstanding, End of Period 73,293 285,053 - ----------------------------------------------------------------------- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.009 Accumulation Unit Value, End of Period $ 9.009 $ 7.046 Number of Units Outstanding, End of Period 267,159 434,350 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 8.111 Accumulation Unit Value, End of Period $ 8.111 $ 6.200 Number of Units Outstanding, End of Period 307,692 600,738 - ----------------------------------------------------------------------- *Contracts with the Performance Death Benefit Option were first offered under the Contracts on June 5, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation Unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.38% and an administrative expense charge of 0.10%.
ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE DEATH BENEFIT COMBINATION OPTION
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.664 Accumulation Unit Value, End of Period $ 9.664 $ 6.789 Number of Units Outstanding, End of Period 256,441 436,004 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.688 Accumulation Unit Value, End of Period $ 9.688 $ 7.009 Number of Units Outstanding, End of Period 54,484 97,903 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 8.402 Accumulation Unit Value, End of Period $ 8.402 $ 6.323 Number of Units Outstanding, End of Period 110,885 137,873 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.669 Accumulation Unit Value, End of Period $10.669 $ 9.930 Number of Units Outstanding, End of Period 279,490 994,366 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.515 Accumulation Unit Value, End of Period $ 9.515 $ 6.829 Number of Units Outstanding, End of Period 692,900 1,351,618 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.178 Accumulation Unit Value, End of Period $ 9.178 $ 7.414 Number of Units Outstanding, End of Period 222,221 359,098 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.918 Accumulation Unit Value, End of Period $ 9.918 $ 9.131 Number of Units Outstanding, End of Period 34,125 173,267 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 6.935 Accumulation Unit Value, End of Period $ 6.935 $ 4.510 Number of Units Outstanding, End of Period 139,820 213,247 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.016 Accumulation Unit Value, End of Period $10.016 $10.065 Number of Units Outstanding, End of Period 36,714 150,236 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.289 Accumulation Unit Value, End of Period $ 9.289 $ 5.211 Number of Units Outstanding, End of Period 26,108 170,133 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.289 Accumulation Unit Value, End of Period $10.289 $10.783 Number of Units Outstanding, End of Period 21,819 335,922 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.248 Accumulation Unit Value, End of Period $10.248 $10.453 Number of Units Outstanding, End of Period 322,690 1,095,666 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.262 Accumulation Unit Value, End of Period $ 7.262 $ 5.199 Number of Units Outstanding, End of Period 28,422 41,466 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.248 Accumulation Unit Value, End of Period $10.248 $11.549 Number of Units Outstanding, End of Period 83,975 821,947 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 8.946 Accumulation Unit Value, End of Period $ 8.946 $ 7.702 Number of Units Outstanding, End of Period 283,453 851,343 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $ 9.909 Accumulation Unit Value, End of Period $ 9.909 $ 8.837 Number of Units Outstanding, End of Period 456,525 932,911 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.116 Accumulation Unit Value, End of Period $10.116 $ 7.369 Number of Units Outstanding, End of Period 357,734 564,418 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.324 Accumulation Unit Value, End of Period $ 8.324 $ 6.954 Number of Units Outstanding, End of Period 301,548 431,332 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $ 9.041 Accumulation Unit Value, End of Period $ 9.041 $ 7.181 Number of Units Outstanding, End of Period 73,831 120,221 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.217 Accumulation Unit Value, End of Period $10.217 $ 9.739 Number of Units Outstanding, End of Period 98,471 484,236 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $11.487 Accumulation Unit Value, End of Period $11.487 $12.418 Number of Units Outstanding, End of Period 23,718 90,218 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 8.118 Accumulation Unit Value, End of Period $ 8.118 $ 5.473 Number of Units Outstanding, End of Period 663,700 845,177 - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period - $10.000 Accumulation Unit Value, End of Period - $ 8.094 Number of Units Outstanding, End of Period - 182,095 - -----------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 8.273 Accumulation Unit Value, End of Period $ 8.273 $ 6.247 Number of Units Outstanding, End of Period 146,236 267,191 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.389 Accumulation Unit Value, End of Period $ 7.389 $ 4.808 Number of Units Outstanding, End of Period 130,991 261,294 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 8.310 Accumulation Unit Value, End of Period $ 8.310 $ 7.151 Number of Units Outstanding, End of Period 345,205 940,100 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.989 Accumulation Unit Value, End of Period $ 7.989 $ 6.003 Number of Units Outstanding, End of Period 126,220 223,872 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.228 Accumulation Unit Value, End of Period $10.228 $10.081 Number of Units Outstanding, End of Period 139,161 1,024,922 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.968 Accumulation Unit Value, End of Period $ 7.968 $ 6.477 Number of Units Outstanding, End of Period 373,195 577,287 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.549 Accumulation Unit Value, End of Period $10.549 $ 9.718 Number of Units Outstanding, End of Period 59,847 313,375 - -----------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.003 Accumulation Unit Value, End of Period $ 9.003 $ 7.034 Number of Units Outstanding, End of Period 180,652 401,979 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 8.106 Accumulation Unit Value, End of Period $ 8.106 $ 6.189 Number of Units Outstanding, End of Period 292,798 570,627 - ----------------------------------------------------------------------- *Contracts with the Death Benefit Combination Option were first offered under the Contracts on June 5, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.49% and an administrative expense charge of 0.10%.
ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE INCOME BENEFIT COMBINATION OPTION 2
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.661 Accumulation Unit Value, End of Period $ 9.661 $ 6.783 Number of Units Outstanding, End of Period 42,754 174,685 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.685 Accumulation Unit Value, End of Period $ 9.685 $ 7.002 Number of Units Outstanding, End of Period 5,881 36,636 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 8.399 Accumulation Unit Value, End of Period $ 8.399 $ 6.317 Number of Units Outstanding, End of Period 29,414 52,850 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.665 Accumulation Unit Value, End of Period $10.665 $ 9.921 Number of Units Outstanding, End of Period 21,693 235,720 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.512 Accumulation Unit Value, End of Period $ 9.512 $ 6.823 Number of Units Outstanding, End of Period 85,912 365,394 - -----------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.175 Accumulation Unit Value, End of Period $ 9.175 $ 7.407 Number of Units Outstanding, End of Period 33,630 125,570 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.914 Accumulation Unit Value, End of Period $ 9.914 $ 9.123 Number of Units Outstanding, End of Period 725 71,662 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 6.933 Accumulation Unit Value, End of Period $ 6.933 $ 4.506 Number of Units Outstanding, End of Period 6,400 60,626 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.013 Accumulation Unit Value, End of Period $10.013 $10.055 Number of Units Outstanding, End of Period 0 37,712 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.288 Accumulation Unit Value, End of Period $ 9.288 $ 5.208 Number of Units Outstanding, End of Period 1,995 67,595 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.285 Accumulation Unit Value, End of Period $10.285 $10.773 Number of Units Outstanding, End of Period 8,832 139,644 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.244 Accumulation Unit Value, End of Period $10.244 $10.443 Number of Units Outstanding, End of Period 42,625 473,269 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.260 Accumulation Unit Value, End of Period $ 7.260 $ 5.194 Number of Units Outstanding, End of Period 2,401 9,287 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.730 Accumulation Unit Value, End of Period $10.730 $11.538 Number of Units Outstanding, End of Period 11,910 208,135 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 8.943 Accumulation Unit Value, End of Period $ 8.943 $ 7.694 Number of Units Outstanding, End of Period 18,563 314,650 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $ 9.905 Accumulation Unit Value, End of Period $ 9.905 $ 8.729 Number of Units Outstanding, End of Period 18,516 202,350
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.113 Accumulation Unit Value, End of Period $10.113 $ 7.362 Number of Units Outstanding, End of Period 14,072 113,013 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 6.375 Accumulation Unit Value, End of Period $ 6.375 $ 5.863 Number of Units Outstanding, End of Period 28,025 39,539 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.321 Accumulation Unit Value, End of Period $ 8.321 $ 6.947 Number of Units Outstanding, End of Period 28,025 66,571 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $ 9.038 Accumulation Unit Value, End of Period $ 9.038 $ 7.175 Number of Units Outstanding, End of Period 6,737 44,320 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.214 Accumulation Unit Value, End of Period $10.214 $ 9.729 Number of Units Outstanding, End of Period 13,153 289,059 - ---------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $11.483 Accumulation Unit Value, End of Period $11.483 $12.406 Number of Units Outstanding, End of Period 4,475 42,773 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 8.115 Accumulation Unit Value, End of Period $ 8.115 $ 5.468 Number of Units Outstanding, End of Period 196,257 281,050 - -----------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period - $10.000 Accumulation Unit Value, End of Period - $ 8.090 Number of Units Outstanding, End of Period - 219,730 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 8.271 Accumulation Unit Value, End of Period $ 8.271 $ 6.241 Number of Units Outstanding, End of Period 6,211 96,658 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.387 Accumulation Unit Value, End of Period $ 7.387 $ 4.803 Number of Units Outstanding, End of Period 9,309 42,720 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 8.307 Accumulation Unit Value, End of Period $ 8.307 $ 7.144 Number of Units Outstanding, End of Period 81,095 260,592 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.987 Accumulation Unit Value, End of Period $ 7.987 $ 5.997 Number of Units Outstanding, End of Period 8,756 104,686 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.225 Accumulation Unit Value, End of Period $10.225 $10.072 Number of Units Outstanding, End of Period 7,310 426,575 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.965 Accumulation Unit Value, End of Period $ 7.965 $ 6.471 Number of Units Outstanding, End of Period 30,555 141,332 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.546 Accumulation Unit Value, End of Period $10.546 $ 9.709 Number of Units Outstanding, End of Period 10,484 59,852 - -----------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.000 Accumulation Unit Value, End of Period $ 9.000 $ 7.028 Number of Units Outstanding, End of Period 23,069 229,523 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 8.103 Accumulation Unit Value, End of Period $ 8.103 $ 6.183 Number of Units Outstanding, End of Period 94,544 203,000 - -----------------------------------------------------------------------
*Contracts with the Income Benefit Combination Option 2 were first offered under the Contracts on June 5, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.55% and an administrative expense charge of 0.10%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.650 Accumulation Unit Value, End of Period $ 9.650 $ 6.762 Number of Units Outstanding, End of Period 469,487 1,061,789 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.674 Accumulation Unit Value, End of Period $ 9.674 $ 6.980 Number of Units Outstanding, End of Period 108,466 353,093 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 $ 8.390 Accumulation Unit Value, End of Period $ 8.390 $ 6.297 Number of Units Outstanding, End of Period 138,177 309,367 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $10.653 Accumulation Unit Value, End of Period $10.653 $ 9.890 Number of Units Outstanding, End of Period 271,910 1,578,584 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 9.501 Accumulation Unit Value, End of Period $ 9.501 $ 6.801 Number of Units Outstanding, End of Period 774,487 2,807,145 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.164 Accumulation Unit Value, End of Period $ 9.164 $ 7.383 Number of Units Outstanding, End of Period 366,996 1,088,233 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 9.903 Accumulation Unit Value, End of Period $ 9.903 $ 9.904 Number of Units Outstanding, End of Period 76,411 443,781 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 $ 6.925 Accumulation Unit Value, End of Period $ 6.925 $ 4.492 Number of Units Outstanding, End of Period 54,190 383,103 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 $10.001 Accumulation Unit Value, End of Period $10.001 $10.024 Number of Units Outstanding, End of Period 10,568 179,563 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 $ 9.285 Accumulation Unit Value, End of Period $ 9.285 $ 5.196 Number of Units Outstanding, End of Period 90,368 677,793 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 $10.274 Accumulation Unit Value, End of Period $10.274 $10.739 Number of Units Outstanding, End of Period 44,141 752,768 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 $10.233 Accumulation Unit Value, End of Period $10.233 $10.410 Number of Units Outstanding, End of Period 331,136 2,182,137 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.251 Accumulation Unit Value, End of Period $ 7.251 $ 5.177 Number of Units Outstanding, End of Period 44,446 131,984 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 $10.718 Accumulation Unit Value, End of Period $10.718 $11.502 Number of Units Outstanding, End of Period 71,637 1,097,215 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 $ 8.933 Accumulation Unit Value, End of Period $ 8.933 $ 7.670 Number of Units Outstanding, End of Period 349,739 2,012,604 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 $ 9.894 Accumulation Unit Value, End of Period $ 9.894 $ 8.702 Number of Units Outstanding, End of Period 927,640 1,542,063
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 $10.101 Accumulation Unit Value, End of Period $10.101 $ 7.339 Number of Units Outstanding, End of Period 262,820 833,046 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 6.368 Accumulation Unit Value, End of Period $ 6.368 $ 5.845 Number of Units Outstanding, End of Period 83,363 309,853 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.312 Accumulation Unit Value, End of Period $ 8.312 $ 6.926 Number of Units Outstanding, End of Period 289,749 583,460 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 $ 9.028 Accumulation Unit Value, End of Period $ 9.028 $ 7.152 Number of Units Outstanding, End of Period 64,366 243,882 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 $10.202 Accumulation Unit Value, End of Period $10.202 $ 9.699 Number of Units Outstanding, End of Period 169,809 1,402,322 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 $11.470 Accumulation Unit Value, End of Period $11.470 $12.367 Number of Units Outstanding, End of Period 24,307 284,418 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIF COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 $ 8.106 Accumulation Unit Value, End of Period $ 8.106 $ 5.451 Number of Units Outstanding, End of Period 1,125,425 2,276,631 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period - $10.000 Accumulation Unit Value, End of Period - $ 8.080 Number of Units Outstanding, End of Period - 1,087,677 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 $ 8.261 Accumulation Unit Value, End of Period $ 8.261 $ 6.221 Number of Units Outstanding, End of Period 149,322 879,656 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.379 Accumulation Unit Value, End of Period $ 7.379 $ 4.788 Number of Units Outstanding, End of Period 142,591 480,552 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 $ 8.298 Accumulation Unit Value, End of Period $ 8.298 $ 7.121 Number of Units Outstanding, End of Period 327,180 1,611,140 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.978 Accumulation Unit Value, End of Period $ 7.978 $ 5.979 Number of Units Outstanding, End of Period 95,260 528,503 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.213 Accumulation Unit Value, End of Period $10.213 $10.040 Number of Units Outstanding, End of Period 284,825 2,415,219 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 7.956 Accumulation Unit Value, End of Period $ 7.956 $ 6.450 Number of Units Outstanding, End of Period 438,221 1,128,214 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 $10.534 Accumulation Unit Value, End of Period $10.534 $ 9.679 Number of Units Outstanding, End of Period 87,345 539,368 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2000 2001 ---- ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 $ 8.990 Accumulation Unit Value, End of Period $ 8.990 $ 7.005 Number of Units Outstanding, End of Period 291,584 1,315,715 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - - Accumulation Unit Value, End of Period - - Number of Units Outstanding, End of Period - - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 $ 8.094 Accumulation Unit Value, End of Period $ 8.094 $ 6.164 Number of Units Outstanding, End of Period 409,032 1,324,888 - ----------------------------------------------------------------------- *Contracts with the Income and Death Benefit Combination Option 2 were first offered under the Contracts on June 5, 2000. The inception dates for the Variable Sub-Accounts are shown above the first table of Accumulation Unit Values on page A-1 above. The Accumulation unit Value for each of these Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.75% and an administrative expense charge of 0.10%.
ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE BASE CONTRACT WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75)
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.364 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.624 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.697 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.307 Number of Units Outstanding, End of Period 18,107 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.215 Number of Units Outstanding, End of Period 3,911 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.973 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.132 Number of Units Outstanding, End of Period 0 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.193 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.623 Number of Units Outstanding, End of Period 8,565 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.001 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.275 Number of Units Outstanding, End of Period 173 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.049 Number of Units Outstanding, End of Period 19,173 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.117 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.417 Number of Units Outstanding, End of Period 10,593 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.444 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.784 Number of Units Outstanding, End of Period 0 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.305 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.258 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.674 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.789 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.852 Number of Units Outstanding, End of Period 1,569 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.584 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.250 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.246 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.392 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.455 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.364 Number of Units Outstanding, End of Period 372 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.350 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.516 Number of Units Outstanding, End of Period 1,576 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.474 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.450 Number of Units Outstanding, End of Period 15,899 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.174 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.632 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- *Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.60%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED - WITH THE PERFORMANCE DEATH BENEFIT OPTION WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75) For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.175 Number of Units Outstanding, End of Period 3,973 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.815 Number of Units Outstanding, End of Period 745 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.694 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.301 Number of Units Outstanding, End of Period 16,151 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.208 Number of Units Outstanding, End of Period 22,051 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.545 Number of Units Outstanding, End of Period 10,888 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.675 Number of Units Outstanding, End of Period 4,517 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 7.710 Number of Units Outstanding, End of Period 12,775 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.783 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.998 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.042 Number of Units Outstanding, End of Period 3,050 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.115 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.409 Number of Units Outstanding, End of Period 2,021 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.110 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.438 Number of Units Outstanding, End of Period 9,096 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.522 Number of Units Outstanding, End of Period 16,619 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.299 Number of Units Outstanding, End of Period 1,366 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.256 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.623 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.787 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.846 Number of Units Outstanding, End of Period 5,928 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.581 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.770 Number of Units Outstanding, End of Period 3,377 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.757 Number of Units Outstanding, End of Period 3,870 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.224 Number of Units Outstanding, End of Period 2,269 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.452 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.357 Number of Units Outstanding, End of Period 8,347 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.119 Number of Units Outstanding, End of Period 535 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.509 Number of Units Outstanding, End of Period 15,351 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.307 Number of Units Outstanding, End of Period 8,555 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.443 Number of Units Outstanding, End of Period 835 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.168 Number of Units Outstanding, End of Period 6,531 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.105 Number of Units Outstanding, End of Period 11,986 - ----------------------------------------------------------------------- *Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.73%.
ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED - WITH THE DEATH BENEFIT COMBINATION OPTION WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75)
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.169 Number of Units Outstanding, End of Period 1,807 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.810 Number of Units Outstanding, End of Period 1,850 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.961 Number of Units Outstanding, End of Period 248 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.295 Number of Units Outstanding, End of Period 51,343 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.203 Number of Units Outstanding, End of Period 13,092 - -----------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.539 Number of Units Outstanding, End of Period 2,806 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.669 Number of Units Outstanding, End of Period 7,554 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 7.705 Number of Units Outstanding, End of Period 16,540 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.611 Number of Units Outstanding, End of Period 5,853 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.918 Number of Units Outstanding, End of Period 12,144 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.036 Number of Units Outstanding, End of Period 31,775 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.152 Number of Units Outstanding, End of Period 224 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.403 Number of Units Outstanding, End of Period 55,102 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.262 Number of Units Outstanding, End of Period 3,574 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.432 Number of Units Outstanding, End of Period 38,678 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.517 Number of Units Outstanding, End of Period 26,727 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.294 Number of Units Outstanding, End of Period 7,285 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.749 Number of Units Outstanding, End of Period 261 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.617 Number of Units Outstanding, End of Period 14,722 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.082 Number of Units Outstanding, End of Period 14,303 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.840 Number of Units Outstanding, End of Period 14,911 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.239 Number of Units Outstanding, End of Period 8,679 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.765 Number of Units Outstanding, End of Period 853 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.752 Number of Units Outstanding, End of Period 14,002 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.219 Number of Units Outstanding, End of Period 5,605 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.816 Number of Units Outstanding, End of Period 1,504 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.352 Number of Units Outstanding, End of Period 5,156 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.114 Number of Units Outstanding, End of Period 885 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.504 Number of Units Outstanding, End of Period 35,106 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.301 Number of Units Outstanding, End of Period 8,463 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.437 Number of Units Outstanding, End of Period 15,121 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.162 Number of Units Outstanding, End of Period 7,318 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.100 Number of Units Outstanding, End of Period 6,656 - -----------------------------------------------------------------------
*Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.84%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED - WITH THE INCOME BENEFIT COMBINATION OPTION 2 WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 66-75)
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares)) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.116 Number of Units Outstanding, End of Period 748 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.619 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.691 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.292 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.176 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.536 Number of Units Outstanding, End of Period 441 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.127 Number of Units Outstanding, End of Period 0 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.188 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.780 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.996 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.033 Number of Units Outstanding, End of Period 7,315 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $9.112 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.400 Number of Units Outstanding, End of Period 2,112 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.107 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.778 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.778 Number of Units Outstanding, End of Period 0 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.292 Number of Units Outstanding, End of Period 328 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.253 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.669 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.784 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.837 Number of Units Outstanding, End of Period 577 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.578 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.244 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.241 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (SERIES I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.387 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.449 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.620 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.344 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.829 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.469 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS IB SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.886 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.702 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.097 Number of Units Outstanding, End of Period 602 - ----------------------------------------------------------------------- *Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.90%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE BASE CONTRACT WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 55 AND LESS) For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.191 Number of Units Outstanding, End of Period 2,706 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.628 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.982 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.317 Number of Units Outstanding, End of Period 1,011 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.225 Number of Units Outstanding, End of Period 4,427 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.976 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.136 Number of Units Outstanding, End of Period 0 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.196 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.789 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.004 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.116 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.060 Number of Units Outstanding, End of Period 45,369 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.120 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.428 Number of Units Outstanding, End of Period 1,996 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.455 Number of Units Outstanding, End of Period 1,990 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.787 Number of Units Outstanding, End of Period 0
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.314 Number of Units Outstanding, End of Period 1,019 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.772 Number of Units Outstanding, End of Period 793 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.678 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.793 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.863 Number of Units Outstanding, End of Period 276 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.263 Number of Units Outstanding, End of Period 1,620 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.253 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.773 Number of Units Outstanding, End of Period 2,245 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.240 Number of Units Outstanding, End of Period 293 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.458 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.374 Number of Units Outstanding, End of Period 2,146 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.353 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.526 Number of Units Outstanding, End of Period 2,580 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.323 Number of Units Outstanding, End of Period 7,034 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.895 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.184 Number of Units Outstanding, End of Period 5,772 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.121 Number of Units Outstanding, End of Period 285 - -----------------------------------------------------------------------
*Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.40%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 55 AND LESS) AND THE PERFORMANCE DEATH BENEFIT OPTION
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.185 Number of Units Outstanding, End of Period 856 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.824 Number of Units Outstanding, End of Period 263 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.698 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.311 Number of Units Outstanding, End of Period 7,536 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.218 Number of Units Outstanding, End of Period 7,275 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.556 Number of Units Outstanding, End of Period 1,140 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.685 Number of Units Outstanding, End of Period 1,632 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 7.718 Number of Units Outstanding, End of Period 439 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.627 Number of Units Outstanding, End of Period 829 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.933 Number of Units Outstanding, End of Period 443 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.279 Number of Units Outstanding, End of Period 121 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.053 Number of Units Outstanding, End of Period 20,406 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.118 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.421 Number of Units Outstanding, End of Period 943 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.448 Number of Units Outstanding, End of Period 12,846 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.532 Number of Units Outstanding, End of Period 7,962
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.308 Number of Units Outstanding, End of Period 2,204 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.766 Number of Units Outstanding, End of Period 1,106 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.633 Number of Units Outstanding, End of Period 1,842 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.791 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.856 Number of Units Outstanding, End of Period 5,648 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.256 Number of Units Outstanding, End of Period 726 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.780 Number of Units Outstanding, End of Period 1,647 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.767 Number of Units Outstanding, End of Period 3,477 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.234 Number of Units Outstanding, End of Period 423 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.831 Number of Units Outstanding, End of Period 429 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.367 Number of Units Outstanding, End of Period 4,442 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.129 Number of Units Outstanding, End of Period 1,019 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 0.520 Number of Units Outstanding, End of Period 4,775 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.317 Number of Units Outstanding, End of Period 3,831 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.453 Number of Units Outstanding, End of Period 4,403 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.178 Number of Units Outstanding, End of Period 2,107 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.115 Number of Units Outstanding, End of Period 2,670 - -----------------------------------------------------------------------
*Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.53%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 55 AND LESS) AND THE DEATH BENEFIT COMBINATION OPTION
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.179 Number of Units Outstanding, End of Period 992 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.819 Number of Units Outstanding, End of Period 654 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.970 Number of Units Outstanding, End of Period 1,956 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.305 Number of Units Outstanding, End of Period 14,817 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.213 Number of Units Outstanding, End of Period 8,540 - -----------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.549 Number of Units Outstanding, End of Period 2,347 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.680 Number of Units Outstanding, End of Period 3,229 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 7.713 Number of Units Outstanding, End of Period 820 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.621 Number of Units Outstanding, End of Period 6,066 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.928 Number of Units Outstanding, End of Period 1,198 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.273 Number of Units Outstanding, End of Period 11,499 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.047 Number of Units Outstanding, End of Period 8,001 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.160 Number of Units Outstanding, End of Period 3,000 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.415 Number of Units Outstanding, End of Period 9,489 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.442 Number of Units Outstanding, End of Period 13,404 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.527 Number of Units Outstanding, End of Period 8,726 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.303 Number of Units Outstanding, End of Period 5,707 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.257 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.628 Number of Units Outstanding, End of Period 4,732 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.092 Number of Units Outstanding, End of Period 1,647 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.850 Number of Units Outstanding, End of Period 18,147 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.250 Number of Units Outstanding, End of Period 2,377 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.774 Number of Units Outstanding, End of Period 1,555 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.761 Number of Units Outstanding, End of Period 12,321 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.229 Number of Units Outstanding, End of Period 6,576 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.826 Number of Units Outstanding, End of Period 3,518 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.362 Number of Units Outstanding, End of Period 5,896 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.124 Number of Units Outstanding, End of Period 100 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.514 Number of Units Outstanding, End of Period 14,176 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.311 Number of Units Outstanding, End of Period 7,953 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.447 Number of Units Outstanding, End of Period 30 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.172 Number of Units Outstanding, End of Period 1,426 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.110 Number of Units Outstanding, End of Period 6,514 - -----------------------------------------------------------------------
*Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.64%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 55 AND LESS) AND THE INCOME BENEFIT COMBINATION OPTION 2
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.176 Number of Units Outstanding, End of Period 1,791 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.622 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.968 Number of Units Outstanding, End of Period 268 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.302 Number of Units Outstanding, End of Period 7,116 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.210 Number of Units Outstanding, End of Period 4,944 - -----------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.546 Number of Units Outstanding, End of Period 1,959 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.677 Number of Units Outstanding, End of Period 885 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 7.711 Number of Units Outstanding, End of Period 2,141 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.618 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.925 Number of Units Outstanding, End of Period 581 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.269 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.027 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.115 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.411 Number of Units Outstanding, End of Period 231 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.439 Number of Units Outstanding, End of Period 2,487 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.524 Number of Units Outstanding, End of Period 1,931 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.388 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.757 Number of Units Outstanding, End of Period 275 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.672 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.089 Number of Units Outstanding, End of Period 849 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.847 Number of Units Outstanding, End of Period 6,589 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.247 Number of Units Outstanding, End of Period 2,225 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.248 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.759 Number of Units Outstanding, End of Period 6,150 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.226 Number of Units Outstanding, End of Period 2,227 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.823 Number of Units Outstanding, End of Period 1,892 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.359 Number of Units Outstanding, End of Period 3,186 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.348 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.511 Number of Units Outstanding, End of Period 5,378 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.308 Number of Units Outstanding, End of Period 918 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.444 Number of Units Outstanding, End of Period 151 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.169 Number of Units Outstanding, End of Period 2,608 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.107 Number of Units Outstanding, End of Period 1,593 - -----------------------------------------------------------------------
*Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.70%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 55 AND LESS) AND THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.166 Number of Units Outstanding, End of Period 37,994 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.807 Number of Units Outstanding, End of Period 14,175 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.958 Number of Units Outstanding, End of Period 11,212 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.292 Number of Units Outstanding, End of Period 102,358 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.200 Number of Units Outstanding, End of Period 122,908 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.536 Number of Units Outstanding, End of Period 54,700 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.666 Number of Units Outstanding, End of Period 42,603 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 7.702 Number of Units Outstanding, End of Period 27,974 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.608 Number of Units Outstanding, End of Period 14,674 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.915 Number of Units Outstanding, End of Period 18,053 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.258 Number of Units Outstanding, End of Period 45,215 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.033 Number of Units Outstanding, End of Period 93,551 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.149 Number of Units Outstanding, End of Period 23,444 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.400 Number of Units Outstanding, End of Period 143,420 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.429 Number of Units Outstanding, End of Period 88,645 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.513 Number of Units Outstanding, End of Period 73,693 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.292 Number of Units Outstanding, End of Period 42,821 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.746 Number of Units Outstanding, End of Period 10,220 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.614 Number of Units Outstanding, End of Period 14,404 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.079 Number of Units Outstanding, End of Period 10,515 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.837 Number of Units Outstanding, End of Period 106,457 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.236 Number of Units Outstanding, End of Period 24,019 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.762 Number of Units Outstanding, End of Period 3,800 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.749 Number of Units Outstanding, End of Period 94,621 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.216 Number of Units Outstanding, End of Period 67,153 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.814 Number of Units Outstanding, End of Period 31,363 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.349 Number of Units Outstanding, End of Period 85,279 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.111 Number of Units Outstanding, End of Period 12,882 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.501 Number of Units Outstanding, End of Period 141,748 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.298 Number of Units Outstanding, End of Period 50,766 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.434 Number of Units Outstanding, End of Period 35,301 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.159 Number of Units Outstanding, End of Period 63,280 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.097 Number of Units Outstanding, End of Period 71,449 - ----------------------------------------------------------------------- *Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.90%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE BASE CONTRACT WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 56-65) For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.186 Number of Units Outstanding, End of Period 149 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.626 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.698 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.312 Number of Units Outstanding, End of Period 10,910 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.182 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.974 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.134 Number of Units Outstanding, End of Period 0 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.195 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.628 Number of Units Outstanding, End of Period 1,438 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.002 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.280 Number of Units Outstanding, End of Period 1,488 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.031 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.119 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.422 Number of Units Outstanding, End of Period 1,612 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.449 Number of Units Outstanding, End of Period 8,443 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.534 Number of Units Outstanding, End of Period 146 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.309 Number of Units Outstanding, End of Period 912 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.259 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.676 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.791 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.858 Number of Units Outstanding, End of Period 2,378 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.586 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.251 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.768 Number of Units Outstanding, End of Period 46 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.235 Number of Units Outstanding, End of Period 1,127 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.456 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.369 Number of Units Outstanding, End of Period 3,520 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.351 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.521 Number of Units Outstanding, End of Period 1,942 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.318 Number of Units Outstanding, End of Period 3,489 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.455 Number of Units Outstanding, End of Period 783 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.709 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.116 Number of Units Outstanding, End of Period 545 - ----------------------------------------------------------------------- *Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.50%.
ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 56-65) AND THE PERFORMANCE DEATH BENEFIT OPTION
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.180 Number of Units Outstanding, End of Period 533 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.624 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.696 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.306 Number of Units Outstanding, End of Period 14,854 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.213 Number of Units Outstanding, End of Period 9,231 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.550 Number of Units Outstanding, End of Period 6,146 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.680 Number of Units Outstanding, End of Period 2,610 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 7.714 Number of Units Outstanding, End of Period 1,265 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.621 Number of Units Outstanding, End of Period 2,103 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.928 Number of Units Outstanding, End of Period 231 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.273 Number of Units Outstanding, End of Period 10,406 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.048 Number of Units Outstanding, End of Period 11,116 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.116 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.415 Number of Units Outstanding, End of Period 7,023 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.443 Number of Units Outstanding, End of Period 6,089 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.527 Number of Units Outstanding, End of Period 4,929
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.304 Number of Units Outstanding, End of Period 5,804 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.760 Number of Units Outstanding, End of Period 803 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.628 Number of Units Outstanding, End of Period 351 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.092 Number of Units Outstanding, End of Period 322 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.851 Number of Units Outstanding, End of Period 22,642 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.250 Number of Units Outstanding, End of Period 1,180 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.249 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.762 Number of Units Outstanding, End of Period 10,081 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.229 Number of Units Outstanding, End of Period 7,038 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.826 Number of Units Outstanding, End of Period 4,355 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.362 Number of Units Outstanding, End of Period 12,654 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.124 Number of Units Outstanding, End of Period 1,651 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.514 Number of Units Outstanding, End of Period 10,661 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.312 Number of Units Outstanding, End of Period 8,414 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.448 Number of Units Outstanding, End of Period 909 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.173 Number of Units Outstanding, End of Period 7,069 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.110 Number of Units Outstanding, End of Period 7,712 - -----------------------------------------------------------------------
*Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.63%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 56-65) AND THE DEATH BENEFIT COMBINATION OPTION
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.174 Number of Units Outstanding, End of Period 5,184 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.622 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.966 Number of Units Outstanding, End of Period 1,368 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.300 Number of Units Outstanding, End of Period 16,542 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.208 Number of Units Outstanding, End of Period 8,290 - -----------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.544 Number of Units Outstanding, End of Period 2,088 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.675 Number of Units Outstanding, End of Period 1,394 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 7.709 Number of Units Outstanding, End of Period 1,226 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.616 Number of Units Outstanding, End of Period 6,298 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.923 Number of Units Outstanding, End of Period 1,308 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.267 Number of Units Outstanding, End of Period 14,958 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.042 Number of Units Outstanding, End of Period 62,503 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.115 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10,409 Number of Units Outstanding, End of Period 17,399 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.437 Number of Units Outstanding, End of Period 5,933 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.522 Number of Units Outstanding, End of Period 7,403 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.299 Number of Units Outstanding, End of Period 2,364 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.255 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.623 Number of Units Outstanding, End of Period 605 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.087 Number of Units Outstanding, End of Period 2,449 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.845 Number of Units Outstanding, End of Period 13,669 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.244 Number of Units Outstanding, End of Period 5,124 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.770 Number of Units Outstanding, End of Period 1,154 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.757 Number of Units Outstanding, End of Period 4,181 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.224 Number of Units Outstanding, End of Period 4,010 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.821 Number of Units Outstanding, End of Period 2,236 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.357 Number of Units Outstanding, End of Period 8,413 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.119 Number of Units Outstanding, End of Period 830 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.509 Number of Units Outstanding, End of Period 40,349 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.306 Number of Units Outstanding, End of Period 3,186 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.442 Number of Units Outstanding, End of Period 3,685 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.167 Number of Units Outstanding, End of Period 4,725 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.105 Number of Units Outstanding, End of Period 15,362 - -----------------------------------------------------------------------
*Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.74%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 56-65) AND THE INCOME BENEFIT COMBINATION OPTION 2
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.360 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.621 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $9.693 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.297 Number of Units Outstanding, End of Period 584 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.205 Number of Units Outstanding, End of Period 591 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.969 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.129 Number of Units Outstanding, End of Period 0 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.190 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.782 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.997 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.264 Number of Units Outstanding, End of Period 1,946 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.038 Number of Units Outstanding, End of Period 598 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.114 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.406 Number of Units Outstanding, End of Period 4,834 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.434 Number of Units Outstanding, End of Period 382 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.519 Number of Units Outstanding, End of Period 1,516
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.386 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.254 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.671 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.084 Number of Units Outstanding, End of Period 200 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.969 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.580 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.246 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.754 Number of Units Outstanding, End of Period 1,424 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.388 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.451 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.354 Number of Units Outstanding, End of Period 1,137 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.346 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.506 Number of Units Outstanding, End of Period 2,764 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.471 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.439 Number of Units Outstanding, End of Period 3,504 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.704 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.628 Number of Units Outstanding, End of Period 0 - -----------------------------------------------------------------------
*Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 1.80%. ACCUMULATION UNIT VALUES AND NUMBER OF ACCUMULATION UNITS OUTSTANDING FOR EACH SUB-ACCOUNT SINCE CONTRACTS WERE FIRST OFFERED WITH THE ENHANCED EARNINGS DEATH BENEFIT PLUS OPTION (AGE 56-65) AND THE INCOME AND DEATH BENEFIT COMBINATION OPTION 2
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- MORGAN STANLEY VARIABLE INVESTMENT SERIES (Class Y Shares) AGGRESSIVE EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.162 Number of Units Outstanding, End of Period 32,523 - ----------------------------------------------------------------------- CAPITAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.802 Number of Units Outstanding, End of Period 10,675 - ----------------------------------------------------------------------- COMPETITIVE EDGE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.953 Number of Units Outstanding, End of Period 4,005 - ----------------------------------------------------------------------- DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.287 Number of Units Outstanding, End of Period 107,106 - ----------------------------------------------------------------------- EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.195 Number of Units Outstanding, End of Period 82,118 - -----------------------------------------------------------------------
For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- EUROPEAN GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.531 Number of Units Outstanding, End of Period 19,588 - ----------------------------------------------------------------------- GLOBAL DIVIDEND GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.661 Number of Units Outstanding, End of Period 14,265 - ---------------------------------------------------------------------- HIGH YIELD Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 7.698 Number of Units Outstanding, End of Period 13,004 - ----------------------------------------------------------------------- INCOME BUILDER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.602 Number of Units Outstanding, End of Period 19,518 - ----------------------------------------------------------------------- INFORMATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.911 Number of Units Outstanding, End of Period 8,484 - ----------------------------------------------------------------------- LIMITED DURATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.253 Number of Units Outstanding, End of Period 62,636 - ----------------------------------------------------------------------- MONEY MARKET Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.028 Number of Units Outstanding, End of Period 140,953 - ----------------------------------------------------------------------- PACIFIC GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.145 Number of Units Outstanding, End of Period 3,092 - ----------------------------------------------------------------------- QUALITY INCOME PLUS Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.394 Number of Units Outstanding, End of Period 74,643 - ----------------------------------------------------------------------- S&P 500 INDEX Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.424 Number of Units Outstanding, End of Period 88,849 - ----------------------------------------------------------------------- STRATEGIST Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.508 Number of Units Outstanding, End of Period 55,765 For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- UTILITIES Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.287 Number of Units Outstanding, End of Period 45,946 - ----------------------------------------------------------------------- THE UNIVERSAL INSTITUTIONAL FUNDS, INC. MORGAN STANLEY UIF EMERGING MARKETS EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.741 Number of Units Outstanding, End of Period 9,160 - ----------------------------------------------------------------------- MORGAN STANLEY UIF EQUITY GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.609 Number of Units Outstanding, End of Period 17,703 - ----------------------------------------------------------------------- MORGAN STANLEY UIF INTERNATIONAL MAGNUM Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.074 Number of Units Outstanding, End of Period 7,499 - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- MORGAN STANLEY UIF MID CAP VALUE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.831 Number of Units Outstanding, End of Period 128,931 - ----------------------------------------------------------------------- MORGAN STANLEY UIF U.S. REAL ESTATE Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $10.230 Number of Units Outstanding, End of Period 22,121 - ----------------------------------------------------------------------- VAN KAMPEN LIFE INVESTMENT TRUST (Class I and II Shares) VAN KAMPEN LIT COMSTOCK, CLASS II Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- VAN KAMPEN LIT EMERGING GROWTH, CLASS I Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.243 Number of Units Outstanding, End of Period 0 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- VAN KAMPEN LIT EMERGING GROWTH, CLASS II Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.744 Number of Units Outstanding, End of Period 97,388 - ----------------------------------------------------------------------- AIM VARIABLE INSURANCE FUNDS (Series I) AIM V.I. CAPITAL APPRECIATION Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.211 Number of Units Outstanding, End of Period 61,095 - ----------------------------------------------------------------------- AIM V.I. GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 8.809 Number of Units Outstanding, End of Period 22,137 - ----------------------------------------------------------------------- AIM V.I. PREMIER EQUITY Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.344 Number of Units Outstanding, End of Period 103,232 - ----------------------------------------------------------------------- ALLIANCE VARIABLE PRODUCTS SERIES FUND (Class B) ALLIANCE GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.106 Number of Units Outstanding, End of Period 28,772 - ----------------------------------------------------------------------- ALLIANCE GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.496 Number of Units Outstanding, End of Period 160,636 - ----------------------------------------------------------------------- ALLIANCE PREMIER GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.293 Number of Units Outstanding, End of Period 19,553 - ----------------------------------------------------------------------- LSA VARIABLE SERIES TRUST LSA AGGRESSIVE GROWTH Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VARIABLE TRUSTS (CLASS 1B SHARES) PUTNAM VT GROWTH AND INCOME Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.429 Number of Units Outstanding, End of Period 23,372 - ----------------------------------------------------------------------- For the Period Beginning January 1* and Ending December 31, VARIABLE SUB-ACCOUNT 2001 ---- PUTNAM VT INTERNATIONAL GROWTH Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.155 Number of Units Outstanding, End of Period 34,549 - ----------------------------------------------------------------------- PUTNAM VT SMALL CAP VALUE Accumulation Unit Value, Beginning of Period - Accumulation Unit Value, End of Period - Number of Units Outstanding, End of Period - - ----------------------------------------------------------------------- PUTNAM VT VOYAGER Accumulation Unit Value, Beginning of Period $10.000 Accumulation Unit Value, End of Period $ 9.092 Number of Units Outstanding, End of Period 40,982 - -----------------------------------------------------------------------
*Contracts with the Enhanced Earnings Death Benefit Plus Option were first offered on May 1, 2001. All the Variable Sub-Accounts were first offered under the Contracts on June 5, 2000 except for the Information Sub-Account which commenced operations on November 6, 2000, and the Van Kampen LIT Emerging Growth (Class II) Variable Sub-Account which commenced operations on May 17, 2001, and the Morgan Stanley UIF Mid Cap Growth, Van Kampen LIT Comstock (Class II), LSA Aggressive Growth, and Putnam VT Small Cap Value Variable Sub-Accounts which commenced operations as of the date of this prospectus. The Accumulation Unit Value for each of the Variable Sub-Accounts was initially set at $10.00. The Accumulation Unit Values in this table reflect a mortality and expense risk charge of 2.00%. 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, 2001 and 2000, 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, 2001. 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, 2001 and 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2001 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 20, 2002 F-1 NORTHBROOK LIFE INSURANCE COMPANY STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
YEAR ENDED DECEMBER 31, ------------------------------ 2001 2000 1999 -------- -------- -------- (IN THOUSANDS) REVENUES Net investment income..................................... $6,098 $6,802 $6,010 Realized capital gains and losses......................... 95 (230) 510 ------ ------ ------ INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE............ 6,193 6,572 6,520 Income Tax Expense.......................................... 2,159 2,293 2,264 ------ ------ ------ NET INCOME.................................................. 4,034 4,279 4,256 ------ ------ ------ OTHER COMPREHENSIVE INCOME (LOSS), AFTER-TAX Change in unrealized net capital gains and losses......... 1,181 2,663 (4,802) ------ ------ ------ COMPREHENSIVE INCOME (LOSS)................................. $5,215 $6,942 $ (546) ====== ====== ======
See notes to financial statements. F-2 NORTHBROOK LIFE INSURANCE COMPANY STATEMENTS OF FINANCIAL POSITION
DECEMBER 31, ------------------------- 2001 2000 ----------- ----------- (IN THOUSANDS, EXCEPT PAR VALUE DATA) ASSETS Investments Fixed income securities, at fair value (amortized cost $88,263 and $91,141)..................................... $ 91,969 $ 93,030 Short-term................................................ 5,746 3,859 ---------- ---------- Total investments......................................... 97,715 96,889 Receivable from affiliates, net............................. 202 -- Reinsurance recoverable from Allstate Life Insurance Company................................................... 2,046,987 1,975,150 Other assets................................................ 2,561 4,817 Separate Accounts........................................... 6,236,902 7,614,673 ---------- ---------- TOTAL ASSETS.......................................... $8,384,367 $9,691,529 ========== ========== LIABILITIES Contractholder funds........................................ $1,896,647 $1,826,062 Reserve for life-contingent contract benefits............... 150,349 149,111 Current income taxes payable................................ 2,057 2,078 Deferred income taxes....................................... 2,994 2,279 Payable to affiliates, net.................................. -- 7,123 Separate Accounts........................................... 6,236,902 7,614,673 ---------- ---------- TOTAL LIABILITIES..................................... 8,288,949 9,601,326 ---------- ---------- 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............................................. 33,909 29,875 Accumulated other comprehensive income: Unrealized net capital gains and losses................... 2,409 1,228 ---------- ---------- Total accumulated other comprehensive income.......... 2,409 1,228 ---------- ---------- TOTAL SHAREHOLDER'S EQUITY............................ 95,418 90,203 ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY............ $8,384,367 $9,691,529 ========== ==========
See notes to financial statements. F-3 NORTHBROOK LIFE INSURANCE COMPANY STATEMENTS OF SHAREHOLDER'S EQUITY
YEAR ENDED DECEMBER 31, ------------------------------ 2001 2000 1999 -------- -------- -------- (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.................................. 29,875 29,596 25,340 Net income.................................................. 4,034 4,279 4,256 Dividends................................................... -- (4,000) -- ------- ------- ------- Balance, end of year........................................ 33,909 29,875 29,596 ------- ------- ------- ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Balance, beginning of year.................................. 1,228 (1,435) 3,367 Change in unrealized net capital gains and losses........... 1,181 2,663 (4,802) ------- ------- ------- Balance, end of year........................................ 2,409 1,228 (1,435) ------- ------- ------- TOTAL SHAREHOLDER'S EQUITY.............................. $95,418 $90,203 $87,261 ======= ======= =======
See notes to financial statements. F-4 NORTHBROOK LIFE INSURANCE COMPANY STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31, ------------------------------ 2001 2000 1999 -------- -------- -------- (IN THOUSANDS) CASH FLOWS FROM OPERATING ACTIVITIES Net income.................................................. $ 4,034 $ 4,279 $ 4,256 Adjustments to reconcile net income to net cash (used in) provided by operating activities: Amortization and other non-cash items................... 684 756 559 Realized capital gains and losses....................... (95) 230 (510) Changes in: Life-contingent contract benefits and contractholder funds................................................ (14) 5 (68) Income taxes payable.................................. 58 7 355 Payable to affiliates................................. (7,325) 1,133 (596) Other operating assets and liabilities................ 1,432 (31) 1,520 -------- -------- -------- Net cash (used in) provided by operating activities..... (1,226) 6,379 5,516 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES Fixed income securities Proceeds from sales....................................... 13,493 6,780 17,992 Investment collections.................................... 4,317 2,933 6,555 Investments purchases..................................... (14,697) (11,561) (32,050) Change in short-term investments, net..................... (1,887) (552) 2,008 -------- -------- -------- Net cash provided by (used in) investing activities..... 1,226 (2,400) (5,495) -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid.............................................. -- (4,000) -- -------- -------- -------- Net cash used in financing activities................... -- (4,000) -- -------- -------- -------- NET (DECREASE) INCREASE IN CASH............................. -- (21) 21 CASH AT 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 - ------------------------------------------------------------------- 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 ("GAAP"). To conform with the 2001 presentation, certain amounts in the prior years' financial statements and notes have been reclassified. NATURE OF OPERATIONS The Company markets a diversified group of products to meet consumer's lifetime needs in the area of protection and retirement solutions exclusively through Morgan Stanley DW, Inc., ("MSDW") (see Note 4), a wholly owned subsidiary of Morgan Stanley Dean Witter & Co. Northbrook Life Insurance Company's products include interest-sensitive life, including single premium life and variable life; fixed annuities including market value adjusted annuities; immediate annuities; and variable annuities. In 2001, substantially all of the Company's statutory premiums and deposits were from annuities. Statutory premiums and deposits is a measure used by management to analyze sales trends. Statutory premiums and deposits includes premiums and annuity considerations determined in conformity with statutory accounting practices prescribed or permitted by the insurance regulatory authorities of the state of Arizona, and all other funds received from customers on deposit-type products which are treated as liabilities. The statutory accounting practices differ in certain, material aspects from GAAP. 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 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, under current U.S. tax law and regulations, deferred and immediate annuities and life insurance, including interest-sensitive products, receive favorable policyholder tax treatment. Any legislative or regulatory changes that adversely alter this treatment are likely to negatively affect the demand for these products. In addition, recent changes in the federal estate tax laws will affect the demand for the types of life insurance used in estate planning. 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, 2001. No other jurisdiction accounted for more than 5% of statutory premiums and deposits. 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 fair value of exchange traded fixed income securities are based upon quoted market prices or dealer quotes. The fair value of non-exchange traded fixed income securities is based on either independent third party pricing sources or widely accepted pricing valuation models which utilize internally developed ratings and independent third party data as inputs. The difference between amortized cost and fair value, net of deferred income taxes, is reflected as a component of Accumulated other comprehensive income. 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. F-6 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------- Realized capital gains and losses are determined on a specific identification basis. They include gains and losses on portfolio trading and write-downs in value due to other than temporary declines in fair value. The Company monitors its fixed income portfolios for ratings changes or other events that may result in declines in value that are other than temporary. Factors considered in evaluating whether a decline in fair value is other than temporary are: 1) the Company's ability and intent to retain the investment for a period of time sufficient to allow for an anticipated recovery in value; 2) the duration for and extent to which the fair value has been less than cost; and 3) the financial condition and near-term prospects of the issuer. 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. Reinsurance does not extinguish the Company's primary liability under the policies written and therefore reinsurers and amounts recoverable are regularly evaluated by the Company. 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 terms of reinsurance agreements. RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS AND INTEREST CREDITED Immediate annuities with life contingencies, including certain structured settlement annuities, provide insurance protection over a period that extends beyond the period in which premiums are collected. Gross premiums in excess of the net premium on immediate annuities with life contingencies are deferred and recognized over the contract period. Contract benefits are recognized in relation to such revenues so as to result in the recognition of profits over the life of the policy. Interest-sensitive life contracts, such as single premium life, 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 charges consist of fees assessed against the contractholder account balance for the cost of insurance (mortality risk), contract administration and surrender charges. These revenues are recognized when levied against the contract balance. Contract benefits include life- contingent benefit payments in excess of the reserves held. Contracts that do not subject the Company to significant risk arising from mortality or morbidity are referred to as investment contracts. Fixed 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 charges for investment contracts consist of fees assessed against the contractholder account balance for contract administration and surrender charges. These revenues are recognized when levied against the contractholder account balance. Interest credited to contractholders' funds represents contractual interest accrued or paid for interest-sensitive life contracts and investment contracts. Crediting rates for fixed rate annuities and interest-sensitive life contracts are adjusted periodically by the Company to reflect current market conditions. Separate Account products include variable annuity and variable life contracts. 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. Contract charges for these contracts consist of fees assessed against the Separate Accounts fund balances for contract maintenance, administration, mortality, expense and surrenders. Contract benefits incurred for Separate Accounts include, for example, guaranteed minimum death benefits paid on variable annuity contracts. 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. The principal assets and liabilities giving rise to such differences are unrealized capital gains and losses on fixed income securities carried at fair value and differences in the tax bases of investments. SEPARATE ACCOUNTS The assets and liabilities related to variable annuity and variable life contracts are legally segregated and reflected as Separate Accounts. The assets of the Separate Accounts are carried at fair value. Separate Accounts liabilities represent the contractholders' claims to the related assets and are carried at the fair value of the assets. Investment income and realized capital gains and losses of the Separate Accounts F-7 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------- accrue directly to the contractholders and therefore, are not included in the Company's statements of operations. Revenues to the Company from the Separate Accounts consist of contract maintenance and administration fees and mortality, surrender and expense charges and are ceded to ALIC. Absent any contract provision wherein the Company guarantees either a minimum return or account value upon death or annuitization, contractholders bear the investment risk that the Separate Accounts' funds may not meet their stated objectives. RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS The reserve for life-contingent contract benefits, which relates to immediate annuities with life contingencies, is computed on the basis of long-term actuarial assumptions as to future investment yields, mortality, morbidity, terminations and expenses. 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 interest-sensitive life policies and 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 surrenders and 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 GAAP 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. PENDING ACCOUNTING STANDARDS In December 2001, the Accounting Standards Executive Committee ("AcSEC") issued Statement of Position ("SOP") 01-6, "Accounting by Certain Entities (Including Entities With Trade Receivables) That Lend to or Finance the Activities of Others", which is effective for interim and annual financial statements issued for the fiscal year beginning after December 15, 2001. The SOP conforms accounting and financial reporting practices for certain lending and financing activities, eliminating various specialized accounting practices that developed from the issuance of AICPA finance company, bank, and credit union audit guides. The SOP also explicitly incorporates lending and financing activities of insurance companies within its scope. The Company's adoption of SOP 01-6 is not expected to have a material effect on the results of operations or financial position. 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, 2001 2000 1999 (IN THOUSANDS) -------- -------- -------- Premiums $ 977 $ 289 $ 2,966 Contract charges 108,600 124,250 118,290 Credited interest, policy benefits, and certain expenses 217,500 224,265 222,513
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 $32.4 million, $22.0 million and $33.9 million in 2001, 2000 and 1999, respectively. Of these costs, the Company retains investment related expenses. All other costs are ceded to ALIC under reinsurance agreements. INCOME TAXES The Company is a party to a federal income tax allocation agreement with the Corporation (Note 9). DEBT The Company has entered into an intercompany loan agreement with the Corporation. The amount of funds available to the Company at a given point in time is dependent upon the debt position of the Corporation. No amounts were F-8 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------- outstanding for the Company under the intercompany loan agreement at December 31, 2001 and 2000, respectively. 4. EXCLUSIVE DISTRIBUTION AGREEMENT The Company has a strategic alliance with MSDW to develop, market and distribute proprietary insurance products through Morgan Stanley Dean Witter Financial Advisors. Affiliates of MSDW 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 MSDW as an exclusive distribution channel for the Company's products. In addition to the Company's products, MSDW markets other products that compete with those of the Company. Pursuant to the alliance agreement, MSDW 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 and interest thereon issued to MSDW under terms of a distribution agreement to the Northbrook Corporation. Under a reinsurance agreement with ALIC, the assets of this alliance are held in a trust. The Company shares approximately half the net profits with MSDW 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 MSDW will preserve the alliance. 5. INVESTMENTS FAIR VALUES The amortized cost, gross unrealized gains and losses, and fair value for fixed income securities are as follows:
GROSS UNREALIZED AMORTIZED ------------------- FAIR AT DECEMBER 31, 2001 COST GAINS LOSSES VALUE -------------------- --------- -------- -------- -------- (IN THOUSANDS) U.S. government and agencies $20,129 $1,120 $ (3) $21,246 Municipal 1,030 2 (3) 1,029 Corporate 53,326 1,926 (249) 55,003 Mortgage-backed securities 13,372 948 (53) 14,267 Foreign government 406 18 -- 424 ------- ------ ----- ------- Total fixed income securities $88,263 $4,014 $(308) $91,969 ======= ====== ===== ======= AT DECEMBER 31, 2000 -------------------- U.S. government and agencies $10,778 $1,193 $ -- $11,971 Municipal 1,095 4 (38) 1,061 Corporate 59,449 656 (720) 59,385 Mortgage-backed securities 19,413 958 (186) 20,185 Foreign government 406 22 -- 428 ------- ------ ----- ------- Total fixed income securities $91,141 $2,833 $(944) $93,030 ======= ====== ===== =======
SCHEDULED MATURITIES The scheduled maturities for fixed income securities are as follows at December 31, 2001:
AMORTIZED FAIR COST VALUE (IN THOUSANDS) --------- -------- Due in one year or less $ 5,757 $ 5,888 Due after one year through five years 28,486 29,945 Due after five years through ten years 26,843 27,087 Due after ten years 13,805 14,782 ------- ------- 74,891 77,702 Mortgage-backed securities 13,372 14,267 ------- ------- Total $88,263 $91,969 ======= =======
Actual maturities may differ from those scheduled as a result of prepayments by the issuers. NET INVESTMENT INCOME
YEAR ENDED DECEMBER 31, 2001 2000 1999 ----------------------- -------- -------- -------- (IN THOUSANDS) Fixed income securities $6,036 $6,635 $5,881 Short-term investments 253 249 261 ------ ------ ------ Investment income, before expense 6,289 6,884 6,142 Investment expense 191 82 132 ------ ------ ------ Net investment income $6,098 $6,802 $6,010 ====== ====== ======
F-9 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------- REALIZED CAPITAL GAINS AND LOSSES, AFTER TAX
YEAR ENDED DECEMBER 31, 2001 2000 1999 ----------------------- -------- -------- -------- (IN THOUSANDS) Fixed income securities $ 95 $(230) $ 510 ---- ----- ----- Realized capital gains and losses 95 (230) 510 Income taxes (33) 80 (178) ---- ----- ----- Realized capital gains and losses, after tax $ 62 $(150) $ 332 ==== ===== =====
Excluding calls and prepayments, gross gains of $203 thousand, $78 thousand and $629 thousand were realized on sales of fixed income securities during 2001, 2000 and 1999, respectively, and gross losses of $108 thousand, $308 thousand and $119 thousand were realized on sales of fixed income securities during 2001, 2000 and 1999, respectively. UNREALIZED NET CAPITAL GAINS AND LOSSES Unrealized net capital gains and losses on fixed income securities included in shareholder's equity at December 31, 2001 are as follows:
GROSS COST/ UNREALIZED AMORTIZED FAIR ------------------- UNREALIZED COST VALUE GAINS LOSSES NET GAINS (IN THOUSANDS) --------- -------- -------- -------- ---------- Fixed income securities $88,263 $91,969 $4,014 $(308) $ 3,706 ======= ======= ====== ===== Deferred income taxes (1,297) ------- Unrealized net capital gains and losses $ 2,409 =======
CHANGE IN UNREALIZED NET CAPITAL GAINS AND LOSSES
YEAR ENDED DECEMBER 31, 2001 2000 1999 ----------------------- -------- -------- -------- (IN THOUSANDS) Fixed income securities $1,817 $ 4,096 $(7,387) Deferred income taxes (636) (1,433) 2,585 ------ ------- ------- Increase (decrease) in unrealized net capital gains and losses $1,181 $ 2,663 $(4,802) ====== ======= =======
SECURITIES ON DEPOSIT At December 31, 2001, fixed income securities with a carrying value of $6.4 million were on deposit with regulatory authorities as required by law. 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 are deemed to approximate fair value. FINANCIAL ASSETS The carrying value and fair value of financial assets at December 31, are as follows:
2001 2000 ----------------------- ----------------------- CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE (IN THOUSANDS) ---------- ---------- ---------- ---------- Fixed income securities $ 91,969 $ 91,969 $ 93,030 $ 93,030 Short-term 5,746 5,746 3,859 3,859 Separate Accounts 6,236,902 6,236,902 7,614,673 7,614,673
Fair values for exchange traded fixed income securities are based upon quoted market prices or dealer quotes. The fair value of non-exchange traded fixed income securities is based on either independent third party pricing sources or widely accepted pricing valuation models which utilize internally developed ratings and independent third party data as inputs. Short-term investments are highly liquid investments with maturities of less than one year whose carrying values 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:
2001 2000 ----------------------- ----------------------- CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE (IN THOUSANDS) ---------- ---------- ---------- ---------- Contractholder funds on investment contracts $1,721,592 $1,708,679 $1,652,039 $1,644,231 Separate Accounts 6,236,902 6,236,902 7,614,673 7,614,673
Contractholder funds include interest-sensitive life insurance contracts and investment contracts. Interest-sensitive life insurance contracts and certain other contractholder liabilities are not considered to be financial instruments subject to fair value disclosure requirements. The fair value of investment contracts is based on the terms of the underlying contracts. Fixed annuities and immediate annuities without life contingencies are valued at the account balance less F-10 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------- surrender charges. Market value adjusted annuities' fair value is estimated to be the market adjusted surrender value. Separate Accounts liabilities are carried at the fair value of the underlying assets. 7. RESERVE FOR LIFE-CONTINGENT CONTRACT BENEFITS AND CONTRACTHOLDER FUNDS At December 31, the Reserve for life-contingent contract benefits consists of the following:
2001 2000 (IN THOUSANDS) -------- -------- Immediate annuities: Structured settlement annuities $108,911 $108,441 Other immediate annuities 41,438 40,670 -------- -------- Total Reserve for life-contingent contract benefits $150,349 $149,111 ======== ========
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 3.0% 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 immediate 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, 2001 and 2000. At December 31, Contractholder funds consists of the following:
2001 2000 (IN THOUSANDS) ---------- ---------- Interest-sensitive life $ 175,011 $ 171,192 Fixed annuities: Immediate annuities 69,857 66,051 Deferred annuities 1,651,779 1,588,819 ---------- ---------- Total Contractholder funds $1,896,647 $1,826,062 ========== ==========
Contractholder funds are equal to deposits received and interest credited for the benefit of the contractholder less surrenders and withdrawals, mortality charges and administrative expenses. Interest rates credited range from 5.8% to 6.3% for interest-sensitive life contracts; 3.2% to 10.2% for immediate annuities and 4.3% to 6.8% 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 49.7% 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. State and federal regulatory initiatives have varied and have included employee benefit regulations, removal of barriers preventing banks from engaging in the securities and insurance businesses, 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 the overall expansion of regulation. The ultimate changes and eventual effects, if any, of these initiatives are uncertain. From time to time, the Company is involved in pending and threatened litigation in the normal course of business in which claims for monetary damages are asserted. In the opinion of management, 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. 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. Amounts assessed to each company are typically related to its proportion of business written in a particular state. The Company's expenses related to these funds are immaterial and are ceded to ALIC under reinsurance agreements. 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 F-11 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------- a separate return, as adjusted for the reinsurance ceded to ALIC. 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:
2001 2000 (IN THOUSANDS) -------- -------- DEFERRED LIABILITIES Difference in tax bases of investments $1,697 $1,618 Unrealized net capital gains 1,297 661 ------ ------ Total deferred liability $2,994 $2,279 ====== ======
The components of income tax expense for the year ended December 31, are as follows:
2001 2000 1999 (IN THOUSANDS) -------- -------- -------- Current $2,080 $2,193 $2,249 Deferred 79 100 15 ------ ------ ------ Total income tax expense $2,159 $2,293 $2,264 ====== ====== ======
The Company paid income taxes of $2.1 million, $2.3 million and $1.9 million in 2001, 2000 and 1999, 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:
2001 2000 1999 -------- -------- -------- Statutory federal income tax rate 35.0% 35.0% 35.0% Tax-exempt income (0.1) (0.1) (0.1) Other -- -- (0.2) ---- ---- ---- Effective income tax rate 34.9% 34.9% 34.7% ==== ==== ====
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, 2001, approximately $16 thousand, will result in federal income taxes payable of $6 thousand 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 following table reconciles Net income for the year ended December 31, and Shareholder's equity at December 31, as reported herein in conformity with GAAP with total statutory net income and capital and surplus of the Company, determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities:
SHAREHOLDER'S NET INCOME EQUITY ------------------------------ ------------------- 2001 2000 1999 2001 2000 (IN THOUSANDS) -------- -------- -------- -------- -------- Balance per GAAP $4,034 $4,279 $4,256 $ 95,418 $90,203 Unrealized gain/loss on fixed income securities -- -- -- (3,706) (1,889) Deferred income taxes 79 440 895 2,027 1,567 Employee benefits (29) -- 1 1,040 1,022 Reserves and non-admitted assets (30) 174 (312) (13,888) (5,505) Other 28 -- -- 11,010 (1,063) ------ ------ ------ -------- ------- Balance per statutory accounting practices $4,082 $4,893 $4,840 $ 91,901 $84,335 ====== ====== ====== ======== =======
The Company prepares its statutory financial statements in accordance with accounting practices prescribed or permitted by the State of Arizona. 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. Effective January 1, 2001, the State of Arizona required insurance companies domiciled in its state to prepare statutory-basis financial statements in accordance with the NAIC Accounting Practices and Procedures Manual--Version effective January 1, 2001 ("codification") subject to any deviations prescribed or permitted by the State of Arizona insurance commissioner. Accounting changes adopted to the provisions of codification are reported as changes in accounting principles. The cumulative effect of changes in accounting principles is reported as an adjustment to unassigned funds (surplus) in the period of the change in accounting principle. The cumulative effect is the difference between the amount of capital and surplus at the beginning of the year and the amount of capital and surplus that would have been reported F-12 NORTHBROOK LIFE INSURANCE COMPANY NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------- at that date if the new accounting principles had been applied retroactively for all periods. The Company reported an increase to surplus of $239 thousand effective January 1, 2001 as a result of recognizing a net deferred tax asset. The NAIC is currently in the process of clarifying and interpreting requirements as the insurance industry implements codification. As the NAIC announces changes and as they are approved by the Arizona Department of Insurance, the impact of the changes will be recorded. 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 statutory surplus and statutory net gain from operations, determined in accordance with statutory accounting practices, as well as the timing and amount of dividends paid in the preceding twelve months. The maximum amount of dividends that the Company can distribute during 2002 without prior approval of the Arizona Department of Insurance is $4.1 million. In December of 2000, the Company paid a cash dividend of $4.0 million to ALIC. 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. At December 31, 2001, 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:
2001 2000 1999 ------------------------------- ------------------------------- ------------------------------- PRETAX TAX AFTER-TAX PRETAX TAX AFTER-TAX PRETAX TAX AFTER-TAX (IN THOUSANDS) -------- -------- --------- -------- -------- --------- -------- -------- --------- UNREALIZED CAPITAL GAINS AND LOSSES: - ---------------------------- Unrealized holding gains (losses) arising during the period $1,912 $(669) $1,243 $3,843 $(1,344) $2,499 $(6,877) $2,407 $(4,470) Less: reclassification adjustments 95 (33) 62 (253) 89 (164) 510 (178) 332 ------ ----- ------ ------ ------- ------ ------- ------ ------- Unrealized net capital gains (losses) 1,817 (636) 1,181 4,096 (1,433) 2,663 (7,387) 2,585 (4,802) ------ ----- ------ ------ ------- ------ ------- ------ ------- Other comprehensive income (loss) $1,817 $(636) $1,181 $4,096 $(1,433) $2,663 $(7,387) $2,585 $(4,802) ====== ===== ====== ====== ======= ====== ======= ====== =======
F-13 NORTHBROOK LIFE INSURANCE COMPANY SCHEDULE IV--REINSURANCE (IN THOUSANDS)
GROSS NET AMOUNT CEDED AMOUNT -------- -------- -------- YEAR ENDED DECEMBER 31, 2001 Life insurance in force..................................... $450,633 $450,633 $ -- ======== ======== ======== Premiums and contract charges: Life and annuities........................................ $109,665 $109,665 $ -- ======== ======== ========
GROSS NET AMOUNT CEDED AMOUNT -------- -------- -------- YEAR ENDED DECEMBER 31, 2000 Life insurance in force..................................... $460,143 $460,143 $ -- ======== ======== ======== 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 $ -- ======== ======== ========
F-14 ---------------------------------------------- NORTHBROOK VARIABLE ANNUITY ACCOUNT II FINANCIAL STATEMENTS AS OF DECEMBER 31, 2001 AND FOR THE PERIODS ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2000, AND INDEPENDENT AUDITORS' REPORT INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholder of Northbrook Life Insurance Company: We have audited the accompanying statements of net assets of each of the individual sub-accounts disclosed in Note 1 which comprise the Northbrook Variable Annuity Account II (the "Account") as of December 31, 2001, the related statements of operations for the periods 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, 2001 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 each of the individual sub-accounts which comprise the Northbrook Variable Annuity Account II as of December 31, 2001, the results of operations for the periods then ended for each of the individual sub-accounts 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 8, 2002 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF NET ASSETS DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series Sub-Accounts ---------------------------------------------------------------------------------- Competitive Aggressive Capital Edge, Dividend Equity Growth "Best Ideas" Growth Equity -------------- -------------- -------------- ---------------- ---------------- ASSETS Investments at fair value $ 66,416,362 $ 94,927,469 $ 37,827,308 $1,173,810,568 $ 942,498,569 -------------- -------------- -------------- ---------------- ---------------- Total assets $ 66,416,362 $ 94,927,469 $ 37,827,308 $1,173,810,568 $ 942,498,569 ============== ============== ============== ================ ================ NET ASSETS Accumulation units $ 66,407,715 $ 94,523,729 $ 37,622,321 $1,170,178,297 $ 940,603,204 Contracts in payout (annuitization) period 8,647 403,740 204,987 3,632,271 1,895,365 -------------- -------------- -------------- ---------------- ---------------- Total net assets $ 66,416,362 $ 94,927,469 $ 37,827,308 $1,173,810,568 $ 942,498,569 ============== ============== ============== ================ ================ FUND SHARE INFORMATION Number of shares 6,511,408 6,949,302 5,275,775 87,077,935 41,593,052 ============== ============== ============== ================ ================ Cost $ 93,413,862 $125,569,960 $ 53,166,881 $1,937,917,248 $1,377,999,828 ============== ============== ============== ================ ================
See notes to financial statements. 2 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF NET ASSETS DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series Sub-Accounts ----------------------------------------------------------------------------- Global European Dividend High Income Growth Growth Yield Builder Information -------------- -------------- -------------- -------------- ------------- ASSETS Investments at fair value $292,289,694 $266,460,136 $ 59,114,871 $ 60,123,631 $ 4,345,693 -------------- -------------- -------------- -------------- ------------- Total assets $292,289,694 $266,460,136 $ 59,114,871 $ 60,123,631 $ 4,345,693 ============== ============== ============== ============== ============= NET ASSETS Accumulation units $291,764,097 $265,846,633 $ 58,978,778 $ 60,090,262 $ 4,345,693 Contracts in payout (annuitization) period 525,597 613,503 136,093 33,369 - -------------- -------------- -------------- -------------- ------------- Total net assets $292,289,694 $266,460,136 $ 59,114,871 $ 60,123,631 $ 4,345,693 ============== ============== ============== ============== ============= FUND SHARE INFORMATION Number of shares 17,491,903 23,231,049 44,447,272 5,666,695 818,398 ============== ============== ============== ============== ============= Cost $382,326,467 $293,119,718 $172,702,622 $ 63,978,104 $ 4,915,000 ============== ============== ============== ============== =============
See notes to financial statements. 3 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF NET ASSETS DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series Sub-Accounts ------------------------------------------------------------------------------ Quality Money Pacific Income S&P 500 Short-Term Market Growth Plus Index Bond -------------- -------------- -------------- -------------- -------------- ASSETS Investments at fair value $419,354,604 $ 29,901,871 $415,028,429 $156,594,437 $ 24,710,264 -------------- -------------- -------------- -------------- -------------- Total assets $419,354,604 $ 29,901,871 $415,028,429 $156,594,437 $ 24,710,264 ============== ============== ============== ============== ============== NET ASSETS Accumulation units $418,710,176 $ 29,871,781 $413,096,172 $156,274,444 $ 24,710,264 Contracts in payout (annuitization) period 644,428 30,090 1,932,257 319,993 - -------------- -------------- -------------- -------------- -------------- Total net assets $419,354,604 $ 29,901,871 $415,028,429 $156,594,437 $ 24,710,264 ============== ============== ============== ============== ============== FUND SHARE INFORMATION Number of shares 419,354,604 7,513,033 39,339,188 14,942,217 2,429,721 ============== ============== ============== ============== ============== Cost $419,354,604 $ 36,220,676 $413,721,823 $176,507,214 $ 24,528,056 ============== ============== ============== ============== ==============
See notes to financial statements. 4 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF NET ASSETS DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Morgan Stanley Variable Investment Series Sub-Accounts Series (Class Y Shares) Sub-Accounts ---------------------------------- ---------------------------------------- Competitive Aggressive Capital Edge, Strategist Utilities Equity Growth "Best Ideas" -------------- -------------- -------------- ------------- ------------- ASSETS Investments at fair value $473,510,304 $301,799,101 $ 18,529,018 $ 6,472,194 $ 5,854,494 -------------- -------------- -------------- ------------- ------------- Total assets $473,510,304 $301,799,101 $ 18,529,018 $ 6,472,194 $ 5,854,494 ============== ============== ============== ============= ============= NET ASSETS Accumulation units $472,175,771 $300,852,713 $ 18,529,018 $ 6,472,194 $ 5,854,494 Contracts in payout (annuitization) period 1,334,533 946,388 - - - -------------- -------------- -------------- ------------- ------------- Total net assets $473,510,304 $301,799,101 $ 18,529,018 $ 6,472,194 $ 5,854,494 ============== ============== ============== ============= ============= FUND SHARE INFORMATION Number of shares 33,967,741 20,488,737 1,821,929 475,547 819,957 ============== ============== ============== ============= ============= Cost $506,268,935 $347,781,673 $ 23,582,451 $ 8,115,744 $ 7,963,552 ============== ============== ============== ============= =============
See notes to financial statements. 5 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF NET ASSETS DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts --------------------------------------------------------------------------------- Global Dividend European Dividend High Growth Equity Growth Growth Yield -------------- -------------- -------------- -------------- ------------- ASSETS Investments at fair value $ 59,002,305 $ 60,597,798 $ 20,540,944 $ 10,357,131 $ 6,087,535 -------------- -------------- -------------- -------------- ------------- Total assets $ 59,002,305 $ 60,597,798 $ 20,540,944 $ 10,357,131 $ 6,087,535 ============== ============== ============== ============== ============= NET ASSETS Accumulation units $ 59,002,305 $ 60,556,521 $ 20,540,944 $ 10,357,131 $ 6,087,535 Contracts in payout (annuitization) period - 41,277 - - - -------------- -------------- -------------- -------------- ------------- Total net assets $ 59,002,305 $ 60,597,798 $ 20,540,944 $ 10,357,131 $ 6,087,535 ============== ============== ============== ============== ============= FUND SHARE INFORMATION Number of shares 4,380,275 2,676,581 1,233,690 906,136 4,577,094 ============== ============== ============== ============== ============= Cost $ 61,107,574 $ 83,355,006 $ 25,795,661 $ 10,676,941 $ 9,089,494 ============== ============== ============== ============== =============
See notes to financial statements. 6 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF NET ASSETS DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts --------------------------------------------------------------------------- Quality Income Money Pacific Income Builder Information Market Growth Plus ------------- ------------- -------------- ------------- -------------- ASSETS Investments at fair value $ 7,099,872 $ 7,355,923 $ 97,216,934 $ 1,628,898 $ 52,926,850 ------------- ------------- -------------- ------------- -------------- Total assets $ 7,099,872 $ 7,355,923 $ 97,216,934 $ 1,628,898 $ 52,926,850 ============= ============= ============== ============= ============== NET ASSETS Accumulation units $ 7,099,872 $ 7,355,923 $ 97,216,934 $ 1,628,898 $ 52,926,850 Contracts in payout (annuitization) period - - - - - ------------- ------------- -------------- ------------- -------------- Total net assets $ 7,099,872 $ 7,355,923 $ 97,216,934 $ 1,628,898 $ 52,926,850 ============= ============= ============== ============= ============== FUND SHARE INFORMATION Number of shares 669,799 1,387,910 97,216,934 408,245 5,021,523 ============= ============= ============== ============= ============== Cost $ 7,295,999 $ 9,086,513 $ 97,216,934 $ 1,980,711 $ 52,376,141 ============= ============= ============== ============= ==============
See notes to financial statements. 7 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF NET ASSETS DECEMBER 31, 2001 - --------------------------------------------------------------------------------
AIM Variable Morgan Stanley Variable Investment Series Insurance Funds (Class Y Shares) Sub-Accounts Sub-Accounts -------------------------------------------------------------- ---------------- S&P 500 Short-Term AIM V.I. Capital Index Bond Strategist Utilities Appreciation -------------- -------------- -------------- -------------- ---------------- ASSETS Investments at fair value $ 45,552,248 $ 22,343,604 $ 46,792,539 $ 24,013,118 $ 21,661,544 -------------- -------------- -------------- -------------- ---------------- Total assets $ 45,552,248 $ 22,343,604 $ 46,792,539 $ 24,013,118 $ 21,661,544 ============== ============== ============== ============== ================ NET ASSETS Accumulation units $ 45,552,248 $ 22,343,604 $ 46,784,943 $ 24,013,118 $ 21,661,544 Contracts in payout (annuitization) period - - 7,596 - - -------------- -------------- -------------- -------------- ---------------- Total net assets $ 45,552,248 $ 22,343,604 $ 46,792,539 $ 24,013,118 $ 21,661,544 ============== ============== ============== ============== ================ FUND SHARE INFORMATION Number of shares 4,363,242 2,199,174 3,359,120 1,631,326 997,309 ============== ============== ============== ============== ================ Cost $ 49,309,727 $ 22,204,617 $ 52,177,809 $ 31,804,891 $ 27,307,304 ============== ============== ============== ============== ================
See notes to financial statements. 8 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF NET ASSETS DECEMBER 31, 2001 - --------------------------------------------------------------------------------
AIM Variable Insurance Alliance Variable Product Funds Sub-Accounts Series Fund Sub-Accounts ------------------------------ ------------------------------------------------- Alliance AIM V.I. AIM V.I. Alliance Growth & Alliance Premier Growth Value Growth Income Growth -------------- -------------- -------------- --------------- ---------------- ASSETS Investments at fair value $ 11,266,812 $ 58,625,674 $ 15,816,830 $145,029,939 $ 38,131,478 -------------- -------------- -------------- --------------- ---------------- Total assets $ 11,266,812 $ 58,625,674 $ 15,816,830 $145,029,939 $ 38,131,478 ============== ============== ============== =============== ================ NET ASSETS Accumulation units $ 11,266,812 $ 58,625,674 $ 15,816,830 $145,028,242 $ 38,131,478 Contracts in payout (annuitization) period - - - 1,697 - -------------- -------------- -------------- --------------- ---------------- Total net assets $ 11,266,812 $ 58,625,674 $ 15,816,830 $145,029,939 $ 38,131,478 ============== ============== ============== =============== ================ FUND SHARE INFORMATION Number of shares 688,260 2,510,736 969,763 6,583,293 1,525,259 ============== ============== ============== =============== ================ Cost $ 15,625,664 $ 66,951,956 $ 20,292,008 $148,963,847 $ 49,756,273 ============== ============== ============== =============== ================
See notes to financial statements. 9 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF NET ASSETS DECEMBER 31, 2001 - --------------------------------------------------------------------------------
The Universal Institutional Putnam Variable Trust Sub-Accounts Funds, Inc. Sub-Accounts ------------------------------------------------ ------------------------------ Emerging VT Growth VT International Markets Equity and Income Growth VT Voyager Equity Growth -------------- ---------------- -------------- -------------- -------------- ASSETS Investments at fair value $ 28,218,465 $ 38,728,400 $ 34,588,836 $ 16,448,244 $ 76,091,462 -------------- ---------------- -------------- -------------- -------------- Total assets $ 28,218,465 $ 38,728,400 $ 34,588,836 $ 16,448,244 $ 76,091,462 ============== ================ ============== ============== ============== NET ASSETS Accumulation units $ 28,218,465 $ 38,728,400 $ 34,587,251 $ 16,448,244 $ 76,077,708 Contracts in payout (annuitization) period - - 1,585 - 13,754 -------------- ---------------- -------------- -------------- -------------- Total net assets $ 28,218,465 $ 38,728,400 $ 34,588,836 $ 16,448,244 $ 76,091,462 ============== ================ ============== ============== ============== FUND SHARE INFORMATION Number of shares 1,203,859 3,133,366 1,211,094 2,480,881 5,354,783 ============== ================ ============== ============== ============== Cost $ 29,060,208 $ 45,642,086 $ 47,213,389 $ 21,794,755 $ 96,016,247 ============== ================ ============== ============== ==============
See notes to financial statements. 10 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF NET ASSETS DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Van Kampen Van Kampen Life Investment Life Investment Trust The Universal Institutional Trust (Class II) Funds, Inc. Sub-Accounts Sub-Account Sub-Account ---------------------------------------------- --------------- --------------- Lit Emerging International Mid Cap U.S. Real Lit Emerging Growth Magnum Value Estate Growth (Class II) (a) -------------- -------------- -------------- --------------- --------------- ASSETS Investments at fair value $ 19,771,754 $ 63,097,030 $ 27,855,482 $163,251,375 $ 17,334,731 -------------- -------------- -------------- --------------- --------------- Total assets $ 19,771,754 $ 63,097,030 $ 27,855,482 $163,251,375 $ 17,334,731 ============== ============== ============== =============== =============== NET ASSETS Accumulation units $ 19,716,450 $ 63,097,030 $ 27,802,514 $163,204,885 $ 17,334,731 Contracts in payout (annuitization) period 55,304 - 52,968 46,490 - -------------- -------------- -------------- --------------- --------------- Total net assets $ 19,771,754 $ 63,097,030 $ 27,855,482 $163,251,375 $ 17,334,731 ============== ============== ============== =============== =============== FUND SHARE INFORMATION Number of shares 2,090,037 4,333,587 2,305,917 5,756,395 612,535 ============== ============== ============== =============== =============== Cost $ 23,369,904 $ 62,480,371 $ 26,978,220 $230,555,117 $ 17,877,552 ============== ============== ============== =============== ===============
(a) For the Period Beginning May 17, 2001 and Ended December 31, 2001 See notes to financial statements. 11 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series Sub-Accounts --------------------------------------------------------------------------------- Competitive Aggressive Capital Edge, Dividend Equity Growth "Best Ideas" Growth Equity -------------- -------------- -------------- --------------- --------------- NET INVESTMENT INCOME (LOSS) Dividends $ 323,453 $ 707,477 $ 330,106 $ 24,183,042 $ 6,337,603 Charges from Northbrook Life Insurance Company: Mortality and expense risk (1,201,601) (1,606,642) (679,873) (17,337,738) (15,473,645) Administrative expense (87,664) (121,891) (49,985) (1,320,179) (1,167,738) -------------- -------------- -------------- --------------- --------------- Net investment income (loss) (965,812) (1,021,056) (399,752) 5,525,125 (10,303,780) -------------- -------------- -------------- --------------- --------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) on fund shares: Proceeds from sales 43,883,993 46,014,468 28,641,243 267,305,873 336,765,742 Cost of investments sold 57,530,196 52,619,301 34,831,249 175,103,828 421,184,847 -------------- -------------- -------------- --------------- --------------- Realized gains (losses) on fund shares (13,646,203) (6,604,833) (6,190,006) 92,202,045 (84,419,105) Realized gain distributions - 8,850,708 3,747,113 - 258,123,859 -------------- -------------- -------------- --------------- --------------- Net realized gains (losses) (13,646,203) 2,245,875 (2,442,893) 92,202,045 173,704,754 Change in unrealized gains (losses) (22,452,756) (44,024,208) (12,400,121) (188,770,326) (615,025,686) -------------- -------------- -------------- --------------- --------------- Net realized and unrealized gains (losses) on investments (36,098,959) (41,778,333) (14,843,014) (96,568,281) (441,320,932) -------------- -------------- -------------- --------------- --------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $(37,064,771) $(42,799,389) $(15,242,766) $ (91,043,156) $(451,624,712) ============== ============== ============== =============== ===============
See notes to financial statements. 12 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series Sub-Accounts -------------------------------------------------------------------------------- Global European Dividend High Income Growth Growth Yield Builder Information --------------- --------------- --------------- ------------- -------------- NET INVESTMENT INCOME (LOSS) Dividends $ 4,242,933 $ 8,314,816 $ 16,045,282 $ 2,751,083 $ 6,925 Charges from Northbrook Life Insurance Company: Mortality and expense risk (4,722,887) (3,982,310) (1,204,840) (813,948) (50,490) Administrative expense (358,244) (303,927) (91,499) (60,857) (3,708) --------------- --------------- --------------- ------------- -------------- Net investment income (loss) (838,198) 4,028,579 14,748,943 1,876,278 (47,273) --------------- --------------- --------------- ------------- -------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) on fund shares: Proceeds from sales 281,532,928 82,977,524 56,305,238 22,928,346 8,279,956 Cost of investments sold 329,758,898 87,486,582 128,848,237 23,518,499 10,298,694 --------------- --------------- --------------- ------------- -------------- Realized gains (losses) on fund shares (48,225,970) (4,509,058) (72,542,999) (590,153) (2,018,738) Realized gain distributions 67,115,058 3,581,782 - - - --------------- --------------- --------------- ------------- -------------- Net realized gains (losses) 18,889,088 (927,276) (72,542,999) (590,153) (2,018,738) Change in unrealized gains (losses) ( 102,918,217) (28,611,193) 20,930,004 (1,096,051) (408,856) --------------- --------------- --------------- ------------- -------------- Net realized and unrealized gains (losses) on investments (84,029,129) (29,538,469) (51,612,995) (1,686,204) (2,427,594) --------------- --------------- --------------- ------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $(84,867,327) $(25,509,890) $(36,864,052) $ 190,074 $ (2,474,867) =============== =============== =============== ============= ==============
See notes to financial statements. 13 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series Sub-Accounts --------------------------------------------------------------------------------- Quality Money Pacific Income S&P 500 Short-Term Market Growth Plus Index Bond ---------------- --------------- -------------- --------------- ------------- NET INVESTMENT INCOME (LOSS) Dividends $ 15,127,207 $ 828,207 $ 23,604,494 $ 1,596,479 $ 656,566 Charges from Northbrook Life Insurance Company: Mortality and expense risk (5,375,549) (597,629) (5,180,388) (2,364,363) (199,502) Administrative expense (405,768) (45,093) (398,556) (173,123) (14,944) ---------------- --------------- -------------- --------------- ------------- Net investment income (loss) 9,345,890 185,485 18,025,550 (941,007) 442,120 ---------------- --------------- -------------- --------------- ------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) on fund shares: Proceeds from sales 2,155,126,003 511,734,087 79,381,126 46,937,305 11,273,847 Cost of investments sold 2,155,126,003 526,767,241 79,854,836 52,366,364 11,204,619 ---------------- --------------- -------------- --------------- ------------- Realized gains (losses) on fund shares - (15,033,154) (473,710) (5,429,059) 69,228 Realized gain distributions - - - - - ---------------- --------------- -------------- --------------- ------------- Net realized gains (losses) - (15,033,154) (473,710) (5,429,059) 69,228 Change in unrealized gains (losses) - 3,976,228 12,514,067 (20,957,287) 156,599 ---------------- --------------- -------------- --------------- ------------- Net realized and unrealized gains (losses) on investments - (11,056,926) 12,040,357 (26,386,346) 225,827 ---------------- --------------- -------------- --------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 9,345,890 $(10,871,441) $ 30,065,907 $(27,327,353) $ 667,947 ================ =============== ============== =============== =============
See notes to financial statements. 14 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Morgan Stanley Variable Investment Investment Series Sub-Accounts Series (Class Y Shares) Sub-Accounts -------------------------------- ---------------------------------------------- Competitive Aggressive Capital Edge, Strategist Utilities Equity Growth "Best Ideas" --------------- --------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) Dividends $ 13,646,075 $ 8,761,174 $ 52,494 $ 27,591 $ 32,729 Charges from Northbrook Life Insurance Company: Mortality and expense risk (7,076,520) (5,207,920) (246,924) (89,899) (81,424) Administrative expense (538,416) (400,258) (16,007) (5,757) (5,367) --------------- --------------- -------------- -------------- -------------- Net investment income (loss) 6,031,139 3,152,996 (210,437) (68,065) (54,062) --------------- --------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) on fund shares: Proceeds from sales 130,394,465 112,816,361 2,975,813 1,040,046 988,732 Cost of investments sold 130,534,746 103,342,288 3,876,276 1,286,529 1,320,694 --------------- --------------- -------------- -------------- -------------- Realized gains (losses) on fund shares (140,281) 9,474,073 (900,463) (246,483) (331,962) Realized gain distributions 23,282,888 25,378,980 - 377,509 413,129 --------------- --------------- -------------- -------------- -------------- Net realized gains (losses) 23,142,607 34,853,053 (900,463) 131,026 81,167 Change in unrealized gains (losses) (100,075,099) (161,250,524) (4,152,238) (1,504,764) (1,541,758) --------------- --------------- -------------- -------------- -------------- Net realized and unrealized gains (losses) on investments (76,932,492) (126,397,471) (5,052,701) (1,373,738) (1,460,591) --------------- --------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (70,901,353) $(123,244,475) $ (5,263,138) $ (1,441,803) $ (1,514,653) =============== =============== ============== ============== ==============
See notes to financial statements. 15 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts ----------------------------------------------------------------------------- Global Dividend European Dividend High Growth Equity Growth Growth Yield -------------- --------------- -------------- ------------ -------------- NET INVESTMENT INCOME (LOSS) Dividends $ 699,131 $ 141,853 $ 188,015 $ 157,072 $ 876,012 Charges from Northbrook Life Insurance Company: Mortality and expense risk (562,506) (675,444) (249,853) (89,393) (68,013) Administrative expense (37,455) (44,936) (16,465) (5,711) (4,480) -------------- --------------- -------------- ------------ -------------- Net investment income (loss) 99,170 (578,527) (78,303) 61,968 803,519 -------------- --------------- -------------- ------------ -------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) on fund shares: Proceeds from sales 8,750,147 6,166,528 43,314,064 989,737 1,768,032 Cost of investments sold 8,556,684 8,554,528 43,943,294 1,047,505 2,397,042 -------------- --------------- -------------- ------------ -------------- Realized gains (losses) on fund shares 193,463 (2,388,000) (629,230) (57,768) (629,010) Realized gain distributions - 10,595,403 3,106,023 68,321 - -------------- --------------- -------------- ------------ -------------- Net realized gains (losses) 193,463 8,207,403 2,476,793 10,553 (629,010) Change in unrealized gains (losses) (3,121,642) (20,034,944) (5,007,923) (393,166) (2,264,080) -------------- --------------- -------------- ------------ -------------- Net realized and unrealized gains (losses) on investments (2,928,179) (11,827,541) (2,531,130) (382,613) (2,893,090) -------------- --------------- -------------- ------------ -------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (2,829,009) $ (12,406,068) $ (2,609,433) $ (320,645) $ (2,089,571) ============== =============== ============== ============ ==============
See notes to financial statements. 16 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts -------------------------------------------------------------------------- Quality Income Money Pacific Income Builder Information Market Growth Plus ------------ -------------- -------------- ------------- ------------- NET INVESTMENT INCOME (LOSS) Dividends $ 191,955 $ 8,124 $ 1,859,490 $ 43,963 $ 1,550,010 Charges from Northbrook Life Insurance Company: Mortality and expense risk (58,063) (74,733) (1,002,011) (24,928) (394,307) Administrative expense (3,852) (4,751) (62,418) (1,638) (26,331) ------------ -------------- -------------- ------------- ------------- Net investment income (loss) 130,040 (71,360) 795,061 17,397 1,129,372 ------------ -------------- -------------- ------------- ------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) on fund shares: Proceeds from sales 930,948 1,192,095 156,057,412 50,591,074 3,116,151 Cost of investments sold 969,997 1,575,230 156,057,412 50,232,309 3,069,886 ------------ -------------- -------------- ------------- ------------- Realized gains (losses) on fund shares (39,049) (383,135) - 358,765 46,265 Realized gain distributions - - - - - ------------ -------------- -------------- ------------- ------------- Net realized gains (losses) (39,049) (383,135) - 358,765 46,265 Change in unrealized gains (losses) (198,790) (1,620,830) - (154,721) 458,324 ------------ -------------- -------------- ------------- ------------- Net realized and unrealized gains (losses) on investments (237,839) (2,003,965) - 204,044 504,589 ------------ -------------- -------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (107,799) $ (2,075,325) $ 795,061 $ 221,441 $ 1,633,961 ============ ============== ============== ============= =============
See notes to financial statements. 17 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 - --------------------------------------------------------------------------------
AIM Variable Morgan Stanley Variable Investment Series Insurance Funds (Class Y Shares) Sub-Accounts Sub-Accounts ----------------------------------------------------------- ---------------- S&P 500 Short-Term AIM V.I. Capital Index Bond Strategist Utilities Appreciation -------------- ----------- -------------- -------------- ---------------- NET INVESTMENT INCOME (LOSS) Dividends $ 251,243 $ 412,305 $ 866,595 $ 472,809 $ - Charges from Northbrook Life Insurance Company: Mortality and expense risk (426,335) (156,560) (511,271) (324,511) (237,705) Administrative expense (28,231) (9,958) (34,039) (21,848) (16,300) -------------- ----------- -------------- -------------- ---------------- Net investment income (loss) (203,323) 245,787 321,285 126,450 (254,005) -------------- ----------- -------------- -------------- ---------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) on fund shares: Proceeds from sales 4,192,322 2,349,818 8,922,310 8,660,443 19,050,306 Cost of investments sold 4,638,136 2,326,747 9,769,521 9,658,572 21,871,073 -------------- ----------- -------------- -------------- ---------------- Realized gains (losses) on fund shares (445,814) 23,071 (847,211) (998,129) (2,820,767) Realized gain distributions - - 1,495,274 1,419,240 1,682,502 -------------- ----------- -------------- -------------- ---------------- Net realized gains (losses) (445,814) 23,071 648,063 421,111 (1,138,265) Change in unrealized gains (losses) (2,662,893) 137,525 (4,611,997) (7,589,144) (2,653,461) -------------- ----------- -------------- -------------- ---------------- Net realized and unrealized gains (losses) on investments (3,108,707) 160,596 (3,963,934) (7,168,033) (3,791,726) -------------- ----------- -------------- -------------- ---------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (3,312,030) $ 406,383 $ (3,642,649) $ (7,041,583) $ (4,045,731) ============== =========== ============== ============== ================
See notes to financial statements. 18 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 - --------------------------------------------------------------------------------
AIM Variable Insurance Alliance Variable Funds Sub-Accounts Product Series Fund Sub-Accounts ------------------------------ ---------------------------------------------- Alliance Alliance AIM V.I. AIM V.I. Alliance Growth & Premier Growth Value Growth Income Growth -------------- -------------- -------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) Dividends $ 26,217 $ 76,279 $ 27,389 $ 406,449 $ - Charges from Northbrook Life Insurance Company: Mortality and expense risk (133,856) (651,040) (181,102) (1,183,524) (522,367) Administrative expense (9,278) (45,317) (12,790) (83,317) (36,687) -------------- -------------- -------------- -------------- -------------- Net investment income (loss) (116,917) (620,078) (166,503) (860,392) (559,054) -------------- -------------- -------------- -------------- -------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) on fund shares: Proceeds from sales 7,689,278 42,555,920 13,370,357 40,940,394 15,579,341 Cost of investments sold 9,178,579 45,855,308 15,699,302 42,193,155 21,151,683 -------------- -------------- -------------- -------------- -------------- Realized gains (losses) on fund shares (1,489,301) (3,299,388) (2,328,945) (1,252,761) (5,572,342) Realized gain distributions - 1,157,918 1,968,811 3,148,416 1,974,216 -------------- -------------- -------------- -------------- -------------- Net realized gains (losses) (1,489,301) (2,141,470) (360,134) 1,895,655 (3,598,126) Change in unrealized gains (losses) (2,100,990) (3,610,163) (3,037,585) (4,612,532) (3,946,380) -------------- -------------- -------------- -------------- -------------- Net realized and unrealized gains (losses) on investments (3,590,291) (5,751,633) (3,397,719) (2,716,877) (7,544,506) -------------- -------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (3,707,208) $ (6,371,711) $ (3,564,222) $ (3,577,269) $ (8,103,560) ============== ============== ============== ============== ==============
See notes to financial statements. 19 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 - --------------------------------------------------------------------------------
The Universal Institutional Putnam Variable Trust Sub-Accounts Funds, Inc. Sub-Accounts ------------------------------------------------ ------------------------------- Emerging VT Growth VT International Markets Equity and Income Growth VT Voyager Equity Growth -------------- ---------------- -------------- -------------- --------------- NET INVESTMENT INCOME (LOSS) Dividends $ 230,096 $ 68,749 $ - $ - $ - Charges from Northbrook Life Insurance Company: Mortality and expense risk (282,304) (445,257) (424,592) (254,755) (1,208,222) Administrative expense (19,768) (30,875) (29,356) (17,962) (87,307) -------------- ---------------- -------------- -------------- --------------- Net investment income (loss) (71,976) (407,383) (453,948) (272,717) (1,295,529) -------------- ---------------- -------------- -------------- --------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) on fund shares: Proceeds from sales 31,510,819 110,418,284 13,004,377 141,280,423 35,946,927 Cost of investments sold 32,034,860 113,042,922 17,543,157 145,217,940 45,517,904 -------------- ---------------- -------------- -------------- --------------- Realized gains (losses) on fund shares (524,041) (2,624,638) (4,538,780) (3,937,517) (9,570,977) Realized gain distributions 169,637 2,802,725 5,909,887 - 109,684 -------------- ---------------- -------------- -------------- --------------- Net realized gains (losses) (354,404) 178,087 1,371,107 (3,937,517) (9,461,293) Change in unrealized gains (losses) (1,201,540) (6,166,679) (8,350,434) 3,365,880 (7,599,027) -------------- ---------------- -------------- -------------- --------------- Net realized and unrealized gains (losses) on investments (1,555,944) (5,988,592) (6,979,327) (571,637) (17,060,320) -------------- ---------------- -------------- -------------- --------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (1,627,920) $ (6,395,975) $ (7,433,275) $ (844,354) $ (18,355,849) ============== ================ ============== ============== ===============
See notes to financial statements. 20 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 2001 - --------------------------------------------------------------------------------
Van Kampen Van Kampen Life Life Investment Investment Trust The Universal Institutional Trust (Class II) Funds, Inc. Sub-Accounts Sub-Account Sub-Account -------------------------------------------- -------------- -------------- Lit Emerging International Mid Cap U.S. Real Lit Emerging Growth Magnum Value Estate Growth (Class II) (a) -------------- ------------- ------------- -------------- -------------- NET INVESTMENT INCOME (LOSS) Dividends $ 103,521 $ - $ 1,000,282 $ - $ - Charges from Northbrook Life Insurance Company: Mortality and expense risk (283,414) (463,915) (291,287) (2,812,299) (85,921) Administrative expense (20,143) (31,576) (20,658) (200,088) (5,226) -------------- ------------- ------------- -------------- -------------- Net investment income (loss) (200,036) (495,491) 688,337 (3,012,387) (91,147) -------------- ------------- ------------- -------------- -------------- NET REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) on fund shares: Proceeds from sales 70,015,200 44,399,515 70,957,491 147,232,356 946,997 Cost of investments sold 71,335,753 45,081,481 69,951,498 192,771,866 1,020,787 -------------- ------------- ------------- -------------- -------------- Realized gains (losses) on fund shares (1,320,553) (681,966) 1,005,993 (45,539,510) (73,790) Realized gain distributions - 35,791 178,077 224,992 - -------------- ------------- ------------- -------------- -------------- Net realized gains (losses) (1,320,553) (646,175) 1,184,070 (45,314,518) (73,790) Change in unrealized gains (losses) (2,439,411) 1,311,149 (219,723) (41,940,418) (542,821) -------------- ------------- ------------- -------------- -------------- Net realized and unrealized gains (losses) on investments (3,759,964) 664,974 964,347 (87,254,936) (616,611) -------------- ------------- ------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ (3,960,000) $ 169,483 $ 1,652,684 $(90,267,323) $ (707,758) ============== ============= ============= ============== ==============
(a) For the Period Beginning May 17, 2001 and Ended December 31, 2001 See notes to financial statements. 21 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series Sub-Accounts ------------------------------------------------------------------------------------------ Competitive Edge, Aggressive Equity Capital Growth "Best Ideas" ----------------------------- ------------------------------ ----------------------------- 2001 2000 2001 2000 2001 2000 -------------- -------------- -------------- --------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS Net investment income (loss) $ (965,812) $ (1,581,613) $ (1,021,056) $ (2,397,798) $ (399,752) $ (749,124) Net realized gains (losses) (13,646,203) 387,151 2,245,875 34,459,492 (2,442,893) 789,554 Change in unrealized gains (losses) (22,452,756) (11,134,118) (44,024,208) (32,870,081) (12,400,121) (14,724,894) -------------- -------------- -------------- --------------- -------------- -------------- Increase (decrease) in net assets from operations (37,064,771) (12,328,580) (42,799,389) (808,387) (15,242,766) (14,684,464) -------------- -------------- -------------- --------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 2,107,201 37,028,311 885,219 13,443,564 493,686 12,414,281 Benefit payments (931,513) (900,845) (2,737,272) (1,969,294) (1,233,248) (532,011) Payments on termination (8,498,598) (6,715,026) (13,342,050) (18,795,015) (4,928,229) (4,806,290) Contract maintenance charge (24,296) (56,112) (21,339) (65,736) (12,466) (28,565) Transfers among the sub-accounts and with the Fixed Account - net (22,572,035) 78,737,903 (15,052,699) 18,365,722 (7,422,665) 14,339,473 -------------- -------------- -------------- --------------- -------------- -------------- Increase (decrease) in net assets from capital transactions (29,919,241) 108,094,231 (30,268,141) 10,979,241 (13,102,922) 21,386,888 -------------- -------------- -------------- --------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS (66,984,012) 95,765,651 (73,067,530) 10,170,854 (28,345,688) 6,702,424 NET ASSETS AT BEGINNING OF PERIOD 133,400,374 37,634,723 167,994,999 157,824,145 66,172,996 59,470,572 -------------- -------------- -------------- --------------- -------------- -------------- NET ASSETS AT END OF PERIOD $ 66,416,362 $133,400,374 $ 94,927,469 $ 167,994,999 $ 37,827,308 $ 66,172,996 ============== ============== ============== =============== ============== ============== UNITS OUTSTANDING Units outstanding at beginning of period 9,575,316 2,601,436 5,684,829 5,101,629 6,699,772 4,893,796 Units issued 2,371,785 12,519,507 1,873,419 2,421,653 3,423,248 3,572,110 Units redeemed (5,144,750) (5,545,627) (2,931,541) (1,838,453) (5,050,027) (1,766,134) -------------- -------------- -------------- --------------- -------------- -------------- Units outstanding at end of period 6,802,351 9,575,316 4,626,707 5,684,829 5,072,993 6,699,772 ============== ============== ============== =============== ============== ==============
See notes to financial statements 22 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series Sub-Accounts ---------------------------------------------------------------------------- Dividend Growth Equity ----------------------------------- ----------------------------------- 2001 2000 2001 2000 ---------------- ---------------- ---------------- ---------------- FROM OPERATIONS Net investment income (loss) $ 5,525,125 $ 10,133,490 $ (10,303,780) $ (14,999,759) Net realized gains (losses) 92,202,045 539,382,896 173,704,754 334,815,706 Change in unrealized gains (losses) (188,770,326) (532,890,671) (615,025,686) (594,936,907) ---------------- ---------------- ---------------- ---------------- Change in net assets resulting from operations (91,043,156) 16,625,715 (451,624,712) (275,120,960) ---------------- ---------------- ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 7,607,425 39,845,901 5,914,512 100,705,202 Benefit payments (26,351,707) (22,382,755) (21,055,042) (18,537,524) Payments on termination (141,486,770) (175,477,715) (119,016,112) (168,025,629) Contract maintenance charge (351,751) (630,181) (217,948) (661,389) Transfers among the sub-accounts and with the Fixed Account - net (20,276,354) (305,079,362) (149,088,835) 121,184,474 ---------------- ---------------- ---------------- ---------------- Change in net assets resulting from capital transactions (180,859,157) (463,724,112) (283,463,425) 34,665,134 ---------------- ---------------- ---------------- ---------------- INCREASE (DECREASE) IN NET ASSETS (271,902,313) (447,098,397) (735,088,137) (240,455,826) NET ASSETS AT BEGINNING OF PERIOD 1,445,712,881 1,892,811,278 1,677,586,706 1,918,042,532 ---------------- ---------------- ---------------- ---------------- NET ASSETS AT END OF PERIOD $1,173,810,568 $1,445,712,881 $ 942,498,569 $1,677,586,706 ================ ================ ================ ================ UNITS OUTSTANDING Units outstanding at beginning of period 41,746,177 54,621,269 28,003,922 25,430,662 Units issued 7,642,417 8,221,067 5,040,743 9,069,570 Units redeemed (11,671,336) (21,096,159) (9,325,871) (6,496,310) ---------------- ---------------- ---------------- ---------------- Units outstanding at end of period 37,717,258 41,746,177 23,718,794 28,003,922 ================ ================ ================ ================ Morgan Stanley Variable Investment Series Sub-Accounts --------------------------------- European Growth --------------------------------- 2001 2000 --------------- --------------- FROM OPERATIONS Net investment income (loss) $ (838,198) $ (4,222,510) Net realized gains (losses) 18,889,088 121,874,225 Change in unrealized gains (losses) (102,918,217) (149,231,476) --------------- --------------- Change in net assets resulting from operations (84,867,327) (31,579,761) --------------- --------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 1,270,031 24,846,114 Benefit payments (6,430,912) (5,830,479) Payments on termination (37,665,104) (54,836,408) Contract maintenance charge (69,797) (190,290) Transfers among the sub-accounts and with the Fixed Account - net (50,608,981) 2,444,524 --------------- --------------- Change in net assets resulting from capital transactions (93,504,763) (33,566,539) --------------- --------------- INCREASE (DECREASE) IN NET ASSETS (178,372,090) (65,146,300) NET ASSETS AT BEGINNING OF PERIOD 470,661,784 535,808,084 --------------- --------------- NET ASSETS AT END OF PERIOD $ 292,289,694 $ 470,661,784 =============== =============== UNITS OUTSTANDING Units outstanding at beginning of period 12,679,136 12,634,372 Units issued 10,608,529 10,148,705 Units redeemed (13,054,812) (10,103,941) --------------- --------------- Units outstanding at end of period 10,232,853 12,679,136 =============== ===============
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 Variable Investment Series Sub-Accounts ------------------------------------------------------------------------------------------ Global Dividend Growth High Yield Income Builder ------------------------------ ------------------------------ ---------------------------- 2001 2000 2001 2000 2001 2000 -------------- --------------- -------------- --------------- ------------- -------------- FROM OPERATIONS Net investment income (loss) $ 4,028,579 $ (2,821,471) $ 14,748,943 $ 31,996,217 $ 1,876,278 $ 2,394,071 Net realized gains (losses) (927,276) 38,005,100 (72,542,999) (49,030,625) (590,153) (1,282,412) Change in unrealized gains (losses) (28,611,193) (57,816,199) 20,930,004 (47,984,362) (1,096,051) (2,694,441) -------------- --------------- -------------- --------------- ------------- -------------- Change in net assets resulting from operations (25,509,890) (22,632,570) (36,864,052) (65,018,770) 190,074 (1,582,782) -------------- --------------- -------------- --------------- ------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 1,255,912 6,820,575 1,043,201 5,088,118 783,806 1,613,246 Benefit payments (6,626,092) (4,968,693) (2,227,506) (4,283,015) (1,242,933) (968,748) Payments on termination (33,293,056) (42,189,879) (13,116,725) (30,396,806) (5,792,750) (5,576,539) Contract maintenance charge (78,035) (153,681) (28,236) (63,055) (16,253) (24,523) Transfers among the sub-accounts and with the Fixed Account - net (18,981,822) (62,748,030) (8,089,181) (45,613,045) 9,385,918 (14,824,705) -------------- --------------- -------------- --------------- ------------- -------------- Change in net assets resulting from capital transactions (57,723,093) (103,239,708) (22,418,447) (75,267,803) 3,117,788 (19,781,269) -------------- --------------- -------------- --------------- ------------- -------------- INCREASE (DECREASE) IN NET ASSETS (83,232,983) (125,872,278) (59,282,499) (140,286,573) 3,307,862 (21,364,051) NET ASSETS AT BEGINNING OF PERIOD 349,693,119 475,565,397 118,397,370 258,683,943 56,815,769 78,179,820 -------------- --------------- -------------- --------------- ------------- -------------- NET ASSETS AT END OF PERIOD $266,460,136 $ 349,693,119 $ 59,114,871 $ 118,397,370 $60,123,631 $ 56,815,769 ============== =============== ============== =============== ============= ============== UNITS OUTSTANDING Units outstanding at beginning of period 19,273,572 24,912,995 7,664,736 11,024,738 4,466,937 6,052,748 Units issued 3,135,308 2,771,536 4,103,739 2,363,606 2,770,595 1,010,620 Units redeemed (6,275,647) (8,410,959) (5,763,540) (5,723,608) (2,522,699) (2,596,431) -------------- --------------- -------------- --------------- ------------- -------------- Units outstanding at end of period 16,133,233 19,273,572 6,004,935 7,664,736 4,714,833 4,466,937 ============== =============== ============== =============== ============= ==============
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 Variable Investment Series Sub-Accounts ---------------------------------------------------------------------------------------- Information Money Market Pacific Growth -------------------------- ------------------------------- ----------------------------- 2001 2000 (b) 2001 2000 2001 2000 ------------- ------------ --------------- --------------- -------------- -------------- FROM OPERATIONS Net investment income (loss) $ (47,273) $ (3,276) $ 9,345,890 $ 15,583,814 $ 185,485 $ 88,849 Net realized gains (losses) (2,018,738) (14,800) - - (15,033,154) (4,721,991) Change in unrealized gains (losses) (408,856) (160,451) - - 3,976,228 (25,754,810) ------------- ------------ --------------- --------------- -------------- -------------- Change in net assets resulting from operations (2,474,867) (178,527) 9,345,890 15,583,814 (10,871,441) (30,387,952) ------------- ------------ --------------- --------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 804,811 1,097,092 11,573,609 47,872,330 232,441 6,138,915 Benefit payments (26,317) - (15,107,122) (15,333,949) (753,036) (779,687) Payments on termination (325,871) (125) (105,922,924) (100,926,101) (4,781,016) (8,242,631) Contract maintenance charge (862) (595) (69,893) (109,981) (12,609) (28,669) Transfers among the sub-accounts and with the Fixed Account - net 3,850,342 1,600,612 190,530,214 (17,688,547) (12,313,581) (14,475,423) ------------- ------------ --------------- --------------- -------------- -------------- Change in net assets resulting from capital transactions 4,302,103 2,696,984 81,003,884 (86,186,248) (17,627,801) (17,387,495) ------------- ------------ --------------- --------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS 1,827,236 2,518,457 90,349,774 (70,602,434) (28,499,242) (47,775,447) NET ASSETS AT BEGINNING OF PERIOD 2,518,457 - 329,004,830 399,607,264 58,401,113 106,176,560 ------------- ------------ --------------- --------------- -------------- -------------- NET ASSETS AT END OF PERIOD $ 4,345,693 $2,518,457 $ 419,354,604 $ 329,004,830 $ 29,901,871 $ 58,401,113 ============= ============ =============== =============== ============== ============== UNITS OUTSTANDING Units outstanding at beginning of period 271,097 - 23,740,229 29,968,046 9,945,463 11,989,810 Units issued 6,024,797 306,866 159,531,277 124,837,673 116,295,697 62,061,623 Units redeemed (5,465,478) (35,769) (153,608,788) (131,065,490) (119,202,892) (64,105,970) ------------- ------------ --------------- --------------- -------------- -------------- Units outstanding at end of period 830,416 271,097 29,662,718 23,740,229 7,038,268 9,945,463 ============= ============ =============== =============== ============== ==============
(b) For the Period Beginning November 6, 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 Variable Investment Series Sub-Accounts -------------------------------------------------------------------------------------- Quality Income Plus S&P 500 Index Short-Term Bond ----------------------------- ----------------------------- -------------------------- 2001 2000 2001 2000 2001 2000 -------------- -------------- -------------- -------------- ------------- ------------ FROM OPERATIONS Net investment income (loss) $ 18,025,550 $ 20,697,830 $ (941,007) $ (1,881,392) $ 442,120 $ 179,078 Net realized gains (losses) (473,710) (8,776,040) (5,429,059) 2,868,493 69,228 2,408 Change in unrealized gains (losses) 12,514,067 21,690,015 (20,957,287) (23,889,850) 156,599 44,678 -------------- -------------- -------------- -------------- ------------- ------------ Change in net assets resulting from operations 30,065,907 33,611,805 (27,327,353) (22,902,749) 667,947 226,164 -------------- -------------- -------------- -------------- ------------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 4,939,358 7,876,912 4,234,143 29,138,284 827,840 1,300,140 Benefit payments (11,094,314) (9,709,897) (2,936,618) (2,917,283) (111,472) (168,784) Payments on termination (46,772,728) (50,375,262) (17,240,687) (17,084,143) (1,670,501) (448,343) Contract maintenance charge (87,841) (154,638) (41,424) (79,072) (3,732) (2,476) Transfers among the sub-accounts and with the Fixed Account - net 68,925,710 (26,207,240) 122,501 36,340,948 18,679,806 2,278,206 -------------- -------------- -------------- -------------- ------------- ------------ Change in net assets resulting from capital transactions 15,910,185 (78,570,125) (15,862,085) 45,398,734 17,721,941 2,958,743 -------------- -------------- -------------- -------------- ------------- ------------ INCREASE (DECREASE) IN NET ASSETS 45,976,092 (44,958,320) (43,189,438) 22,495,985 18,389,888 3,184,907 NET ASSETS AT BEGINNING OF PERIOD 369,052,337 414,010,657 199,783,875 177,287,890 6,320,376 3,135,469 -------------- -------------- -------------- -------------- ------------- ------------ NET ASSETS AT END OF PERIOD $415,028,429 $369,052,337 $156,594,437 $199,783,875 $24,710,264 $6,320,376 ============== ============== ============== ============== ============= ============ UNITS OUTSTANDING Units outstanding at beginning of period 19,220,868 23,143,001 17,090,755 13,501,566 602,331 311,741 Units issued 9,500,211 4,689,882 5,147,175 8,539,280 3,588,911 787,481 Units redeemed (8,183,520) (8,612,015) (6,695,896) (4,950,091) (1,951,098) (496,891) -------------- -------------- -------------- -------------- ------------- ------------ Units outstanding at end of period 20,537,559 19,220,868 15,542,034 17,090,755 2,240,144 602,331 ============== ============== ============== ============== ============= ============
See notes to financial statements 26 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Morgan Stanley Variable Investment Series Sub-Accounts Sub-Accounts --------------------------------------------------------------- --------------------------- Strategist Utilities Aggressive Equity ------------------------------- ------------------------------- --------------------------- 2001 2000 2001 2000 2001 2000 (c) --------------- --------------- --------------- --------------- ------------- ------------- FROM OPERATIONS Net investment income (loss) $ 6,031,139 $ 8,251,101 $ 3,152,996 $ 4,052,378 $ (210,437) $ (61,967) Net realized gains (losses) 23,142,607 94,961,684 34,853,053 57,634,352 (900,463) 3,399 Change in unrealized gains (losses) (100,075,099) (101,361,897) (161,250,524) (53,017,599) (4,152,238) (901,195) --------------- --------------- --------------- --------------- ------------- ------------- Change in net assets resulting from operations (70,901,353) 1,850,888 (123,244,475) 8,669,131 (5,263,138) (959,763) --------------- --------------- --------------- --------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 3,631,326 27,377,665 2,076,106 18,520,186 11,324,530 13,046,167 Benefit payments (10,302,665) (9,554,700) (9,695,104) (8,048,701) (304,310) (51,889) Payments on termination (56,354,072) (67,256,375) (44,646,795) (55,510,014) (462,426) (57,611) Contract maintenance charge (98,200) (250,462) (76,336) (212,176) (2,109) (2,890) Transfers among the sub-accounts and with the Fixed Account - net (25,435,303) 28,655,668 (28,984,727) 11,594,071 (111,224) 1,373,681 --------------- --------------- --------------- --------------- ------------- ------------- Change in net assets resulting from capital transactions (88,558,914) (21,028,204) (81,326,856) (33,656,634) 10,444,461 14,307,458 --------------- --------------- --------------- --------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS (159,460,267) (19,177,316) (204,571,331) (24,987,503) 5,181,323 13,347,695 NET ASSETS AT BEGINNING OF PERIOD 632,970,571 652,147,887 506,370,432 531,357,935 13,347,695 - --------------- --------------- --------------- --------------- ------------- ------------- NET ASSETS AT END OF PERIOD $ 473,510,304 $ 632,970,571 $ 301,799,101 $ 506,370,432 $18,529,018 $13,347,695 =============== =============== =============== =============== ============= ============= UNITS OUTSTANDING Units outstanding at beginning of period 21,840,204 21,267,771 16,364,971 16,449,057 1,383,746 - Units issued 4,104,055 5,521,468 3,556,444 4,054,132 1,982,988 1,448,277 Units redeemed (6,376,316) (4,949,035) (5,887,145) (4,138,218) (654,888) (64,531) --------------- --------------- --------------- --------------- ------------- ------------- Units outstanding at end of period 19,567,943 21,840,204 14,034,270 16,364,971 2,711,846 1,383,746 =============== =============== =============== =============== ============= =============
(c) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements 27 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts -------------------------------------------------------------------------------------- Competitive Edge, Capital Growth "Best Ideas" Dividend Growth --------------------------- --------------------------- ---------------------------- 2001 2000 (c) 2001 2000 (c) 2001 2000 (c) ------------- ------------ ------------- ------------ ------------- ------------- FROM OPERATIONS Net investment income (loss) $ (68,065) $ (62,730) $ (54,062) $ (20,710) $ 99,170 $ 52,178 Net realized gains (losses) 131,026 80,864 81,167 (8,768) 193,463 307,875 Change in unrealized gains (losses) (1,504,764) (138,786) (1,541,758) (567,300) (3,121,642) 1,016,373 ------------- ------------ ------------- ------------ ------------- ------------- Change in net assets resulting from operations (1,441,803) (120,652) (1,514,653) (596,778) (2,829,009) 1,376,426 ------------- ------------ ------------- ------------ ------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 6,256,469 1,840,288 2,988,492 5,131,055 44,517,215 17,370,177 Benefit payments - (7,387) (161,876) (11,615) (757,264) (11,393) Payments on termination (271,538) (35,472) (238,905) (10,508) (1,197,030) (110,205) Contract maintenance charge (171) (763) (240) (1,010) 546 (4,132) Transfers among the sub-accounts and with the Fixed Account - net (1,597,050) 1,850,273 116,654 153,878 185,138 461,836 ------------- ------------ ------------- ------------ ------------- ------------- Change in net assets resulting from capital transactions 4,387,710 3,646,939 2,704,125 5,261,800 42,748,605 17,706,283 ------------- ------------ ------------- ------------ ------------- ------------- INCREASE (DECREASE) IN NET ASSETS 2,945,907 3,526,287 1,189,472 4,665,022 39,919,596 19,082,709 NET ASSETS AT BEGINNING OF PERIOD 3,526,287 - 4,665,022 - 19,082,709 - ------------- ------------ ------------- ------------ ------------- ------------- NET ASSETS AT END OF PERIOD $ 6,472,194 $3,526,287 $ 5,854,494 $4,665,022 $59,002,305 $19,082,709 ============= ============ ============= ============ ============= ============= UNITS OUTSTANDING Units outstanding at beginning of period 364,488 - 555,055 - 1,788,587 - Units issued 692,780 379,582 515,427 584,648 5,291,977 1,858,396 Units redeemed (138,185) (15,094) (153,685) (29,593) (1,110,578) (69,809) ------------- ------------ ------------- ------------ ------------- ------------- Units outstanding at end of period 919,083 364,488 916,797 555,055 5,969,986 1,788,587 ============= ============ ============= ============ ============= =============
(c) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements 28 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts ---------------------------------------------------------------------------------------- Equity European Growth Global Dividend Growth ----------------------------- ---------------------------- --------------------------- 2001 2000 (c) 2001 2000 (c) 2001 2000 (c) -------------- ------------- ------------- ------------- ------------- ------------ FROM OPERATIONS Net investment income (loss) $ (578,527) $ (24,207) $ (78,303) $ (44,423) $ 61,968 $ (9,494) Net realized gains (losses) 8,207,403 447,101 2,476,793 88,720 10,553 19,508 Change in unrealized gains (losses) (20,034,944) (2,722,264) (5,007,923) (246,794) (393,166) 73,356 -------------- ------------- ------------- ------------- ------------- ------------ Change in net assets resulting from operations (12,406,068) (2,299,370) (2,609,433) (202,497) (320,645) 83,370 -------------- ------------- ------------- ------------- ------------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 40,593,357 31,964,349 13,426,870 10,744,322 7,838,484 2,118,591 Benefit payments (762,856) (37,877) (186,331) (68,776) (92,960) - Payments on termination (2,185,708) (193,229) (886,861) (74,892) (398,453) (27,365) Contract maintenance charge (1,863) (6,897) (803) (2,288) 42 (479) Transfers among the sub-accounts and with the Fixed Account - net 3,503,119 2,430,841 228,293 173,340 1,119,958 36,588 -------------- ------------- ------------- ------------- ------------- ------------ Change in net assets resulting from capital transactions 41,146,049 34,157,187 12,581,168 10,771,706 8,467,071 2,127,335 -------------- ------------- ------------- ------------- ------------- ------------ INCREASE (DECREASE) IN NET ASSETS 28,739,981 31,857,817 9,971,735 10,569,209 8,146,426 2,210,705 NET ASSETS AT BEGINNING OF PERIOD 31,857,817 - 10,569,209 - 2,210,705 - -------------- ------------- ------------- ------------- ------------- ------------ NET ASSETS AT END OF PERIOD $ 60,597,798 $31,857,817 $20,540,944 $10,569,209 $10,357,131 $2,210,705 ============== ============= ============= ============= ============= ============ UNITS OUTSTANDING Units outstanding at beginning of period 3,353,484 - 1,150,046 - 222,737 - Units issued 7,126,523 3,473,718 7,046,571 1,260,761 1,066,724 234,838 Units redeemed (1,677,271) (120,234) (5,466,312) (110,715) (162,936) (12,101) -------------- ------------- ------------- ------------- ------------- ------------ Units outstanding at end of period 8,802,736 3,353,484 2,730,305 1,150,046 1,126,525 222,737 ============== ============= ============= ============= ============= ============
(c) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements 29 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts ---------------------------------------------------------------------------------- High Yield Income Builder Information --------------------------- ------------------------ --------------------------- 2001 2000 (c) 2001 2000 (c) 2001 2000 (c) ------------- ------------ ------------ ---------- ------------- ------------ FROM OPERATIONS Net investment income (loss) $ 803,519 $ 169,524 $ 130,040 $ 14,866 $ (71,360) $ (2,841) Net realized gains (losses) (629,010) (40,614) (39,049) (937) (383,135) 8 Change in unrealized gains (losses) (2,264,080) (737,879) (198,790) 2,663 (1,620,830) (109,760) ------------- ------------ ------------ ---------- ------------- ------------ Change in net assets resulting from operations (2,089,571) (608,969) (107,799) 16,592 (2,075,325) (112,593) ------------- ------------ ------------ ---------- ------------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 6,530,498 2,468,796 5,610,188 914,037 6,931,932 2,037,542 Benefit payments (225,479) - (3,452) - (196,021) - Payments on termination (156,237) (9,079) (91,672) (2,112) (176,872) (1,735) Contract maintenance charge (10) (421) (158) (209) (29) (415) Transfers among the sub-accounts and with the Fixed Account - net 85,872 92,135 728,253 36,204 957,649 (8,210) ------------- ------------ ------------ ---------- ------------- ------------ Change in net assets resulting from capital transactions 6,234,644 2,551,431 6,243,159 947,920 7,516,659 2,027,182 ------------- ------------ ------------ ---------- ------------- ------------ INCREASE (DECREASE) IN NET ASSETS 4,145,073 1,942,462 6,135,360 964,512 5,441,334 1,914,589 NET ASSETS AT BEGINNING OF PERIOD 1,942,462 - 964,512 - 1,914,589 - ------------- ------------ ------------ ---------- ------------- ------------ NET ASSETS AT END OF PERIOD $ 6,087,535 $1,942,462 $7,099,872 $964,512 $ 7,355,923 $1,914,589 ============= ============ ============ ========== ============= ============ UNITS OUTSTANDING Units outstanding at beginning of period 279,829 - 96,269 - 206,139 - Units issued 1,360,797 312,694 712,982 104,339 1,507,758 209,148 Units redeemed (359,649) (32,865) (100,092) (8,070) (335,880) (3,009) ------------- ------------ ------------ ---------- ------------- ------------ Units outstanding at end of period 1,280,977 279,829 709,159 96,269 1,378,017 206,139 ============= ============ ============ ========== ============= ============
(c) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements 30 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts -------------------------------------------------------------------------------------- Money Market Pacific Growth Quality Income Plus ----------------------------- -------------------------- --------------------------- 2001 2000 (c) 2001 2000 (c) 2001 2000 (c) -------------- ------------- ------------- ----------- ------------- ------------ FROM OPERATIONS Net investment income (loss) $ 795,061 $ 132,280 $ 17,397 $ (3,834) $ 1,129,372 $ 65,677 Net realized gains (losses) - - 358,765 (5,163) 46,265 2,019 Change in unrealized gains (losses) - - (154,721) (197,092) 458,324 92,385 -------------- ------------- ------------- ----------- ------------- ------------ Change in net assets resulting from operations 795,061 132,280 221,441 (206,089) 1,633,961 160,081 -------------- ------------- ------------- ----------- ------------- ------------ INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 75,326,969 20,255,548 1,815,801 921,823 36,939,348 4,616,633 Benefit payments (397,110) - (48,605) - (233,819) - Payments on termination (3,386,711) (225,866) (98,393) (359) (1,177,477) (18,951) Contract maintenance charge (475) (2,990) (57) (158) (1,020) (1,120) Transfers among the sub-accounts and with the Fixed Account - net 11,069,346 (6,349,118) (990,026) 13,520 10,592,889 416,325 -------------- ------------- ------------- ----------- ------------- ------------ Change in net assets resulting from capital transactions 82,612,019 13,677,574 678,720 934,826 46,119,921 5,012,887 -------------- ------------- ------------- ----------- ------------- ------------ INCREASE (DECREASE) IN NET ASSETS 83,407,080 13,809,854 900,161 728,737 47,753,882 5,172,968 NET ASSETS AT BEGINNING OF PERIOD 13,809,854 - 728,737 - 5,172,968 - -------------- ------------- ------------- ----------- ------------- ------------ NET ASSETS AT END OF PERIOD $ 97,216,934 $13,809,854 $ 1,628,898 $ 728,737 $52,926,850 $5,172,968 ============== ============= ============= =========== ============= ============ UNITS OUTSTANDING Units outstanding at beginning of period 1,348,029 - 100,012 - 482,561 - Units issued 25,827,584 2,292,915 8,171,326 103,862 4,757,929 496,413 Units redeemed (17,806,873) (944,886) (7,978,127) (3,850) (603,608) (13,852) -------------- ------------- ------------- ----------- ------------- ------------ Units outstanding at end of period 9,368,740 1,348,029 293,211 100,012 4,636,882 482,561 ============== ============= ============= =========== ============= ============
(c) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements 31 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts --------------------------------------------------------------------------------------- S&P 500 Index Short-Term Bond Strategist ---------------------------- --------------------------- ---------------------------- 2001 2000 (c) 2001 2000 (c) 2001 2000 (c) ------------- ------------- ------------- ------------ ------------- ------------- FROM OPERATIONS Net investment income (loss) $ (203,323) $ (53,514) $ 245,787 $ 13,440 $ 321,285 $ 156,284 Net realized gains (losses) (445,814) (5,201) 23,071 234 648,063 171,173 Change in unrealized gains (losses) (2,662,893) (1,094,586) 137,525 1,462 (4,611,997) (773,273) ------------- ------------- ------------- ------------ ------------- ------------- Change in net assets resulting from operations (3,312,030) (1,153,301) 406,383 15,136 (3,642,649) (445,816) ------------- ------------- ------------- ------------ ------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 32,700,877 13,059,493 16,333,039 1,236,517 30,873,411 22,556,091 Benefit payments (349,545) (72,473) (274,167) - (669,235) (7,531) Payments on termination (1,169,872) (76,724) (283,408) (3,902) (1,401,990) (87,319) Contract maintenance charge (1,865) (2,755) (81) (310) 31 (5,054) Transfers among the sub-accounts and with the Fixed Account - net 4,958,183 972,260 4,732,155 182,242 (1,711,094) 1,333,694 ------------- ------------- ------------- ------------ ------------- ------------- Change in net assets resulting from capital transactions 36,137,778 13,879,801 20,507,538 1,414,547 27,091,123 23,789,881 ------------- ------------- ------------- ------------ ------------- ------------- INCREASE (DECREASE) IN NET ASSETS 32,825,748 12,726,500 20,913,921 1,429,683 23,448,474 23,344,065 NET ASSETS AT BEGINNING OF PERIOD 12,726,500 - 1,429,683 - 23,344,065 - ------------- ------------- ------------- ------------ ------------- ------------- NET ASSETS AT END OF PERIOD $45,552,248 $12,726,500 $22,343,604 $1,429,683 $46,792,539 $23,344,065 ============= ============= ============= ============ ============= ============= UNITS OUTSTANDING Units outstanding at beginning of period 1,422,645 - 139,170 - 2,359,030 - Units issued 5,255,205 1,505,720 2,229,668 142,204 4,304,741 2,433,178 Units redeemed (825,085) (83,075) (281,504) (3,034) (1,307,289) (74,148) ------------- ------------- ------------- ------------ ------------- ------------- Units outstanding at end of period 5,852,765 1,422,645 2,087,334 139,170 5,356,482 2,359,030 ============= ============= ============= ============ ============= =============
(c) For the Period Beginning May 1, 2000 and Ended December 31, 2000 See notes to financial statements 32 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts AIM Variable Insurance Funds Sub-Accounts ---------------------------- ---------------------------------------------------------- AIM V.I. Capital Utilities Appreciation AIM V.I. Growth ---------------------------- ---------------------------- ---------------------------- 2001 2000 (c) 2001 2000 (d) 2001 2000 (d) ------------- ------------- ------------- ------------- ------------- ------------- FROM OPERATIONS Net investment income (loss) $ 126,450 $ 71,974 $ (254,005) $ (81,022) $ (116,917) $ (49,223) Net realized gains (losses) 421,111 47,089 (1,138,265) (401,925) (1,489,301) (53,577) Change in unrealized gains (losses) (7,589,144) (202,629) (2,653,461) (2,992,299) (2,100,990) (2,257,862) ------------- ------------- ------------- ------------- ------------- ------------- Change in net assets resulting from operations (7,041,583) (83,566) (4,045,731) (3,475,246) (3,707,208) (2,360,662) ------------- ------------- ------------- ------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 17,972,784 18,280,101 11,283,385 8,831,089 6,148,518 6,951,807 Benefit payments (531,753) (7,416) (252,462) (104,263) (89,676) (70,239) Payments on termination (1,252,653) (88,324) (851,339) (277,657) (615,818) (100,901) Contract maintenance charge 514 (4,126) (2,492) (4,181) (960) (2,311) Transfers among the sub-accounts and with the Fixed Account - net (4,191,336) 960,476 1,338,219 9,222,222 602,492 4,511,770 ------------- ------------- ------------- ------------- ------------- ------------- Change in net assets resulting from capital transactions 11,997,556 19,140,711 11,515,311 17,667,210 6,044,556 11,290,126 ------------- ------------- ------------- ------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS 4,955,973 19,057,145 7,469,580 14,191,964 2,337,348 8,929,464 NET ASSETS AT BEGINNING OF PERIOD 19,057,145 - 14,191,964 - 8,929,464 - ------------- ------------- ------------- ------------- ------------- ------------- NET ASSETS AT END OF PERIOD $24,013,118 $19,057,145 $21,661,544 $14,191,964 $11,266,812 $ 8,929,464 ============= ============= ============= ============= ============= ============= UNITS OUTSTANDING Units outstanding at beginning of period 1,929,314 - 1,712,669 - 1,209,656 - Units issued 2,505,750 1,974,752 5,220,251 3,307,926 3,430,058 2,221,059 Units redeemed (1,178,338) (45,438) (3,547,113) (1,595,257) (2,365,167) (1,011,403) ------------- ------------- ------------- ------------- ------------- ------------- Units outstanding at end of period 3,256,726 1,929,314 3,385,807 1,712,669 2,274,547 1,209,656 ============= ============= ============= ============= ============= =============
(c) For the Period Beginning May 1, 2000 and Ended December 31, 2000 (d) For the Period Beginning January 31, 2000 and Ended December 31, 2000 See notes to financial statements 33 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
AIM Variable Insurance Funds Sub-Accounts Alliance Variable Product Series Fund Sub-Accounts ---------------------------- ----------------------------------------------------------- AIM V.I. Value Alliance Growth Alliance Growth & Income ---------------------------- ---------------------------- ----------------------------- 2001 2000 (d) 2001 2000 (d) 2001 2000 (d) ------------- ------------- ------------- ------------- -------------- ------------- FROM OPERATIONS Net investment income (loss) $ (620,078) $ (133,916) $ (166,503) $ (52,697) $ (860,392) $ (96,169) Net realized gains (losses) (2,141,470) 727,844 (360,134) (155,693) 1,895,655 133,075 Change in unrealized gains (losses) (3,610,163) (4,716,119) (3,037,585) (1,437,593) (4,612,532) 678,624 ------------- ------------- ------------- ------------- -------------- ------------- Change in net assets resulting from operations (6,371,711) (4,122,191) (3,564,222) (1,645,983) (3,577,269) 715,530 ------------- ------------- ------------- ------------- -------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 26,751,435 19,428,320 7,061,877 6,020,329 51,947,042 8,503,685 Benefit payments (653,692) (110,067) (129,331) (80,917) (1,158,197) (126,654) Payments on termination (2,699,572) (527,967) (691,022) (234,818) (6,797,540) (302,659) Contract maintenance charge (7,277) (8,468) (2,416) (2,835) (18,599) (7,260) Transfers among the sub-accounts and with the Fixed Account - net 11,323,246 15,623,618 3,610,868 5,475,300 77,984,715 17,867,145 ------------- ------------- ------------- ------------- -------------- ------------- Change in net assets resulting from capital transactions 34,714,140 34,405,436 9,849,976 11,177,059 121,957,421 25,934,257 ------------- ------------- ------------- ------------- -------------- ------------- INCREASE (DECREASE) IN NET ASSETS 28,342,429 30,283,245 6,285,754 9,531,076 118,380,152 26,649,787 NET ASSETS AT BEGINNING OF PERIOD 30,283,245 - 9,531,076 - 26,649,787 - ------------- ------------- ------------- ------------- -------------- ------------- NET ASSETS AT END OF PERIOD $58,625,674 $30,283,245 $15,816,830 $ 9,531,076 $145,029,939 $26,649,787 ============= ============= ============= ============= ============== ============= UNITS OUTSTANDING Units outstanding at beginning of period 3,717,578 - 1,179,904 - 2,511,481 - Units issued 13,498,534 5,567,112 3,663,768 1,719,787 18,770,259 3,900,121 Units redeemed (9,016,103) (1,849,534) (2,261,359) (539,883) (7,240,216) (1,388,640) ------------- ------------- ------------- ------------- -------------- ------------- Units outstanding at end of period 8,200,009 3,717,578 2,582,313 1,179,904 14,041,524 2,511,481 ============= ============= ============= ============= ============== =============
(d) For the Period Beginning January 31, 2000 and Ended December 31, 2000 See notes to financial statements 34 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Alliance Variable Product Series Fund Sub-Accounts Putnam Variable Trust Sub-Accounts ---------------------------- ----------------------------------------------------------- Alliance Premier Growth VT Growth and Income VT International Growth ---------------------------- ---------------------------- ----------------------------- 2001 2000 (d) 2001 2000 (d) 2001 2000 (d) ------------- ------------- ------------- ------------- -------------- ------------- FROM OPERATIONS Net investment income (loss) $ (559,054) $ (210,747) $ (71,976) $ (33,533) $ (407,383) $ (124,744) Net realized gains (losses) (3,598,126) 59,280 (354,404) 38,307 178,087 (336,871) Change in unrealized gains (losses) (3,946,380) (7,678,415) (1,201,540) 359,797 (6,166,679) (747,007) ------------- ------------- ------------- ------------- -------------- ------------- Change in net assets resulting from operations (8,103,560) (7,829,882) (1,627,920) 364,571 (6,395,975) (1,208,622) ------------- ------------- ------------- ------------- -------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 12,853,163 19,474,950 13,709,215 4,011,399 18,018,746 12,932,128 Benefit payments (1,060,178) (97,170) (202,145) - (524,641) (66,733) Payments on termination (3,242,915) (766,535) (1,080,127) (197,399) (1,911,538) (422,871) Contract maintenance charge (6,307) (11,185) (2,817) (2,605) (5,000) (6,887) Transfers among the sub-accounts and with the Fixed Account - net 890,529 26,030,568 7,401,783 5,844,510 5,169,813 13,149,980 ------------- ------------- ------------- ------------- -------------- ------------- Change in net assets resulting from capital transactions 9,434,292 44,630,628 19,825,909 9,655,905 20,747,380 25,585,617 ------------- ------------- ------------- ------------- -------------- ------------- INCREASE (DECREASE) IN NET ASSETS 1,330,732 36,800,746 18,197,989 10,020,476 14,351,405 24,376,995 NET ASSETS AT BEGINNING OF PERIOD 36,800,746 - 10,020,476 - 24,376,995 - ------------- ------------- ------------- ------------- -------------- ------------- NET ASSETS AT END OF PERIOD $38,131,478 $36,800,746 $28,218,465 $10,020,476 $ 38,728,400 $24,376,995 ============= ============= ============= ============= ============== ============= UNITS OUTSTANDING Units outstanding at beginning of period 4,656,277 - 936,439 - 2,687,654 - Units issued 4,352,659 5,325,043 5,747,188 2,675,270 20,752,870 7,011,913 Units redeemed (3,159,169) (668,766) (3,795,415) (1,738,831) (18,029,071) (4,324,259) ------------- ------------- ------------- ------------- -------------- ------------- Units outstanding at end of period 5,849,767 4,656,277 2,888,212 936,439 5,411,453 2,687,654 ============= ============= ============= ============= ============== =============
(d) For the Period Beginning January 31, 2000 and Ended December 31, 2000 See notes to financial statements 35 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Putnam Variable Trust Sub-Accounts The Universal Institutional Funds, Inc. Sub-Accounts ---------------------------- ------------------------------------------------------------- VT Voyager Emerarkets Equity Equity Growth ---------------------------- ----------------------------- ------------------------------ 2001 2000 (d) 2001 2000 2001 2000 ------------- ------------- ------------- -------------- -------------- -------------- FROM OPERATIONS Net investment income (loss) $ (453,948) $ (150,801) $ (272,717) $ (408,788) $ (1,295,529) $ (1,522,865) Net realized gains (losses) 1,371,107 (189,522) (3,937,517) 2,088,466 (9,461,293) 9,037,530 Change in unrealized gains (losses) (8,350,434) (4,274,119) 3,365,880 (13,971,580) (7,599,027) (26,639,061) ------------- ------------- ------------- -------------- -------------- -------------- Change in net assets resulting from operations (7,433,275) (4,614,442) (844,354) (12,291,902) (18,355,849) (19,124,396) ------------- ------------- ------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 14,580,601 15,917,834 2,817,762 10,687,977 8,016,968 26,800,090 Benefit payments (483,576) - (448,287) (264,494) (2,166,156) (1,101,811) Payments on termination (2,053,817) (633,137) (1,554,168) (1,504,909) (8,376,530) (7,282,991) Contract maintenance charge (4,970) (7,325) (5,829) (7,488) (17,033) (41,500) Transfers among the sub-accounts and with the Fixed Account - net 4,192,114 15,128,829 (1,827,017) (59,472) (11,909,590) 36,549,584 ------------- ------------- ------------- -------------- -------------- -------------- Change in net assets resulting from capital transactions 16,230,352 30,406,201 (1,017,539) 8,851,614 (14,452,341) 54,923,372 ------------- ------------- ------------- -------------- -------------- -------------- INCREASE (DECREASE) IN NET ASSETS 8,797,077 25,791,759 (1,861,893) (3,440,288) (32,808,190) 35,798,976 NET ASSETS AT BEGINNING OF PERIOD 25,791,759 - 18,310,137 21,750,425 108,899,652 73,100,676 ------------- ------------- ------------- -------------- -------------- -------------- NET ASSETS AT END OF PERIOD $34,588,836 $25,791,759 $16,448,244 $ 18,310,137 $ 76,091,462 $108,899,652 ============= ============= ============= ============== ============== ============== UNITS OUTSTANDING Units outstanding at beginning of period 3,176,076 - 2,272,435 1,586,252 9,444,030 5,271,726 Units issued 5,566,988 3,960,813 28,318,662 19,001,484 3,119,200 7,821,954 Units redeemed (3,258,210) (784,737) (28,295,190) (18,315,301) (4,327,095) (3,649,650) ------------- ------------- ------------- -------------- -------------- -------------- Units outstanding at end of period 5,484,854 3,176,076 2,295,907 2,272,435 8,236,135 9,444,030 ============= ============= ============= ============== ============== ==============
(d) For the Period Beginning January 31, 2000 and Ended December 31, 2000 See notes to financial statements 36 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
The Universal Institutional Funds, Inc. Sub-Accounts --------------------------------------------------------------------------------------- International Magnum Mid Cap Value U.S. Real Estate ---------------------------- --------------------------- ---------------------------- 2001 2000 2001 2000 (d) 2001 2000 ------------- ------------- ------------- ------------ ------------- ------------- FROM OPERATIONS Net investment income (loss) $ (200,036) $ (112,708) $ (495,491) $ (24,152) $ 688,337 $ 130,992 Net realized gains (losses) (1,320,553) 239,943 (646,175) 844,368 1,184,070 680,966 Change in unrealized gains (losses) (2,439,411) (2,386,683) 1,311,149 (694,490) (219,723) 1,473,607 ------------- ------------- ------------- ------------ ------------- ------------- Change in net assets resulting from operations (3,960,000) (2,259,448) 169,483 125,726 1,652,684 2,285,565 ------------- ------------- ------------- ------------ ------------- ------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 4,408,920 6,888,652 26,411,766 5,225,576 6,639,035 2,199,419 Benefit payments (184,304) (218,924) (262,132) (4,831) (115,172) (83,181) Payments on termination (1,357,299) (1,086,218) (1,592,265) (142,447) (2,328,953) (829,831) Contract maintenance charge (5,514) (7,789) (6,508) (1,966) (3,869) (5,703) Transfers among the sub-accounts and with the Fixed Account - net 373,747 5,829,986 30,415,069 2,759,559 5,698,417 7,508,547 ------------- ------------- ------------- ------------ ------------- ------------- Change in net assets resulting from capital transactions 3,235,550 11,405,707 54,965,930 7,835,891 9,889,458 8,789,251 ------------- ------------- ------------- ------------ ------------- ------------- INCREASE (DECREASE) IN NET ASSETS (724,450) 9,146,259 55,135,413 7,961,617 11,542,142 11,074,816 NET ASSETS AT BEGINNING OF PERIOD 20,496,204 11,349,945 7,961,617 - 16,313,340 5,238,524 ------------- ------------- ------------- ------------ ------------- ------------- NET ASSETS AT END OF PERIOD $19,771,754 $20,496,204 $63,097,030 $7,961,617 $27,855,482 $16,313,340 ============= ============= ============= ============ ============= ============= UNITS OUTSTANDING Units outstanding at beginning of period 2,019,182 948,787 779,054 - 1,454,011 595,388 Units issued 12,969,712 6,533,728 12,998,868 2,431,686 10,467,127 5,062,148 Units redeemed (12,487,223) (5,463,333) (7,306,337) (1,652,632) (9,620,118) (4,203,525) ------------- ------------- ------------- ------------ ------------- ------------- Units outstanding at end of period 2,501,671 2,019,182 6,471,585 779,054 2,301,020 1,454,011 ============= ============= ============= ============ ============= =============
(d) For the Period Beginning January 31, 2000 and Ended December 31, 2000 See notes to financial statements 37 NORTHBROOK VARIABLE ANNUITY ACCOUNT II STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEARS ENDED DECEMBER 31, - --------------------------------------------------------------------------------
Van Kampen Life Investment Van Kampen Life Investment Trust (Class II) Trust Sub-Account Sub-Account --------------------------------- ----------------- Lit Emerging Lit Emerging Growth Growth (Class II) --------------------------------- ----------------- 2001 2000 2001 (a) --------------- --------------- ----------------- FROM OPERATIONS Net investment income (loss) $ (3,012,387) $ (3,851,941) $ (91,147) Net realized gains (losses) (45,314,518) 7,737,918 (73,790) Change in unrealized gains (losses) (41,940,418) (73,283,344) (542,821) --------------- --------------- ----------------- Change in net assets resulting from operations (90,267,323) (69,397,367) (707,758) --------------- --------------- ----------------- INCREASE (DECREASE) IN NET ASSETS FROM CAPITAL TRANSACTIONS Deposits 18,217,319 98,979,814 16,979,578 Benefit payments (3,098,694) (1,770,332) (73,377) Payments on termination (17,798,015) (16,299,682) (65,489) Contract maintenance charge (48,420) (113,455) - Transfers among the sub-accounts and with the Fixed Account - net (23,769,801) 138,452,923 1,201,777 --------------- --------------- ----------------- Change in net assets resulting from capital transactions (26,497,611) 219,249,268 18,042,489 --------------- --------------- ----------------- INCREASE (DECREASE) IN NET ASSETS (116,764,934) 149,851,901 17,334,731 NET ASSETS AT BEGINNING OF PERIOD 280,016,309 130,164,408 - --------------- --------------- ----------------- NET ASSETS AT END OF PERIOD $ 163,251,375 $ 280,016,309 $ 17,334,731 =============== =============== ================= UNITS OUTSTANDING Units outstanding at beginning of period 15,481,969 5,431,871 - Units issued 11,986,090 17,245,951 2,284,044 Units redeemed (12,187,569) (7,195,853) (163,713) --------------- --------------- ----------------- Units outstanding at end of period 15,280,490 15,481,969 2,120,331 =============== =============== =================
(a) For the Period Beginning May 17, 2001 and Ended December 31, 2001 See notes to financial statements 38 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 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 MORGAN STANLEY 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 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 39 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 1. ORGANIZATION (CONTINUED) PUTNAM VARIABLE TRUST VT Growth and Income VT Voyager VT International Growth THE UNIVERSAL INSTITUTIONAL FUNDS, INC. Emerging Markets Equity Mid Cap Value Equity Growth U.S. Real Estate International Magnum VAN KAMPEN LIFE INVESTMENT TRUST LIT Emerging Growth VAN KAMPEN LIFE INVESTMENT TRUST (CLASS II) LIT Emerging Growth (Class II) 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 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 on fund shares 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. Income from realized gain distributions are recorded on the Fund's ex-distribution date. 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. OTHER - To conform with the 2001 presentation, certain amounts in the prior year's financial statements and notes have been reclassified. In addition, disclosures have been revised to adopt appropriate provisions of the AICPA Audit and Accounting Guide, AUDITS OF INVESTMENT COMPANIES. 40 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 at a rate ranging from .60% to 2.25% per annum of the daily net assets of the Account, based on Contract and rider options selected. 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. 41 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 4. PURCHASES OF INVESTMENTS The cost of purchases of investments for the year ended December 31, 2001 were as follows:
Purchases ------------------- Investments in the Morgan Stanley Variable Investment Series Sub-Accounts: Aggressive Equity $ 12,970,058 Capital Growth 23,539,607 Competitive Edge, "Best Ideas" 18,871,355 Dividend Growth 91,658,837 Equity 300,759,189 European Growth 254,203,125 Global Dividend Growth 32,789,082 High Yield 48,610,100 Income Builder 27,910,111 Information 12,534,242 Money Market 2,245,404,546 Pacific Growth 494,279,127 Quality Income Plus 113,236,959 S&P 500 Index 30,090,961 Short-Term Bond 29,436,540 Strategist 71,012,537 Utilities 59,911,850 Investments in the Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity 13,206,947 Capital Growth 5,736,437 Competitive Edge, "Best Ideas" 4,050,914 Dividend Growth 51,593,790 Equity 57,322,556 European Growth 58,920,665 Global Dividend Growth 9,586,618 High Yield 8,805,774 Income Builder 7,303,938 Information 8,636,978 Money Market 239,461,502 Pacific Growth 51,287,033 Quality Income Plus 50,364,324 S&P 500 Index 40,124,022 Short-Term Bond 23,102,833 Strategist 37,824,938 Utilities 22,199,563
42 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 4. PURCHASES OF INVESTMENTS (CONTINUED) The cost of purchases of investments for the year ended December 31, 2001 were as follows:
Purchases ------------------- Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V. I. Capital Appreciation $ 31,991,041 AIM V. I. Growth 13,614,985 AIM V. I. Value 77,801,344 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 25,020,577 Alliance Growth & Income 165,180,069 Alliance Premier Growth 26,420,828 Investments in the Putnam Variable Trust Sub-Accounts: VT Growth and Income 51,432,221 VT International Growth 133,555,729 VT Voyager 34,685,084 Investments in The Universal Institutional Funds, Inc. Sub-Accounts: Emerging Markets Equity 139,986,202 Equity Growth 20,285,164 International Magnum 73,046,277 Mid Cap Value 98,904,022 U.S. Real Estate 81,709,830 Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth 117,886,724 Investments in the Van Kampen Life Investment Trust (Class II) Sub-Account: LIT Emerging Growth (Class II) 18,898,339 ------------------- $ 5,667,165,494 ===================
43 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 5. FINANCIAL HIGHLIGHTS The range of lowest and highest accumulation unit values, the investment income ratio, the range of lowest and highest expense ratio assessed by Northbrook Life, and the corresponding range of total return is presented for each rider option of the sub-account which had outstanding units during the period. As explained in Note 3, the expense ratio represents mortality and expense risk and administrative expense charges which are assessed as a percentage of daily net assets. The amount deducted is based upon the product and the number and magnitude of rider options selected by each contractholder. This results in several unit values for each sub-account based upon those choices. ITEMS IN THE FOLLOWING TABLE ARE NOTATED AS FOLLOWS: * INVESTMENT INCOME RATIO - This represents dividends, excluding realized gain distributions, received by the sub-account, net of management fees assessed by the fund manager, divided by the average net assets. This ratio excludes those expenses that result in direct reductions in the unit values. The recognition of investment income by the sub-account is affected by the timing of the declaration of dividends in which the sub-accounts invest. ** EXPENSE RATIO - This represents the annualized contract expenses of the sub-account for the period and includes only those expenses that are charged through a reduction in the unit values. Excluded are expenses of the underlying fund portfolios and charges made directly to contractholder accounts through the redemption of units. *** TOTAL RETURN - This represents the total return for the period and reflects a deduction only for expenses assessed through the daily unit value calculation. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Returns were annualized for new products launched during 2001 to represent the return as if the contractholder was invested in the sub-account for the entire year. Sub-accounts with a date notation indicate the effective date of that investment option in the Account. The investment income ratio and total return are calculated for the period or from the effective date through the end of the reporting period.
At December 31, 2001 For the year ended December 31, 2001 -------------------- --------------------------------------------------------------- Accumulation Investment Expense Total Unit Value Income Ratio* Ratio** Return*** -------------------- --------------- ------------------- ------------------------- Investments in the Morgan Stanley Variable Investment Series Sub-Accounts: Aggressive Equity $ 6.47 - $ 9.91 0.32 % 0.70 % - 2.05 % -30.89 % - -28.96 % Capital Growth 7.04 - 22.75 0.54 0.70 - 2.05 -28.76 - -26.83 Competitive Edge, "Best Ideas" 6.36 - 7.51 0.63 0.70 - 2.05 -25.80 - -23.87 Dividend Growth 9.31 - 34.38 1.85 0.70 - 2.05 -7.79 - -5.87 Equity 6.57 - 48.84 0.48 0.70 - 2.05 -29.31 - -27.38 European Growth 7.45 - 33.05 1.11 0.70 - 2.05 -20.26 - -18.33 Global Dividend Growth 9.17 - 17.10 2.70 0.70 - 2.05 -8.84 - -6.91 High Yield 3.71 - 10.49 18.08 0.70 - 2.05 -36.14 - -34.21 Income Builder 10.05 - 12.96 4.71 0.70 - 1.85 0.55 - 1.45 Information 5.21 - 5.39 0.20 1.28 - 2.05 -44.17 - -43.60 Money Market 10.19 - 14.44 4.04 0.70 - 2.05 1.25 - 3.17 Pacific Growth 4.00 - 8.41 1.88 0.70 - 2.05 -29.86 - -27.93 Quality Income Plus 10.75 - 21.56 6.02 0.70 - 2.05 6.87 - 8.80 S&P 500 Index 7.74 - 10.22 0.90 0.70 - 2.05 -14.78 - -12.85 Short-Term Bond 10.46 - 11.14 4.23 0.70 - 2.05 4.05 - 5.98 Strategist 8.44 - 27.67 2.47 0.70 - 2.05 -12.74 - -10.81 Utilities 7.30 - 24.48 2.17 0.70 - 2.05 -28.20 - -26.27
44 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 5. FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, 2001 For the year ended December 31, 2001 -------------------- --------------------------------------------------------------- Accumulation Investment Expense Total Unit Value Income Ratio* Ratio** Return*** -------------------- --------------- ------------------- ------------------------- Investments in the Morgan Stanley Variable Investment Series (Class Y Shares) Sub-Accounts: Aggressive Equity $ 6.27 - $ 9.19 0.33 % 1.35 % - 2.20 % -30.21 % - -29.58 % Capital Growth 6.77 - 8.82 0.55 1.35 - 2.20 -28.11 - -27.48 Competitive Edge, "Best Ideas" 6.30 - 8.98 0.62 1.35 - 2.20 -25.20 - -24.57 Dividend Growth 9.28 - 9.97 1.79 1.35 - 2.20 -7.33 - -6.70 Equity 6.36 - 9.22 0.31 1.35 - 2.20 -28.68 - -28.05 European Growth 7.38 - 9.56 1.21 1.35 - 2.20 -19.66 - -19.03 Global Dividend Growth 9.09 - 9.69 2.50 1.35 - 2.20 -8.34 - -7.71 High Yield 4.49 - 7.72 21.82 1.35 - 2.20 -35.44 - -34.81 Income Builder 9.60 - 10.10 4.76 1.35 - 2.20 0.10 - 0.73 Information 5.19 - 8.93 0.18 1.35 - 2.20 -44.39 - -43.76 Money Market 10.02 - 10.49 3.35 1.35 - 2.20 1.62 - 2.25 Pacific Growth 5.18 - 8.16 3.73 1.35 - 2.20 -28.87 - -28.24 Quality Income Plus 10.39 - 11.59 5.34 1.35 - 2.20 7.22 - 7.85 S&P 500 Index 7.62 - 9.45 0.86 1.35 - 2.20 -14.34 - -13.71 Short-Term Bond 10.25 - 10.82 3.47 1.35 - 2.20 4.43 - 5.06 Strategist 8.29 - 9.53 2.47 1.35 - 2.20 -12.24 - -11.61 Utilities 6.76 - 8.31 2.20 1.35 - 2.20 -27.61 - -26.98 Investments in the AIM Variable Insurance Funds Sub-Accounts: AIM V. I. Capital Appreciation 5.77 - 11.84 0.00 0.70 - 2.20 -25.96 - -23.82 AIM V. I. Growth 4.77 - 8.83 0.26 0.70 - 2.20 -36.49 - -34.35 AIM V. I. Value 6.87 - 11.06 0.17 0.70 - 2.20 -15.32 - -13.18 Investments in the Alliance Variable Product Series Fund Sub-Accounts: Alliance Growth 5.98 - 11.65 0.22 0.70 - 2.20 -25.71 - -24.11 Alliance Growth & Income 9.49 - 11.68 0.47 0.70 - 2.20 -2.69 - -0.55 Alliance Premier Growth 6.38 - 11.40 0.00 0.70 - 2.20 -20.12 - -17.98 Investments in the Putnam Variable Trust Sub-Accounts: VT Growth and Income 9.25 - 10.63 1.20 0.70 - 2.20 -8.82 - -7.01 VT International Growth 7.01 - 10.83 0.22 0.70 - 2.20 -23.31 - -21.17 VT Voyager 6.03 - 11.03 0.00 0.70 - 2.20 -25.10 - -22.95 Investments in The Universal Institutional Funds, Inc. Sub-Accounts: Emerging Markets Equity 5.71 - 9.77 0.00 0.70 - 2.20 -8.92 - -7.11 Equity Growth 6.86 - 10.14 0.00 0.70 - 2.20 -17.85 - -15.71 International Magnum 7.15 - 9.09 0.51 0.70 - 2.20 -21.61 - -19.80 Mid Cap Value 9.08 - 12.10 0.00 0.70 - 2.20 -5.97 - -3.83 U.S. Real Estate 10.22 - 13.95 4.53 0.70 - 2.20 7.72 - 8.89
45 NOTES TO FINANCIAL STATEMENTS (CONTINUED) - -------------------------------------------------------------------------------- 5. FINANCIAL HIGHLIGHTS (CONTINUED)
At December 31, 2001 For the year ended December 31, 2001 -------------------- --------------------------------------------------------------- Accumulation Investment Expense Total Unit Value Income Ratio* Ratio** Return*** -------------------- --------------- ------------------- ------------------------- Investments in the Van Kampen Life Investment Trust Sub-Account: LIT Emerging Growth $ 5.18 - $ 14.49 0.00 % 0.70 % - 2.05 % -33.90 % - -31.97 % Investments in the Van Kampen Life Investment Trust (Class II) Sub-Account: LIT Emerging Growth (Class II) (a) 8.08 - 8.77 0.00 1.35 - 2.20 -19.57 - -18.94
(a) For the Period Beginning May 17, 2001 and Ended December 31, 2001 46 PART C OTHER INFORMATION 24. FINANCIAL STATEMENTS AND EXHIBITS (a) FINANCIAL STATEMENTS Northbrook Life Insurance Company Financial Statements and Northbrook Variable Annuity Account II Financial Statements are included in the 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 (Previously filed in Post-Effective Amendment No. 13 to this Registration Statement (File No. 033-35412) dated December 31, 1996). (2) Not applicable. (3)(a) Form of Underwriting Agreement (Previously filed in Post-Effective Amendment No. 13 to this Registration Statement (File No. 033-35412) dated December 31, 1996). (b) Form of General Agency Agreement (Previously filed in Post-Effective Amendment No. 13 to this Registration Statement (File No. 033-35412) dated December 31, 1996). (4)(a) Form of Contract, Riders and Amendments for the Morgan Stanley Variable Annuity II ("VA II")(Previously filed in Post-Effective Amendment Nos. 13, 14, 20, 23 and 25 to this Registration Statement (File No. 033-35412) dated December 31, 1996, February 28, 1997, March 3, 1999, and February 15, 2000). (b) Form of Contract and Certificate Amendments for the Morgan Stanley Variable Annuity II Asset Manager (Previously filed in Post-Effective Amendment Nos. 19, and 20 to this Registration Statement (File No. 033-35412) dated June 5, 1998 and March 3, 1999 respectively). (c) Form of Contract and Amendments for the Morgan Stanley Variable Annuity 3 (Previously filed in Post-Effective Amendment No. 24 to this Registration Statement (File No. 033-35412) dated March 2, 2000). (d) Income Benefit Combination Rider 2 ("VA II") (Previously filed in Post-Effective Amendment No. 28 to this Registration Statement (File No. 033-35412) dated August 25, 2000). (e) Income and Death Benefit Combination Rider 2 ("VA II") (Previously filed in Post-Effective Amendment No. 28 to this Registration Statement (File No. 033-35412) dated August 25, 2000). (f) Enhanced Earnings Death Benefit Rider ("VA II") (Previously filed in Post-Effective Amendment No. 31 to this Registration Statement (File No. 033-35412) dated November 8, 2000). (g) Enhanced Earnings Death Benefit Plus Rider (Variable Annuity 3) (Previously filed in Post-Effective Amendment No. 32 to this Registration Statement (File No. 033-35412) dated March 16, 2001. (h) Form of Longevity Reward Rider ("VA II") (Previously filed in Post-Effective Amendment No. 35 to this Registration Statement (File No. 033-35412) dated October 12, 2001). (i) Income and Performance Death Benefit Rider (VAII, VA3) filed herewith. (5)(a) Form of Application for the Morgan Stanley Variable Annuity II (Previously filed in Post-Effective Amendment No. 13 to this Registration Statement (File No. 033-35412) dated December 31, 1996). (b) Form of Application for the Morgan Stanley Variable Annuity II Asset Manager (Previously filed in Post-Effective Amendment No. 19 to this Registration Statement (File No. 033-35412) dated June 5, 1998). (c) Form of Application for the Morgan Stanley Variable Annuity 3 (Previously filed in Post-Effective Amendment No. 26 to this Registration Statement (File No. 033-35412) dated May 2, 2000). (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: (8)(a) Morgan Stanley Variable Investment Series (Previously filed in Post-Effective Amendment No. 12 to this Registration Statement (File No. 033-35412) dated April 29, 1996). (b) The Universal Institutional Funds, Inc. (Incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (File No. 333-93871) dated January 28, 2000). (c) AIM Variable Insurance Funds (Incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (File No.333-93871) dated January 28, 2000). (d) Alliance Variable Products Series Fund (Incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (File No.333-93871) dated January 28, 2000). (e) Putnam Variable Trust (Incorporated herein by reference to Post- Effective Amendment No. 1 to Registrant's Registration Statement (File No. 333-93871)dated January 28, 2000). (f) Van Kampen Life Investment Trust (Incorporated herein by reference to Post-Effective Amendment No. 1 to Registrant's Registration Statement (File No. 333-93871) dated January 28, 2000). (g) LSA Variable Series Trust, dated May 1, 2002 filed herewith. (9)(a) 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. 26 to this Registration Statement (File No. 033-35412) dated May 2, 2000). (b) 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. 28 to this Registration Statement (File No. 033-35412) dated August 25, 2000). (c) 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. 30 to this Registration Statement (File No. 033-35412) dated November 3, 2000). (d) 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. 31 to this Registration Statement (File No. 033-35412) dated November 8, 2000). (e) 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. 33 to this Registration Statement (File No. 033-35412) dated April 25, 2001). (f) 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. 34 to this Registration Statement (File No. 033-35412) dated September 20, 2001). (g) Opinion and Consent of General Counsel filed herewith. (10)(a) Independent Auditors' Consent filed herewith. (b) Consent of Foley & Lardner filed herewith. (11) Not applicable. (12) Not applicable. (13) Performance Data Calculations (a) Morgan Stanley Variable Annuity II (Previously filed in Post-Effective Amendment No. 17 to this Registration Statement (File No. 033-3542) dated March 5, 1998). (b) Morgan Stanley Variable Annuity 3 (Previously filed in Post-Effective Amendment No. 26 to this Registration Statement (File No. 033-35412) dated May 2, 2000). (c) Morgan Stanley Variable Annuity II, Variable Annuity II Asset Manager and Variable Annuity 3 (Previously filed in Post-Effective Amendment No. 33 (File No. 033-35412) dated September 20, 2001. (d) Morgan Stanley Variable Annuity II, Variable Annuity II Asset Manager and Variable Annuity 3 filed herewith. (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. 26 to Form N-4 Registration Statement (File No. 033-35412) dated May 2, 2000). (b) Powers of Attorney for Margaret G. Dyer, Marla G. Friedman, John C. Lounds, and J. Kevin McCarthy (Previously filed in Post-Effective Amendment No. 33 to this Registration Statement (File No. 033-35412) dated April 25, 2001). (c) Power of Attorney for Steven E. Shebik (Previously filed in Post- Effective Amendment No. 34 to this Registration Statement (File No. 033-35412) dated September 20, 2001). 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR, NORTHBROOK LIFE INSURANCE COMPANY NAME AND PRINCIPAL POSITION AND OFFICE WITH THE DEPOSITER BUSINESS ADDRESS* 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 E. Shebik Director and Vice President (Principal Financial Officer) John R. Hunter Vice President Kevin R. Slawin Vice President Timothy N. Vander Pas 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 President and Controller (Principal Accounting Officer) James P. Zils Treasurer 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 William F. Emmons Assistant Secretary Paul N. Kierig Assistant Secretary Mary J. McGinn Assistant Secretary Errol Cramer Appointed Actuary *The principal business address of Mr. Emmons is 2940 South 84th Street, Lincoln, Nebraska, 68506. The principal office of Mr. Slawin is 544 Lakeview Parkway, Vernon Hills, Illinois 60061. 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, 2002 (File No. 1-11840). 27. NUMBER OF CONTRACT OWNERS (a) Variable Annuity II. As of January 31, 2002 there were 74,019 non-qualified contracts and 17,133 qualified contracts. (b) Variable Annuity II Asset Manager. As of January 31, 2002 there were 230 non-qualified contracts and 156 qualified contracts. (c) Variable Annuity III. As of January 31, 2002 there were 9,176 non-qualified contracts and 6,853 qualified contracts. 28. INDEMNIFICATION The General Agency Agreement (Exhibit 3(b)) contains a provision in which Northbrook Life agrees to indemnify Morgan Stanley DW Inc. 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 his 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, Morgan Stanley DW 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 principal officers of the principal underwriter are: Name and Principal Business Positions and Officers Address* of Each Such Person with Principal 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 the above-named individuals is 1585 Broadway, New York, New York 10036. (c) Compensation of Morgan Stanley DW 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 Compensation Underwriter Commissions Redemption Commissions - -------------------------------------------------------------------------------- Morgan Stanley DW Inc. N/A N/A $24,597,731.06 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, Morgan Stanley DW Inc., is located at 1585 Broadway, New York, New York 10036. 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 Life Insurance Company 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 Life Insurance Company under the Contracts. Northbrook Life Insurance Company 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 Life Insurance Company 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 the 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 April 29, 2002. 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 April 29, 2002. */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 E. SHEBIK Director and Vice President Steven E. Shebik (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 previously filed or filed herewith. EXHIBIT INDEX Exhibit Description (4)(i) Income and Performance Death Benefit Rider (8)(g) LSA Variable Series Participation Agreement (9)(g) Opinion and Consent of General Counsel (10)(a) Independent Auditors' Consent (10)(b) Consent of Foley & Lardner (13)(d) Performance Data Calculation EX-4 3 exhibit4i.txt RIDER NORTHBROOK LIFE INSURANCE COMPANY (herein called "we" or "us") Income and Performance Death Benefit Combination Rider This rider was issued because you selected the Performance Death Benefit and the Income Benefit Combination. As used in this rider, "Contract" means the Contract or Certificate to which this rider is attached. For purposes of this rider, "Rider Date" is the date this rider was issued as a part of your Contract: xx/xx/xxxx The following changes are made to your Contract. Performance Death Benefit The Death Benefit provision of your Contract is modified as follows: If the Owner is a natural person, the Performance Death Benefit applies only to the death of the Owner. If the Owner is not a natural person, the Performance Death Benefit applies only to the death of the Annuitant. This is unlike the death benefit defined in the Death Benefit provision of your Contract which may apply to the death of the Annuitant even if the Owner is a natural person. The Death Benefit will be the greatest of the values stated in your Contract, or the value of the Performance Death Benefit. After the Rider Date, the Performance Death Benefit is recalculated when a purchase payment or withdrawal is made or on a Contract anniversary as follows: Death Benefit - - On the Rider Date, the Death Benefit is equal to the Contract value. - - After the Rider Date, the Death Benefit is recalculated when a purchase payment or a withdrawal is made or on a Contract anniversary as follows: - For purchase payments for all ages, the Death Benefit is equal to the most recently calculated Death Benefit plus the purchase payment. - For withdrawals for all ages, the Death Benefit is equal to the most recently calculated Death Benefit reduced by a withdrawal adjustment defined below. - The Death Benefit will be recalculated for purchase payments, for withdrawals and on Contract anniversaries until the first Contract anniversary after the 85th birthday of the oldest Owner or, if the Owner is not a living individual, the oldest Annuitant. In the absence of any withdrawals or purchase payments, the Death Benefit will be the greater of the Contract value on the Rider Date and all Contract anniversary Contract values between the Rider Date and the date we calculate the Death Benefit. Withdrawal Adjustment The withdrawal adjustment is equal to (1) divided by (2) with the result multiplied by (3) where: (1) = the withdrawal amount. (2) = the Contract value immediately prior to the withdrawal. (3) = the most recently calculated Death Benefit, as applicable Income Benefit Combination The following is added to your Contract: Qualifications On the Payout Start Date, the Owner may choose to receive income payments defined in the Income Benefit Combination provision if all of the following conditions are met. - - The Owner elects a Payout Start date that is on or after the 10th anniversary of the Rider Date; - - The Payout Start Date occurs during the 30 day period following the Contract anniversary; - - The Income Base is applied to Fixed Account Income Payments or Variable Amount Income Payments as we may permit from time to time for all owners who choose to receive Income Payments under this rider; and - - The selected Income Plan provides payments guaranteed for either single or joint life with a period certain of at least: - 10 years, if the youngest Annuitant's age is 80 or less on the date the amount is applied, or - 5 years, if the youngest Annuitant's age is greater than 80 on the date the amount is applied. Throughout the PAYOUT PHASE section of your Contract, the term "Contract value" is replaced with "The greater of the Contract value or the Income Benefit Combination." If the amount applied to an Income Plan is the Contract value, then the Income Plan may be any plan then offered by us. Income Base The Income Base is the greater of Income Base A or Income Base B. Income base is used solely for the purpose of calculating the Income Benefit Combination and does not provide a Contract value or guarantee performance of any investment option. Income Base A. - On the Rider Date, Income Base A is equal to the Contract value. - After the Rider Date, Income Base A is recalculated as follows on the Contract anniversary and when a purchase payment or withdrawal is made. - For the purchase payments, Income Base A is equal to the most recently calculated Income Base A plus the purchase payment. - For withdrawals, Income Base A is equal to the most recently calculated Income Base A reduced by a withdrawal adjustment. - On each Contract anniversary, Income Base A is equal to the greater of the Contract value or the most recently calculated Income Base A. In the absence of any withdrawals or purchase payments, Income Base A will be the greatest of the Contract value on the Rider Date and all Contract anniversary Contract values between the Rider Date and the Payout Start Date. Income Base A will be recalculated for purchase payments, for withdrawals and on Contract anniversaries until the first Contract anniversary after the 85th birthday of the oldest Owner or, if no Owner is a living individual, the oldest Annuitant. After that date, Income Base A will be recalculated only for purchase payments and withdrawals. Income Base B. On the Rider Date, Income Base B is equal to the Contract value. After the Rider Date, Income Base B plus any subsequent purchase payments and less a withdrawal adjustment for any subsequent withdrawals will accumulate daily at a rate equivalent to 5% per year until the first Contract anniversary after the 85th birthday of the oldest Owner or, if the Owner is not a living individual, the oldest Annuitant. Withdrawal Adjustment The adjustment is equal to (1) divided by (2), with the result multiplied by (3) where: (1) = the withdrawal amount. (2) = the Contract value immediately prior to the withdrawal. (3) = the most recently calculated Income Base. Guaranteed Income Benefit The Guaranteed Income Benefit amount is determined by applying the Income Base to the guaranteed rates for the Income Plan elected by the Owner. The Income Plan selected must satisfy the conditions defined in Qualifications above. The rates are the guaranteed rates defined in the Income Payment Tables section of the Contract for either a single or joint life with a period certain. On the Payout Start Date, the income payment will be the greater of the Guaranteed Income Benefit and the income payment provided in the Payout Phase section of the Contract. Mortality and Expense Risk Charge The Mortality and Expense Risk Charge provision of your Contract is modified as follows: On and after the Rider Date, the maximum annualized Mortality and Expense Risk Charge is increased by 0.43% for this rider. Except as amended by this rider, the Contract remains unchanged. Michael J. Velotta Thomas J. Wilson - -------------------------------------------------------------------------------- [GRAPHIC OMITTED][GRAPHIC OMITTED] - -------------------------------------------------------------------------------- Secretary Chairman and Chief Executive Officer EX-8 4 va2exhibit8g.txt PARTICIPATION AGREEMENT Exhibit 8(g) PARTICIPATION AGREEMENT Among LSA VARIABLE SERIES TRUST, LSA ASSET MANAGEMENT LLC And NORTHBROOK LIFE INSURANCE COMPANY THIS AGREEMENT (the "Agreement"), made and entered into as of the first day of May 2002, by and among Northbrook Life Insurance Company (hereinafter the "Company"), on its own behalf and on behalf of each separate account of the Company named in Schedule 1 to this Agreement (collectively, the "Accounts"), LSA Variable Series Trust (the "Fund") and LSA Asset Management LLC (the "Manager"). WHEREAS, the Fund is an open-end management investment company and is available to act as the investment vehicle for separate accounts now in existence or to be established in the future for variable life insurance policies, variable annuity contracts and other tax-deferred products offered by insurance companies (the "Participating Insurance Companies"); WHEREAS, the beneficial interest in the Fund is divided into several series of shares, each designated a "Portfolio", (collectively, the "Portfolios") and each representing the interests in a particular managed pool of securities and other assets; WHEREAS, the Fund has obtained an order from the Securities and Exchange Commission (the "SEC"), dated October 4, 1999 (File No. 812-11656) (hereinafter, the "Order") granting relief to the Fund, the Manager and any subsequently registered open-end investment companies that in the future are advised by the Manager, or by any entity controlling, controlled by, or under common control with the Manager. Specifically, the Order provides exemptions from Section 15(a) of the 1940 Act and Rule 18f-2 thereunder, subject to the conditions set forth in the application, to permit investment advisers other than the Manager, to serve and act as an investment sub-adviser to one or more portfolios of the Fund (the "Adviser(s)") pursuant to written agreements between the Manager and each Adviser that have been approved by the Board of Trustees of the Fund (the "Board") but which have not been approved by a vote of a majority of the outstanding voting securities of each portfolio. The Order also provides exemptions from: certain registration statement disclosure requirements of Items 3, 6(a)(1)(ii) and 15(a)(3) of Form N1-A and Item 3 of Form N-14; certain proxy statement disclosure requirements of Items 22(a)(3)(iv), (c)(1)(ii), (c)(1)(iii), (c)(8) and (c)(9) of Schedule 14A under the Securities Exchange Act of 1934, as amended; certain semi-annual reporting disclosure requirements of Item 48 of Form N-SAR; and, certain financial statement disclosure requirements of Sections 6-07(2)(a), (b), and (c) of Regulation S-X which may be deemed to require various disclosures regarding advisory fees paid to the Advisers; WHEREAS, the Fund is registered as an open-end management investment company under the Investment Company Act of 1940, as amended (the "1940 Act") and its shares are registered under the Securities Act of 1933, as amended (the "1933 Act"): WHEREAS, the Manager is duly registered as an investment adviser under the Investment Advisers Act of 1940: WHEREAS, the Company has registered or will register certain variable annuity and/or life insurance contracts under the 1933 Act (the "Contracts") (unless an exemption from registration is available); WHEREAS, the Accounts are or will be duly organized, validly existing segregated asset accounts, established by resolution of the Board of Directors of the Company, to set aside and invest assets attributable to the Contracts and the Accounts; WHEREAS, the Company has registered or will register the Accounts as unit investment trusts under the 1940 Act (unless an exemption from registration is available); WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in the Portfolios (as named in Schedule 2 to this Agreement and as may be amended from time to time by mutual consent of the parties) on behalf of the Accounts to fund the Contracts (as named in Schedule 3 to this Agreement and as may be amended from time to time by mutual consent of the parties) and the Fund is authorized to sell such shares to the Accounts at net asset value; and NOW, THEREFORE, in consideration of their mutual promises, the Fund, the Manager and the Company agree as follows: ARTICLE I. Sale of Fund Shares 1.1. The Fund agrees to sell to the Company those shares of the Fund which the Company orders on behalf of the Account, executing such orders on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the order for the shares of the Fund. For purposes of this Section 1.1, the Company shall be the designee of the Fund for receipt of such orders from each Account and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives notice of such order by 9:30 a.m. Eastern Standard Time on the next following Business Day. "Business Day" shall mean any day on which the New York Stock Exchange is open for trading and on which the Fund calculates its net asset value pursuant to the rules of the SEC. 1.2. The Company will pay for Fund shares on the next Business Day after it places an order to purchase Fund shares in accordance with Section 1.1. Payment shall be in federal funds transmitted by wire or by a credit for any shares redeemed. 1.3 The Fund agrees to make Fund shares available for purchase at the applicable net asset value per share by the Company for its Accounts (as named in Schedule 1 to this Agreement and as may be amended from time to time by mutual consent of the parties) on those days on which the Fund calculates its net asset value pursuant to the rules of the SEC; provided, however, that the Board may refuse to sell shares of any Portfolio to any person, or suspend or terminate the offering of shares of any Portfolio if such action is required by law or by regulatory authorities having jurisdiction or is, in the sole discretion of the Board, acting in good faith and in light of their fiduciary duties under federal and any applicable state laws, in the best interests of the shareholders of any Portfolio. 1.4 The Fund agrees to redeem, upon the Company's request, any full or fractional shares of the Fund held by the Company, executing such requests on a daily basis at the net asset value next computed after receipt by the Fund or its designee of the request for redemption. For purposes of this Section 1.4, the Company shall be the designee of the Fund for receipt of requests for redemption and receipt by such designee shall constitute receipt by the Fund; provided that the Fund receives written (or facsimile) notice of such request for redemption by 9:30 a.m. Eastern Standard Time on the next following Business Day. Payment shall be made within the time period specified in the Fund's prospectus or statement of additional information, in federal funds transmitted by wire to the Company's account as designated by the Company in writing from time to time. 1.5 The Company shall pay for the Fund shares on the next Business Day after an order to purchase shares is made in accordance with the provisions of Section 1.4. Payment shall be in federal funds transmitted by wire pursuant to the instructions of the Fund's treasurer or by a credit for any shares redeemed. 1.6 The Company agrees to purchase and redeem the shares of the Portfolios named In Schedule 2 offered by the Fund's then current prospectus and statement of additional information in accordance with the provisions of such prospectus and statement of additional information. 1.7 Net Asset Value. The Fund shall use its best efforts to inform the Company of the net asset value per share for each Portfolio available to the Company by 6:30 p.m. Eastern Standard Time or as soon as reasonably practicable after the net asset value per share for such Portfolio is calculated. The Fund shall calculate such net asset value in accordance with the prospectus for such Portfolio. In the event that net asset values are not communicated to the Company by such time, the Company agrees to use its best efforts to include the net asset value when received in its next business cycle for purposes of calculating purchase orders and requests for redemption. However, if net asset values are not available for an inclusion in the next business cycle and purchase orders/redemptions are not able to be calculated and available to the Company to execute within the time-frame identified in Section 2.3 (a), the Fund shall reimburse and make the Company whole for any losses incurred as a result of such delays. 1.8 Pricing Errors. Any material errors in the calculation of the net asset value, dividends or capital gain information shall be reported to the Fund promptly upon discovery by the Company. An error shall be deemed "material" based on the Company's interpretation of the SEC's position and policy with regard to materiality, as it may be modified from time to time. Neither the Fund, the Manager, nor any of their affiliates shall be liable for any information provided to the Company pursuant to this Agreement which information is based on incorrect information supplied by or on behalf of the Company or any other Participating Company to the Fund or the Manager. The Fund shall make the Company whole for any payments or adjustments to the number of shares in the Account that are reasonably demonstrated to be required as a result of pricing errors. ARTICILE II. Representations and Warranties 2.1 The Company represents and warrants that the Contracts are or will be registered under the 1933 Act; that the Contracts will be issued and sold in compliance in all material respects with all applicable federal and state laws and that sale of the Contracts shall comply in all material respects with state insurance suitability requirements. The Company further represents and warrants that is an insurance company duly organized and in good standing under applicable law and that it has legally and validly established each Account prior to any issuance or sale thereof as a segregated asset account under laws of the State of Arizona and has registered or, prior to any issuance or sale of the Contracts, will register each Account as a unit investment trust in accordance with the provisions of the 1940 Act to serve as a segregated investment account for the Contracts. 2.2 The Fund represents and warrants that Fund shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold in compliance with the applicable laws of the State of Delaware and all applicable federal and state securities laws and that the Fund is and shall remain registered under the 1940 Act. The Fund shall amend the registration statement for its shares under the 1933 Act and the 1940 Act from time to time as required in order to effect the continuous offering of its shares. The Fund shall register and qualify the shares for sale in accordance with the laws of the various states only if and to the extent deemed advisable by the Fund. 2.3 The Fund represents that it is currently qualified as a Regulated Investment Company under Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code"), and that it will make every effort to maintain such qualification (under Subchapter M or any successor or similar provision) and that it will notify the Company immediately upon having a reasonable basis for believing that it has ceased to so qualify or that it might not so qualify in the future. 2.4 The Company represents that the Contracts are currently treated as life insurance policies or annuity contracts, under applicable provisions of the Code and that it will make every effort to maintain such treatment and that it will notify the Fund immediately upon having a reasonable basis for believing that the Contracts have ceased to be so treated or that they might not be so treated in the future. 2.5 The Fund represents that to the extent that it decides to finance distribution expenses pursuant to Rule 12b-1 under the 1940 Act, the Fund undertakes to have its Board, a majority of whom are not interested persons of the Fund, formulate and approve any plan under Rule 12b-1 to finance distribution expenses. 2.6 The Fund makes no representation as to whether any aspect of Its operations (including, but not limited to, fees and expenses and investment policies) complies with the insurance laws or regulations of the various states except that the Fund represents that the Fund's investment policies, fees and expenses are and shall at all times remain in compliance with the applicable laws of the State of Delaware and the Fund represents that its operations are and shall at all times remain in material compliance with the applicable laws of the State of Delaware to the extent required to perform this Agreement. 2.7 The Fund represents that it is lawfully organized and validly existing under the laws of the State of Delaware and that it does and will comply in all material respects with the 1940 Act. 2.8 The Manager represents and warrants that it is and shall remain duly registered in all material respects under all applicable federal and state securities laws and that it will perform its obligations for the Fund in compliance in all material respects with the laws of its state of domicile and any applicable state and federal securities laws. The Manager further represents that it will make reasonable efforts to verify that all subadvisers are similarly registered. 2.9 The Fund represents and warrants that its trustees, officers, employees, and other individuals/entities, if any, dealing with the money and/or securities of the Fund are and shall continue to be at all times covered by a blanket fidelity bond or similar coverage for the benefit of the Fund in an amount not less than the minimal coverage as required currently by Rule 17g-(1) of the 1940 Act or related provisions as may be promulgated from time to time. The aforesaid blanket fidelity bond shall include coverage for larceny and embezzlement and shall be issued by a reputable bonding company. 2.10 The Company represents and warrants that all of its directors, officers, employees, investment advisers, and other individuals/entities, if any, dealing with the money and/or securities of the Fund are covered by a blanket fidelity bond or similar coverage, in an amount not less $5 million. The aforesaid includes coverage for larceny and embezzlement is issued by a reputable bonding company. The Company agrees to make all reasonable efforts to see that this bond or another bond containing these provisions is always in effect, and agrees to notify the Fund and the Manager in the event that such coverage no longer applies. ARTICLE III. Sales Material, Prospectuses and Other Reports 3.1 The Company shall furnish, or shall cause to be furnished, to the Fund or its designee, each piece of sales literature or other promotional material in which the Fund or the Manager is named, at least five Business Days prior to its use. No such material shall be used if the Fund or its designee reasonably objects to such use within five Business Days after receipt of such material. 3.2 Except with the express permission of the Fund, the Company shall not give any information or make any representations or statements on behalf of the Fund or concerning the Fund in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Fund shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in reports or proxy statements for the Fund, or in sales literature or other promotional material approved by the Fund or its designee. 3.3 For purposes of this Article III, the phrase "sales literature or other promotional material" shall mean advertisements (such as material published, or designed for use in, a newspaper, magazine, or other periodical, radio, television, telephone or tape recording, videotape display, signs or billboard or electronic media), and sales literature (such as brochures, circulars, market letters and form letters), distributed or made generally available to customers or the public. 3.4 The Fund shall provide a copy of its current prospectus within a reasonable period of its effective filing date, and provide other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus for the Fund is supplemented or amended) to have the prospectus for the Contracts and the prospectus for the Fund printed together in one document (such printing to be at the Company's expense). The Manager shall be permitted to review and approve the typeset form of the Fund's prospectus prior to such printing. 3.5 The Fund or the Manager shall provide the Company with either: (i) a copy of the Fund's proxy material, reports to shareholders, other information relating to the Fund necessary to prepare financial reports, and other communications to shareholders for printing and distribution to Contract owners at the Company's expense, or (ii) camera ready and/or printed copies, if appropriate, of such material for distribution to Contract owners at the Company's expense, within a reasonable period of the filing date for definitive copies of such material. The Manager shall be permitted to review and approve the typeset form of such proxy material, shareholder reports and communications prior to such printing. ARTICLE IV. Fees and Expenses 4.1 The Fund and Manager shall pay no fee or other compensation to the Company under this Agreement, and the Company shall pay no fee or other compensation to the Fund or Manager, except as provided herein. 4.2 All expenses incident to performance by each party of its respective duties under this Agreement shall be paid by that party. The Fund shall ensure that all its shares are registered and authorized for issuance in accordance with applicable federal law and, if and to the extent advisable by the Fund, in accordance with applicable state laws prior to their sale. The Fund shall bear the expenses for the cost of registration and qualification of the Fund's shares, preparation and filing of the Fund's prospectus and registration statement, proxy materials and reports, and the preparation of all statements and notices required by any federal or state law. 4.3 The Fund, at its expense, shall provide the Company with copies of its proxy statements, reports to shareholders, and other communications (except for prospectuses and statements of additional information, which are covered in section 3.4) to shareholders in such quantity as the Company shall reasonably require for distributing to Contract owners. The Fund shall bear the expense of mailing such proxy materials in the event the proxy vote is a result of actions initiated by the Fund. 4.4 In the event the Fund adds one or more additional Portfolios and the parties desire to make such Portfolios available to the respective Contract owners as an underlying investment medium, a new Schedule 3 which shall be an amendment to this Agreement shall be executed by the parties authorizing the issuance of shares of the new Portfolios to the particular Account. The amendment may also provide for the sharing of expenses for the establishment of new Portfolios among Participating Insurance Companies desiring to invest in such Portfolios and the provision of funds as the initial investment in the new Portfolios. 4.5 Except as provided in this Section 4.5, all expenses of preparing, setting in type and printing and distributing Fund prospectuses and statements of additional information shall be the expense of the Company. For prospectuses and statements of additional information, or supplements thereto, provided by the Company to its existing owners of Contracts who currently own shares of one or more of the Fund's Portfolios, in order to update disclosure as required by the 1933 Act and/or the 1940 Act, the cost of printing shall be borne by the Fund. If the Company chooses to receive camera-ready film or computer diskettes in lieu of receiving printed copies of the Fund's prospectus, the Fund shall bear the cost of typesetting to provide the Fund's prospectus to the Company in the format in which the Fund is accustomed to formatting prospectuses, and the Company shall bear the expense of adjusting or changing the format to conform with any of its prospectuses. In such event, the Fund will reimburse the Company in an amount equal to the product of x and y where x is the number of such prospectuses distributed to owners of the Contracts who currently own shares of one or more of the Fund's Portfolios, and y is the Fund's per unit cost of typesetting and printing the Fund's prospectus. The same procedure shall be followed with respect to the Fund's statement of additional information. The Company agrees to provide the Fund or its designee with such information as may be reasonably requested by the Fund to assure that the Fund's expenses do not include the cost of printing, typesetting, and distributing any prospectuses or statements of additional information other than those actually distributed to existing owners of the Contracts who currently own shares of one or more of the Fund's Portfolios. ARTICLE V. Conditions of the Order: Applicable Law 5.1 The Company has reviewed a copy of the Order, and in particular, has reviewed the conditions to the requested relief set forth therein. The Company agrees to be bound by the responsibilities of a Participating Insurance Company as set forth in the Order. 5.2 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the State of Delaware. 5.3 This Agreement shall be subject to the provisions of the 1933, 1934 and 1940 Acts, and the rules and regulations and rulings thereunder, including such exemptions from those statutes, rules and regulations as the SEC may grant (including, but not limited to, the Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE VI. Diversification 6.1 The Fund will at all times invest money from the Contracts in such a manner as to ensure that the Contracts will be treated as variable contracts under the Code and the regulations issued thereunder. Without limiting the scope of the foregoing, the Fund will at all times comply with Section 817(h) of the Code and Treasury Regulation 1.817-5, relating to the diversification requirements for variable annuity, endowment, or life insurance contracts and any amendments or other modifications to such Section or Regulations. In the even of a breach of this Article VI by the Fund, it will take all reasonable steps (a) to notify Company of such breach and (b) to adequately diversify the Fund so as to achieve compliance within the grace period afforded by Regulation 817-5. The Fund shall provide the Company information reasonably requested in relation to Section 817(h) diversification requirements, including quarterly reports and annual certifications. ARTICLE VII. Potential Conflicts 7.1 The Board will monitor the Fund for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Fund. A material irreconcilable conflict may arise for a variety of reasons, including: (a) an action by any state insurance regulatory authority: (b) a change in applicable federal or state insurance, tax, or securities laws or regulations, or a public ruling, private letter ruling, no-action or interpretative letter, or any similar action by insurance. tax, or securities regulatory authorities; (c) an administrative or judicial decision in any relevant proceeding; (d) the manner in which the investments of any Portfolio are being managed; (e) a difference in voting instructions given by Variable Insurance Product owners; or (f) a decision by a Participating Insurance Company to disregard the voting instructions of contract owners. The Board shall promptly inform the Company if it determines that an irreconcilable material conflict exists and the implications thereof. ARTICLE VIII. Indemnification 8.1 Indemnification By The Company 8.1(a) The Company agrees to indemnify and hold harmless the Fund and each member of the Board and officers, and each Adviser and each director and officer of each Adviser, and each person, if any, who controls the Fund or the Adviser within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" and individually, "Indemnified Party", for purposes of this Section 8.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company) or litigation (including legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of the Fund's shares or the Contracts and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in the registration statement or prospectus for the Contracts or contained in the Contracts or sales literature for the Contracts (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Company by or on behalf of the Fund for use in the registration statement or prospectus for the Contracts or in the Contracts or sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Fund shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature of the Fund not supplied by the Company, or persons under its control and other than statements or representations authorized by the Fund or an Adviser) or unlawful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Fund shares; or (iii)arise out of or as a result of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, or sales literature of the Fund or any amendment thereof or supplement thereto or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading if such a statement or omission was made in reliance upon and in conformity with information furnished to the Fund by or on behalf of the Company; or (iv) arise as a result of any failure by the Company to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other material breach of this Agreement by the Company, as limited by and in accordance with the provisions of Sections 8.1(b) and 8.1 (c) hereof. 8.1(b) The Company shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations or duties under this Agreement. 8.1(c) The Company shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Company in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Company of any such claim shall not relieve the Company from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provisions. In case any such action is brought against the Indemnified Parties, the Company shall be entitled to participate, at its own expense, in the defense of such action. The Company also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Company to such party of the Company's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Company will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.1(d). The Indemnified Parties will promptly notify the Company of the commencement of any litigation or proceedings against them in connection with the issuance or sale of the Fund shares or the Contracts or the operation of the Fund. 8.2 Indemnification by the Manager 8.2(a). The Manager agrees, with respect to each Portfolio that it manages, to indemnify and hold harmless the Company and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" and individually, "Indemnified Party," for purposes of this Section 8.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Adviser) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements are related to the sale or acquisition of shares of the Portfolio that it manages or the Contracts and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the registration statement or prospectus or sales literature of the Fund (or any amendment or supplement to any of the foregoing), or arise out of or are based upon the omission or the alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided that this agreement to indemnify shall not apply as to any Indemnified Party if such statement or omission or such alleged statement or omission was made in reliance upon and in conformity with information furnished to the Fund by or on behalf of the Company for use in the registration statement or prospectus for the Fund or in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Portfolio shares; or (ii) arise out of or as a result of statements or representations (other than statements or representations contained in the registration statement, prospectus or sales literature for the Contracts not supplied by the Fund or persons under its control and other than statements or representations authorized by the Company) or unlawful conduct of the Fund or Manager(s) or persons under their control, with respect to the sale or distribution of the Con-tracts or Portfolio shares; or (iii) arise out of or as a result of any untrue statement or alleged untrue statement of a material fact contained in a registration statement, prospectus, or sales literature covering the Contracts, or any amendment thereof or supplement thereto, or the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statement or statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Company by or on behalf of the Fund; or (iv) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement; or (v) arise out of or result from any material breach of any representation and/or warranty made by the Manager in this Agreement or arise out of or result from any other material breach of this Agreement by the Manager; as limited by and in accordance with the provisions of Section 8.2(b) and 8.2(c) hereof. 8.2(b). The Manager shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as such may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement. 8.2(c) The Manager shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Manager in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Manager of any such claim shall not relieve the Manager from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Manager will be entitled to participate, at its own expense, in the defense thereof. The Manager also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Manager to such party of the Manager's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Manager will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.2(d). The Company agrees promptly to notify the Manager of the commencement of any litigation or proceedings against it or any of its officers or directors in connection with the issuance or sale of the Contracts or the operation of each Account. 8.3 Indemnification by the Fund 8.3(a). The Fund agrees to indemnify and hold harmless the Company, and each of its directors and officers and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act (hereinafter collectively, the "Indemnified Parties" and individually, "Indemnified Party," for purposes of this Section 8.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Fund) or litigation (including legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation, at common law or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions in respect thereof) or settlements result from the gross negligence (except for failure to comply with Section 6.1 of this Agreement for which the standard is negligence), bad faith or willful misconduct of the Board or any member thereof, are related to the operations of the Fund and: (i) arise as a result of any failure by the Fund to provide the services and furnish the materials under the terms of this Agreement (including any failure to comply with Section 6.1 of this Agreement); or (ii) arise out of or result from any material breach of any representation and/or warranty made by the Fund in this Agreement or arise out of or result from any other material breach of this Agreement by the Fund; 8.3(b). The Fund shall not be liable under this indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party as may arise from such Indemnified Party's willful misfeasance, bad faith, or gross negligence in the performance of such Indemnified Party's duties or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement. 8.3(c). The Fund shall not be liable under this indemnification provision with respect to any claim made against an Indemnified Party unless such Indemnified Party shall have notified the Fund in writing within a reasonable time after the summons or other first legal process giving information of the nature of the claim shall have been served upon such Indemnified Party (or after such Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Fund of any such claim shall not relieve the Fund from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of this indemnification provision. In case any such action is brought against the Indemnified Parties, the Fund will be entitled to participate, at its own expense, in the defense thereof. The Fund also shall be entitled to assume the defense thereof, with counsel satisfactory to the party named in the action. After notice from the Fund to such party of the Fund's election to assume the defense thereof, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, and the Fund will not be liable to such party under this Agreement for any legal or other expenses subsequently incurred by such party independently in connection with the defense thereof other than reasonable costs of investigation. 8.3(d). The Company agrees promptly to notify the Fund of the commencement of any litigation or proceedings against it or any of its respective officers or directors in connection with this Agreement, the issuance or sale of the Contracts, with respect to the operation of either Account, or the sale or acquisition of shares of the Fund. ARTICLE IX. Termination 9.1 This Agreement shall terminate with respect to some or all Portfolios: (a) at the option of any party upon six months advance written notice to the other parties at the address specified in Section X of this Agreement; or (b) at the option of the Company to the extent that shares of Portfolios are not reasonably available to meet the requirements of its Contracts or are not appropriate funding vehicles for the Contracts, as determined by the Company reasonably and in good faith. Prompt written notice of the election to terminate for such cause and an explanation of such cause shall be furnished by the Company. 9.2. It is understood and agreed that the right of any party hereto to terminate this Agreement pursuant to Section 9.1(a) may be exercised for cause or for no cause. ARTICLE X. Notices Any notice shall be sufficiently given when sent by registered or certified mail to the other party at the address of such party set forth below or at such other address as such party may from time to time specify in writing to the other parties to this Agreement. If to the Fund: LSA Variable Series Trust 3100 Sanders Road Northbrook, Illinois 60062 ATTN: Law Department, J5B If to the Manager: LSA Asset Management LLC 3100 Sanders Road Northbrook, Illinois 60062 ATTN: Law Department, J5B If to the Company: Northbrook Life Insurance Company 3100 Sanders Road Northbrook, Illinois 60062 ATTN: Law Department, J5B ARTICLE XI. Miscellaneous 11.1 Subject to the requirements of legal process and regulatory authority, each party hereto shall treat as confidential the names and addresses of the owners of the Contracts and all information reasonably identified as confidential in writing by any other party hereto and, except as permitted by the Agreement, shall not disclose, disseminate or utilize such names and addresses and other confidential information without the express written consent of the affected party until such time as it may come into the public domain. 11.2 The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect. 11.3 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 11.4 If any provision of this Agreement shall be held or made invalid by a court decision, status, rule, or otherwise, the remainder of the Agreement shall not be affected thereby. 11.5 Each party hereto shall cooperate with all appropriate governmental authorities (including without limitation the SEC, the National Association of Securities Dealers, Inc. and state insurance regulators) and shall permit such authorities reasonable access to its books and records in connection with any investigation or inquiry relating to this Agreement or the transactions contemplated hereby. Each party hereto shall promptly notify the other parties to this Agreement, by written notice to the addresses specified in Section V, of any such investigation or inquiry. 11.6 The rights, remedies and obligations contained in this Agreement are cumulative and are in addition to any and all rights, remedies and obligations, at law or in equity, which the parties hereto are entitled to under state and federal laws. 11.7 It is understood by the parties that this Agreement is not an exclusive arrangement. 11.8 The Company and the Manager each understand and agree that the obligations of the Fund under this Agreement are not binding upon any shareholder of the Fund personally, but bind only the Fund and the Fund's property; the Company and the Manager separately represent that each has notice of the provisions of the Declaration of Trust of the Fund disclaiming shareholder liability for acts or obligations of the Fund. 11.9 This Agreement shall not be assigned by any party hereto without the prior written consent of all the parties. 11.10This Agreement sets forth the entire agreement between the parties and supercedes all prior communications, agreements and understandings, oral or written, between the parties regarding the subject matter hereof. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and ratified in its name and on its behalf by its duly authorized representative as of the day and year above written. NORTHBROOK LIFE INSURANCE COMPANY By:____________________________________ Title: __________________________________ LSA VARIABLE SERIES TRUST By: ___________________________________ Title:__________________________________ LSA ASSET MANAGEMENT LLC By: ___________________________________ Title: __________________________________ IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and ratified in its name and on its behalf by its duly authorized representative as of the day and year above written. NORTHBROOK LIFE INSURANCE COMPANY By: ___________________________________ Title: __________________________________ LSA VARIABLE SERIES TRUST By: ___________________________________ Title: __________________________________ LSA ASSET MANAGEMENT LLC By: ___________________________________ Title: __________________________________ IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed and ratified in its name and on its behalf by its duly authorized representative as of the day and year above written. NORTHBROOK LIFE INSURANCE COMPANY By: ___________________________________ Title: __________________________________ LSA VARIABLE SERIES TRUST By: ___________________________________ Title: __________________________________ LSA ASSET MANAGEMENT LLC By: ___________________________________ Title: __________________________________ Schedule 1 Separate Accounts Northbrook Variable Annuity Account II Schedule 2 Authorized Portfolios LSA Variable Series Trust Aggressive Growth Fund Schedule 3 Contracts Variable Annuity II Variable Annuity II Asset Manager Preferred Client Variable Annuity Variable Annuity 3 Variable Annuity 3 Asset Manager EX-9 5 exhibit9g.txt OPINION AND CONSENT OF GENERAL COUNSEL NORTHBROOK LIFE INSURANCE COMPANY LAW AND REGULATION DEPARTMENT 3100 Sanders Road, J5B Northbrook, Illinois 60062 Direct Dial Number 847-402-2400 Facsimile 847-402-4371 Michael J. Velotta Please direct reply to: Vice President, Secretary Post Office Box 3005 and General Counsel Northbrook, Illinois 60065-3005 April 29, 2002 TO: NORTHBROOK LIFE INSURANCE COMPANY NORTHBROOK, ILLINOIS 60062 FROM: MICHAEL J. VELOTTA VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL RE: FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 AND THE INVESTMENT COMPANY ACT OF 1940 FILE NO. 033-35412; 811-06116 With reference to the Registration Statement on Form N-4 filed by Northbrook Life Insurance Company (the "Company"), as depositor, and Northbrook Variable Annuity Account II, as registrant, with the Securities and Exchange Commission covering the Flexible Premium Deferred Variable Annuity Contracts (Preferred Client Variable annuity), I have examined such documents and such law as I have considered necessary and appropriate, and on the basis of such examination, it is my opinion that as of April 29, 2002: 1. The Company is duly organized and existing under the laws of the State of Arizona and has been duly authorized to do business by the Director of Insurance of the State of Arizona. 2. The securities registered by the above Registration Statement when issued will be valid, legal and binding obligations of the Company. I hereby consent to the filing of this opinion as an exhibit to the above referenced Registration Statement and to the use of my name under the caption "Legal Matters" in the Prospectus constituting a part of the Registration Statement. Sincerely, /S/ MICHAEL J. VELOTTA - ------------------------ Michael J. Velotta Vice President, Secretary and General Counsel EX-10 6 exhibit10.txt CONSENTS Exhibit 10(a) INDEPENDENT AUDITORS' CONSENT We consent to the use in this Post-Effective Amendment No. 36 to Registration Statement No. 33-35412 of Northbrook Variable Annuity Account II of Northbrook Life Insurance Company on Form N-4 of our report dated February 20, 2002 relating to the financial statements and the related financial statement schedule of Northbrook Life Insurance Company, and our report dated March 8, 2002 relating to the financial statements of Northbrook Variable Annuity Account II, appearing in the Statements of Additional Information (which are incorporated by reference in the Prospectuses of Northbrook Variable Annuity Account II), which are part of such Registration Statement, and to the references to us under the heading "Experts" in such Statements of Additional Information. /s/ Deloitte & Touche LLP Chicago, Illinois April 26, 2002 Exhibit 10(b) CONSENT OF FOLEY & LARDNER We hereby consent to the reference to our firm under the caption "Legal Matters" in the prospectuses contained in Post-Effective Amendment No. 36 to the Form N-4 Registration Statement of Northbrook Variable Annuity Account II (File No. 033-35412). /s/ Foley & Lardner FOLEY & LARDNER Washington, D.C. April 16, 2002 EX-13 7 exhibit13.txt PERFORMANCE DATA CALCULATIONS Exhibit 13(d) Variable Annuity II
Date 12/31/01 End 12/31/01 VAII - Base Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.363643 87.9999 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 15.684470 0.04250 0.042505 0.042505 0.042505 0.042505 9 FEE 31-Dec-00 0.666667 14.339335 0.04649 69.738241 0.046492 0.046492 0.046492 0.046492 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 69.671574 #N/A #N/A #N/A 87.844285 $ Value 696.7157 #N/A #N/A #N/A 878.4428 Surrender $ Value 654.2157 #N/A #N/A #N/A 844.4428 Cumulative No Surrender -30.33% #N/A #N/A #N/A -12.16% W/ Surrender -34.58% #N/A #N/A #N/A -15.56% Annualized No Surrender -30.33% #N/A #N/A #N/A -5.71% W/ Surrender -34.58% #N/A #N/A #N/A -7.38% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.787552 147.3285 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 6.988550 0.09539 0.095394 0.095394 0.095394 0.095394 9 FEE 31-Dec-00 0.666667 8.580666 0.07769 116.541070 0.077694 0.077694 0.077694 0.077694 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 116.474404 #N/A #N/A #N/A 147.088767 $ Value 1164.7440 #N/A #N/A #N/A 1470.8877 Surrender $ Value 1122.2440 #N/A #N/A #N/A 1436.8877 Cumulative No Surrender 16.47% #N/A #N/A #N/A 47.09% W/ Surrender 12.22% #N/A #N/A #N/A 43.69% Annualized No Surrender 16.47% #N/A #N/A #N/A 15.52% W/ Surrender 12.22% #N/A #N/A #N/A 14.52% Date 12/31/01 End 12/31/01 Van Kampen LIT Comstock, Class I Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.668845 115.3556 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 8.115297 0.08215 0.082149 0.082149 0.082149 0.082149 9 FEE 31-Dec-00 0.666667 10.392183 0.06415 96.226173 0.064151 0.064151 0.064151 0.064151 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 96.159506 #N/A #N/A #N/A 115.142654 $ Value 961.5951 #N/A #N/A #N/A 1151.4265 Surrender $ Value 919.0951 #N/A #N/A #N/A 1117.4265 Cumulative No Surrender -3.84% #N/A #N/A #N/A 15.14% W/ Surrender -8.09% #N/A #N/A #N/A 11.74% Annualized No Surrender -3.84% #N/A #N/A #N/A 5.41% W/ Surrender -8.09% #N/A #N/A #N/A 4.24% LSA Aggressive Growth Range JJ 36 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.193758 89.3355 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.666667 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.666667 10.434701 0.06389 0.063889 0.063889 0.063889 0.063889 0.063889 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.271613 $ Value #N/A #N/A #N/A #N/A 931.5226 Surrender $ Value #N/A #N/A #N/A #N/A 880.5226 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.85% W/ Surrender #N/A #N/A #N/A #N/A -11.95% Annualized No Surrender #N/A #N/A #N/A #N/A -6.85% W/ Surrender #N/A #N/A #N/A #N/A -11.95% Date 12/31/01 End 12/31/01 VAII - Base - EEDB Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.413889 87.6126 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 15.747459 0.04233 0.042335 0.042335 0.042335 0.042335 9 FEE 31-Dec-00 0.666667 14.368104 0.04640 69.598605 0.046399 0.046399 0.046399 0.046399 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 69.531939 #N/A #N/A #N/A 87.457156 $ Value 695.3194 #N/A #N/A #N/A 874.5716 Surrender $ Value 652.8194 #N/A #N/A #N/A 840.5716 Cumulative No Surrender -30.47% #N/A #N/A #N/A -12.54% W/ Surrender -34.72% #N/A #N/A #N/A -15.94% Annualized No Surrender -30.47% #N/A #N/A #N/A -5.90% W/ Surrender -34.72% #N/A #N/A #N/A -7.57% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.823823 146.5454 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 7.016550 0.09501 0.095013 0.095013 0.095013 0.095013 9 FEE 31-Dec-00 0.666667 8.597932 0.07754 116.307038 0.077538 0.077538 0.077538 0.077538 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 116.240371 #N/A #N/A #N/A 146.306201 $ Value 1162.4037 #N/A #N/A #N/A 1463.0620 Surrender $ Value 1119.9037 #N/A #N/A #N/A 1429.0620 Cumulative No Surrender 16.24% #N/A #N/A #N/A 46.31% W/ Surrender 11.99% #N/A #N/A #N/A 42.91% Annualized No Surrender 16.24% #N/A #N/A #N/A 15.29% W/ Surrender 11.99% #N/A #N/A #N/A 14.28% Date 12/31/01 End 12/31/01 Van Kampen LIT Comstock, Class I Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.715252 114.7414 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 8.147779 0.08182 0.081822 0.081822 0.081822 0.081822 9 FEE 31-Dec-00 0.666667 10.413102 0.06402 96.032863 0.064022 0.064022 0.064022 0.064022 0 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 95.966197 #N/A #N/A #N/A 114.528865 $ Value 959.6620 #N/A #N/A #N/A 1145.2886 Surrender $ Value 917.1620 #N/A #N/A #N/A 1111.2886 Cumulative No Surrender -4.03% #N/A #N/A #N/A 14.53% W/ Surrender -8.28% #N/A #N/A #N/A 11.13% Annualized No Surrender -4.03% #N/A #N/A #N/A 5.20% W/ Surrender -8.28% #N/A #N/A #N/A 4.03% LSA Aggressive Growth Range JJ 36 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.204203 89.2522 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.666667 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.666667 10.436481 0.06388 0.063878 0.063878 0.063878 0.063878 0.063878 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.188342 $ Value #N/A #N/A #N/A #N/A 930.8124 Surrender $ Value #N/A #N/A #N/A #N/A 879.8124 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.92% W/ Surrender #N/A #N/A #N/A #N/A -12.02% Annualized No Surrender #N/A #N/A #N/A #N/A -6.92% W/ Surrender #N/A #N/A #N/A #N/A -12.02% Date 12/31/01 End 12/31/01 VAII - PB or DB Combo Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.423964 87.5353 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 15.760086 0.04230 0.042301 0.042301 0.042301 0.042301 9 FEE 31-Dec-00 0.666667 14.373872 0.04638 69.570677 0.046380 0.046380 0.046380 0.046380 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 69.504010 #N/A #N/A #N/A 87.379942 $ Value 695.0401 #N/A #N/A #N/A 873.7994 Surrender $ Value 652.5401 #N/A #N/A #N/A 839.7994 Cumulative No Surrender -30.50% #N/A #N/A #N/A -12.62% W/ Surrender -34.75% #N/A #N/A #N/A -16.02% Annualized No Surrender -30.50% #N/A #N/A #N/A -5.93% W/ Surrender -34.75% #N/A #N/A #N/A -7.61% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.831107 146.3892 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 7.022167 0.09494 0.094937 0.094937 0.094937 0.094937 9 FEE 31-Dec-00 0.666667 8.601390 0.07751 116.260279 0.077507 0.077507 0.077507 0.077507 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 116.193612 #N/A #N/A #N/A 146.150047 $ Value 1161.9361 #N/A #N/A #N/A 1461.5005 Surrender $ Value 1119.4361 #N/A #N/A #N/A 1427.5005 Cumulative No Surrender 16.19% #N/A #N/A #N/A 46.15% W/ Surrender 11.94% #N/A #N/A #N/A 42.75% Annualized No Surrender 16.19% #N/A #N/A #N/A 15.25% W/ Surrender 11.94% #N/A #N/A #N/A 14.24% Date 12/31/01 End 12/31/01 Van Kampen LIT Comstock, Class I Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.724571 114.6188 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 8.154304 0.08176 0.081756 0.081756 0.081756 0.081756 9 FEE 31-Dec-00 0.666667 10.417288 0.06400 95.994274 0.063996 0.063996 0.063996 0.063996 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 95.927607 #N/A #N/A #N/A 114.406397 $ Value 959.2761 #N/A #N/A #N/A 1144.0640 Surrender $ Value 916.7761 #N/A #N/A #N/A 1110.0640 Cumulative No Surrender -4.07% #N/A #N/A #N/A 14.41% W/ Surrender -8.32% #N/A #N/A #N/A 11.01% Annualized No Surrender -4.07% #N/A #N/A #N/A 5.16% W/ Surrender -8.32% #N/A #N/A #N/A 3.98% LSA Aggressive Growth Range JJ 36 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.206294 89.2356 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.666667 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.666667 10.436839 0.06388 0.063876 0.063876 0.063876 0.063876 0.063876 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.171691 $ Value #N/A #N/A #N/A #N/A 930.6706 Surrender $ Value #N/A #N/A #N/A #N/A 879.6706 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.93% W/ Surrender #N/A #N/A #N/A #N/A -12.03% Annualized No Surrender #N/A #N/A #N/A #N/A -6.93% W/ Surrender #N/A #N/A #N/A #N/A -12.03% Date 12/31/01 End 12/31/01 VAII - EDB, PIB, or PDB Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.396274 87.7480 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 15.725381 0.04239 0.042394 0.042394 0.042394 0.042394 9 FEE 31-Dec-00 0.666667 14.358031 0.04643 69.647433 0.046432 0.046432 0.046432 0.046432 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 69.580766 #N/A #N/A #N/A 87.592485 $ Value 695.8077 #N/A #N/A #N/A 875.9249 Surrender $ Value 653.3077 #N/A #N/A #N/A 841.9249 Cumulative No Surrender -30.42% #N/A #N/A #N/A -12.41% W/ Surrender -34.67% #N/A #N/A #N/A -15.81% Annualized No Surrender -30.42% #N/A #N/A #N/A -5.83% W/ Surrender -34.67% #N/A #N/A #N/A -7.51% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.811109 146.8190 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 7.006741 0.09515 0.095146 0.095146 0.095146 0.095146 9 FEE 31-Dec-00 0.666667 8.591889 0.07759 116.388841 0.077593 0.077593 0.077593 0.077593 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 116.322174 #N/A #N/A #N/A 146.579563 $ Value 1163.2217 #N/A #N/A #N/A 1465.7956 Surrender $ Value 1120.7217 #N/A #N/A #N/A 1431.7956 Cumulative No Surrender 16.32% #N/A #N/A #N/A 46.58% W/ Surrender 12.07% #N/A #N/A #N/A 43.18% Annualized No Surrender 16.32% #N/A #N/A #N/A 15.37% W/ Surrender 12.07% #N/A #N/A #N/A 14.37% Date 12/31/01 End 12/31/01 Van Kampen LIT Comstock, Class I Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.698987 114.9559 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 8.136401 0.08194 0.081936 0.081936 0.081936 0.081936 9 FEE 31-Dec-00 0.666667 10.405774 0.06407 96.100492 0.064067 0.064067 0.064067 0.064067 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 96.033825 #N/A #N/A #N/A 114.743244 $ Value 960.3383 #N/A #N/A #N/A 1147.4324 Surrender $ Value 917.8383 #N/A #N/A #N/A 1113.4324 Cumulative No Surrender -3.97% #N/A #N/A #N/A 14.74% W/ Surrender -8.22% #N/A #N/A #N/A 11.34% Annualized No Surrender -3.97% #N/A #N/A #N/A 5.28% W/ Surrender -8.22% #N/A #N/A #N/A 4.10% LSA Aggressive Growth Range JJ 36 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.200544 89.2814 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.666667 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.666667 10.435859 0.06388 0.063882 0.063882 0.063882 0.063882 0.063882 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.217495 $ Value #N/A #N/A #N/A #N/A 931.0612 Surrender $ Value #N/A #N/A #N/A #N/A 880.0612 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.89% W/ Surrender #N/A #N/A #N/A #N/A -11.99% Annualized No Surrender #N/A #N/A #N/A #N/A -6.89% W/ Surrender #N/A #N/A #N/A #N/A -11.99% Date 12/31/01 End 12/31/01 VAII IB and DB Combo II EEDB Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.540464 86.6516 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 15.906024 0.04191 0.041913 0.041913 0.041913 0.041913 9 FEE 31-Dec-00 0.666667 14.440301 0.04617 69.250634 0.046167 0.046167 0.046167 0.046167 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 69.183967 #N/A #N/A #N/A 86.496882 $ Value 691.8397 #N/A #N/A #N/A 864.9688 Surrender $ Value 649.3397 #N/A #N/A #N/A 830.9688 Cumulative No Surrender -30.82% #N/A #N/A #N/A -13.50% W/ Surrender -35.07% #N/A #N/A #N/A -16.90% Annualized No Surrender -30.82% #N/A #N/A #N/A -6.37% W/ Surrender -35.07% #N/A #N/A #N/A -8.05% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.915344 144.6060 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 7.087052 0.09407 0.094068 0.094068 0.094068 0.094068 9 FEE 31-Dec-00 0.666667 8.641267 0.07715 115.723771 0.077149 0.077149 0.077149 0.077149 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 115.657104 #N/A #N/A #N/A 144.368082 $ Value 1156.5710 #N/A #N/A #N/A 1443.6808 Surrender $ Value 1114.0710 #N/A #N/A #N/A 1409.6808 Cumulative No Surrender 15.66% #N/A #N/A #N/A 44.37% W/ Surrender 11.41% #N/A #N/A #N/A 40.97% Annualized No Surrender 15.66% #N/A #N/A #N/A 14.72% W/ Surrender 11.41% #N/A #N/A #N/A 13.70% Date 12/31/01 End 12/31/01 Van Kampen LIT Comstock, Class I Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.832413 113.2193 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 8.229618 0.08101 0.081008 0.081008 0.081008 0.081008 9 FEE 31-Dec-00 0.666667 10.465594 0.06370 95.551194 0.063701 0.063701 0.063701 0.063701 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 95.484527 #N/A #N/A #N/A 113.007968 $ Value 954.8453 #N/A #N/A #N/A 1130.0797 Surrender $ Value 912.3453 #N/A #N/A #N/A 1096.0797 Cumulative No Surrender -4.52% #N/A #N/A #N/A 13.01% W/ Surrender -8.77% #N/A #N/A #N/A 9.61% Annualized No Surrender -4.52% #N/A #N/A #N/A 4.68% W/ Surrender -8.77% #N/A #N/A #N/A 3.49% LSA Aggressive Growth Range JJ 36 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.230378 89.0442 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.666667 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.666667 10.440934 0.06385 0.063851 0.063851 0.063851 0.063851 0.063851 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 88.980347 $ Value #N/A #N/A #N/A #N/A 929.0379 Surrender $ Value #N/A #N/A #N/A #N/A 878.0379 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -7.10% W/ Surrender #N/A #N/A #N/A #N/A -12.20% Annualized No Surrender #N/A #N/A #N/A #N/A -7.10% W/ Surrender #N/A #N/A #N/A #N/A -12.20% Date 12/31/01 End 12/31/01 VAII - IB & DB Combo 2 Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.489674 87.0347 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 15.842425 0.04208 0.042081 0.042081 0.042081 0.042081 9 FEE 31-Dec-00 0.666667 14.411395 0.04626 69.389535 0.046260 0.046260 0.046260 0.046260 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 69.322868 #N/A #N/A #N/A 86.879664 $ Value 693.2287 #N/A #N/A #N/A 868.7966 Surrender $ Value 650.7287 #N/A #N/A #N/A 834.7966 Cumulative No Surrender -30.68% #N/A #N/A #N/A -13.12% W/ Surrender -34.93% #N/A #N/A #N/A -16.52% Annualized No Surrender -30.68% #N/A #N/A #N/A -6.18% W/ Surrender -34.93% #N/A #N/A #N/A -7.86% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.878599 145.3784 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 7.058775 0.09445 0.094445 0.094445 0.094445 0.094445 9 FEE 31-Dec-00 0.666667 8.623907 0.07730 115.956724 0.077304 0.077304 0.077304 0.077304 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 115.890057 #N/A #N/A #N/A 145.140025 $ Value 1158.9006 #N/A #N/A #N/A 1451.4002 Surrender $ Value 1116.4006 #N/A #N/A #N/A 1417.4002 Cumulative No Surrender 15.89% #N/A #N/A #N/A 45.14% W/ Surrender 11.64% #N/A #N/A #N/A 41.74% Annualized No Surrender 15.89% #N/A #N/A #N/A 14.95% W/ Surrender 11.64% #N/A #N/A #N/A 13.93% Date 12/31/01 End 12/31/01 VAII - IB & DB Combo 2 Van Kampen LIT Comstock, Class I Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.785360 113.8257 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 8.196785 0.08133 0.081333 0.081333 0.081333 0.081333 9 FEE 31-Dec-00 0.666667 10.444569 0.06383 95.743539 0.063829 0.063829 0.063829 0.063829 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 95.676872 #N/A #N/A #N/A 113.613900 $ Value 956.7687 #N/A #N/A #N/A 1136.1390 Surrender $ Value 914.2687 #N/A #N/A #N/A 1102.1390 Cumulative No Surrender -4.32% #N/A #N/A #N/A 13.61% W/ Surrender -8.57% #N/A #N/A #N/A 10.21% Annualized No Surrender -4.32% #N/A #N/A #N/A 4.89% W/ Surrender -8.57% #N/A #N/A #N/A 3.70% LSA Aggressive Growth Range JJ 36 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.219898 89.1274 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.666667 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.666667 10.439152 0.06386 0.063862 0.063862 0.063862 0.063862 0.063862 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.063508 $ Value #N/A #N/A #N/A #N/A 929.7475 Surrender $ Value #N/A #N/A #N/A #N/A 878.7475 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -7.03% W/ Surrender #N/A #N/A #N/A #N/A -12.13% Annualized No Surrender #N/A #N/A #N/A #N/A -7.03% W/ Surrender #N/A #N/A #N/A #N/A -12.13% Date 12/31/01 End 12/31/01 VAII - IB Combo 2 Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.439094 87.4195 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 15.779054 0.04225 0.042250 0.042250 0.042250 0.042250 9 FEE 31-Dec-00 0.666667 14.382530 0.04635 69.528796 0.046353 0.046353 0.046353 0.046353 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 69.462130 #N/A #N/A #N/A 87.264241 $ Value 694.6213 #N/A #N/A #N/A 872.6424 Surrender $ Value 652.1213 #N/A #N/A #N/A 838.6424 Cumulative No Surrender -30.54% #N/A #N/A #N/A -12.74% W/ Surrender -34.79% #N/A #N/A #N/A -16.14% Annualized No Surrender -30.54% #N/A #N/A #N/A -5.99% W/ Surrender -34.79% #N/A #N/A #N/A -7.67% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.842031 146.1554 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 7.030597 0.09482 0.094824 0.094824 0.094824 0.094824 9 FEE 31-Dec-00 0.666667 8.606582 0.07746 116.190144 0.077460 0.077460 0.077460 0.077460 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 116.123477 #N/A #N/A #N/A 145.916482 $ Value 1161.2348 #N/A #N/A #N/A 1459.1648 Surrender $ Value 1118.7348 #N/A #N/A #N/A 1425.1648 Cumulative No Surrender 16.12% #N/A #N/A #N/A 45.92% W/ Surrender 11.87% #N/A #N/A #N/A 42.52% Annualized No Surrender 16.12% #N/A #N/A #N/A 15.18% W/ Surrender 11.87% #N/A #N/A #N/A 14.17% Date 12/31/01 End 12/31/01 Van Kampen LIT Comstock, Class I Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.738571 114.4352 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 8.164096 0.08166 0.081658 0.081658 0.081658 0.081658 9 FEE 31-Dec-00 0.666667 10.423584 0.06396 95.936292 0.063958 0.063958 0.063958 0.063958 10 FEE 31-Dec-01 0.666667 10.000000 0.06667 0.066667 0.066667 0.066667 0.066667 0.066667 ------------------------------------------------------------- Units 95.869625 #N/A #N/A #N/A 114.222904 $ Value 958.6963 #N/A #N/A #N/A 1142.2290 Surrender $ Value 916.1963 #N/A #N/A #N/A 1108.2290 Cumulative No Surrender -4.13% #N/A #N/A #N/A 14.22% W/ Surrender -8.38% #N/A #N/A #N/A 10.82% Annualized No Surrender -4.13% #N/A #N/A #N/A 5.10% W/ Surrender -8.38% #N/A #N/A #N/A 3.92% LSA Aggressive Growth Range JJ 36 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.209432 89.2106 0 FEE 31-Dec-91 0.666667 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.666667 #N/A -- -- 0 2 FEE 31-Dec-93 0.666667 #N/A -- -- 0 3 FEE 31-Dec-94 0.666667 #N/A -- -- 0 4 FEE 31-Dec-95 0.666667 #N/A -- -- 0 5 FEE 31-Dec-96 0.666667 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.666667 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.666667 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.666667 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.666667 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.666667 10.437370 0.06387 0.063873 0.063873 0.063873 0.063873 0.063873 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.146713 $ Value #N/A #N/A #N/A #N/A 930.4572 Surrender $ Value #N/A #N/A #N/A #N/A 879.4572 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.95% W/ Surrender #N/A #N/A #N/A #N/A -12.05% Annualized No Surrender #N/A #N/A #N/A #N/A -6.95% W/ Surrender #N/A #N/A #N/A #N/A -12.05%
Variable Annuity II AssetManager
Date 12/31/01 End 12/31/01 VAII Asset Manager - Base Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.423964 87.5353 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.760086 0.04935 0.049351 0.049351 0.049351 0.049351 9 FEE 31-Dec-00 0.777778 14.373872 0.05411 69.570677 0.054111 0.054111 0.054111 0.054111 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.492899 #N/A #N/A #N/A 87.354050 $ Value 694.9290 #N/A #N/A #N/A 873.5405 Surrender $ Value 694.9290 #N/A #N/A #N/A 873.5405 Cumulative No Surrender -30.51% #N/A #N/A #N/A -12.65% W/ Surrender -30.51% #N/A #N/A #N/A -12.65% Annualized No Surrender -30.51% #N/A #N/A #N/A -5.95% W/ Surrender -30.51% #N/A #N/A #N/A -5.95% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.831107 146.3892 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.022167 0.11076 0.110760 0.110760 0.110760 0.110760 9 FEE 31-Dec-00 0.777778 8.601390 0.09042 116.260279 0.090425 0.090425 0.090425 0.090425 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 116.182501 #N/A #N/A #N/A 146.110195 $ Value 1161.8250 #N/A #N/A #N/A 1461.1019 Surrender $ Value 1161.8250 #N/A #N/A #N/A 1461.1019 Cumulative No Surrender 16.18% #N/A #N/A #N/A 46.11% W/ Surrender 16.18% #N/A #N/A #N/A 46.11% Annualized No Surrender 16.18% #N/A #N/A #N/A 15.24% W/ Surrender 16.18% #N/A #N/A #N/A 15.24% Date 12/31/01 End 12/31/01 Van Kampen LIT Comstock, Class I Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.724571 114.6188 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.154304 0.09538 0.095382 0.095382 0.095382 0.095382 9 FEE 31-Dec-00 0.777778 10.417288 0.07466 95.994274 0.074662 0.074662 0.074662 0.074662 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 95.916496 #N/A #N/A #N/A 114.370994 $ Value 959.1650 #N/A #N/A #N/A 1143.7099 Surrender $ Value 959.1650 #N/A #N/A #N/A 1143.7099 Cumulative No Surrender -4.08% #N/A #N/A #N/A 14.37% W/ Surrender -4.08% #N/A #N/A #N/A 14.37% Annualized No Surrender -4.08% #N/A #N/A #N/A 5.15% W/ Surrender -4.08% #N/A #N/A #N/A 5.15% LSA Aggressive Growth Range JJ 36 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR .381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.206294 89.2356 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.436839 0.07452 0.074522 0.074522 0.074522 0.074522 0.074522 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.161045 $ Value #N/A #N/A #N/A #N/A 930.5595 Surrender $ Value #N/A #N/A #N/A #N/A 922.0595 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.94% W/ Surrender #N/A #N/A #N/A #N/A -7.79% Annualized No Surrender #N/A #N/A #N/A #N/A -6.94% W/ Surrender #N/A #N/A #N/A #N/A -7.79% Date 12/31/01 End 12/31/01 VAII Asset Manager - Combo DB Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.484604 87.0731 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.836068 0.04911 0.049114 0.049114 0.049114 0.049114 9 FEE 31-Dec-00 0.777778 14.408503 0.05398 69.403463 0.053980 0.053980 0.053980 0.053980 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.325685 #N/A #N/A #N/A 86.892221 $ Value 693.2568 #N/A #N/A #N/A 868.9222 Surrender $ Value 693.2568 #N/A #N/A #N/A 868.9222 Cumulative No Surrender -30.67% #N/A #N/A #N/A -13.11% W/ Surrender -30.67% #N/A #N/A #N/A -13.11% Annualized No Surrender -30.67% #N/A #N/A #N/A -6.17% W/ Surrender -30.67% #N/A #N/A #N/A -6.17% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.874925 145.4561 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.055944 0.11023 0.110230 0.110230 0.110230 0.110230 9 FEE 31-Dec-00 0.777778 8.622170 0.09021 115.980084 0.090207 0.090207 0.090207 0.090207 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 115.902306 #N/A #N/A #N/A 145.177918 $ Value 1159.0231 #N/A #N/A #N/A 1451.7792 Surrender $ Value 1159.0231 #N/A #N/A #N/A 1451.7792 Cumulative No Surrender 15.90% #N/A #N/A #N/A 45.18% W/ Surrender 15.90% #N/A #N/A #N/A 45.18% Annualized No Surrender 15.90% #N/A #N/A #N/A 14.96% W/ Surrender 15.90% #N/A #N/A #N/A 14.96% Date 12/31/01 End 12/31/01 Van Kampen LIT Comstock, Class I Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.780672 113.8865 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.193515 0.09493 0.094926 0.094926 0.094926 0.094926 9 FEE 31-Dec-00 0.777778 10.442470 0.07448 95.762784 0.074482 0.074482 0.074482 0.074482 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 95.685006 #N/A #N/A #N/A 113.639314 $ Value 956.8501 #N/A #N/A #N/A 1136.3931 Surrender $ Value 956.8501 #N/A #N/A #N/A 1136.3931 Cumulative No Surrender -4.31% #N/A #N/A #N/A 13.64% W/ Surrender -4.31% #N/A #N/A #N/A 13.64% Annualized No Surrender -4.31% #N/A #N/A #N/A 4.90% W/ Surrender -4.31% #N/A #N/A #N/A 4.90% LSA Aggressive Growth Range JJ 36 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.218852 89.1357 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.438975 0.07451 0.074507 0.074507 0.074507 0.074507 0.074507 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.061173 $ Value #N/A #N/A #N/A #N/A 929.7074 Surrender $ Value #N/A #N/A #N/A #N/A 921.2074 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -7.03% W/ Surrender #N/A #N/A #N/A #N/A -7.88% Annualized No Surrender #N/A #N/A #N/A #N/A -7.03% W/ Surrender #N/A #N/A #N/A #N/A -7.88% Date 12/31/01 End 12/31/01 VAII Asset Manager - Enhanced DB Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.456772 87.2846 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.801204 0.04922 0.049223 0.049223 0.049223 0.049223 9 FEE 31-Dec-00 0.777778 14.392629 0.05404 69.480010 0.054040 0.054040 0.054040 0.054040 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.402232 #N/A #N/A #N/A 87.103580 $ Value 694.0223 #N/A #N/A #N/A 871.0358 Surrender $ Value 694.0223 #N/A #N/A #N/A 871.0358 Cumulative No Surrender -30.60% #N/A #N/A #N/A -12.90% W/ Surrender -30.60% #N/A #N/A #N/A -12.90% Annualized No Surrender -30.60% #N/A #N/A #N/A -6.07% W/ Surrender -30.60% #N/A #N/A #N/A -6.07% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.854808 145.8830 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.040448 0.11047 0.110473 0.110473 0.110473 0.110473 9 FEE 31-Dec-00 0.777778 8.612642 0.09031 116.108390 0.090307 0.090307 0.090307 0.090307 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 116.030613 #N/A #N/A #N/A 145.604449 $ Value 1160.3061 #N/A #N/A #N/A 1456.0445 Surrender $ Value 1160.3061 #N/A #N/A #N/A 1456.0445 Cumulative No Surrender 16.03% #N/A #N/A #N/A 45.60% W/ Surrender 16.03% #N/A #N/A #N/A 45.60% Annualized No Surrender 16.03% #N/A #N/A #N/A 15.09% W/ Surrender 16.03% #N/A #N/A #N/A 15.09% Date 12/31/01 End 12/31/01 VAII Asset Manager - Enhanced DB Van Kampen LIT Comstock, Class I Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.754923 114.2215 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.175518 0.09513 0.095135 0.095135 0.095135 0.095135 9 FEE 31-Dec-00 0.777778 10.430924 0.07456 95.868784 0.074565 0.074565 0.074565 0.074565 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 95.791006 #N/A #N/A #N/A 113.973973 $ Value 957.9101 #N/A #N/A #N/A 1139.7397 Surrender $ Value 957.9101 #N/A #N/A #N/A 1139.7397 Cumulative No Surrender -4.21% #N/A #N/A #N/A 13.97% W/ Surrender -4.21% #N/A #N/A #N/A 13.97% Annualized No Surrender -4.21% #N/A #N/A #N/A 5.01% W/ Surrender -4.21% #N/A #N/A #N/A 5.01% LSA Aggressive Growth Range JJ 36 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.213100 89.1814 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.437999 0.07451 0.074514 0.074514 0.074514 0.074514 0.074514 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.106890 $ Value #N/A #N/A #N/A #N/A 930.0976 Surrender $ Value #N/A #N/A #N/A #N/A 921.5976 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.99% W/ Surrender #N/A #N/A #N/A #N/A -7.84% Annualized No Surrender #N/A #N/A #N/A #N/A -6.99% W/ Surrender #N/A #N/A #N/A #N/A -7.84%
Variable Annuity 3
Date 12/31/01 End 12/31/01 VA3 - Base Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.363643 87.9999 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.684470 0.04959 0.049589 0.049589 0.049589 0.049589 9 FEE 31-Dec-00 0.777778 14.339335 0.05424 69.738241 0.054241 0.054241 0.054241 0.054241 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.660463 #N/A #N/A #N/A 87.818341 $ Value 696.6046 #N/A #N/A #N/A 878.1834 Surrender $ Value 654.1046 #N/A #N/A #N/A 835.6834 Cumulative No Surrender -30.34% #N/A #N/A #N/A -12.18% W/ Surrender -34.59% #N/A #N/A #N/A -16.43% Annualized No Surrender -30.34% #N/A #N/A #N/A -5.72% W/ Surrender -34.59% #N/A #N/A #N/A -7.82% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.787552 147.3285 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 6.988550 0.11129 0.111293 0.111293 0.111293 0.111293 9 FEE 31-Dec-00 0.777778 8.580666 0.09064 116.541070 0.090643 0.090643 0.090643 0.090643 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 116.463293 #N/A #N/A #N/A 147.048807 $ Value 1164.6329 #N/A #N/A #N/A 1470.4881 Surrender $ Value 1122.1329 #N/A #N/A #N/A 1427.9881 Cumulative No Surrender 16.46% #N/A #N/A #N/A 47.05% W/ Surrender 12.21% #N/A #N/A #N/A 42.80% Annualized No Surrender 16.46% #N/A #N/A #N/A 15.51% W/ Surrender 12.21% #N/A #N/A #N/A 14.25% Van Kampen LIT Comstock, Class II Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.806920 113.5471 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.230715 0.09450 0.094497 0.094497 0.094497 0.094497 9 FEE 31-Dec-00 0.777778 10.441167 0.07449 95.774735 0.074491 0.074491 0.074491 0.074491 10 FEE 31-Dec-01 0.777778 9.977051 0.07796 0.077957 0.077957 0.077957 0.077957 0.077957 ------------------------------------------------------------- Units 95.696778 #N/A #N/A #N/A 113.300129 $ Value 954.7716 #N/A #N/A #N/A 1130.4012 Surrender $ Value 912.2716 #N/A #N/A #N/A 1087.9012 Cumulative No Surrender -4.52% #N/A #N/A #N/A 13.04% W/ Surrender -8.77% #N/A #N/A #N/A 8.79% Annualized No Surrender -4.52% #N/A #N/A #N/A 4.69% W/ Surrender -8.77% #N/A #N/A #N/A 3.20% LSA Aggressive Growth Range KK 37 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.193758 89.3355 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.434701 0.07454 0.074538 0.074538 0.074538 0.074538 0.074538 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.260965 $ Value #N/A #N/A #N/A #N/A 931.4115 Surrender $ Value #N/A #N/A #N/A #N/A 880.4115 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.86% W/ Surrender #N/A #N/A #N/A #N/A -11.96% Annualized No Surrender #N/A #N/A #N/A #N/A -6.86% W/ Surrender #N/A #N/A #N/A #N/A -11.96% Date 12/31/01 End 12/31/01 VA3 - IB Combo 2 Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.439094 87.4195 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.779054 0.04929 0.049292 0.049292 0.049292 0.049292 9 FEE 31-Dec-00 0.777778 14.382530 0.05408 69.528796 0.054078 0.054078 0.054078 0.054078 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.451019 #N/A #N/A #N/A 87.238363 $ Value 694.5102 #N/A #N/A #N/A 872.3836 Surrender $ Value 652.0102 #N/A #N/A #N/A 829.8836 Cumulative No Surrender -30.55% #N/A #N/A #N/A -12.76% W/ Surrender -34.80% #N/A #N/A #N/A -17.01% Annualized No Surrender -30.55% #N/A #N/A #N/A -6.00% W/ Surrender -34.80% #N/A #N/A #N/A -8.11% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.842031 146.1554 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.030597 0.11063 0.110628 0.110628 0.110628 0.110628 9 FEE 31-Dec-00 0.777778 8.606582 0.09037 116.190144 0.090370 0.090370 0.090370 0.090370 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 116.112366 #N/A #N/A #N/A 145.876657 $ Value 1161.1237 #N/A #N/A #N/A 1458.7666 Surrender $ Value 1118.6237 #N/A #N/A #N/A 1416.2666 Cumulative No Surrender 16.11% #N/A #N/A #N/A 45.88% W/ Surrender 11.86% #N/A #N/A #N/A 41.63% Annualized No Surrender 16.11% #N/A #N/A #N/A 15.17% W/ Surrender 11.86% #N/A #N/A #N/A 13.90% Van Kampen LIT Comstock, Class II Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.878434 112.6325 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.280842 0.09392 0.093925 0.093925 0.093925 0.093925 9 FEE 31-Dec-00 0.777778 10.473323 0.07426 95.480680 0.074263 0.074263 0.074263 0.074263 10 FEE 31-Dec-01 0.777778 9.977787 0.07795 0.077951 0.077951 0.077951 0.077951 0.077951 ------------------------------------------------------------- Units 95.402729 #N/A #N/A #N/A 112.386337 $ Value 951.9081 #N/A #N/A #N/A 1121.3669 Surrender $ Value 909.4081 #N/A #N/A #N/A 1078.8669 Cumulative No Surrender -4.81% #N/A #N/A #N/A 12.14% W/ Surrender -9.06% #N/A #N/A #N/A 7.89% Annualized No Surrender -4.81% #N/A #N/A #N/A 4.38% W/ Surrender -9.06% #N/A #N/A #N/A 2.88% LSA Aggressive Growth Range KK 37 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.209432 89.2106 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.437370 0.07452 0.074519 0.074519 0.074519 0.074519 0.074519 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.136068 $ Value #N/A #N/A #N/A #N/A 930.3461 Surrender $ Value #N/A #N/A #N/A #N/A 879.3461 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.97% W/ Surrender #N/A #N/A #N/A #N/A -12.07% Annualized No Surrender #N/A #N/A #N/A #N/A -6.97% W/ Surrender #N/A #N/A #N/A #N/A -12.07% Date 12/31/01 End 12/31/01 VA3 - IB & DB Combo 2 Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.489674 87.0347 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.842425 0.04909 0.049095 0.049095 0.049095 0.049095 9 FEE 31-Dec-00 0.777778 14.411395 0.05397 69.389535 0.053970 0.053970 0.053970 0.053970 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.311757 #N/A #N/A #N/A 86.853829 $ Value 693.1176 #N/A #N/A #N/A 868.5383 Surrender $ Value 650.6176 #N/A #N/A #N/A 826.0383 Cumulative No Surrender -30.69% #N/A #N/A #N/A -13.15% W/ Surrender -34.94% #N/A #N/A #N/A -17.40% Annualized No Surrender -30.69% #N/A #N/A #N/A -6.19% W/ Surrender -34.94% #N/A #N/A #N/A -8.30% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.878599 145.3784 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.058775 0.11019 0.110186 0.110186 0.110186 0.110186 9 FEE 31-Dec-00 0.777778 8.623907 0.09019 115.956724 0.090189 0.090189 0.090189 0.090189 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 115.878946 #N/A #N/A #N/A 145.100289 $ Value 1158.7895 #N/A #N/A #N/A 1451.0029 Surrender $ Value 1116.2895 #N/A #N/A #N/A 1408.5029 Cumulative No Surrender 15.88% #N/A #N/A #N/A 45.10% W/ Surrender 11.63% #N/A #N/A #N/A 40.85% Annualized No Surrender 15.88% #N/A #N/A #N/A 14.94% W/ Surrender 11.63% #N/A #N/A #N/A 13.67% Van Kampen LIT Comstock, Class II Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.926442 112.0267 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.314437 0.09355 0.093545 0.093545 0.093545 0.093545 9 FEE 31-Dec-00 0.777778 10.494809 0.07411 95.285202 0.074111 0.074111 0.074111 0.074111 10 FEE 31-Dec-01 0.777778 9.978280 0.07795 0.077947 0.077947 0.077947 0.077947 0.077947 ------------------------------------------------------------- Units 95.207255 #N/A #N/A #N/A 111.781115 $ Value 950.0047 #N/A #N/A #N/A 1115.3833 Surrender $ Value 907.5047 #N/A #N/A #N/A 1072.8833 Cumulative No Surrender -5.00% #N/A #N/A #N/A 11.54% W/ Surrender -9.25% #N/A #N/A #N/A 7.29% Annualized No Surrender -5.00% #N/A #N/A #N/A 4.17% W/ Surrender -9.25% #N/A #N/A #N/A 2.67% LSA Aggressive Growth Range KK 37 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.219898 89.1274 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.439152 0.07451 0.074506 0.074506 0.074506 0.074506 0.074506 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.052864 $ Value #N/A #N/A #N/A #N/A 929.6364 Surrender $ Value #N/A #N/A #N/A #N/A 878.6364 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -7.04% W/ Surrender #N/A #N/A #N/A #N/A -12.14% Annualized No Surrender #N/A #N/A #N/A #N/A -7.04% W/ Surrender #N/A #N/A #N/A #N/A -12.14% Date 12/31/01 End 12/31/01 VA3 - DB Combo Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.423964 87.5353 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.760086 0.04935 0.049351 0.049351 0.049351 0.049351 9 FEE 31-Dec-00 0.777778 14.373872 0.05411 69.570677 0.054111 0.054111 0.054111 0.054111 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.492899 #N/A #N/A #N/A 87.354050 $ Value 694.9290 #N/A #N/A #N/A 873.5405 Surrender $ Value 652.4290 #N/A #N/A #N/A 831.0405 Cumulative No Surrender -30.51% #N/A #N/A #N/A -12.65% W/ Surrender -34.76% #N/A #N/A #N/A -16.90% Annualized No Surrender -30.51% #N/A #N/A #N/A -5.95% W/ Surrender -34.76% #N/A #N/A #N/A -8.05% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.831107 146.3892 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.022167 0.11076 0.110760 0.110760 0.110760 0.110760 9 FEE 31-Dec-00 0.777778 8.601390 0.09042 116.260279 0.090425 0.090425 0.090425 0.090425 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 116.182501 #N/A #N/A #N/A 146.110195 $ Value 1161.8250 #N/A #N/A #N/A 1461.1019 Surrender $ Value 1119.3250 #N/A #N/A #N/A 1418.6019 Cumulative No Surrender 16.18% #N/A #N/A #N/A 46.11% W/ Surrender 11.93% #N/A #N/A #N/A 41.86% Annualized No Surrender 16.18% #N/A #N/A #N/A 15.24% W/ Surrender 11.93% #N/A #N/A #N/A 13.97% Van Kampen LIT Comstock, Class II Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.864094 112.8147 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.270806 0.09404 0.094039 0.094039 0.094039 0.094039 9 FEE 31-Dec-00 0.777778 10.466893 0.07431 95.539335 0.074308 0.074308 0.074308 0.074308 10 FEE 31-Dec-01 0.777778 9.977642 0.07795 0.077952 0.077952 0.077952 0.077952 0.077952 ------------------------------------------------------------- Units 95.461383 #N/A #N/A #N/A 112.568389 $ Value 952.4795 #N/A #N/A #N/A 1123.1671 Surrender $ Value 909.9795 #N/A #N/A #N/A 1080.6671 Cumulative No Surrender -4.75% #N/A #N/A #N/A 12.32% W/ Surrender -9.00% #N/A #N/A #N/A 8.07% Annualized No Surrender -4.75% #N/A #N/A #N/A 4.44% W/ Surrender -9.00% #N/A #N/A #N/A 2.94% LSA Aggressive Growth Range KK 37 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.206294 89.2356 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.436839 0.07452 0.074522 0.074522 0.074522 0.074522 0.074522 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.161045 $ Value #N/A #N/A #N/A #N/A 930.5595 Surrender $ Value #N/A #N/A #N/A #N/A 879.5595 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.94% W/ Surrender #N/A #N/A #N/A #N/A -12.04% Annualized No Surrender #N/A #N/A #N/A #N/A -6.94% W/ Surrender #N/A #N/A #N/A #N/A -12.04% Date 12/31/01 End 12/31/01 VA3 - PDB Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.396274 87.7480 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.725381 0.04946 0.049460 0.049460 0.049460 0.049460 9 FEE 31-Dec-00 0.777778 14.358031 0.05417 69.647433 0.054170 0.054170 0.054170 0.054170 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.569655 #N/A #N/A #N/A 87.566570 $ Value 695.6966 #N/A #N/A #N/A 875.6657 Surrender $ Value 653.1966 #N/A #N/A #N/A 833.1657 Cumulative No Surrender -30.43% #N/A #N/A #N/A -12.43% W/ Surrender -34.68% #N/A #N/A #N/A -16.68% Annualized No Surrender -30.43% #N/A #N/A #N/A -5.84% W/ Surrender -34.68% #N/A #N/A #N/A -7.94% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.811109 146.8190 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.006741 0.11100 0.111004 0.111004 0.111004 0.111004 9 FEE 31-Dec-00 0.777778 8.591889 0.09052 116.388841 0.090525 0.090525 0.090525 0.090525 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 116.311063 #N/A #N/A #N/A 146.539662 $ Value 1163.1106 #N/A #N/A #N/A 1465.3966 Surrender $ Value 1120.6106 #N/A #N/A #N/A 1422.8966 Cumulative No Surrender 16.31% #N/A #N/A #N/A 46.54% W/ Surrender 12.06% #N/A #N/A #N/A 42.29% Annualized No Surrender 16.31% #N/A #N/A #N/A 15.36% W/ Surrender 12.06% #N/A #N/A #N/A 14.10% Van Kampen LIT Comstock, Class II Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.837853 113.1497 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.252408 0.09425 0.094249 0.094249 0.094249 0.094249 9 FEE 31-Dec-00 0.777778 10.455093 0.07439 95.647164 0.074392 0.074392 0.074392 0.074392 10 FEE 31-Dec-01 0.777778 9.977368 0.07795 0.077954 0.077954 0.077954 0.077954 0.077954 ------------------------------------------------------------- Units 95.569210 #N/A #N/A #N/A 112.903058 $ Value 953.5292 #N/A #N/A #N/A 1126.4754 Surrender $ Value 911.0292 #N/A #N/A #N/A 1083.9754 Cumulative No Surrender -4.65% #N/A #N/A #N/A 12.65% W/ Surrender -8.90% #N/A #N/A #N/A 8.40% Annualized No Surrender -4.65% #N/A #N/A #N/A 4.55% W/ Surrender -8.90% #N/A #N/A #N/A 3.06% LSA Aggressive Growth Range KK 37 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.200544 89.2814 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.435859 0.07453 0.074529 0.074529 0.074529 0.074529 0.074529 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.206848 $ Value #N/A #N/A #N/A #N/A 930.9501 Surrender $ Value #N/A #N/A #N/A #N/A 879.9501 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.90% W/ Surrender #N/A #N/A #N/A #N/A -12.00% Annualized No Surrender #N/A #N/A #N/A #N/A -6.90% W/ Surrender #N/A #N/A #N/A #N/A -12.00% Date 12/31/01 End 12/31/01 VA3 - Base - EEDB @ 0.35% Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.451714 87.3232 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.794866 0.04924 0.049242 0.049242 0.049242 0.049242 9 FEE 31-Dec-00 0.777778 14.389728 0.05405 69.494017 0.054051 0.054051 0.054051 0.054051 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.416239 #N/A #N/A #N/A 87.142102 $ Value 694.1624 #N/A #N/A #N/A 871.4210 Surrender $ Value 651.6624 #N/A #N/A #N/A 828.9210 Cumulative No Surrender -30.58% #N/A #N/A #N/A -12.86% W/ Surrender -34.83% #N/A #N/A #N/A -17.11% Annualized No Surrender -30.58% #N/A #N/A #N/A -6.05% W/ Surrender -34.83% #N/A #N/A #N/A -8.16% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.851165 145.9606 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.037635 0.11052 0.110517 0.110517 0.110517 0.110517 9 FEE 31-Dec-00 0.777778 8.610914 0.09032 116.131691 0.090325 0.090325 0.090325 0.090325 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 116.053913 #N/A #N/A #N/A 145.681958 $ Value 1160.5391 #N/A #N/A #N/A 1456.8196 Surrender $ Value 1118.0391 #N/A #N/A #N/A 1414.3196 Cumulative No Surrender 16.05% #N/A #N/A #N/A 45.68% W/ Surrender 11.80% #N/A #N/A #N/A 41.43% Annualized No Surrender 16.05% #N/A #N/A #N/A 15.11% W/ Surrender 11.80% #N/A #N/A #N/A 13.84% Van Kampen LIT Comstock, Class II Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.890431 112.4805 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.289248 0.09383 0.093830 0.093830 0.093830 0.093830 9 FEE 31-Dec-00 0.777778 10.478709 0.07422 95.431603 0.074225 0.074225 0.074225 0.074225 10 FEE 31-Dec-01 0.777778 9.977910 0.07795 0.077950 0.077950 0.077950 0.077950 0.077950 ------------------------------------------------------------- Units 95.353653 #N/A #N/A #N/A 112.234482 $ Value 951.4302 #N/A #N/A #N/A 1119.8656 Surrender $ Value 908.9302 #N/A #N/A #N/A 1077.3656 Cumulative No Surrender -4.86% #N/A #N/A #N/A 11.99% W/ Surrender -9.11% #N/A #N/A #N/A 7.74% Annualized No Surrender -4.86% #N/A #N/A #N/A 4.32% W/ Surrender -9.11% #N/A #N/A #N/A 2.83% LSA Aggressive Growth Range KK 37 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.212051 89.1897 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.437818 0.07452 0.074515 0.074515 0.074515 0.074515 0.074515 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.115232 $ Value #N/A #N/A #N/A #N/A 930.1686 Surrender $ Value #N/A #N/A #N/A #N/A 879.1686 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -6.98% W/ Surrender #N/A #N/A #N/A #N/A -12.08% Annualized No Surrender #N/A #N/A #N/A #N/A -6.98% W/ Surrender #N/A #N/A #N/A #N/A -12.08% Date 12/31/01 End 12/31/01 VA3 - IB Combo 2 - EEDB @ 0.35% Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.527755 86.7472 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.890110 0.04895 0.048947 0.048947 0.048947 0.048947 9 FEE 31-Dec-00 0.777778 14.433078 0.05389 69.285290 0.053889 0.053889 0.053889 0.053889 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.207513 #N/A #N/A #N/A 86.566546 $ Value 692.0751 #N/A #N/A #N/A 865.6655 Surrender $ Value 649.5751 #N/A #N/A #N/A 823.1655 Cumulative No Surrender -30.79% #N/A #N/A #N/A -13.43% W/ Surrender -35.04% #N/A #N/A #N/A -17.68% Annualized No Surrender -30.79% #N/A #N/A #N/A -6.33% W/ Surrender -35.04% #N/A #N/A #N/A -8.45% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.906150 144.7985 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.079974 0.10986 0.109856 0.109856 0.109856 0.109856 9 FEE 31-Dec-00 0.777778 8.636932 0.09005 115.781854 0.090053 0.090053 0.090053 0.090053 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 115.704076 #N/A #N/A #N/A 144.520790 $ Value 1157.0408 #N/A #N/A #N/A 1445.2079 Surrender $ Value 1114.5408 #N/A #N/A #N/A 1402.7079 Cumulative No Surrender 15.70% #N/A #N/A #N/A 44.52% W/ Surrender 11.45% #N/A #N/A #N/A 40.27% Annualized No Surrender 15.70% #N/A #N/A #N/A 14.77% W/ Surrender 11.45% #N/A #N/A #N/A 13.49% Van Kampen LIT Comstock, Class II Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.962608 111.5747 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.339724 0.09326 0.093262 0.093262 0.093262 0.093262 9 FEE 31-Dec-00 0.777778 10.510970 0.07400 95.138698 0.073997 0.073997 0.073997 0.073997 10 FEE 31-Dec-01 0.777778 9.978650 0.07794 0.077944 0.077944 0.077944 0.077944 0.077944 ------------------------------------------------------------- Units 95.060754 #N/A #N/A #N/A 111.329464 $ Value 948.5780 #N/A #N/A #N/A 1110.9178 Surrender $ Value 906.0780 #N/A #N/A #N/A 1068.4178 Cumulative No Surrender -5.14% #N/A #N/A #N/A 11.09% W/ Surrender -9.39% #N/A #N/A #N/A 6.84% Annualized No Surrender -5.14% #N/A #N/A #N/A 4.01% W/ Surrender -9.39% #N/A #N/A #N/A 2.51% LSA Aggressive Growth Range KK 37 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.227751 89.0650 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.440487 0.07450 0.074496 0.074496 0.074496 0.074496 0.074496 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 88.990536 $ Value #N/A #N/A #N/A #N/A 929.1045 Surrender $ Value #N/A #N/A #N/A #N/A 878.1045 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -7.09% W/ Surrender #N/A #N/A #N/A #N/A -12.19% Annualized No Surrender #N/A #N/A #N/A #N/A -7.09% W/ Surrender #N/A #N/A #N/A #N/A -12.19% Date 12/31/01 End 12/31/01 VA3 - IB & DB Combo 2 - EEDB @ 0.35% Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.578713 86.3654 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.953911 0.04875 0.048752 0.048752 0.048752 0.048752 9 FEE 31-Dec-00 0.777778 14.462021 0.05378 69.146629 0.053781 0.053781 0.053781 0.053781 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.068851 #N/A #N/A #N/A 86.185074 $ Value 690.6885 #N/A #N/A #N/A 861.8507 Surrender $ Value 648.1885 #N/A #N/A #N/A 819.3507 Cumulative No Surrender -30.93% #N/A #N/A #N/A -13.81% W/ Surrender -35.18% #N/A #N/A #N/A -18.06% Annualized No Surrender -30.93% #N/A #N/A #N/A -6.52% W/ Surrender -35.18% #N/A #N/A #N/A -8.64% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.943042 144.0291 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.108337 0.10942 0.109418 0.109418 0.109418 0.109418 9 FEE 31-Dec-00 0.777778 8.654301 0.08987 115.549482 0.089872 0.089872 0.089872 0.089872 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 115.471704 #N/A #N/A #N/A 143.752020 $ Value 1154.7170 #N/A #N/A #N/A 1437.5202 Surrender $ Value 1112.2170 #N/A #N/A #N/A 1395.0202 Cumulative No Surrender 15.47% #N/A #N/A #N/A 43.75% W/ Surrender 11.22% #N/A #N/A #N/A 39.50% Annualized No Surrender 15.47% #N/A #N/A #N/A 14.54% W/ Surrender 11.22% #N/A #N/A #N/A 13.26% Van Kampen LIT Comstock, Class II Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 9.011069 110.9746 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.373546 0.09289 0.092885 0.092885 0.092885 0.092885 9 FEE 31-Dec-00 0.777778 10.532527 0.07385 94.943977 0.073845 0.073845 0.073845 0.073845 10 FEE 31-Dec-01 0.777778 9.979139 0.07794 0.077940 0.077940 0.077940 0.077940 0.077940 ------------------------------------------------------------- Units 94.866037 #N/A #N/A #N/A 110.729954 $ Value 946.6814 #N/A #N/A #N/A 1104.9896 Surrender $ Value 904.1814 #N/A #N/A #N/A 1062.4896 Cumulative No Surrender -5.33% #N/A #N/A #N/A 10.50% W/ Surrender -9.58% #N/A #N/A #N/A 6.25% Annualized No Surrender -5.33% #N/A #N/A #N/A 3.80% W/ Surrender -9.58% #N/A #N/A #N/A 2.29% LSA Aggressive Growth Range KK 37 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.238243 88.9819 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.442268 0.07448 0.074484 0.074484 0.074484 0.074484 0.074484 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 88.907397 $ Value #N/A #N/A #N/A #N/A 928.3949 Surrender $ Value #N/A #N/A #N/A #N/A 877.3949 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -7.16% W/ Surrender #N/A #N/A #N/A #N/A -12.26% Annualized No Surrender #N/A #N/A #N/A #N/A -7.16% W/ Surrender #N/A #N/A #N/A #N/A -12.26% Date 12/31/01 End 12/31/01 VA3 - DB Combo - EEDB @ 0.35% Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.512504 86.8621 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.871012 0.04901 0.049006 0.049006 0.049006 0.049006 9 FEE 31-Dec-00 0.777778 14.424391 0.05392 69.327017 0.053921 0.053921 0.053921 0.053921 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.249239 #N/A #N/A #N/A 86.681371 $ Value 692.4924 #N/A #N/A #N/A 866.8137 Surrender $ Value 649.9924 #N/A #N/A #N/A 824.3137 Cumulative No Surrender -30.75% #N/A #N/A #N/A -13.32% W/ Surrender -35.00% #N/A #N/A #N/A -17.57% Annualized No Surrender -30.75% #N/A #N/A #N/A -6.28% W/ Surrender -35.00% #N/A #N/A #N/A -8.39% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.895115 145.0302 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.071484 0.10999 0.109988 0.109988 0.109988 0.109988 9 FEE 31-Dec-00 0.777778 8.631711 0.09011 115.851886 0.090107 0.090107 0.090107 0.090107 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 115.774108 #N/A #N/A #N/A 144.752341 $ Value 1157.7411 #N/A #N/A #N/A 1447.5234 Surrender $ Value 1115.2411 #N/A #N/A #N/A 1405.0234 Cumulative No Surrender 15.77% #N/A #N/A #N/A 44.75% W/ Surrender 11.52% #N/A #N/A #N/A 40.50% Annualized No Surrender 15.77% #N/A #N/A #N/A 14.83% W/ Surrender 11.52% #N/A #N/A #N/A 13.56% Van Kampen LIT Comstock, Class II Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.948121 111.7553 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.329590 0.09338 0.093375 0.093375 0.093375 0.093375 9 FEE 31-Dec-00 0.777778 10.504496 0.07404 95.197333 0.074042 0.074042 0.074042 0.074042 10 FEE 31-Dec-01 0.777778 9.978499 0.07795 0.077945 0.077945 0.077945 0.077945 0.077945 ------------------------------------------------------------- Units 95.119387 #N/A #N/A #N/A 111.509943 $ Value 949.1487 #N/A #N/A #N/A 1112.7019 Surrender $ Value 906.6487 #N/A #N/A #N/A 1070.2019 Cumulative No Surrender -5.09% #N/A #N/A #N/A 11.27% W/ Surrender -9.34% #N/A #N/A #N/A 7.02% Annualized No Surrender -5.09% #N/A #N/A #N/A 4.07% W/ Surrender -9.34% #N/A #N/A #N/A 2.57% LSA Aggressive Growth Range KK 37 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.224614 89.0899 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.439955 0.07450 0.074500 0.074500 0.074500 0.074500 0.074500 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.015423 $ Value #N/A #N/A #N/A #N/A 929.3170 Surrender $ Value #N/A #N/A #N/A #N/A 878.3170 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -7.07% W/ Surrender #N/A #N/A #N/A #N/A -12.17% Annualized No Surrender #N/A #N/A #N/A #N/A -7.07% W/ Surrender #N/A #N/A #N/A #N/A -12.17% Date 12/31/01 End 12/31/01 VA3 - PDB - EEDB @ 0.35% Morgan Stanley UIF Mid Cap Growth Range J 10 Inception 10/18/99 NO. YEARS 2.205 0.2055 YEAR YEAR YEAR YEAR 2.205 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 18-Oct-99 Inception Date 10/18/99 11.484604 87.0731 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 15.836068 0.04911 0.049114 0.049114 0.049114 0.049114 9 FEE 31-Dec-00 0.777778 14.408503 0.05398 69.403463 0.053980 0.053980 0.053980 0.053980 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 69.325685 #N/A #N/A #N/A 86.892221 $ Value 693.2568 #N/A #N/A #N/A 868.9222 Surrender $ Value 650.7568 #N/A #N/A #N/A 826.4222 Cumulative No Surrender -30.67% #N/A #N/A #N/A -13.11% W/ Surrender -34.92% #N/A #N/A #N/A -17.36% Annualized No Surrender -30.67% #N/A #N/A #N/A -6.17% W/ Surrender -34.92% #N/A #N/A #N/A -8.28% Putnam VT Small Cap Value Range FF 32 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 6.874925 145.4561 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 7.055944 0.11023 0.110230 0.110230 0.110230 0.110230 9 FEE 31-Dec-00 0.777778 8.622170 0.09021 115.980084 0.090207 0.090207 0.090207 0.090207 10 FEE 31-Dec-01 0.777778 10.000000 0.07778 0.077778 0.077778 0.077778 0.077778 0.077778 ------------------------------------------------------------- Units 115.902306 #N/A #N/A #N/A 145.177918 $ Value 1159.0231 #N/A #N/A #N/A 1451.7792 Surrender $ Value 1116.5231 #N/A #N/A #N/A 1409.2792 Cumulative No Surrender 15.90% #N/A #N/A #N/A 45.18% W/ Surrender 11.65% #N/A #N/A #N/A 40.93% Annualized No Surrender 15.90% #N/A #N/A #N/A 14.96% W/ Surrender 11.65% #N/A #N/A #N/A 13.69% Van Kampen LIT Comstock, Class II Range HH 34 Inception 4/30/99 NO. YEARS 2.674 0.6740 YEAR YEAR YEAR YEAR 2.674 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 30-Apr-99 Inception Date 4/30/99 8.921614 112.0873 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 8.311060 0.09358 0.093583 0.093583 0.093583 0.093583 9 FEE 31-Dec-00 0.777778 10.492661 0.07413 95.304709 0.074126 0.074126 0.074126 0.074126 10 FEE 31-Dec-01 0.777778 9.978230 0.07795 0.077947 0.077947 0.077947 0.077947 0.077947 ------------------------------------------------------------- Units 95.226761 #N/A #N/A #N/A 111.841685 $ Value 950.1945 #N/A #N/A #N/A 1115.9821 Surrender $ Value 907.6945 #N/A #N/A #N/A 1073.4821 Cumulative No Surrender -4.98% #N/A #N/A #N/A 11.60% W/ Surrender -9.23% #N/A #N/A #N/A 7.35% Annualized No Surrender -4.98% #N/A #N/A #N/A 4.19% W/ Surrender -9.23% #N/A #N/A #N/A 2.69% LSA Aggressive Growth Range KK 37 Inception 8/14/01 NO. YEARS 0.381 0.3808 YEAR YEAR YEAR YEAR 0.381 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS 1 3 5 10 Inception 31-Dec-00 31-Dec-98 31-Dec-96 31-Dec-91 14-Aug-01 Inception Date 8/14/01 11.218852 89.1357 0 FEE 31-Dec-91 0.777778 #N/A -- #N/A 0 1 FEE 31-Dec-92 0.777778 #N/A -- -- 0 2 FEE 31-Dec-93 0.777778 #N/A -- -- 0 3 FEE 31-Dec-94 0.777778 #N/A -- -- 0 4 FEE 31-Dec-95 0.777778 #N/A -- -- 0 5 FEE 31-Dec-96 0.777778 #N/A -- #N/A -- 0 6 FEE 31-Dec-97 0.777778 #N/A -- -- -- 0 7 FEE 31-Dec-98 0.777778 #N/A -- #N/A -- -- 0 8 FEE 31-Dec-99 0.777778 #N/A -- -- -- -- 0 9 FEE 31-Dec-00 0.777778 #N/A -- #N/A -- -- -- 0 10 FEE 31-Dec-01 0.777778 10.438975 0.07451 0.074507 0.074507 0.074507 0.074507 0.074507 ------------------------------------------------------------- Units #N/A #N/A #N/A #N/A 89.061173 $ Value #N/A #N/A #N/A #N/A 929.7074 Surrender $ Value #N/A #N/A #N/A #N/A 878.7074 #N/A Cumulative No Surrender #N/A #N/A #N/A #N/A -7.03% W/ Surrender #N/A #N/A #N/A #N/A -12.13% Annualized No Surrender #N/A #N/A #N/A #N/A -7.03% W/ Surrender #N/A #N/A #N/A #N/A -12.13%
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