-----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, LDAnT310VSHIxmpZEEStnH8tLYygS5n2djFBnpZX4hAKBcQyzlN9VnU60sQg1Qva f+NqQBCbaEOHQYhu+4djXA== 0000945094-00-000212.txt : 20000428 0000945094-00-000212.hdr.sgml : 20000428 ACCESSION NUMBER: 0000945094-00-000212 CONFORMED SUBMISSION TYPE: N-4/A PUBLIC DOCUMENT COUNT: 6 FILED AS OF DATE: 20000427 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLSTATE LIFE INSURANCE CO SEPARATE ACCOUNT A CENTRAL INDEX KEY: 0001078402 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: IL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-4/A SEC ACT: SEC FILE NUMBER: 333-31288 FILM NUMBER: 610974 FILING VALUES: FORM TYPE: N-4/A SEC ACT: SEC FILE NUMBER: 811-09227 FILM NUMBER: 610975 BUSINESS ADDRESS: STREET 1: 3100 SANDERS ROAD SUITE J5B CITY: NORTHBROOK STATE: IL ZIP: 60062 BUSINESS PHONE: 8474025000 N-4/A 1 PUTNAM L As filed with the Securities and Exchange Commission on April 27, 2000. File Nos. 333-31288 811-09227 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Pre-Effective Amendment No. 1 /x/ and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 Amendment No. 7 /x/ ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A (Exact Name of Registrant) ALLSTATE LIFE INSURANCE COMPANY (Name of Depositor) 3100 SANDERS ROAD, NORTHBROOK, ILLINOIS 60062 1-800/390-1277 (Principal Executive Offices and Telephone Number of Depositor) MICHAEL J. VELOTTA SENIOR VICE PRESIDENT, SECRETARY AND GENERAL COUNSEL ALLSTATE LIFE INSURANCE COMPANY 3100 SANDERS ROAD, NORTHBROOK, ILLINOIS 60062 (Name and Address of Agent for Service) Copies to: Richard T. Choi, Terry R. Young, Esquire Esquire Allstate Distributors, L.L.C. Freedman, Levy, Kroll & 3100 Sanders Road, J5B Simonds Northbrook, Illinois 60062 1050 Connecticut Avenue, N.W., Suite 825 Washington, D.C. 20036-5366 Approximate date of proposed public offering: As soon as practicable after the effective date of the registration statement. Title of Securities Being Registered: Units of interest in the Allstate Life Insurance Company Separate Account A under flexible premium deferred variable annuity contracts. THE PUTNAM ALLSTATE ADVISOR Allstate Life Insurance Company Prospectus dated April 28, 2000 3100 Sanders Road Northbrook, Illinois 60062 Telephone Number: 1-800-390-1277 Allstate Life Insurance Company ("Allstate") is offering the following individual and group flexible premium deferred variable annuity contracts (each, a "Contract"): o Putnam Allstate Advisor o Putnam Allstate Advisor Apex (formerly known as Putnam Allstate Advisor - A) o Putnam Allstate Advisor Plus o Putnam Allstate Advisor Preferred This prospectus contains information about each Contract that you should know before investing. Please keep it for future reference. Not all Contracts may be available in all states or through your sales representative. Please check with your sales representative for details. Each Contract currently offers several investment alternatives ("investment alternatives"). The investment alternatives include up to 3 fixed account options ("Fixed Account Options"), depending on the Contract, and include 24 variable sub-accounts ("Variable Sub-Accounts") of the Allstate Life Insurance Company Separate Account A ("Variable Account"). Each Variable Sub-Account invests exclusively in the class IB shares of one of the following mutual fund portfolios ("Funds") of Putnam Variable Trust:
Putnam VT American Government Income Fund Putnam VT International Growth and Income Fund Putnam VT Asia Pacific Growth Fund Putnam VT International New Opportunities Fund Putnam VT Diversified Income Fund Putnam VT Investors Fund Putnam VT The George Putnam Fund of Boston Putnam VT Money Market Fund Putnam VT Global Asset Allocation Fund Putnam VT New Opportunities Fund Putnam VT Global Growth Fund Putnam VT New Value Fund Putnam VT Growth and Income Fund Putnam VT OTC & Emerging Growth Fund Putnam VT Growth Opportunities Fund Putnam VT Research Fund Putnam VT Health Sciences Fund Putnam VT Small Cap Value Fund Putnam VT High Yield Fund Putnam VT Utilities Growth and Income Fund Putnam VT Income Fund Putnam VT Vista Fund Putnam VT International Growth Fund Putnam VT Voyager Fund
For Putnam Allstate Advisor Plus Contracts, each time you make a purchase payment, we will add to your Contract value ("Contract Value") a credit enhancement ("Credit Enhancement") equal to 4% of such purchase payment. Expenses for this contract may be higher than a Contract without the Credit Enhancement. Over time, the amount of the Credit Enhancement may be more than offset by the fees associated with the Credit Enhancement. We (Allstate) have filed a Statement of Additional Information, dated April 28, 2000, with the Securities and Exchange Commission ("SEC"). It contains more information about each 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 __ 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 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 on the accuracy or the adequacy of this prospectus. Anyone who tells you otherwise is committing a federal crime. The Contracts may be distributed through broker-dealers that have relationships with banks or other IMPORTANT financial institutions or by employees of such banks. NOTICES However, the Contracts are not deposits, or obligations of, or guaranteed by such institutions or any federal regulatory agency. Investment in the Contracts involves investment risks, including possible loss of principal. The Contracts are not FDIC insured.
TABLE OF CONTENTS - ----------------------------------------------------------------------------------------------------------------------------------- Page Important Terms........................................................................ The Contracts At A Glance ............................................................. Overview How The Contracts Work................................................................. Expense Table.......................................................................... Financial Information.................................................................. The Contracts.......................................................................... Purchases.............................................................................. Contract Value......................................................................... Contract Features Investment Alternatives................................................................ The Variable Sub-Accounts..................................................... The Fixed Account............................................................. Transfers..................................................................... Expenses............................................................................... Access To Your Money................................................................... Income Payments........................................................................ Death Benefits......................................................................... More Information........................................................................ Other Information Taxes................................................................................... Performance Information................................................................. Statement of Additional Information Table of Contents.................................. Appendix A.............................................................................. Appendix B.............................................................................. Appendix C.............................................................................. Appendix D..............................................................................
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 ......................................................................... Allstate ("We").................................................................................. Annuitant........................................................................................ Automatic Additions Program...................................................................... Automatic Fund Rebalancing Program............................................................... Beneficiary ..................................................................................... Cancellation Period ............................................................................. *Contract ....................................................................................... Contract Anniversary............................................................................. Contract Owner ("You") .......................................................................... Contract Value .................................................................................. Contract Year ................................................................................... Credit Enhancement............................................................................... Dollar Cost Averaging Program.................................................................... Due Proof of Death............................................................................... Enhanced Beneficiary Protection Option........................................................... Fixed Account Options............................................................................ Free Withdrawal Amount .......................................................................... Funds............................................................................................ Guarantee Period ............................................................................... Income Base...................................................................................... Income Plan ..................................................................................... Investment Alternatives ......................................................................... Issue Date ...................................................................................... Maximum Anniversary Value........................................................................ Payout Phase..................................................................................... Payout Start Date ............................................................................... Retirement Income Guarantee Rider................................................................ Right to Cancel ................................................................................. SEC.............................................................................................. Settlement Value ............................................................................... Standard Fixed Account Option.................................................................... Systematic Withdrawal Program ................................................................... Valuation Date................................................................................... Variable Account ................................................................................ Variable Sub-Account ............................................................................
* In certain states a Contract may be available only as a group Contract. If you purchase a group Contract, 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. References to "Contract" also include all four Contracts listed on the cover page of this prospectus, unless otherwise noted. However, we administer each Contract separately. Overview of Contracts - -------------------------------------------------------------------------------- The Contracts offer many of the same basic features and benefits. They differ primarily with respect to the charges imposed, as follows: o The Putnam Allstate Advisor Contract has a mortality and expense risk charge of 1.25%, an annual contract maintenance charge of $30, a withdrawal charge of up to 7% with a 7 year withdrawal charge period, and an annual Free Withdrawal Amount. o The Putnam Allstate Advisor Apex Contract has a front-end sales charge of up to 5.75% of purchase payments, a lower mortality and expense risk charge (0.80%), no contract maintenance charge, a lower withdrawal charge (0.50%) with a shorter withdrawal charge period (1 year), but no Free Withdrawal Amount. o The Putnam Allstate Advisor Plus Contract offers a 4% Credit Enhancement on purchase payments, a higher mortality and expense risk charge (1.60%), no contract maintenance charge, a higher withdrawal charge (up to 8%) with a longer withdrawal charge period (8 years), and an annual Free Withdrawal Amount. o The Putnam Allstate Advisor Preferred Contract has a higher mortality and expense risk charge (1.65%), no contract maintenance charge, a lower withdrawal charge (up to 2%) with a shorter withdrawal charge period (2 years), but no Free Withdrawal Amount. Other differences among the Contracts relate to the minimum initial purchase payment, the maximum age of Contract owners and Annuitants, available Fixed Account Options, and available withdrawal charge waivers, and available employee endorsements. For a side-by-side comparison of these differences, please turn to Appendix D of this prospectus. THE CONTRACTS AT A GLANCE - --------------------------------------------------------------------------------
The following is a snapshot of the Contracts. Please read the remainder of this prospectus for more information. Flexible Payments You can purchase each Contract with as little as: o $1,000 for Putnam Allstate Advisor Contracts o $1,000 for Putnam Allstate Advisor Apex Contracts o $10,000 for Putnam Allstate Advisor Plus Contracts o $10,000 for Putnam Allstate Advisor Preferred Contracts Putnam Allstate Advisor and Putnam Allstate Advisor Apex Contracts that are Qualified Contracts, which are Contracts issued with a qualified plan, can be purchased with an initial purchase payment of $500 or more. You can add to your Contract as often and as much as you like, but each subsequent payment must be at least $500 ($50 for automatic payments). We may limit the amount of any additional purchase payment to a maximum of $1,000,000. You must maintain a minimum account size of $1,000. For Putnam Allstate Advisor Plus Contracts, each time you make a purchase payment, we will add to your Contract Value a Credit Enhancement equal to 4% of such purchase payment. ---------------------------------- -------------------------------------------------------------------------------- ---------------------------------- -------------------------------------------------------------------------------- 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 federal or state law permits, to reflect the investment experience of any amounts allocated to the Variable Account. If you exercise your Right to Cancel the Contract, the amount we refund to you will not include any Credit Enhancement. See "Right to Cancel" for details. ---------------------------------- -------------------------------------------------------------------------------- ---------------------------------- -------------------------------------------------------------------------------- Expenses Each Fund pays expenses that you will bear indirectly if you invest in a Variable Sub-Account. You also will bear the following expenses: Putnam Allstate Advisor Contracts o Annual mortality and expense risk charge equal to 1.25% of average daily net assets o Annual contract maintenance charge of $30 (waived in certain cases) o Withdrawal charges ranging from 0% to 7% of purchase payments withdrawn (with certain exceptions) Putnam Allstate Advisor Apex Contracts o Annual mortality and expense risk charge equal to 0.80% of average daily net assets o Front end sales charge ranging from 5.75% to 0.50% of the amount of purchase payments o Withdrawal charge equal to 0.50% of purchase payments withdrawn during the first Contract Year (currently only assessed on Contracts that have total purchase payments of at least $1,000,000) Putnam Allstate Advisor Plus Contracts o Annual mortality and expense risk charge equal to 1.60% of average daily net assets. o Withdrawal charges ranging from 0% to 8% of purchase payments withdrawn (with certain exceptions) Putnam Allstate Advisor Preferred Contracts o Annual mortality and expense risk charge equal to 1.65% of average daily net assets o Withdrawal charges ranging from 0% to 2% of purchase payments withdrawn (with certain exceptions) All Contracts o An additional 0.15% applies to the annual mortality and expense risk charge if you select the Enhanced Beneficiary Protection Option o If you select a Retirement Income Guarantee Rider you would pay an additional fee at the annual rate of 0.05% or 0.30% (depending on the option you select) of the Income Base in effect on a Contract anniversary ("Contract Anniversary") o Transfer fee equal to 0.50% of the amount transferred after 12th transfer in any year o State premium tax (if your state imposes one) ---------------------------------- -------------------------------------------------------------------------------- ---------------------------------- -------------------------------------------------------------------------------- Investment Each Contract offers several investment alternatives including: Alternatives o a Standard Fixed Account Option that credits interest at rates we guarantee, and o 24 Variable Sub-Accounts investing in Funds offering professional money management by Putnam Investment Management, Inc. Putnam Allstate Advisor and Putnam Allstate Advisor Apex Contracts offer 2 additional Fixed Account Options that credit interest at rates we guarantee. To find out current rates being paid on the Fixed Account Option(s), or to find out how the Variable Sub-Accounts have performed, please call us at 1-800/390-1277. ---------------------------------- -------------------------------------------------------------------------------- ---------------------------------- -------------------------------------------------------------------------------- Special Services For your convenience, we offer these special services: o Automatic Fund Rebalancing Program o Automatic Additions Program o Dollar Cost Averaging Program o 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: o life income with guaranteed payments o a joint and survivor life income with guaranteed payments o guaranteed payments for a specified period (5 to 30 years) Allstate also offers two Retirement Income Guarantee Riders that allow you to lock in a dollar amount that you can apply towards fixed income payments. ---------------------------------- -------------------------------------------------------------------------------- ---------------------------------- -------------------------------------------------------------------------------- Death Benefits If you die before income payments begin, we will pay the death benefit described in the Contract. We also offer an Enhanced Beneficiary Protection Option. ---------------------------------- -------------------------------------------------------------------------------- ---------------------------------- -------------------------------------------------------------------------------- Transfers Before the Payout Start Date, you may transfer your Contract Value among the investment alternatives, with certain restrictions. The minimum amount you may transfer is $100 or the amount remaining in the investment alternative, if less. A charge may apply after the 12th transfer in each Contract year ("Contract Year"), which we measure from the date we issue your Contract or a Contract Anniversary. ---------------------------------- -------------------------------------------------------------------------------- ---------------------------------- -------------------------------------------------------------------------------- Withdrawals You may withdraw some or all of your Contract Value at anytime during the Accumulation Phase and during the Payout Phase in certain cases. In general, you must withdraw at least $50 at a time ($1,000 during the Payout Phase). A 10% federal tax penalty may apply if you withdraw before you are 59 1/2 years old. A withdrawal charge also may apply. ---------------------------------- --------------------------------------------------------------------------------
HOW THE CONTRACTS WORK - -------------------------------------------------------------------------------- Each Contract basically works in two ways. First, each Contract can help you (we assume you are the "Contract Owner") save for retirement because you can invest in your Contract's 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 Fixed Account Options. If you invest in a Fixed Account Option, 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 Funds. Second, each 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 Funds. 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 Payout Start Date Accumulation Phase Date Payout Phase - --------------------------------------------------------------------------------------------------------------------------------- ^ ^ ^ ^ - > | | | | | You save for retirement You buy You start receiving income You can receive Or you can a Contract payments or receive a lump income payments receive income sum 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 1-800-390-1277 if you have any question about how the Contracts work. 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 Fund expenses, please refer to the accompanying prospectus for the Funds. ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- CONTRACT OWNER TRANSACTION EXPENSES ----------------------------------------------------------------------------- -----------------------------------------------------------------------------
Sales Charge Imposed on Purchases (as a percentage of purchase payments) Contract: -------- Putnam Allstate Advisor.....................................................None Putnam Allstate Advisor Apex Purchase Payment Amount Sales Charge Percentage ----------------------- ----------------------- Less than $50,000 5.75% At least $50,000 but less than $100,000 4.50% At least $100,000 but less than $250,000 3.50% At least $250,000 but less than $500,000 2.50% At least $500,000 but less than $1,000,000 2.00% At least $1,000,000 0.50% Putnam Allstate Advisor Plus............................................None Putnam Allstate Advisor Preferred ......................................None ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- Withdrawal Charge (as a percentage of purchase payments withdrawn)* Contract: Number of Complete Years Since We Received Payment Being Withdrawn/ -------- ------------------------------------------------------------------- Applicable Charge: ------------------ Putnam Allstate Advisor 0 1 2 3 4 5 6 7+ 7% 7% 6% 5% 4% 3% 2% 0% Putnam Allstate Advisor Apex 0 1+ 0.5%** 0% Putnam Allstate Advisor Preferred 0 1 2+ 2% 1% 0% Putnam Allstate Advisor Plus 0 1 2 3 4 5 6 7 8+ 8% 8% 8% 7% 6% 5% 4% 3% 0% ------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------------------------
* Under Putnam Allstate Advisor and Putnam Allstate Advisor Plus Contracts, each Contract Year, you may withdraw up to the Free Withdrawal Amount offered under your Contract without incurring a withdrawal charge. See "Withdrawal Charges," for more information. ** Currently assessed on Contracts that have total purchase payments of at least $1,000,000. ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- Annual Contract Maintenance Charge Contract: -------- Putnam Allstate Advisor......................................... $30*** Putnam Allstate Advisor Apex...................................... None Putnam Allstate Advisor Plus...................................... None Putnam Allstate Advisor Preferred................................. None ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- Transfer Fee....................................... 0.50% of the amount transferred**** ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- *** Waived in certain cases. See "Expenses." **** Applies solely to the 13th and subsequent transfers within a Contract Year, excluding transfers due to dollar cost averaging and automatic fund rebalancing. ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- VARIABLE ACCOUNT ANNUAL EXPENSES (as a percentage of average daily net asset value deducted from each Variable Sub-Account) ----------------------------------------------------------------------------- --------------------------------------------------- ---------------------- --
Mortality and Expense Total Variable Risk Charge* Administrative Charge Account Annual Contract ------------------ --------------------- Expenses -------- -------- 1.25% 0.00% 1.25% Putnam Allstate Advisor 0.80% 0.00% 0.80% Putnam Allstate Advisor Apex 1.65% 0.00% 1.65% Putnam Allstate Advisor Preferred 1.60% 0.00% 1.60% Putnam Allstate Advisor Plus
--------------------------------------------------- ---------------------- -- ----------------------------------------------------------------------------- * If you select the Enhanced Beneficiary Protection Option, the mortality and expense risk charge will be an additional 0.15%. ----------------------------------------------------------------------------- ------------------------------------------------------------------------------ Retirement Income Guarantee Rider Expenses If you select a Retirement Income Guarantee Rider, you would pay an additional fee at the annual rate of 0.05% or 0.30% (depending on the Option you select) of the Income Base in effect on a Contract Anniversary. See "Retirement Income Guarantee Riders" for details. ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- FUND ANNUAL EXPENSES (After Voluntary Reductions and Reimbursements) (as a percentage of Fund average daily net assets)(1)
Fund Management Rule 12b-1 Other Total Annual Fee Fee Expenses Fund Expenses(1) Putnam VT American Government Income Fund(2) 0.41% 0.15% 0.49% 1.05% Putnam VT Asia Pacific Growth Fund 0.80% 0.15% 0.33% 1.28% Putnam VT Diversified Income Fund 0.68% 0.15% 0.10% 0.93% Putnam VT The George Putnam Fund of Boston 0.65% 0.15% 0.18% 0.98% Putnam VT Global Asset Allocation Fund 0.65% 0.15% 0.12% 0.92% Putnam VT Global Growth Fund 0.61% 0.15% 0.12% 0.88% Putnam VT Growth and Income Fund 0.46% 0.15% 0.04% 0.65% Putnam VT Growth Opportunities Fund 0.70% 0.15% 0.20% 1.05% Putnam VT Health Sciences Fund 0.70% 0.15% 0.13% 0.98% Putnam VT High Yield Fund 0.65% 0.15% 0.07% 0.87% Putnam VT Income Fund 0.60% 0.15% 0.07% 0.82% Putnam VT International Growth Fund 0.80% 0.15% 0.22% 1.17% Putnam VT International Growth and Income Fund 0.80% 0.15% 0.18% 1.13% Putnam VT International New Opportunities Fund 1.08% 0.15% 0.33% 1.56% Putnam VT Investors Fund 0.63% 0.15% 0.08% 0.86% Putnam VT Money Market Fund 0.41% 0.15% 0.08% 0.64% Putnam VT New Opportunities Fund 0.54% 0.15% 0.05% 0.74% Putnam VT New Value Fund 0.70% 0.15% 0.10% 0.95% Putnam VT OTC & Emerging Growth Fund(3) 0.53% 0.15% 0.37% 1.05% Putnam VT Research Fund(3) 0.54% 0.15% 0.31% 1.00% Putnam VT Small Cap Value Fund 0.53% 0.15% 0.76% 1.44% Putnam VT Utilities Growth and Income Fund 0.65% 0.15% 0.06% 0.86% Putnam VT Vista Fund 0.65% 0.15% 0.10% 0.90% Putnam VT Voyager Fund 0.53% 0.15% 0.04% 0.72% (1) Figures shown in the table are based on the Funds' last fiscal year ended December 31, 1999, except that the figures for the Putnam VT Small Cap Value Fund, which commenced operations on April 30, 1999, and Putnam VT American Government Income Fund and Putnam VT Growth Opportunities Fund, which commenced operations on January 31, 2000 are based on estimates for the Funds' current fiscal year. Figures shown in the table include amounts paid through expense offset and brokerage service arrangements. See the prospectus for the Putnam Variable Trust for more information about Rule 12b-1 fees payable under the Funds' distribution plan. (2) Absent voluntary reductions and reimbursements, the estimated management fees, Rule 12b-1 fees, other expenses, and total annual fund expenses for the Putnam VT American Government Income Fund expressed as a percentage of average net assets of the Fund would have been as follows: Fund Management Rule 12b-1 Other Total Annual Fee Fee Expenses Fund Expenses Putnam VT American Government Income Fund 0.65% 0.15% 0.49% 1.29% (3) Absent voluntary reductions and reimbursements for certain Funds (including amounts paid through expense offset and brokerage service arrangements), management fees, Rule 12b-1 fees, other expenses, and total annual Fund expenses expressed as a percentage of average net assets of the Funds would have been as follows: Fund Management Rule 12b-1 Other Total Annual Fee Fee Expenses Fund Expenses Putnam VT OTC & Emerging Growth Fund 0.70% 0.15% 0.37% 1.22% Putnam VT Research Fund 0.65% 0.15% 0.31% 1.11%
EXAMPLE 1 The example below shows the dollar amount of expenses that you would bear directly or indirectly if you: o invested a $1,000 in a Variable Sub-Account, o earned a 5% annual return on your investment, o surrendered your Contract, or began receiving income payments for a specified period of less than 120 months, at the end of each time period (no withdrawal charge is included in the calculations for the Putnam Allstate Advisor Apex Contracts because no withdrawal charge applies after one year); o elect the Enhanced Beneficiary Protection Option; and o elect Retirement Income Guarantee Rider 2 (assuming Income Base B). The example assumes that any fund expense waivers or reimbursement arrangements described in footnote 2 above are in effect for the time periods presented below. The example does not include any taxes or tax penalties you may be required to pay if you surrender your Contract.
Putnam Allstate Putnam Allstate Putnam Allstate Putnam Allstate Advisor Advisor Apex Advisor Plus Advisor Preferred SUB-ACCOUNT 1 Year 3 Year 1 Year 3 Year 1 Year 3 Year 1 Year 3 Year - ----------- ------ ------ ------ ------ ------ ------ ------ ------ Putnam American Government $88 $132 $80 $127 $100 $157 $40 $90 Income Putnam Asia Pacific Growth $91 $139 $82 $134 $102 $164 $42 $97 Putnam Diversified Income $87 $128 $79 $124 $99 $154 $38 $87 The George Putnam Fund $88 $129 $79 $125 $99 $155 $39 $88 Putnam Global Asset Allocation $87 $128 $79 $123 $99 $153 $38 $87 Putnam Global Growth $87 $126 $78 $122 $98 $152 $38 $85 Putnam Growth and Income $84 $119 $76 $115 $96 $145 $35 $78 Putnam Growth Opportunities $88 $132 $80 $127 $100 $157 $40 $90 Putnam Health Sciences $88 $129 $79 $125 $99 $155 $39 $88 Putnam High Yield $87 $126 $78 $122 $98 $152 $38 $85 Putnam Income $86 $124 $78 $120 $98 $150 $37 $83 Putnam International Growth $90 $135 $81 $131 $101 $161 $41 $94 Putnam International Growth $89 $134 $81 $129 $101 $160 $40 $93 and Income Putnam International New $94 $147 $85 $142 $105 $173 $45 $106 Opportunities Putnam Investors $87 $126 $78 $122 $98 $151 $38 $85 Putnam Money Market $84 $119 $76 $115 $96 $145 $35 $78 Putnam New Opportunities $85 $122 $77 $118 $97 $148 $36 $81 Putnam New Value $87 $128 $79 $124 $99 $154 $39 $87 Putnam OTC & Emerging $88 $132 $80 $127 $100 $157 $40 $90 Growth Putnam Research $88 $130 $80 $126 $99 $156 $39 $89 Putnam Small Cap Value $92 $143 $84 $138 $104 $169 $44 $102 Putnam Utilities Growth and $87 $126 $78 $122 $98 $151 $38 $85 Income Putnam Vista $87 $127 $79 $123 $98 $153 $38 $86 Putnam Voyager $85 $121 $77 $117 $96 $147 $36 $80 EXAMPLE 2 Same assumptions as Example 1 above, except that you decide not to surrender your Contract, or you began receiving income payments for at least 120 months if under an Income Plan for a specified period, at the end of each period. Putnam Allstate Putnam Allstate Putnam Allstate Advisor Advisor Plus Advisor Preferred SUB-ACCOUNT 1 Year 3 Year 1 Year 3 Year 1 Year 3 Year - ----------- ------ ------ ------ ------ ------ ------ Putnam American Government $29 $89 $32 $98 $30 $90 Income Putnam Asia Pacific Growth $31 $96 $34 $105 $32 $97 Putnam Diversified Income $28 $85 $31 $94 $28 $87 The George Putnam Fund $28 $87 $31 $96 $29 $88 Putnam Global Asset Allocation $28 $85 $31 $94 $28 $87 Putnam Global Growth $27 $84 $30 $93 $28 $85 Putnam Growth and Income $25 $77 $28 $86 $25 $78 Putnam Growth Opportunities $29 $89 $32 $98 $30 $90 Putnam Health Sciences $28 $87 $31 $96 $29 $88 Putnam High Yield $27 $84 $30 $92 $28 $85 Putnam Income $27 $82 $30 $91 $27 $83 Putnam International Growth $30 $93 $33 $101 $31 $94 Putnam International Growth $30 $91 $33 $100 $30 $93 and Income Putnam International New $34 $105 $37 $113 $35 $106 Opportunities Putnam Investors $27 $83 $30 $92 $28 $85 Putnam Money Market $25 $76 $28 $85 $25 $78 Putnam New Opportunities $26 $80 $29 $88 $26 $81 Putnam New Value $28 $86 $31 $95 $29 $87 Putnam OTC & Emerging $29 $89 $32 $98 $30 $90 Growth Putnam Research $28 $87 $31 $96 $29 $89 Putnam Small Cap Value $33 $101 $36 $110 $34 $102 Putnam Utilities Growth and $27 $83 $30 $92 $28 $85 Income Putnam Vista $27 $84 $30 $93 $280 $859 Putnam Voyager $26 $79 $28 $88 $261 $803
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 the Enhanced Beneficiary Protection Option and the Retirement Income Guarantee Rider 2 and that Income Base B is applied. If one or both of these features were not elected, the expense figures shown above would be slightly lower. To reflect the contract maintenance charge in the examples (for Putnam Allstate Advisor Contracts only), we estimated an equivalent percentage charge, based on an assumed average Contract size of $45,000. The figures for the Putnam Allstate Advisor Apex Contract assume a 5.75% sales charge. 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 analogous to, but not the same as, the share price of a mutual fund. Accumulation Unit Values for Putnam Allstate Advisor and Putnam Allstate Advisor Apex Contracts appear in Appendix C. No Accumulation Unit Values are shown for the Putnam Allstate Advisor Plus and Putnam Allstate Advisor Preferred Contracts which were first offered as of February 4, 2000 and April 28, 2000 respectively. The financial statements of Allstate and the Variable Account appear in the Statement of Additional Information. THE CONTRACT - -------------------------------------------------------------------------------- CONTRACT OWNER Each Contract is an agreement between you, the Contract Owner, and Allstate, 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): o the investment alternatives during the Accumulation and Payout Phases, o the amount and timing of your purchase payments and withdrawals, o the programs you want to use to invest or withdraw money, o the income payment plan you want to use to receive retirement income, o the Annuitant (either yourself or someone else) on whose life the income payments will be based, o the Beneficiary or Beneficiaries who will receive the benefits that the Contract provides when the last surviving Contract Owner or the Annuitant dies, and o any other rights that the Contract provides, including restricting income payments to beneficiaries. If you die, any surviving joint 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. The maximum age of any Contract owner on the Issue Date for each Contract is as follows: 90 - Putnam Allstate Advisor 90 - Putnam Allstate Advisor Apex 80 - Putnam Allstate Advisor Plus 80 - Putnam Allstate Advisor Preferred If you select the Enhanced Beneficiary Protection Option, the maximum age of any owner on the date we issue the Contract rider is 75. 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 issued with a qualified plan. See "Tax Qualified Contracts" on page __. You may change the Contract Owner at any time. Once we have received a satisfactory written request for a change of Contract Owner, the change will take effect as of the date you signed it. We are not liable for any payment we make or other action we take before receiving any written request for a change from you. ANNUITANT The Annuitant is the individual whose age determines the latest Payout Start Date and whose life determines the amount and duration of income payments (other than under Income Plans with guaranteed payments for a specified period). You may name a new Annuitant only upon the death of the current Annuitant. You may designate a joint Annuitant, who is a second person on whose life income payments depend, at the time you select an Income Plan. The maximum age of any Annuitant on the Issue Date for each Contract is as follows: 90 - Putnam Allstate Advisor 90 - Putnam Allstate Advisor Apex 80 - Putnam Allstate Advisor Plus 80 - Putnam Allstate Advisor Preferred If you select an Income Plan that depends on the Annuitant or a joint Annuitant's life, we may require proof of age and sex before income payments begin and proof that the Annuitant or joint Annuitant is still alive before we make each payment. BENEFICIARY The Beneficiary is the person who may 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 change or add Beneficiaries at any time by writing to us before income payments begin, 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. 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 unless otherwise provided in the Beneficiary designation, if a Beneficiary predeceases the owner and there are no other surviving Beneficiaries, the new Beneficiary will be: o your spouse or, if he or she is no longer alive, o your surviving children equally, or if you have no surviving children, o your estate. If more than one Beneficiary survives you, 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 Beneficiaries. If one of the Beneficiaries dies before you, we will divide the death benefit among the surviving Beneficiaries. MODIFICATION OF THE CONTRACT Only an Allstate 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 We will not honor an assignment of an interest in a Contract as collateral or security for a loan. No Beneficiary may assign benefits under the Contract until they are due. 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 an attorney before trying to assign your Contract. PURCHASES - -------------------------------------------------------------------------------- MINIMUM PURCHASE PAYMENTS The minimum initial purchase payment for each Contract is as follows: o $1,000 for Putnam Allstate Advisor Contracts o $1,000 for Putnam Allstate Advisor Apex Contracts o $10,000 for Putnam Allstate Advisor Plus Contracts o $10,000 for Putnam Allstate Advisor Preferred Contracts The minimum initial purchase payment for Qualified Contracts is $500, $10,000 for Putnam Allstate Advisor Plus and Putnam Allstate Advisor Preferred Contracts. All subsequent purchase payments under a Contract must be $500 or more. You may make purchase payments at any time prior to the Payout Start Date. The most we accept without our prior approval is $1 million. We reserve the right to limit the availability of the investment alternatives for additional investments. We also reserve the right to reject any application. AUTOMATIC ADDITIONS PROGRAM You may make subsequent purchase payments of $50 or more per month by automatically transferring money from your bank account. Please consult with your sales representative for detailed information. ALLOCATION OF PURCHASE PAYMENTS At the time you apply for a Contract, you must decide how to allocate your purchase payment among the investment alternatives. For Putnam Allstate Advisor Apex Contracts, each purchase payment allocated to an investment alternative will be reduced by the applicable sales charge. The allocation you specify on your application will be effective immediately. All allocations must be in whole percents that total 100% or in whole dollars. You can change your allocations by calling 1-800-390-1277. 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 home office. 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 at the close of the business day on which we receive the purchase payment at our home office. 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." Our business day closes when the New York Stock Exchange closes, usually 4 p.m. Eastern Time (3 p.m. Central Time). 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. CREDIT ENHANCEMENT (Putnam Allstate Advisor Plus Contracts only) Each time you make a purchase payment, we will add to your Contract Value a Credit Enhancement equal to 4% of the purchase payment. If you exercise your Right to Cancel the Contract, the amount we refund to you will not include any Credit Enhancement. See "Right to Cancel" below for details. The Putnam Allstate Advisor Plus Contract may not be available in all states. We will allocate any Credit Enhancements to the investment alternatives according to the allocation instructions you have on file with us at the time we receive your purchase payment. We will allocate each Credit Enhancement among the investment alternatives in the same proportions as the corresponding purchase payment. For purposes of determining the death benefit and the amount applied to an Income Plan, Credit Enhancements will be included with purchase payments. We do not consider Credit Enhancements to be investments in the Contract for income tax purposes. We use a portion of the withdrawal charge and mortality and expense risk charge to help recover the cost of providing the Credit Enhancement under the Contract. See "Expenses." Under certain circumstances (such as a period of poor market performance) the cost associated with the Credit Enhancement may exceed the sum of the Credit Enhancement and any related earnings. You should consider this possibility before purchasing the Contract. RIGHT TO CANCEL You may cancel your Contract by returning it to us within the Cancellation Period, which is the 20 day period after you receive the Contract, or such longer period that your state may require. You may return it by delivering it or mailing it to us. 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. We also will return your purchase payments allocated to the Variable Account adjusted, to the extent federal or state law permits, to reflect investment gain or loss that occurred from the date of allocation through the date of cancellation. For Putnam Allstate Advisor Plus Contracts, we are applying for regulatory relief to enable us to recover the amount of any Credit Enhancement applied to Contracts that are cancelled during the Cancellation Period. Until we receive such relief, we will return, upon cancellation, the amount you would have received had there been no Credit Enhancement. After we receive the requested regulatory relief, the amount we return to you upon exercise of this Right to Cancel will not include any Credit Enhancement or the amount of charges deducted prior to cancellation but will reflect, except in states where we are required to return the amount of your purchase payments, any investment gain or loss associated with your Variable Account purchase payments and with the Credit Enhancement. We reserve the right to allocate your purchase payments to the Putnam Money Market Variable Sub-Account during the Cancellation Period. CONTRACT VALUE - -------------------------------------------------------------------------------- On the Issue Date, the Contract Value is equal to: o your initial purchase payment for Putnam Allstate Advisor Contracts o your initial purchase payment less applicable sales charge for Putnam Allstate Advisor Apex Contracts o your initial purchase payment plus the Credit Enhancement for Putnam Allstate Advisor Plus Contracts o your initial purchase payment for Putnam Allstate Advisor Preferred Contracts Thereafter, 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 interest in the Fixed Account Option(s) offered by your Contract. 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. For Putnam Allstate Advisor Plus Contracts, we also would credit you with an additional 40 Accumulation Units of the Variable Sub-Account to reflect the 4% Credit Enhancement on your purchase payment. See "Credit Enhancement." For Putnam Allstate Advisor Apex Contracts, please remember that a sales charge will reduce the amount of the purchase payment allocated. 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 for each Contract will rise or fall to reflect: o changes in the share price of the Fund in which the Variable Sub-Account invests, and o the deduction of amounts reflecting the mortality and expense risk charge, and any provision for taxes that have accrued since we last calculated the Accumulation Unit Value. We determine withdrawal charges, Retirement Income Guarantee charges (if applicable), transfer fees, and contract maintenance charges (if applicable) separately for each Contract. They do not affect the Accumulation Unit Value. Instead, we obtain payment of those charges and fees by redeeming Accumulation Units. For details on how we compute Accumulation Unit Values, please refer to the Statement of Additional Information. We determine a separate Accumulation Unit Value for each Variable Sub-Account for each Contract on each Valuation Date. We also determine separate sets of Accumulation Unit Values for each Contract that reflect the cost of the Enhanced Beneficiary Protection Option described on page __ below. You should refer to the prospectus for the Funds that accompanies this prospectus for a description of how the assets of each Fund are valued, since that determination directly bears on the Accumulation Unit Value of the corresponding Variable Sub-Account and, therefore, your Contract Value. INVESTMENT ALTERNATIVES: The Variable Sub-Accounts - -------------------------------------------------------------------------------- You may allocate your purchase payments to up to 24 Variable Sub-Accounts. Each Variable Sub-Account invests in the shares of a corresponding Fund. Each Fund has its own investment objective(s) and policies. We briefly describe the Funds below. For more complete information about each Fund, including expenses and risks associated with the Fund, please refer to the accompanying prospectus for the Fund. You should carefully review the Fund prospectuses before allocating amounts to the Variable Sub-Accounts. Putnam Investment Management, Inc. ("Putnam Management") serves as the investment adviser to each Fund.
Fund: Each Fund Seeks: - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT American Government Income Fund High current income with preservation of capital as a secondary objective - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Asia Pacific Growth Fund Capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Diversified Income Fund High current income consistent with capital preservation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT The George Putnam Fund of Boston To provide a balanced investment composed of a well diversified portfolio of stocks and bonds that will produce both capital growth and current income - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Global Asset Allocation Fund A high level of long-term total return consistent with preservation of capital - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Global Growth Fund Capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Growth and Income Fund Capital growth and current income - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Growth Opportunity Fund Capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Health Sciences Fund Capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT High Yield Fund High current income. Capital growth is a secondary objective when consistent with high current income. - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Income Fund Current income consistent with preservation of capital - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT International Growth Fund Capital growth - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT International Growth and Income Fund Capital growth. Current income is a secondary objective. - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT International New Opportunities Fund Long-term capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Investors Fund Long-term growth of capital and any increased income that results from this growth - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Money Market Fund As high a rate of current income as Putnam Management believes is consistent with preservation of capital and maintenance of liquidity. - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT New Opportunities Fund Long-term capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT New Value Fund Long-term capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT OTC & Emerging Growth Fund Capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Research Fund Capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Small Cap Value Fund Capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Utilities Growth and Income Fund Capital growth and current income - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Vista Fund Capital appreciation - ------------------------------------------------------ --------------------------------------------------------------- Putnam VT Voyager Fund Capital appreciation - ----------------------------------------------------------------------------------------------------------------------
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 Funds in which those Variable Sub-Accounts invest. You bear the investment risk that the Funds might not meet their investment objectives. Shares of the Funds 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. INVESTMENT ALTERNATIVES: The Fixed Account - -------------------------------------------------------------------------------- You may allocate all or a portion of your purchase payments to the Fixed Account. The Fixed Account Options available under each Contract are as follows:
Advisor Advisor Apex Advisor Plus Advisor Preferred Standard Fixed Account Option Yes Yes Yes Yes 6 Month Dollar Cost Averaging Option Yes Yes No No 12 Month Dollar Cost Averaging Option Yes Yes No No
We may offer additional Fixed Account options in the future. We will credit a minimum annual interest rate of 3% to money you allocate to any of the Fixed Account Options available under your Contract. The Fixed Account Options may not be available in all states. In addition, Allstate may limit the availability of the Standard Fixed Account Option. Please consult with your representative 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 the Fixed Account does not entitle you to share in the investment experience of the Fixed Account. DOLLAR COST AVERAGING FIXED ACCOUNT OPTIONS (Putnam Allstate Advisor and Putnam Allstate Advisor Apex Contracts only) The Dollar Cost Averaging Fixed Account Options are two of the investment alternatives that you can use to establish a Dollar Cost Averaging Program, as described on page __. These options allow you to allocate purchase payments to the Fixed Account either for up to 6 months (the "6 Month Dollar Cost Averaging Option") or for up to 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 Standard Fixed Account Option described below. For Putnam Allstate Advisor Apex Contracts, please remember that the applicable sales charge will reduce the amount of your purchase payment allocated. You must transfer all of your money out of the 6 or 12 Month Dollar Cost Averaging Options to other investment alternatives in equal installments. At the end of the applicable 6 or 12 month period, we will transfer any remaining amounts in the 6 or 12 Month Dollar Cost Averaging Options to the Putnam Money Market Variable Sub-Account unless you request a different investment alternative. Transfers out of the 6 or 12 Month Dollar Cost Averaging Options do not count towards the 12 transfers you can make without paying a transfer fee. You may not transfer money from other investment alternatives to either the 6 or 12 Month Dollar Cost Averaging Options. The 6 or 12 Month Dollar Cost Averaging Options may not be available in your state. Please check with your representative for availability. STANDARD FIXED ACCOUNT OPTION Each purchase payment or transfer allocated to the Standard Fixed Account Option earns interest at the current rate in effect at the time of allocation. For Putnam Allstate Advisor Apex Contracts, please remember that the applicable sales charge will reduce the amount of your purchase payment allocated. For Putnam Allstate Advisor Plus Contracts each purchase payment plus the appropriate portion of the Credit Enhancement allocated to the Standard Fixed Account Option earns interest at the current rate in effect at the time of allocation. We guarantee that rate for a period of years we call Guarantee Periods. We are currently offering Guarantee Periods of 1 year in length. In the future we may offer Guarantee Periods of different lengths or stop offering some Guarantee Periods. You select a Guarantee Period for each purchase or transfer. After the initial Guarantee Period, we will guarantee a renewal rate. 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. INVESTMENT ALTERNATIVES: Transfers - ------------------------------------------------------------------------------- TRANSFERS DURING THE ACCUMULATION PHASE During the Accumulation Phase, you may transfer Contract Value among the investment alternatives. We do not permit transfers into any Dollar Cost Averaging Fixed Account Option. You may request transfers in writing on a form that we provided or by telephone according to the procedure described below. You may make 12 transfers per Contract Year without charge. A transfer fee equal to 0.50% of the amount transferred applies to each transfer after the 12th transfer in any Contract Year. The minimum amount that you may transfer from the Standard Fixed Account Option or a Variable Sub-Account is $100 or the total remaining balance in the Standard Fixed Account Option or the Variable Sub-Account, if less. These limitations do not apply to the 6-month or 12-month Dollar Cost Averaging Fixed Account Options. The most you can transfer from the Standard Fixed Account Option during any Contract Year is the greater of (i) 30% of the Standard Fixed Account Option balance as of the last Contract Anniversary or (ii) the greatest dollar amount of any prior transfer from the Standard Fixed Account Option. This limitation does not apply to the Dollar Cost Averaging Program. Also, if the interest rate on any renewed Guarantee Period is at least one percentage point less than the previous interest rate, you may transfer up to 100% of the monies receiving that reduced rate within 60 days of the notification of the interest rate decrease. 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 from any Fixed Account Option 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. 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. You may make up to 12 transfers per Contract Year. You may not convert any portion of your fixed income payments into variable income payments. You may make transfers from the Variable Sub-Accounts to increase the proportion of your income payments consisting of fixed income payments if Income Plan 3, described below, is in effect. TELEPHONE TRANSFERS You may make transfers by telephone by calling 1-800-390-1277. 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 from you at any telephone number other than the number that appears in this paragraph or received after the close of trading on the Exchange. If you own the Contract with a joint Contract Owner, unless we receive contrary instructions, we will accept instructions from either you or the other Contract Owner. 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. EXCESSIVE TRADING LIMITS We reserve the right to limit transfers in any Contract Year, or to refuse any transfer request for a Contract Owner or certain Contract Owners, if: o we believe, in our sole discretion, that excessive trading by such Contract Owner or Owners, or a specific transfer request or group of transfer requests, may have a detrimental effect on the Accumulation Unit Values of any Variable Sub-Account or the share prices of the corresponding Funds or would be to the disadvantage of other Contract Owners; or o we are informed by one or more of the corresponding Funds that they intend to restrict the purchase or redemption of Fund shares because of excessive trading or because they believe that a specific transfer or group of transfers would have a detrimental effect on the prices of Fund shares. We may apply the restrictions in any manner reasonably designed to prevent transfers that we consider disadvantageous to other Contract Owners. DOLLAR COST AVERAGING PROGRAM You may automatically transfer a set amount from any Variable Sub-Account or from any Fixed Account Option available under your Contract to any of the other Variable Sub-Accounts through our Dollar Cost Averaging Program. The Program is available only during the Accumulation Phase. 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. AUTOMATIC FUND 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 Fund Rebalancing Program, we will automatically rebalance the Contract Value in each Variable Sub-Account and return it to the desired percentage allocations. Money you allocate to the Fixed Account will not be included in the rebalancing. We will rebalance your account quarterly, semi-annually, or annually. We will measure these periods 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 written or telephone request. We are not responsible for rebalancing that occurs prior to receipt of proper notice 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 Putnam Income Variable Sub-Account and 60% to be in the Putnam Global 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 Putnam Income Variable Sub-Account now represents 50% of your holdings because of its increase in value. If you choose to have your holdings in a Contract or Contracts rebalanced quarterly, on the first day of the next quarter we would sell some of your units in the Putnam Income Variable Sub-Account for the appropriate Contract(s) and use the money to buy more units in the Putnam Global Variable Sub-Account so that the percentage allocations would again be 40% and 60% respectively. The Automatic Fund 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. We may sometimes refer to this Program as the "Putnam Automatic Rebalancing Program." Fund 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 (Putnam Allstate Advisor Contracts only) During the Accumulation Phase, on each Contract Anniversary, we will deduct a $30 contract maintenance charge from your assets invested in the Putnam Money Market Variable Sub-Account. If there are insufficient assets in that Variable Sub-Account, we will deduct the charge proportionally from the other Variable Sub-Accounts. We also will deduct this charge if you withdraw your entire Contract Value, unless your Contract qualifies for a waiver. 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: o your total Contract Value is greater than $50,000 on a Contract Anniversary or on the Payout Start Date, or o all of your money is allocated to the Fixed Account Options on a Contract Anniversary or all income payments are fixed income payments. We also reserve the right to waive this charge if you own more than one Contract and the Contracts meet certain minimum dollar amount requirements. In addition, we reserve the right to waive this charge for all Contracts. MORTALITY AND EXPENSE RISK CHARGE We deduct a mortality and expense risk charge daily from the net assets you have invested in the Variable Sub-Accounts. The annual rate of the charge is: o 1.25% for Putnam Allstate Advisor Contracts o 0.80% for Putnam Allstate Advisor Apex Contracts o 1.60% for Putnam Allstate Advisor Plus Contracts o 1.65% for Putnam Allstate Advisor Preferred Contracts 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 be sufficient in the future to cover the cost of administering the Contract. The mortality and expense risk charge also helps pay for the cost of the Credit Enhancement under the Putnam Allstate Advisor Plus Contracts. If the charges under the Contract are not sufficient, then Allstate will bear the loss. If you select the Enhanced Beneficiary Protection Option, the mortality and expense risk charge will include an additional 0.15% for the Option. Allstate reserves the right to raise the Enhanced Beneficiary Protection Option charge to up to 0.25%. However, once your Option is in effect, Allstate cannot change the fee that applies to your Contract. We charge the additional fee for the Enhanced Beneficiary Protection Option to compensate us for the additional risk that we accept by providing the Option. We guarantee the mortality and expense risk charge and we cannot increase it. We assess the mortality and expense risk charge during both during the Accumulation Phase and the Payout Phase. RETIREMENT INCOME GUARANTEE CHARGE We impose a separate charge for each Retirement Income Guarantee Rider. The charges equal, on an annual basis, 0.05% of the income base for Retirement Income Guarantee Rider 1 and 0.30% of the income base for Retirement Income Guarantee Rider 2. We reserve the right to change the Rider fee. However, once we issue your Rider, we cannot change the Rider fee that applies to your Contract. The Rider 1 fee will never exceed 0.15% and the Rider 2 fee will never exceed 0.50%. See "Retirement Income Guarantee Riders" for details. TRANSFER FEE We impose a fee upon transfers in excess of 12 during any Contract Year. The fee is equal to 0.50% of the dollar amount transferred. We will not charge a transfer fee on transfers that are part of a Dollar Cost Averaging Program or Automatic Fund Rebalancing Program. SALES CHARGE (Putnam Allstate Advisor Apex Contracts only) We may assess a sales charge on all purchase payments ranging from 0.50% to 5.75% of the amount of the purchase payment. The sales charge percentage will vary based upon the amount of the purchase payment(s) received. A schedule showing how the sales charge is assessed appears on page __, above. We use the amounts obtained from the sales charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts. To the extent that the sales charge does not cover all sales commissions and other promotional or distribution expenses, we may use any of our corporate assets, including any profit which may arise from the mortality and expense risk charge or any other charges or fee described above, to make up any difference. Reduction of Sales Charge. You may also be entitled to a reduced sales charge if you (1) sign a letter of intent and invest a combined purchase payment amount of $50,000 or more within a 13-month period; and/or (2) have related contracts with us that qualify for rights of accumulation privileges. See "Rights of Accumulation" below. In addition, no sales charge will apply to purchase payments made under Contracts issued to employees of Allstate, certain other eligible organizations, and to certain customers of participating financial services corporations in conjunction with a new or existing asset based brokerage account program such as a "wrap fee" or "fee based" program in states where approved. Letter of Intent: A letter of intent allows you to set your own investment goal of $50,000 or more over a 13-month period. We base the sales charge on the purchase payments you make during the 13-month period on your investment goal. In essence, we reduce your sales charge on purchase payments made during the 13-month period as though you invested the total amount of purchase payments (your investment goal) in one lump sum. Example: Assume as part of your Contract application you sign a letter of intent indicating an investment goal of $50,000 over a 13-month period. The sales charge corresponding to your investment goal is 4.50%. You make an initial purchase payment of $20,000. We deduct a reduced sales charge of 4.50% from your initial purchase payment. Two months later you make a subsequent purchase payment of $30,000. We again deduct a reduced sales charge of 4.50% from your purchase payment. Without a letter of intent the sales charge for each purchase payment would have been 5.75%. You may elect to participate in the letter of intent program at any time. However, we do not retroactively reduce sales charges on purchase payments made before we receive your letter of intent. If you choose to participate in this program at the time you apply for the Contract, you must complete the letter of intent section on the application. If you elect to participate in the program after your Contract is issued, you must complete the appropriate form. The letter of intent form is available by calling our Annuity Service Center at 1-800/390-1277. You are not obligated to reach your investment goal. If you do not achieve your investment goal by the end of the 13-month period or upon a full surrender prior to the end of the 13-month period, we will deduct from your Contract the difference between (1) the sales charge applicable to the actual amount of purchase payments you made during the period and (2) the sales charge you actually paid. These charges will be deducted from your Contract proportionately from each investment alternative at the end of the 13-month period. If you exceed your investment goal and reach the next breakpoint, the sales charge deducted on the next payment is based on the next breakpoint level. However, we do not retroactively reduce sales charges on previous purchase payments. At any time during the 13-month period, you may increase your investment goal. You must inform us in writing. We include purchase payments received during the 90 days prior to your notice in determining the sales charge on purchase payments made from the date of notice through the end of the original 13-month period. We reserve the right to modify, suspend or terminate this program at any time. This program may not be available in all states. Rights Of Accumulation: You may qualify for a reduced sales charge through rights of accumulation. Rights of accumulation involves combining your current purchase payment with your current Contract Value of your Putnam Allstate Advisor Apex Contract and/or the current Contract Values of eligible related contracts. If through accumulation you reach the next breakpoint level, we reduce your sales charge accordingly. Related contracts include certain other Putnam Allstate Advisor Apex Contracts owned by you. There may be other requirements for qualification. For information on which related contracts qualify for rights of accumulation privileges, please contact your investment representative. In order to use rights of accumulation to reduce your sales charge, for each purchase payment, you or your investment representative must inform us in writing of the related contracts. The sales charge for purchase payments will be based on the breakpoint corresponding to the sum of (1) your new purchase payment; and (2) your current Contract Value; and (3) the current Contract Value(s) of your eligible related contract(s). Example: Assume your Contract has a current Contract Value of $20,000. You have a second Contract with us that qualifies for rights of accumulation that has a current Contract Value of $25,000. You make a $5,000 purchase payment to your current Contract and include your rights of accumulation number with your payment. To determine the sales charge applicable to your purchase payment we first calculate the sum of (1) your current Contract Value ($20,000); (2) the current Contract Value of your related Contract ($25,000); and (3) your current purchase payment ($5,000). The sum of these values is $50,000. We deduct the sales charge corresponding to a $50,000 purchase payment, or 4.50%, from your $5,000 purchase payment. We reserve the right to modify, suspend or terminate this program at any time. This program may not be available in all states. WITHDRAWAL CHARGE We may assess a withdrawal charge from the purchase payment(s) you withdraw. The amount of the charge will depend on the number of years that have elapsed since we received the purchase payment being withdrawn. A schedule showing the charge applicable for each Contract appears on page ___, above. The Contracts differ in the following respects: Putnam Allstate Advisor Contracts Under Putnam Allstate Advisor Contracts, you can withdraw up to the Free Withdrawal Amount each Contract Year without paying the withdrawal charge. The Free Withdrawal Amount is the greater of earnings not previously withdrawn, or 15% of purchase payments. Unused portions of this 15% "Free Withdrawal Amount" are not carried forward to future Contract Years. Putnam Allstate Advisor Apex Contracts The withdrawal charge for Putnam Allstate Advisor Apex Contracts currently applies only to Contracts that have total purchase payments of at least $1,000,000. There is no Free Withdrawal Amount under Putnam Allstate Advisor Apex Contracts. Putnam Allstate Advisor Plus Contracts Under Putnam Allstate Advisor Plus Contracts, you can withdraw up to the Free Withdrawal Amount each Contract Year without paying the withdrawal charge. The Free Withdrawal Amount is 15% of total purchase payments. Unused portions of this 15% "Free Withdrawal Amount" are not carried forward to future Contract Years. Credit Enhancements are not considered Purchase Payments when determining the Free Withdrawal Amount. Putnam Allstate Advisor Preferred Contracts There is no Free Withdrawal Amount under Putnam Allstate Advisor Preferred Contracts. All Contracts We will deduct withdrawal charges, if applicable, from the amount paid. For purposes of the withdrawal charge, we will treat withdrawals as coming from the oldest purchase payments first. However, for federal income tax purposes, earnings are considered to come out first, which means you pay taxes on the earnings portion of your withdrawal. We do not apply a withdrawal charge in the following situations: o 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); o the death of the Contract Owner or Annuitant (unless the Settlement Value is used); o withdrawals taken to satisfy IRS minimum distribution rules for the Contract; or o withdrawals that qualify for one of the waivers described below. We use the amounts obtained from the withdrawal charge to pay sales commissions and other promotional or distribution expenses associated with marketing the Contracts, and to help defray the cost of the Credit Enhancement for the Putnam Allstate Advisor Plus Contracts. To the extent that the withdrawal charge does not cover all sales commissions and other promotional or distribution expenses, or the cost of the Credit Enhancement, 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. The following waivers are available for Putnam Allstate Advisor and Putnam Allstate Advisor Plus Contracts only. Confinement Waiver. We will waive the withdrawal charge on any withdrawal taken prior to the Payout Start Date under your Contract if the following conditions are satisfied: 1) you or the Annuitant, if the Contract Owner is not a living individual, are first confined to a long term care facility or a hospital for at least 90 consecutive days. You or the Annuitant must enter the long term care facility or hospital at least 30 days after the Issue Date, 2) we receive your request for withdrawal and written proof of the stay no later than 90 days following the end of your or the Annuitant's stay at the long term care facility or hospital, and 3) a physician must have prescribed the stay and the stay must be medically necessary (as defined in the Contract). Terminal Illness Waiver. We will waive the withdrawal charge on any withdrawal under your Contract taken prior to the Payout Start Date if: 1) you or the Annuitant, if the Contract Owner is not a living individual, are diagnosed by a physician as having a terminal illness (as defined in the Contract) at least 30 days after the Issue Date, and 2) you provide adequate proof of diagnosis to us before or at the time you request the withdrawal. Unemployment Waiver. We will waive the withdrawal charge on one partial or full withdrawal from your Contract, if you meet the following requirements: 1) you or the Annuitant, if the Contract Owner is not a living individual, become unemployed at least one year after the Issue Date, 2) you or the Annuitant receive unemployment compensation (as defined in the Contract) for at least 30 days as a result of that unemployment, and 3) you or the Annuitant claim this benefit within 180 days of your or the Annuitant's initial receipt of unemployment compensation. You may exercise this benefit once before the Payout Start Date. Please refer to your Contract for more detailed information about the terms and conditions of these waivers. These waivers are not available for Putnam Allstate Advisor Apex and Putnam Allstate Advisor Preferred Contracts. The laws of your state may limit the availability of these waivers and may also change certain terms and/or benefits available under the waivers. You should consult your Contract for further details on these variations. Also, even if you do not need to pay our withdrawal charge because of these waivers, you still may be required to pay taxes or tax penalties on the amount withdrawn. You should consult your tax adviser to determine the effect of a withdrawal on your taxes. 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. We may some time in the future 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, 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. OTHER EXPENSES Each Fund deducts advisory fees and other expenses from its assets. You indirectly bear the charges and expenses of the Fund whose shares are held by the Variable Sub-Accounts. These fees and expenses are described in the accompanying prospectus for the Funds. For a summary of current estimates of those charges and expenses, see pages ___ above. We may receive compensation from the Funds' investment adviser, distributor, or their affiliates for administrative services we provide to the Funds. ACCESS TO YOUR MONEY - ------------------------------------------------------------------------------- You can withdraw some or all of your Contract Value at any time prior to the Payout Start Date. Withdrawals also are available under limited circumstances on or after the Payout Start Date. See "Income Plans" on page __. The amount payable upon withdrawal is the Contract Value next computed after we receive the request for a withdrawal at our home office, less any applicable withdrawal charges, income tax withholding, any applicable contract maintenance charge, any applicable Retirement Guarantee Rider fee, and any premium taxes. We will pay withdrawals from the Variable Account within 7 days of receipt of the request, subject to postponement in certain circumstances. You can withdraw money from the Variable Account or the Fixed Account Option(s) available under your Contract. To complete a partial withdrawal from the Variable Account, we will cancel Accumulation Units in an amount equal to the withdrawal and any applicable withdrawal charge and premium taxes. You must name the investment alternative from which you are taking the withdrawal. If none is named, then the withdrawal request is incomplete and cannot be honored. In general, you must withdraw at least $50 at a time. If you request a total withdrawal, we may require that you return your Contract to us. 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 Option(s) available under your Contract 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. SYSTEMATIC WITHDRAWAL PROGRAM You may choose to receive systematic withdrawal payments on a monthly, quarterly, semi-annual, or annual basis at any time prior to the Payout Start Date. Please consult your sales representative or call us at 1-800-390-1277 for more information. Depending on fluctuations in the value of the Variable Sub-Accounts and the value of the Fixed Account Option(s) available under your Contract, systematic withdrawals may reduce or even exhaust the Contract Value. Income taxes may apply to systematic withdrawals. Please consult your tax adviser before taking any withdrawal. MINIMUM CONTRACT VALUE If your request for a partial withdrawal would reduce the Contract Value to less than $1,000, 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. If we terminate your Contract, we will distribute to you its Contract Value, less withdrawal and other charges and taxes. 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 at least 30 days after the Issue Date and on or before the later of: o the Annuitant's 90th birthday, or o the 10th Contract Anniversary. 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 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. 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: o fixed income payments; o variable income payments; or o 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 as required by the Contract. Income Plan 2 -- Joint and Survivor Life Income with Guaranteed Payments. Under this plan, we make periodic income payments for at least as long as either the Annuitant or the joint Annuitant, named at the time the plan was selected, is alive. If both the Annuitant and the joint Annuitant die 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 3 -- Guaranteed Payments for a Specified Period (5 Years to 30 Years). Under this plan, we make periodic income payments for the period you have chosen. These payments do not depend on the Annuitant's life. Income payments for less than 120 months may be subject to a withdrawal charge (does not apply to Putnam Allstate Advisor Apex Contracts). We will deduct the mortality and expense risk charge from the assets of the Variable Sub-Accounts supporting this 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 amount 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. 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 are alive before we make each payment. Please note that under such 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 income payments at any time and receive a lump sum equal to the present value of the remaining 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. Income payments to Beneficiaries may be subject to restrictions established by the Contract owner. We also deduct applicable premium taxes from the Contract Value at the Payout Start Date. We may make other Income Plans available. You may obtain information about them by writing or calling us. You must apply at least the Contract Value in the Fixed Account on the Payout Start Date to fixed income payments. If you wish to apply any portion of your Fixed Account 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 to fixed income payments. We will apply your Contract Value, less applicable taxes, to your Income Plan on the Payout Start Date. We can make income payments in monthly, quarterly, semi-annual or annual installments, as you select. If the Contract Owner has not made any purchase payments for at least 2 years preceding the Payout Start Date, and the Contract Value is less than $2,000, or not enough to provide an initial payment of at least $20, and state law permits, we may: o 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 o 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 Funds; 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%. (We reserve the right to offer other assumed investment rates.) 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 whatever 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. RETIREMENT INCOME GUARANTEE RIDERS For owners up to and including age 75, you have the option to add to your Contract one of two Retirement Income Guarantee Riders (Rider 1 or Rider 2). Each Rider guarantees a minimum dollar amount (we call the "guaranteed income benefit") to be applied to an Income Plan. You may exercise this benefit up to the your latest Payout Start Date. The Riders may not be available in all states. Eligibility. To qualify for this benefit, you must meet the following conditions as of the Payout Start Date: o You must elect a Payout Start Date that is on or after the 10th anniversary of the date we issued the Rider (the "Rider Date"); o The Payout Start Date must occur during the 30 day period following a Contract Anniversary; o You must elect to receive fixed income payments; and o 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: o 10 years, if the youngest Annuitant's age is 80 or less on the date the amount is applied, or o 5 years, if the youngest Annuitant's age is greater than 80 on the date the amount is applied. Retirement Income Guarantee Rider 1. This Rider guarantees that the amount you apply to an Income Plan will not be less than the total of your purchase payments, including any Credit Enhancements applied under Putnam Allstate Advisor Plus Contracts, less any withdrawals and any applicable taxes. The current charge for this Rider, on an annual basis, is 0.05% multiplied by the Income Base in effect on each Contract Anniversary. We deduct the fee only from your assets in the Variable Sub-Account(s). In the case of a full withdrawal of the Contract Value on any date other than the Contract Anniversary, we will deduct from the amount paid upon withdrawal a Rider fee equal to 0.05% multiplied by the Income Base immediately prior to the withdrawal pro rated to reflect the number of days the Rider was in effect during the current Contract Year. We calculate the Income Base that we use to determine the value of the guaranteed income benefit as follows: 1) On the Rider Date, the Income Base is equal to the Contract Value. 2) After the Rider Date, we recalculate the Income Base when a purchase payment or withdrawal is made as follows: (a) For purchase payments, the Income Base is equal to the most recently calculated Income Base plus the purchase payment (and any Credit Enhancement in the case of Putnam Allstate Advisor Plus Contracts). (b) For withdrawals, the Income Base is equal to the most recently calculated Income Base reduced by a withdrawal adjustment, described below. In the absence of any withdrawals or purchase payments, the Income Base will be equal to the Contract Value as of the Rider Date. The withdrawal adjustment is equal to (1) divided by (2), with the result multiplied by (3), where: 1) = withdrawal amount, 2) = the Contract Value immediately prior to the withdrawal, and 3) = the most recently calculated Income Base. See Appendix B for an example of how the withdrawal adjustment applies. The guaranteed income benefit amount is determined by applying the Income Base, less any applicable taxes, to the guaranteed rates for the Income Plan that you select. On the Payout Start Date, the income payment will be the greater of (i) the income payment produced by the guaranteed income benefit and (ii) the income payment provided in the fixed amount income payment provision of the Contract. Retirement Income Guarantee Rider 2. This Rider guarantees that the amount you apply to an Income Plan will not be less than the greater of Income Base A or Income Base B described below. The current annual charge for this Rider is 0.30% multiplied by the Income Base in effect on each Contract Anniversary. We deduct the fee only from the Variable Sub-Account(s). In the case of a full withdrawal of the Contract Value on any date other than the Contract Anniversary, we will deduct from the amount paid upon withdrawal a Rider fee equal to 0.30% multiplied by the Income Base immediately prior to the withdrawal pro rated to reflect the number of days the Rider was in effect during the current Contract Year. The Income Base is the greater of Income Base A and Income Base B. We determine each Income Base as follows: 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: 1) For purchase payments, Income Base A is equal to the most recently calculated Income Base plus the purchase payment (and any Credit Enhancement in the case of Putnam Allstate Advisor Plus Contracts). 2) For withdrawals, Income Base A is equal to the most recently calculated Income Base reduced by a withdrawal adjustment. 3) On each Contract Anniversary, Income Base A is equal to the greater of the Contract Value on that date or the most recently calculated Income Base A. In the absence of any withdrawals or purchase payments, Income Base A will be equal to the greatest Contract Value as of the Rider Date and all Contract Anniversary Contract Values between the Rider Date and the Payout Start Date. We will recalculate Income Base A for purchase payments, for withdrawals and on Contract Anniversaries until the first Contract Anniversary after the 85th birthday of the oldest Contract Owner or, if no Contract Owner is a living individual, the oldest Annuitant. After that date, we will recalculate Income Base A 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 any Credit Enhancement in the case of Putnam Allstate Advisor Plus Contracts) and less a withdrawal adjustment for any subsequent withdrawals, will accumulate daily at a rate equal to 6% per year until the first day of the month following the oldest Contract Owner's or, if the Contract Owner is not a living individual, the Annuitant's 85th birthday. For purposes of computing Income Base A or B, the withdrawal adjustment is equal to (1) divided by (2), with the result multiplied by (3), where: 1) = withdrawal amount, 2) = the Contract Value immediately prior to the withdrawal, and 3) = the most recently calculated Income Base. See Appendix B for an example of how the withdrawal adjustment applies. We determine the guaranteed income benefit amount by applying the Income Base, less any applicable taxes, to the guaranteed rates for the Income Plan that you select. On the Payout Start Date, the income payment will be the greater of (i) the income payment provided by the guaranteed income benefit and (ii) the income payment provided in the fixed amount income payment provision of the Contract. 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 applicable 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 as determined immediately after the death. The new Contract Owner would be a surviving Contract Owner or, if none, the Beneficiary. In the case of the death of the Annuitant, we will pay the death benefit to the current Contract Owner. Death Benefit Amount Prior to the Payout Start Date, the death benefit is equal to the greatest of the following death benefit alternatives: 1) the Contract Value as of the date we determine the death benefit, or 2) the sum of all purchase payments (and Credit Enhancements in the case of Putnam Allstate Advisor Plus Contracts), less withdrawals, or 3) the most recent Maximum Anniversary Value prior to the date we determine the death benefit (see "Maximum Anniversary Value" below). 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. 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": o a certified copy of a death certificate, o a certified copy of a decree of a court of competent jurisdiction as to the finding of death, or o other documentation as we may accept in our sole discretion. Maximum Anniversary Value. On the Issue Date, the Maximum Anniversary Value is equal to the initial purchase payment (including Credit Enhancement in the case of Putnam Allstate Advisor Plus Contracts). After the Issue Date, we recalculate the Maximum Anniversary Value when a purchase payment or withdrawal is made or on a Contract Anniversary as follows: 1) For purchase payments, the Maximum Anniversary Value is equal to the most recently calculated Maximum Anniversary Value plus the purchase payment (including Credit Enhancement in the case of Putnam Allstate Advisor Plus Contracts). 2) For withdrawals, the Maximum Anniversary Value is equal to the most recently calculated Maximum Anniversary Value reduced by a withdrawal adjustment, as defined below. 3) On each Contract Anniversary, the Maximum Anniversary Value is equal to the greater of the Contract Value or the most recently calculated Maximum Anniversary Value. In the absence of any withdrawals or purchase payments, the Maximum Anniversary Value will be the greatest of all Contract Anniversary Contract Values on or prior to the date we calculate the death benefit. We will recalculate the Maximum Anniversary Value until the first Contract Anniversary after the 80th birthday of the oldest Contract Owner or, if no Contract Owner is a living individual, the Annuitant. After that date, we will recalculate the Maximum Anniversary Value only for purchase payments and withdrawals. The Maximum Anniversary Value will never be greater than the maximum death benefit allowed by any applicable state non-forfeiture laws. Withdrawal Adjustment. The withdrawal adjustment is equal to (a) divided by (b), with the result multiplied by (c), where: (a) = the withdrawal amount, (b) = the Contract Value immediately prior to the withdrawal, and (c) = the value of the applicable death benefit alternative immediately prior to the withdrawal. See Appendix A for an example of a withdrawal adjustment. ENHANCED BENEFICIARY PROTECTION OPTION For Contract Owners up to and including age 75, the Enhanced Beneficiary Protection Option is an optional benefit that you may elect. If you elect the Option, the death benefit will be the greater of the death benefit alternatives (1) through (3) listed above, or (4) the Enhanced Beneficiary Protection Option. The Enhanced Beneficiary Protection Option may not be available in all states. We will issue a rider to your Contract if you elect the Option. The Enhanced Beneficiary Protection Option on the date we issue the Contract rider ("Rider Date") is equal to the Contract Value on that date. After the Rider Date, the Enhanced Beneficiary Protection Option, plus any subsequent payments (including Credit Enhancements in the case of Putnam Allstate Advisor Plus Contracts) and less a withdrawal adjustment (computed as described above), will accumulate daily at the rate of 5% per year until the earlier of: 1) the date we determine the death benefit, or 2) the first Contract Anniversary following the 80th birthday of the oldest Contract Owner or, if no Contract Owner is a living individual, the 80th birthday of the oldest Annuitant. We will determine the death benefit under the Enhanced Beneficiary Protection Option in the same manner as described under "Death Benefit Amount." Death Benefit Payments Death of Contract Owner. Within 180 days of the date of your death, the new Contract Owner may elect to: 1) receive the death benefit in a lump sum, or 2) apply an amount equal to the death benefit to one of the available Income Plans described above. The Payout Start Date must be within one year of the date of your death. Income payments must be: (a) over the life of the new Contract Owner, (b) for a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of the new Contract Owner, or (c) over the life of new Contract Owner with a guaranteed number of payments from 5 to 30 years but not to exceed the life expectancy of the new Contract Owner. Otherwise, the new Contract Owner will receive the Settlement Value. The "Settlement Value" is the Contract Value, less any applicable withdrawal charge, premium tax and, in the case of Putnam Allstate Advisor Contracts, contract maintenance charge. The new Contract Owner may make a single withdrawal of any amount within one year of the date of death without incurring a withdrawal charge. We will calculate the Settlement Value as of the end of the Valuation Date coinciding with the requested distribution date for payment or on the mandatory distribution date of 5 years after the date of your death, whichever is earlier. 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. We are currently waiving the 180 day limit, but we reserve the right to enforce the limitation in the future. 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. 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). 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. Prior to the Payout Start Date, the death benefit of the continued Contract will be the greater of: o the sum of all purchase payments (including Credit Enhancements in the case of Putnam Allstate Advisor Plus Contracts) less any withdrawals; or o the Contract Value on the date we determine the death benefit; or o the Maximum Anniversary Value as defined in the "Death Benefit Amount" section, with the following changes: o "Issue Date" is replaced by the date the Contract is continued, o "initial purchase payment" (including Credit Enhancements in the case of Putnam Allstate Advisor Plus Contracts) is replaced with the death benefit as described at the end of the Valuation Period during which we received Due Proof of Death. For Contracts with the optional Enhanced Beneficiary Protection Option: o the Enhanced Beneficiary Protection value as defined in the Rider, with the following changes: o "Rider Date" is replaced by the date the Contract is continued, o "Contract Value" is replaced with the death benefit as described at the end of the Valuation Period during which we received Due Proof of Death. 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 a lump sum or may elect to receive the Settlement Value in a lump sum within 5 years of death. We are currently waiving the 180 day limit, but we reserve the right to enforce the limitation in the future. Death of Annuitant. If the 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: 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. 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. 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 are currently waiving the 180 day limit, but we reserve the right to enforce the limitation in the future. MORE INFORMATION - ------------------------------------------------------------------------------- ALLSTATE Allstate is the issuer of the Contract. Allstate is an Illinois stock life insurance company organized in 1957. Allstate is licensed to operate in the District of Columbia, Puerto Rico, and all states except New York. We intend to offer the Contract in those jurisdictions in which we are licensed. Our home office is located at 3100 Sanders Road, Northbrook, Illinois, 60062. Allstate is a wholly owned subsidiary of Allstate Insurance Company, a stock property-liability insurance company incorporated under the laws of Illinois. All of the outstanding capital stock of Allstate Insurance Company is owned by The Allstate Corporation. Several independent rating agencies regularly evaluate life insurers' claims-paying ability, quality of investments, and overall stability. A.M. Best Company assigns A+ (Superior) to Allstate. Standard & Poor's Insurance Rating Services assigns an AA+ (Very Strong) financial strength rating and Moody's assigns an Aa2 (Excellent) financial strength rating to Allstate. 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. VARIABLE ACCOUNT Allstate established the Allstate Life Insurance Company Separate Account A on January 27, 1999. 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 Allstate. We own the assets of the Variable Account. The Variable Account is a segregated asset account under Illinois 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 Allstate. The Variable Account consists of 24 Variable Sub-Accounts, each of which invests in a corresponding Fund. 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 Funds. 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 FUNDS Dividends and Capital Gain Distributions. We automatically reinvest all dividends and capital gains distributions from the Funds in shares of the distributing Funds at their net asset value. Voting Privileges. As a general matter, you do not have a direct right to vote the shares of the Funds 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 Funds 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 Fund 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 reserve for such Contract allocated to the applicable Sub-Account by the net asset value per share of the corresponding Fund. 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 Fund 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 Funds. If the shares of any of the Funds 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 Fund 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. The Funds 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 Fund. The board of directors of the Funds monitors for possible conflicts among separate accounts buying shares of the Funds. 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, the Funds' board of directors may require a separate account to withdraw its participation in a Fund. A Fund'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 Distribution. ALFS, Inc., (formerly known as Allstate Life Financial Services Inc.) ("ALFS"), located at 3100 Sanders Road, Northbrook, IL 60062-7154, will serve as principal underwriter of the Contracts until May 1, 2000. ALFS is a wholly owned subsidiary of Allstate. Beginning May 1, 2000, Allstate Distributors, L.L.C. ("Allstate Distributors"), a broker-dealer jointly owned by Allstate and Putnam Investments, will serve as principal underwriter of the Contracts. ALFS and Allstate Distributors are each a registered broker dealer under the Securities and Exchange Act of 1934, as amended, ("Exchange Act") and a member of the National Association of Securities Dealers, Inc. Contracts are sold by registered representatives of unaffiliated broker-dealers or bank employees who are licensed insurance agents appointed by Allstate, either individually or through an incorporated insurance agency and have entered into a selling agreement with ALFS (until May 1, 2000) or Allstate Distributors (beginning May 1, 2000) to sell the Contract. We will pay commissions to broker-dealers who sell the Contracts. Commissions paid may vary, but we estimate that the total commission paid on all Contract sales will not exceed 6% of all purchase payments. From time to time, we may pay or permit other promotional incentives, in cash or credit or other compensation. The commission is intended to cover distribution expenses. In some states, Contracts may be sold by representatives or employees of banks. Allstate may pay Allstate Distributors a commission for distribution of the Contracts. The underwriting agreement with Allstate Distributors provides that we will reimburse Allstate Distributors for expenses incurred in distributing the Contracts, including any liability to Contract Owners arising out of services rendered or Contracts issued. For Putnam Allstate Advisor Contracts issued to employees of Allstate and certain other eligible organizations, and in lieu of Allstate paying any commissions on sales of those Contracts, the Contract Owner will receive a credit of 6% of the amount of each purchase payment that will be applied to each purchase payment. Allstate will allocate this credit in the same allocation as your most recent instruction. If you exercise your Right to Cancel your Contract as described in this prospectus, we will return to you the amount you would have received had there been no credit. Unless we are required by law to return your purchase payments, this amount also will include any charges deducted that reduced your Contract Value prior to cancellation, plus any investment gain on the credit. The credit may not be available in all states. We do not consider the credit to be an "investment in the contract" for income tax purposes. For Putnam Allstate Advisor Apex Contracts issued to employees of Allstate and certain other eligible organizations, and in lieu of Allstate paying any commissions on sales of those Contracts, the sales charge will be waived. Administration. We have primary responsibility for all administration of the Contracts and the Variable Account. We provide the following administrative services, among others: o issuance of the Contracts; o maintenance of Contract Owner records; o Contract Owner services; o calculation of unit values; o maintenance of the Variable Account; and o preparation of Contract Owner reports. We will send you Contract statements and transaction confirmations at least annually. 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 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 Freedman, Levy, Kroll & Simonds, Washington, D.C., has advised Allstate on certain federal securities law matters. All matters of Illinois law pertaining to the Contracts, including the validity of the Contracts and Allstate's right to issue such Contracts under Illinois insurance law, have been passed upon by Michael J. Velotta, General Counsel of Allstate. TAXES - ------------------------------------------------------------------------------- The following discussion is general and is not intended as tax advice. Allstate 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 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 owner is a natural person, 2) the investments of the Variable Account are "adequately diversified" according to Treasury Department regulations, and 3) Allstate 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 is taxed as ordinary income received or accrued by the owner during the taxable year. Please see the Statement of Additional Information for a discussion of several exceptions to the general rule for contracts owned by non-natural persons. 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 owner during the taxable year. Although Allstate does not have control over the Funds or their investments, we expect the Funds to meet the diversification requirements. Ownership Treatment. The IRS has stated that you will be considered the owner of Variable Account assets if you possess 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 Variable Account investments may cause an investor to be treated as the owner of the Variable 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 more 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. Allstate 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 partial withdrawal under a Qualified Contract, 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. If you make a full withdrawal under a non-Qualified Contract or a Qualified Contract, the amount received will be taxable only to the extent it exceeds the investment in the Contract. "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. "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: o made on or after the date the individual attains age 59 1/2, o made to a beneficiary after the Contract Owner's death, o attributable to the Contract Owner being disabled, or o for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000). 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 treated as a withdrawal of such amount or portion. Taxation of Annuity Payments. Generally, the rule for income taxation of annuity payments received from a nonqualified 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. 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. Taxation of Annuity Death Benefits. Death of a Contract Owner, or death of the Annuitant if the Contract is owned by a non-natural person, will cause a distribution of death benefits from a Contract. Generally, such 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 an income payment. Please see the Statement of Additional Information for more detail on distribution at death requirements. 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 disability, 3) made in substantially equal periodic payments over the Contract Owner's life or life expectancy, 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 if any other exceptions to the penalty apply to your situation. Similar exceptions may apply to distributions from Qualified Contracts. Aggregation of Annuity Contracts. All non-qualified deferred annuity contracts issued by Allstate (or its affiliates) to the same Contract Owner during any calendar year will be aggregated and treated as one annuity contract for purposes of determining the taxable amount of a distribution. Tax 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: o Individual Retirement Annuities or Accounts (IRAs) under Section 408 of the Code; o Roth IRAs under Section 408A of the Code; o Simplified Employee Pension Plans under Section 408(k) of the Code; o Savings Incentive Match Plans for Employees (SIMPLE) Plans under Section 408(p) of the Code; o Tax Sheltered Annuities under Section 403(b) of the Code; o Corporate and Self Employed Pension and Profit Sharing Plans; and o State and Local Government and Tax-Exempt Organization Deferred Compensation Plans. 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. The income on qualified plan and IRA investments is tax deferred and variable annuities held by such plans do 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. Allstate reserves the right to limit the availability of the Contract for use with any of the Qualified Plans listed above. Restrictions Under Section 403(b) Plans. 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: o attains age 59 1/2, o separates from service, o dies, o becomes disabled, or o on account of hardship (earnings on salary reduction contributions may not be distributed on the account of hardship). These limitations do not apply to withdrawals where Allstate is directed to transfer some or all of the contract value to another 403(b) plan. Income Tax Withholding Allstate 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) over the life (joint lives) of the participant (and beneficiary). Allstate may be required to withhold federal and state income taxes on any distributions from non-Qualified Contracts or Qualified Contracts that are not eligible rollover distributions, unless you notify us of your election to not have taxes withheld. PERFORMANCE INFORMATION - ------------------------------------------------------------------------------- We may advertise the performance of the Variable Sub-Accounts, including yield and total return information. 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. Yield refers to the income generated by an investment in a Variable Sub-Account over a specified period. All performance advertisements will include, as applicable, standardized yield and total return figures that reflect insurance charges, withdrawal charges and the following (as applicable): o contract maintenance charge for Putnam Allstate Advisor Contracts o sales charge for Putnam Allstate Advisor Apex Contracts o Credit Enhancement for Putnam Allstate Advisor Plus Contracts Performance advertisements also may include total return figures that reflect the deduction of insurance charges, but not withdrawal charges or the contract maintenance charge for Putnam Allstate Advisor Contracts. However, any total return figures that reflect the Credit Enhancement will also reflect applicable withdrawal charges to the extent required. 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 Funds for the periods beginning with the inception dates of the Funds 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.
STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS Page ADDITIONS, DELETIONS, OR SUBSTITUTIONS OF INVESTMENTS...................................... THE CONTRACTS.............................................................................. PERFORMANCE INFORMATION.................................................................... CALCULATION OF ACCUMULATION UNIT VALUES.................................................... CALCULATION OF VARIABLE INCOME PAYMENTS.................................................... GENERAL MATTERS............................................................................ FEDERAL TAX MATTERS........................................................................ Qualified Plans............................................................................ EXPERTS.................................................................................... FINANCIAL STATEMENTS....................................................................... APPENDIX A................................................................................. APPENDIX B................................................................................. APPENDIX C................................................................................. APPENDIX D................................................................................. -----------------------------------------------
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.
Appendix A Withdrawal Adjustment Example - Death Benefits* Issue Date: January 1, 2000 Initial Purchase Payment: $50,000 (For Putnam Allstate Advisor Plus Contracts, a $2,000 Credit Enhancement would apply) - --------- ------------ ------------- ------------ ------------ ------------------------------------------------------------- Death Benefit Amount ------------------------------------------------------------- ----------------------- ------------ ------------------------ Purchase Payment Value Enhanced Beneficiary - -------- Beginning Contract Maximum Value Type of Contract Transaction Value Anniversary Occurrence Value Amount After Value Date Occurrence - --------- ------------ ------------- ------------ ------------ ----------------------- ------------ ------------------------ - --------- ------------ ------------- ------------ ------------ ----------- ----------- ------------ ------------ ----------- Advisor, Advisor, Apex, and Apex, and Preferred Plus Preferred Plus - --------- ------------ ------------- ------------ ------------ ----------- ----------- ------------ ------------ ----------- 1/1/01 Contract Anniversary $55,000 $55,000 $50,000 $52,000 $55,000 $52,500 $54,600 - --------- ------------ ------------- ------------ ------------ ----------- ----------- ------------ ------------ ----------- - --------- ------------ ------------- ------------ ------------ ----------- ----------- ------------ ------------ ----------- 7/1/01 Partial Withdrawal $60,000 $15,000 $45,000 $35,000 $37,000 $41,250 $40,347 $41,961 - --------- ------------ ------------- ------------ ------------ ----------- ----------- ------------ ------------ ----------- The Purchase Payment Value is reduced by the amount of the withdrawal. The withdrawal adjustment reduces the Maximum Anniversary Value and Enhanced Beneficiary Value by the same proportion as the Contract Value.
Advisor, Plus Apex, and Preferred Purchase Payment Value Death Benefit Partial Withdrawal Amount (a) $15,000 $15,000 Value of Death Benefit Amount Immediately Prior to Partial Withdrawal (b) $50,000 $52,000 Adjusted Death Benefit (c) $35,000 $37,000 Maximum Anniversary Value Death Benefit Partial Withdrawal Amount (a) $15,000 $15,000 Contract Value Immediately Prior to Partial Withdrawal (b) $60,000 $60,000 Value of Death Benefit Amount Immediately Prior to Partial Withdrawal (c) $55,000 $55,000 Withdrawal Adjustment [(a)/(b)]*(c) $13,750 $13,750 Adjusted Death Benefit $41,250 $41,250 Enhanced Beneficiary Protection Value Death Benefit Partial Withdrawal Amount (a) $15,000 $15,000 Contract Value Immediately Prior to Partial Withdrawal (b) $60,000 $60,000 Value of Death Benefit Amount Immediately Prior to Partial Withdrawal (c) $53,796 $55,948 (assumes half years worth of Interest) Withdrawal Adjustment [(a)/(b)]*(c) $13,449 $13,987 Adjusted Death Benefit $40,347 $41,961 * For purposes of illustrating the withdrawal adjustment calculation, the example assumes the same Contract Values and Maximum Anniversary Value for all four Contracts. Actual Contract Values and Maximum Anniversary Values will differ due to the different fees and charges under each Contract and the Credit Enhancement available under the Putnam Allstate Advisor Plus Contract.
Appendix B Withdrawal Adjustment Example - Income Benefits* Issue Date: January 1, 2000 Initial Purchase Payment: $50,000 (For Putnam Allstate Advisor Plus Contracts, a $2,000 Credit Enhancement would apply)
- --------- ------------ ------------- ------------ ------------ ------------------------------------------------------------ Income Benefit Amount ------------------------------------------------------------ ----------------------- ------------ ----------------------- Purchase Payment Value 6% Roll-Up Value Beginning Contract Maximum Type of Contract Transaction Value Anniversary Date Occurrence Value Amount After Value Occurrence - --------- ------------ ------------- ------------ ------------ ----------------------- ------------ ----------------------- - --------- ------------ ------------- ------------ ------------ ----------- ----------- ------------ ------------ ---------- Advisor, Advisor, Apex, and Apex, and Preferred Plus Preferred Plus - --------- ------------ ------------- ------------ ------------ ----------- ----------- ------------ ------------ ---------- 1/1/01 Contract Anniversary $55,000 $55,000 $50,000 $52,000 $55,000 $53,000 $55,120 - --------- ------------ ------------- ------------ ------------ ----------- ----------- ------------ ------------ ---------- - --------- ------------ ------------- ------------ ------------ ----------- ----------- ------------ ------------ ---------- 7/1/01 Partial Withdrawal $60,000 $15,000 $45,000 $37,500 $39,000 $41,250 $40,925 $42,562 - --------- ------------ ------------- ------------ ------------ ----------- ----------- ------------ ------------ ---------- The withdrawal adjustment reduces the Purchase Payment Value, the Maximum Anniversary Value and the 6% Roll-Up Value by the same proportion as the Contract Value. Advisor Apex, Plus and Preferred Purchase Payment Value Income Benefit Partial Withdrawal Amount Contract Value Immediately Prior to Partial Withdrawal Value of Income Benefit Amount Immediately Prior to Partial Withdrawal Withdrawal Adjustment Adjusted Income Benefit (a) $15,000 $15,000 (b) $60,000 $60,000 (c) $50,000 $52,000 [(a)/(b)]*(c) $12,500 $13,000 $37,500 $39,000 Maximum Anniversary Value Income Benefit Partial Withdrawal Amount (a) $15,000 $15,000 Contract Value Immediately Prior to Partial Withdrawal (b) $60,000 $60,000 Value of Income Benefit Amount Immediately Prior to Partial Withdrawal (c) $55,000 $55,000 Withdrawal Adjustment [(a)/(b)]*(c) $13,750 $13,750 Adjusted Income Benefit $41,250 $41,250 6% Roll-Up Value Income Benefit Partial Withdrawal Amount (a) $15,000 $15,000 Contract Value Immediately Prior to Partial Withdrawal (b) $60,000 $60,000 Value of Income Benefit Amount Immediately Prior to Partial Withdrawal (c) $54,567 $56,750 (assumes half years worth of interest) Withdrawal Adjustment [(a)/(b)]*(c) $13,642 $14,187 Adjusted Income Benefit $40,925 $42,562 * For purposes of illustrating the withdrawal adjustment calculation, the example assumes the same Contract Values and Maximum Anniversary Value for all four Contracts. Actual Contract Values and Maximum Anniversary Values will differ due to the different fees and charges under each Contract and the Credit Enhancement available under the Putnam Allstate Plus Contract. APPENDIX C Accumulation Unit Values for the Putnam Allstate Advisor Contracts for the period April 30, 1999 (date Contracts first offered) through December 31, 1999 are set out below: Accumulation Unit Values and Number of Accumulation Units Outstanding for Each Variable Sub-Account* ---------------------------------------------------------- ---------------------- ------------------------------- With the Enhanced Beneficiary SUB-ACCOUNTS Basic Policy** Protection Option*** ------------ -------------- -------------------- Asia Pacific Growth ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 17.436886 17.419179 Number of Units Outstanding, End of Period 241,341 32,678 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Diversified Income ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 9.866141 9.856084 Number of Units Outstanding, End of Period 1,112,113 408,577 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- The George Putnam Fund of Boston ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 9.299008 9.289512 Number of Units Outstanding, End of Period 2,629,405 487,965 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Global Asset Allocation ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 10.69758 10.686682 Number of Units Outstanding, End of Period 216,789 44,565 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Global Growth ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 15.664991 15.649055 Number of Units Outstanding, End of Period 809,571 274,617 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Growth and Income ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 9.171812 9.162457 Number of Units Outstanding, End of Period 10,446,547 3,225,308 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Health Sciences ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 10.596764 10.58596 Number of Units Outstanding, End of Period 1,037,948 293,891 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- High Yield ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 9.933858 9.923723 Number of Units Outstanding, End of Period 688,505 223,608 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Income ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 9.714014 9.7041 Number of Units Outstanding, End of Period 994,313 271,083 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- International Growth ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 14.427139 14.412463 Number of Units Outstanding, End of Period 1,416,491 429,465 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- International Growth and Income ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 10.968143 10.956967 Number of Units Outstanding, End of Period 515,493 136,651 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- International New Opportunities ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 18.134432 18.11602 Number of Units Outstanding, End of Period 389,045 133,941 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Investors ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 12.167781 12.155375 Number of Units Outstanding, End of Period 5,517,617 1,309,524 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Money Market ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 10.231419 10.220995 Number of Units Outstanding, End of Period 1,261,646 386,731 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- New Opportunities ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 15.692325 15.676352 Number of Units Outstanding, End of Period 2,351,890 730,176 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- New Value ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 8.795115 8.786127 Number of Units Outstanding, End of Period 626,817 137,044 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- OTC & Emerging Growth ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 19.837583 19.817403 Number of Units Outstanding, End of Period 697,007 181,669 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Research ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 11.597614 11.585792 Number of Units Outstanding, End of Period 1,575,893 369,070 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Small Cap Value ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 10.301654 10.291145 Number of Units Outstanding, End of Period 451,498 140,296 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Utilities Growth and Income ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 9.986611 9.976417 Number of Units Outstanding, End of Period 585,124 153,652 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Vista ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 14.08793 14.073581 Number of Units Outstanding, End of Period 824,655 202,009 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Voyager ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 14.325845 14.311263 Number of Units Outstanding, End of Period 6,006,888 1,752,111 ---------------------------------------------------------- ---------------------- ------------------------------- * No Accumulation Unit Values are shown for the Putnam VT American Government Income and Growth Opportunities Sub-Accounts, because they were offered as of February 4, 2000. ** The Accumulation Unit Values in this column reflect a mortality and expense risk charge of 1.25%. *** The Accumulation Unit Values in this column reflect a mortality and expense risk charge of 1.40%. Accumulation Unit Values for the Putnam Allstate Advisor Apex Contracts for the period October 25, 1999 (date Contracts first offered) through December 31, 1999 are set out below: Accumulation Unit Values and Number of Accumulation Units Outstanding for Each Variable Sub-Account* ---------------------------------------------------------- ---------------------- ------------------------------- With the Enhanced Beneficiary SUB-ACCOUNTS Basic Policy** Protection Option*** ---------------------------------------------------------- ---------------------- ------------------------------- Asia Pacific Growth ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 13.36408 13.360614 Number of Units Outstanding, End of Period 1,911 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Diversified Income ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 10.191844 10.189182 Number of Units Outstanding, End of Period 409 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- The George Putnam Fund of Boston ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 9.777516 9.774957 Number of Units Outstanding, End of Period 2,578 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Global Asset Allocation ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.00000 10.00000 Accumulation Unit Value, End of Period 10.650241 10.647465 Number of Units Outstanding, End of Period - - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Global Growth ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 13.563279 13.559763 Number of Units Outstanding, End of Period 1,404 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Growth and Income ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 9.685588 9.683049 Number of Units Outstanding, End of Period 11,859 1,229 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Health Sciences ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 10.628529 10.625756 Number of Units Outstanding, End of Period 4,191 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- High Yield ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 10.379612 10.376902 Number of Units Outstanding, End of Period 691 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Income ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 9.946392 9.943792 Number of Units Outstanding, End of Period - - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- International Growth ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 12.85899 12.855652 Number of Units Outstanding, End of Period 5,440 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- International Growth and Income ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 10.576858 10.574094 Number of Units Outstanding, End of Period 1,515 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- International New Opportunities ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 14.530054 14.526295 Number of Units Outstanding, End of Period 2,774 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Investors ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 11.613439 11.610406 Number of Units Outstanding, End of Period 7,389 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Money Market ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 10.074512 10.07188 Number of Units Outstanding, End of Period 938 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- New Opportunities ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 13.467912 13.464415 Number of Units Outstanding, End of Period 4,105 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- New Value ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 9.707587 9.705049 Number of Units Outstanding, End of Period - - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- OTC & Emerging Growth ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 15.156053 15.15214 Number of Units Outstanding, End of Period 312 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Research ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 11.061395 11.058511 Number of Units Outstanding, End of Period 3,617 808 ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Small Cap Value ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 10.775309 10.772498 Number of Units Outstanding, End of Period 2,352 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Utilities Growth and Income ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 9.606396 9.603884 Number of Units Outstanding, End of Period 106 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Vista ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 13.011521 13.008145 Number of Units Outstanding, End of Period 1,448 - ---------------------------------------------------------- ---------------------- ------------------------------- ---------------------------------------------------------- ---------------------- ------------------------------- Voyager ---------------------------------------------------------- ---------------------- ------------------------------- Accumulation Unit Value, Beginning of Period 10.0000 10.00000 Accumulation Unit Value, End of Period 12.949953 12.946585 Number of Units Outstanding, End of Period 9,326 694 ---------------------------------------------------------- ---------------------- ------------------------------- * No Accumulation Unit Values are shown for the Putnam VT American Government Income and Growth Opportunities Sub-Accounts, because they were offered as of February 4, 2000. ** The Accumulation Unit Values in this column reflect a mortality and expense risk charge of 0.80%. *** The Accumulation Unit Values in this column reflect a mortality and expense risk charge of 0.95%. Appendix D Putnam Allstate Advisor Contract Comparison Chart - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Feature Advisor Advisor Apex Advisor Plus Advisor Preferred - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Maximum Age of Contract 90 90 80 80 Owner and Annuitant on the Issue Date - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Minimum Initial Purchase $1,000 $1,000 $10,000 $10,000 Payment - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Fixed Account Options o Standard Fixed o Standard Fixed o Standard Fixed o Standard Fixed Account Option Account Option Account Option Account Option o 6 Month Dollar o 6 Month Dollar Cost Averaging Cost Averaging Option Option o 12 Month o 12 Month Dollar Dollar Cost Cost Averaging Averaging Option Option - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Credit Enhancement None None 4% applied to all None purchase payments - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Sales Load None 5.75% - 0.50% of None None premiums - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Contract Maintenance Charge $30 per year, full None None None amount on surrender (waived in certain cases) - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Mortality and Expense Risk 1.25% 0.80% 1.60% 1.65% Charge (without optional benefit) - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Free Withdrawal Amount greater of earnings None 15% of purchase payments None (each Contract Year) not previously withdrawn, or 15% of purchase payments - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Withdrawal Charge (measured Year: 0 1 2 3 4 5 6 7+ Year: 0 1+ Year: 0 1 2 3 4 5 6 7 8+ Year: 0 1 2+ from number of complete %: 7 7 6 5 4 3 2 0 %: 0.5 0 %: 8 8 8 7 6 5 4 3 0 %: 2 1 0 years since we received the purchase payment)(as a (currently only percentage of purchase assessed on Contracts payments withdrawn in excess that have total of the Free Withdrawal purchase payments of at Amount) least $1,000,000) - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Withdrawal Charge Waivers Yes No Yes No - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- - ---------------------------- ------------------------ ------------------------- ------------------------- ------------------------- Employee Endorsement 6% Credit Enhancement Sales load waived None None - ---------------------------- ------------------------ ------------------------- ------------------------- -------------------------
THE PUTNAM ALLSTATE ADVISOR CONTRACTS Allstate Life Insurance Company Statement of Additional Information 3100 Sanders Road dated April 28, 2000 Northbrook, Illinois 60062 1-800-390-1277 This Statement of Additional Information supplements the information in the prospectus for the following Contracts: o Putnam Allstate Advisor o Putnam Allstate Advisor Apex (formerly known as Putnam Allstate Advisor - A) o Putnam Allstate Advisor Plus o Putnam Allstate Advisor Preferred Not all Contracts may be available in all states or through your sales representative. Please check with your sale representative for details. This Statement of Additional Information does not constitute an offer of any Contract in such cases. This Statement of Additional Information is not a prospectus. You should read it with the prospectus dated April 28, 2000 for each Contract. You may obtain a prospectus by calling or writing us at the address or telephone number listed above. For convenience, we use the terms "Contract" and "Contracts" to refer generally to all four Contracts, except as specifically noted. In addition, this Statement of Additional Information uses the same defined terms as the prospectus for each Contract that we offer, except as specifically noted. TABLE OF CONTENTS
Description Page Additions, Deletions or Substitutions of Investments The Contracts Performance Information Calculation of Accumulation Unit Values Calculation of Variable Income Payments General Matters Federal Tax Matters Qualified Plans Experts Financial Statements Appendix A A-1 Appendix B B-1 Appendix C C-1 Appendix D D-1
ADDITIONS, DELETIONS OR SUBSTITUTIONS OF INVESTMENTS - -------------------------------------------------------------------------------- We may add, delete, or substitute the Fund shares held by any Variable Sub-Account to the extent the law permits. We may substitute shares of any Fund with those of another Fund of the same or different mutual fund if the shares of the Fund are no longer available for investment, or if we believe investment in any Fund 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 SEC 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 Fund 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 Funds. 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 CONTRACTS - -------------------------------------------------------------------------------- The Contracts are primarily designed to aid individuals in long-term financial planning. You can use them for retirement planning regardless of whether the retirement plan qualifies for special federal income tax treatment. PURCHASE OF CONTRACTS We offer the Contracts to the public through banks as well as brokers licensed under the federal securities laws and state insurance laws. ALFS, Inc. (formerly known as Allstate Life Financial Services, Inc.) ("ALFS"), an affiliate of Allstate, will serve as the principal underwriter for the Variable Account and distribute the Contracts until May 1, 2000. Commission income of ALFS for the last fiscal year is $61,588,893. Beginning May 1, 2000, Allstate Distributors, L.L.C. ("Allstate Distributors"), a broker-dealer jointly owned by Allstate and Putnam Investments, will serve as the principal underwriter for the Variable Account and distribute the Contracts. The offering of the Contracts is continuous. We do not anticipate discontinuing the offering of the Contracts, but we reserve the right to do so at any time. TAX-FREE EXCHANGES (1035 EXCHANGES, ROLLOVERS AND TRANSFERS) We accept purchase payments that are the proceeds of a Contract in a transaction qualifying for a tax-free exchange under Section 1035 of the Internal Revenue Code ("Code"). Except as required by federal law in calculating the basis of the Contract, we do not differentiate between Section 1035 purchase payments and non-Section 1035 purchase payments. We also accept "rollovers" and transfers from Contracts qualifying as tax-sheltered annuities ("TSAs"), individual retirement annuities or accounts ("IRAs"), or any other Qualified Contract that is eligible to "rollover" into an IRA. We differentiate among non-Qualified Contracts, TSAs, IRAs and other Qualified Contracts to the extent necessary to comply with federal tax laws. For example, we restrict the assignment, transfer, or pledge of TSAs and IRAs so the Contracts will continue to qualify for special tax treatment. A Contract Owner contemplating any such exchange, rollover or transfer of a Contract should contact a competent tax adviser with respect to the potential effects of such a transaction. PERFORMANCE INFORMATION - -------------------------------------------------------------------------------- From time to time we may advertise the "standardized," "non-standardized," and "adjusted historical" total returns of the Variable Sub-Accounts, as described below. Please remember that past performance is not an estimate or guarantee of future performance and does not necessarily represent the actual experience of amounts invested by a particular Contract Owner. Also please note that the performance figures 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 (plus $40 credit thereon for Putnam Allstate Advisor Plus Contracts only) 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 (plus $40 credit thereon for Putnam Allstate Advisor Plus Contracts only) 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. (The Free Withdrawal Amount is not applicable with the Putnam Allstate Advisor Apex and Putnam Allstate Advisor Preferred Contracts.) 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. For Putnam Allstate Advisor Apex Contracts, we also assume that the maximum sales charge of 5.75% is deducted from the initial $1,000 payment. When factoring the contract maintenance charge (only applicable to the Putnam Allstate Advisor Contract), we pro rate the charge by dividing (a) the contract maintenance charge by (b) an assumed contract size of $45,000. We then multiply the resulting percentage by a hypothetical $1,000 investment. When factoring the charge for the optional Retirement Income Guarantee Rider 2, we assume that Income Base B applies and that there are no additional purchase payments or withdrawals. The standardized total returns for the Variable Sub-Accounts, for the periods ended December 31, 1999, are set out in Appendices A through D to this Statement of Additional Information. The Putnam Allstate Advisor Apex, Putnam Allstate Advisor Plus, and Putnam Allstate Advisor Preferred Contracts were first offered to the public on October 25, 1999, February 4, 2000, and as of the date of this Statement of Additional Information, respectively. Accordingly, performance shown for periods prior to those dates reflects the performance of the Variable Sub-Accounts, adjusted to reflect the current charges under the Contracts that would have applied had they been in existence at the time. 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 or the contract maintenance charge under the Putnam Allstate Advisor Contracts. Such charges, if reflected, would reduce the performance shown. Non-standardized total returns also do not take into account the amount of any applicable Credit Enhancement under the Putnam Allstate Advisor Plus Contracts. When factoring the charge for the optional Retirement Income Guarantee Rider 2, we assume that Income Base B applies and that there are no additional purchase payments or withdrawals. 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 an 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 total returns for the Variable Sub-Accounts, for the periods ended December 31, 1999, are set out in Appendices A through D to this Statement of Additional Information. The Putnam Allstate Advisor Apex, Putnam Allstate Advisor Plus, and Putnam Allstate Advisor Preferred Contracts were first offered to the public on October 25, 1999, February 4, 2000, and as of the date of this Statement of Additional Information, respectively. Accordingly, performance shown for periods prior to those dates reflects the performance of the Variable Sub-Accounts, adjusted to reflect the current charges under the Contracts that would have applied had they been in existence at the time. ADJUSTED HISTORICAL TOTAL RETURNS We may advertise the total return for periods prior to the date that the Variable Sub-Accounts commenced operations. We calculate such "adjusted historical total returns" using the same method that we use to compute standardized total returns, except that instead of using the Variable Sub-Account inception dates, we use the inception dates of the underlying Funds and adjust such performance to reflect the current level of charges that apply to the Variable Sub-Accounts under each Contract. The adjusted historical total returns for the Variable Sub-Accounts, for the periods ended December 31, 1999, for each Contract are set out in Appendices A through D to this Statement of Additional Information. CALCULATION OF ACCUMULATION UNIT VALUES - ------------------------------------------------------------------------------- The value of Accumulation Units will change each Valuation Period according to the investment performance of the Fund 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 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 Fund 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 Fund underlying the Variable Sub-Account during the current Valuation Period; (B) is the net asset value per share of the Fund underlying the Variable Sub-Account determined as of the end of the immediately preceding Valuation Period; and (C) is the mortality and expense risk charge corresponding to the portion of the current calendar year that is 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 Fund 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 or tax qualified plans 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 Fund shares held by each of the Variable Sub-Accounts. The Funds do not issue stock certificates. Therefore, we hold the Variable Account's assets in open account in lieu of stock certificates. See the Funds' prospectuses for a more complete description of the custodian of the Funds. PREMIUM TAXES Applicable premium tax rates depend on the Contract Owner's state of residency and the insurance laws and our status in those states where premium taxes are incurred. Premium tax rates may be changed by legislation, administrative interpretations, or judicial acts. TAX RESERVES We do not establish capital gains tax reserves for any Variable Sub-Account nor do we deduct charges for tax reserves because we believe that capital gains attributable to the Variable Account will not be taxable. However, we reserve the right to deduct charges to establish tax reserves for potential taxes on realized or unrealized capital gains. FEDERAL TAX MATTERS - ------------------------------------------------------------------------------- THE FOLLOWING DISCUSSION IS GENERAL AND IS NOT INTENDED AS TAX ADVICE. WE MAKE NO GUARANTEE REGARDING THE TAX TREATMENT OF ANY CONTRACT OR TRANSACTION INVOLVING A CONTRACT. Federal, state, local and other tax consequences of ownership or receipt of distributions under an annuity contract depend on the individual circumstances of each person. If you are concerned about any tax consequences with regard to your individual circumstances, you should consult a competent tax adviser. TAXATION OF ALLSTATE LIFE INSURANCE COMPANY Allstate 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 Allstate, and its operations form a part of Allstate, it will not be taxed separately as a "Regulated Investment Company" under Subchapter M of the Code. Investment income and realized capital gains of the Variable Account are automatically applied to increase reserves under the Contract. Under existing federal income tax law, Allstate 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, Allstate does not anticipate that it will incur any federal income tax liability attributable to the Variable Account, and therefore Allstate does not intend to make provisions for any such taxes. If Allstate is taxed on investment income or capital gains of the Variable Account, then Allstate may impose a charge against the Variable Account in order to make provision for such taxes. EXCEPTIONS TO THE NON-NATURAL OWNER RULE There are several exceptions to the general rule that annuity contracts held by a non-natural owner are not treated as annuity contracts for federal income tax purposes. Contracts will generally be treated as held by a natural person if the nominal owner is a trust or other entity which holds the Contract as agent for a natural person. However, this special exception will not apply in the case of an employer who is the nominal owner of an annuity contract under a non-qualified deferred compensation arrangement for its employees. Other exceptions to the non-natural owner rule are: (1) Contracts acquired by an estate of a decedent by reason of the death of the decedent; (2) certain Qualified Contracts; (3) Contracts purchased by employers upon the termination of certain qualified plans; (4) certain Contracts used in connection with structured settlement agreements, and (5) Contracts purchased with a single premium when the annuity starting date is no later than a year from purchase of the annuity and substantially equal periodic payments are made, not less frequently than annually, during the annuity period. IRS REQUIRED DISTRIBUTION AT DEATH RULES In order to be considered an annuity contract for federal income tax purposes, 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 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 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 Owner's death. If the Contract Owner's designated Beneficiary is the surviving spouse of the Owner, the Contract may be continued with the surviving spouse as the new Contract Owner. 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. QUALIFIED PLANS - ------------------------------------------------------------------------------- The Contract may be used with several types of qualified plans. Allstate reserves the right to limit the availability of the Contract for use with any of the Qualified Plans listed below. The tax rules applicable to participants in such qualified plans vary according to the type of plan and the terms and conditions of the plan itself. Adverse tax consequences may result from excess contributions, premature distributions, distributions that do not conform to specified commencement and minimum distribution rules, excess distributions and in other circumstances. Contract Owners and participants under the plan and Annuitants and Beneficiaries under the Contract may be subject to the terms and conditions of the plan regardless of the terms of the Contract. 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. An IRA generally may not provide life insurance, but it may provide a death benefit that equals the greater of the premiums paid and the Contract's Cash Value. The Contract provides a death benefit that in certain circumstances may exceed the greater of the payments and the Contract Value. It is possible that the death benefit could be viewed as violating the prohibition on investment in life insurance contracts with the result that the Contract would not be viewed as satisfying the requirements of an IRA. ROTH 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. "Qualified distributions" from Roth Individual Retirement Annuities are not includible in gross income. "Qualified distributions" are any distributions made more than five taxable years after the taxable year of the first contribution to the Roth Individual Retirement Annuity, and which are made on or after the date the individual attains age 59 1/2, made to a beneficiary after the owner's death, attributable to the owner being disabled or for a first time home purchase (first time home purchases are subject to a lifetime limit of $10,000). "Nonqualified distributions" are treated as made from contributions first and are includible in gross income to the extent such distributions exceed the contributions made to the Roth Individual Retirement Annuity. The taxable portion of a "nonqualified distribution" may be subject to the 10% penalty tax on premature distributions. Subject to certain limitations, a traditional Individual Retirement Account or Annuity may be converted or "rolled over" to a Roth Individual Retirement Annuity. The taxable portion of a conversion or rollover distribution is includible in gross income, but is exempted from the 10% penalty tax on premature distributions. SIMPLIFIED EMPLOYEE PENSION PLANS Section 408(k) of the Code allows employers to establish simplified employee pension plans for their employees using the employees' individual retirement annuities if certain criteria are met. Under these plans the employer may, within specified limits, make deductible contributions on behalf of the employees to their individual retirement annuities. Employers intending to use the Contract in connection with such plans should seek competent advice. SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE PLANS) Sections 408(p) and 401(k) of the Code allow employers with 100 or fewer employees to establish SIMPLE retirement plans for their employees. SIMPLE plans may be structured as a SIMPLE retirement account using an employee's IRA to hold the assets or as a Section 401(k) qualified cash or deferred arrangement. In general, a SIMPLE plan consists of a salary deferral program for eligible employees and matching or nonelective contributions made by employers. Employers intending to use the Contract in conjunction with SIMPLE plans should seek competent tax and legal advice. TAX SHELTERED ANNUITIES Section 403(b) of the Code permits public school employees and employees of certain types of tax-exempt organizations (specified in Section 501(c)(3) of the Code) to have their employers purchase annuity contracts for them, and subject to certain limitations, to exclude the purchase payments from the employees' gross income. An annuity contract used for a Section 403(b) plan must provide that distributions attributable to salary reduction contributions made after 12/31/88, and all earnings on salary reduction contributions, may be made only on or after the date the employee attains age 59 1/2, separates from service, dies, becomes disabled or on the account of hardship (earnings on salary reduction contributions may not be distributed for hardship). These limitations do not apply to withdrawals where Allstate is directed to transfer some or all of the Contract Value to another 403(b) plan. CORPORATE AND SELF-EMPLOYED PENSION AND PROFIT SHARING PLANS Sections 401(a) and 403(a) of the Code permit corporate employers to establish various types of tax favored retirement plans for employees. The Self-Employed Individuals Retirement Act of 1962, as amended, (commonly referred to as "H.R. 10" or "Keogh") permits self-employed individuals to establish tax favored retirement plans for themselves and their employees. Such retirement plans may permit the purchase of annuity contracts in order to provide benefits under the plans. STATE AND LOCAL GOVERNMENT AND TAX-EXEMPT ORGANIZATION DEFERRED COMPENSATION PLANS Section 457 of the Code permits employees of state and local governments and tax-exempt organizations to defer a portion of their compensation without paying current taxes. The employees must be participants in an eligible deferred compensation plan. To the extent the Contracts are used in connection with an eligible plan, employees are considered general creditors of the employer and the employer as owner of the Contract has the sole right to the proceeds of the Contract. Generally, under the non-natural owner rules, such Contracts are not treated as annuity contracts for federal income tax purposes. Under these plans, contributions made for the benefit of the employees will not be includible in the employees' gross income until distributed from the plan. However, under a Section 457 plan all the compensation deferred under the plan must remain solely the property of the employer, subject only to the claims of the employer's general creditors, until such time as made available to the employee or a beneficiary. EXPERTS - ------------------------------------------------------------------------------- The consolidated financial statements of Allstate as of December 31, 1999 and 1998 and for each of the three years in the period ended December 31, 1999 and related financial statement schedules 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, 1999 and for each of the periods in the two years then ended that appear in this Statement of Additional Information have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report appearing herein, and are included in reliance upon the report of such firm given upon their authority as experts in accounting and auditing. FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- The financial statements of the Variable Account as of December 31, 1999 and for each of the periods in the two years then ended, the financial statements of Allstate as of December 31, 1999 and 1998 and for each of the three years in the period ended December 31, 1999, the related financial statement schedules and the accompanying Independent Auditors' Reports appear in the pages that follow. The financial statements and schedules of Allstate included herein should be considered only as bearing upon the ability of Allstate to meet its obligations under the Contacts. INDEPENDENT AUDITORS' REPORT TO THE BOARD OF DIRECTORS AND SHAREHOLDER OF ALLSTATE LIFE INSURANCE COMPANY: We have audited the accompanying Consolidated Statements of Financial Position of Allstate Life Insurance Company and subsidiaries (the "Company", an affiliate of The Allstate Corporation) as of December 31, 1999 and 1998, and the related Consolidated Statements of Operations, Comprehensive Income, Shareholder's Equity and Cash Flows for each of the three years in the period ended December 31, 1999. Our audits also included Schedule I - Summary of Investments other than Investments in Related Parties, Schedule III - Supplementary Insurance Information, Schedule IV - Reinsurance, and Schedule V - Valuation Allowance and Qualifying Accounts. These financial statements and financial statement schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and financial statement schedules based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of Allstate Life Insurance Company and subsidiaries as of December 31, 1999 and 1998, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1999 in conformity with generally accepted accounting principles. Also, in our opinion, Schedule I - Summary of Investments other than Investments in Related Parties, Schedule III - Supplementary Insurance Information, Schedule IV - Reinsurance, and Schedule V - Valuation Allowance and Qualifying Accounts, when considered in relation to the basic financial statements taken as a whole, present fairly, in all material respects, the information set forth therein. /s/ Deloitte & Touche LLP Chicago, Illinois February 25, 2000 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - -------------------------------------------------------------------------------- ($ in millions)
YEAR ENDED DECEMBER 31, ----------------------------------------- 1999 1998 1997 ---- ---- ---- REVENUES Life and annuity premiums (net of reinsurance ceded of $241, $178 and $194) $ 838 $ 889 $ 955 Life and annuity contract charges 723 630 547 Property-liability insurance premiums (net of reinsurance ceded of $3, $1 and $3) 289 268 275 Net investment income 2,265 2,139 2,118 Realized capital gains and losses 195 332 192 ------ ------ ------- 4,310 4,258 4,087 ------ ------ ------- COSTS AND EXPENSES Life and annuity contract benefits (net of reinsurance recoveries of $161, $52 and $75) 1,251 1,225 1,239 Interest credited to contractholders' funds 1,260 1,190 1,167 Property-liability insurance claims and claims expense (net of reinsurance recoveries of $36, $14 and $4) 222 195 179 Amortization of deferred policy acquisition costs 409 412 333 Operating costs and expenses 387 370 368 ------ ------ ------- 3,529 3,392 3,286 ------ ------ ------- INCOME FROM OPERATIONS BEFORE INCOME TAX EXPENSE 781 866 801 Income tax expense 270 310 284 ------ ------ ------- NET INCOME $ 511 $ 556 $ 517 ====== ====== =======
See notes to consolidated financial statements. 2 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - -------------------------------------------------------------------------------- ($ IN MILLIONS)
YEAR ENDED DECEMBER 31, ----------------------------------- 1999 1998 1997 ---- ---- ---- NET INCOME $ 511 $556 $517 OTHER COMPREHENSIVE (LOSS) INCOME, AFTER-TAX Changes in: Unrealized net capital gains and losses (644) 73 250 Unrealized foreign currency translation adjustments 7 1 (8) ----- ---- ---- OTHER COMPREHENSIVE (LOSS) INCOME, AFTER-TAX (637) 74 242 ----- ---- ---- Comprehensive (loss) income $(126) $630 $759 ===== ==== ====
See notes to consolidated financial statements. 3 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL POSITION - -------------------------------------------------------------------------------- ($ IN MILLIONS EXCEPT PAR VALUE)
DECEMBER 31, ------------------------------ 1999 1998 ------------- ------------- ASSETS Investments Fixed income securities, at fair value (amortized cost $27,354 and $24,630) $ 27,523 $ 26,858 Mortgage loans 3,801 3,285 Equity securities, at fair value (cost $503 and $446) 743 748 Short-term 711 742 Policy loans 606 569 Other 25 26 ------------ ------------ Total investments 33,409 32,228 Cash 71 109 Deferred policy acquisition costs 2,695 2,195 Reinsurance recoverables 495 254 Accrued investment income 394 360 Other assets 252 296 Separate Accounts 13,857 10,098 ------------ ------------ TOTAL ASSETS $ 51,173 $ 45,540 ============ ============ LIABILITIES Contractholder funds $ 23,995 $ 21,133 Reserve for life-contingent contract benefits 7,148 7,601 Reserve for property-liability insurance claims and claims expense 368 313 Unearned premiums 155 152 Payable to affiliates, net 51 59 Other liabilities and accrued expenses 854 940 Deferred income taxes 171 452 Separate Accounts 13,857 10,098 ------------ ------------ TOTAL LIABILITIES 46,599 40,748 ------------ ------------ COMMITMENTS AND CONTINGENT LIABILITIES(NOTE 10) SHAREHOLDER'S EQUITY Redeemable preferred stock - series A, $100 par value, 1,500,000 shares authorized, 663,650 and 579,990 shares issued and outstanding 66 58 Redeemable preferred stock - series B, $100 par value, 1,500,000 shares authorized, 1,170,000 shares issued and outstanding 117 117 Common stock, $227 and $214 par value, 23,800 and 22,700 shares authorized, issued and outstanding 5 5 Additional capital paid-in 617 617 Retained income 3,565 3,154 Accumulated other comprehensive income: Unrealized net capital gains 220 864 Unrealized foreign currency translation adjustments (16) (23) ------------ ------------ TOTAL ACCUMULATED OTHER COMPREHENSIVE INCOME 204 841 ------------ ------------ TOTAL SHAREHOLDER'S EQUITY 4,574 4,792 ------------ ------------ TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 51,173 $ 45,540 ============ ============
See notes to consolidated financial statements. 4 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY - -------------------------------------------------------------------------------- ($ in millions)
DECEMBER 31, ------------------------ 1999 1998 1997 ------ ------ ------ REDEEMABLE PREFERRED STOCK - SERIES A Balance, beginning of year $ 58 $ 45 $ 32 Issuance of shares 8 13 13 ------ ------ ------ Balance, end of year 66 58 45 ------ ------ ------ REDEEMABLE PREFERRED STOCK - SERIES B Balance, beginning of year $ 117 $ 117 $ 117 Issuance of shares - - - ------ ------ ------ Balance, end of year 117 117 117 ------ ------ ------ COMMON STOCK Balance, beginning of year $ 5 $ 4 $ 2 Issuance of shares - - 1 Adjustment to par value - 1 1 ------ ------ ------ Balance, end of year 5 5 4 ------ ------ ------ ADDITIONAL CAPITAL PAID-IN Balance, beginning of year $ 617 $ 618 $ 619 Adjustment to par value - (1) (1) ------ ------ ------ Balance, end of year 617 617 618 ------ ------ ------ RETAINED INCOME Balance, beginning of year $3,154 $2,706 $2,322 Net income 511 556 517 Dividends (100) (108) (133) ------ ------ ------ Balance, end of year 3,565 3,154 2,706 ------ ------ ------ ACCUMULATED OTHER COMPREHENSIVE INCOME Balance, beginning of year $ 841 $ 767 $ 525 Change in unrealized net capital gains and losses (644) 73 250 Change in unrealized foreign currency translation adjustments 7 1 (8) ------ ------ ------ Balance, end of year 204 841 767 ------ ------ ------ Total shareholder's equity $4,574 $4,792 $4,257 ====== ====== ======
See notes to consolidated financial statements. 5 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS - -------------------------------------------------------------------------------- ($ IN MILLIONS)
YEAR ENDED DECEMBER 31, ---------------------------- 1999 1998 1997 -------- ------- ------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 511 $ 556 $ 517 Adjustments to reconcile net income to net cash provided by operating activities: Amortization and other non-cash items (145) (118) (105) Realized capital gains and losses (195) (332) (192) Interest credited to contractholder funds 1,260 1,190 1,167 Changes in: Policy benefit and other insurance reserves (3) (55) (55) Unearned premiums 3 (11) (45) Deferred policy acquisition costs (267) (252) (236) Reinsurance recoverables (78) (39) (16) Income taxes payable 73 27 38 Other operating assets and liabilities (91) 117 (36) -------- ------- ------- Net cash provided by operating activities 1,068 1,083 1,037 -------- ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sales Fixed income securities 4,832 2,495 2,293 Equity securities 1,070 765 697 Real estate - 309 - Investment collections Fixed income securities 2,928 2,984 3,056 Mortgage loans 392 432 598 Investment purchases Fixed income securities (10,261) (6,216) (6,267) Equity securities (953) (529) (607) Mortgage loans (906) (780) (409) Change in short-term investments, net 10 (330) 172 Change in other investments, net (36) (95) 35 -------- ------- ------- Net cash used in investing activities (2,924) (965) (432) -------- ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issuance of redeemable preferred stock 8 13 13 Contractholder fund deposits 5,594 3,275 2,657 Contractholder fund withdrawals (3,684) (3,306) (3,076) Dividends paid (100) (108) (133) -------- ------- ------- Net cash provided by (used in) financing activities 1,818 (126) (539) -------- ------- ------- NET (DECREASE) INCREASE IN CASH (38) (8) 66 CASH AT BEGINNING OF YEAR 109 117 51 -------- ------- ------- CASH AT END OF YEAR $ 71 $ 109 $ 117 ======== ======= =======
See notes to consolidated financial statements. 6 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. GENERAL BASIS OF PRESENTATION The accompanying consolidated financial statements include the accounts of Allstate Life Insurance Company ("ALIC") and its wholly owned subsidiaries (collectively referred to as the "Company"). ALIC is wholly owned by Allstate Insurance Company ("AIC"), a wholly owned subsidiary of The Allstate Corporation (the "Corporation"). These consolidated financial statements have been prepared in conformity with generally accepted accounting principles. All significant intercompany accounts and transactions have been eliminated. NATURE OF OPERATIONS The Company is engaged principally in the life and savings business in the United States. The Company owns a subsidiary, Allstate Insurance Company of Canada ("AICC"), which operates in Canada and sells property-liability insurance. The Company's life and savings ("Life and Savings") segment markets a broad line of life insurance and savings products countrywide, accounting for approximately 97% of the Company's 1999 statutory premiums and deposits. Statutory premiums and deposits are determined in accordance with accounting principles prescribed or permitted by the insurance department of the applicable domiciliary state and include premiums and deposits for all products. Life insurance consists of traditional products, including term and whole life, interest-sensitive life, immediate annuities with life contingencies, variable life and indexed life insurance. Savings products include deferred annuities and immediate annuities without life contingencies. Deferred annuities include fixed rate, market value adjusted, indexed and variable annuities. Group pension savings products include contracts with fixed or indexed rates and fixed terms, such as guaranteed investment contracts and funding agreements, and deferred and immediate annuities also referred to as retirement annuities. In 1999, annuity premiums and deposits represented approximately 79% of Life and Savings total statutory premiums and deposits. The Company is authorized to sell life and savings products in all 50 states, the District of Columbia and Puerto Rico. The Company is also authorized to sell certain insurance products in various foreign countries. The top geographic locations in the United States for statutory premiums and deposits for the Life and Savings segment were California, Florida, Illinois, and Pennsylvania for the year ended December 31, 1999. No other jurisdiction accounted for more than 5% of statutory premiums and deposits for Life and Savings. The Company distributes its life and savings products using Allstate agents, which include life specialists and financial advisors, as well as banks, independent agents, securities firms and through direct response methods. Although the Company currently benefits from agreements with financial services entities who market and distribute its products, change in control of these non-affiliated entities with which the Company has alliances could negatively impact Life and Savings sales. The Company's property-liability ("Property-Liability") segment is principally engaged in private passenger auto and homeowners insurance in Canada, writing approximately 3% of the Company's total 1999 statutory premiums. Statutory premiums are determined in accordance with accounting principles prescribed or permitted by the insurance department of the applicable domiciliary province. The Company distributes property-liability products in Canada. The top provinces for statutory premiums earned by the Property-Liability segment were Ontario, Quebec, Alberta, and New Brunswick for the year ended December 31, 1999. No other province accounted for more than 5% of statutory premiums earned for Property-Liability. The Company distributes property-liability products through Allstate agents, primarily employee agents, but also utilizes independent agents and specialized brokers to expand market reach. The Company monitors economic and regulatory developments which have the potential to impact its business. Recently enacted federal legislation will allow for banks and other financial organizations to have greater participation in securities and insurance businesses. This legislation may present an increased level of competition for sales of the Company's products. Furthermore, the market for deferred annuities and interest-sensitive life insurance is enhanced by the tax incentives available under current law. Any legislative changes which lessen these incentives are likely to negatively impact the demand for these products. 7 Additionally, traditional demutualization 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. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES INVESTMENTS Fixed income securities include bonds, mortgage-backed and asset-backed securities, and redeemable preferred stocks. All fixed income securities are carried at fair value and may be sold prior to their contractual maturity ("available for sale"). The difference between the amortized cost and fair value, net of deferred income taxes, certain life and annuity deferred policy acquisition costs, and certain reserves for life-contingent contract benefits, is reflected as a component of shareholder's equity. Provisions are recognized for declines in the value of fixed income securities that are other than temporary. Such writedowns are included in realized capital gains and losses. Mortgage loans are carried at outstanding principal balance, net of unamortized premium or discount and valuation allowances. Valuation allowances are established for impaired loans when it is probable that contractual principal and interest will not be collected. Valuation allowances for impaired loans reduce the carrying value to the fair value of the collateral or the present value of the loan's expected future repayment cash flows, discounted at the loan's original effective interest rate. Valuation allowances on loans not considered to be impaired are established based on consideration of the underlying collateral, borrower financial strength, current and expected market conditions, and other factors. Equity securities include common and non-redeemable preferred stocks and real estate investment trusts which are carried at fair value and limited partnerships which are recorded based on the equity method. The difference between cost and fair value of equity securities, less deferred income taxes, is reflected as a component of shareholder's equity. Short-term investments are carried at cost or amortized cost, which approximates fair value, and includes collateral received in connection with securities lending activities. Policy loans are carried at unpaid principal balances. Other investments consist primarily of real estate investments, which are accounted for by the equity method if held for investment, or depreciated cost, net of valuation allowances, if the Company has an active plan to sell. Investment income consists primarily of interest, dividends, and gains and losses for certain derivative transactions. Interest is recognized on an accrual basis and dividends are recorded at the ex-dividend date. Interest income on mortgage-backed and asset-backed securities is determined on the effective yield method, based on estimated principal repayments. Accrual of income is suspended for fixed income securities and mortgage loans that are in default or when the receipt of interest payments is in doubt. Realized capital gains and losses are determined on a specific identification basis. DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments include swaps, futures, forwards, and options, including caps and floors. When derivatives meet specific criteria they may be designated as accounting hedges and accounted for on either a fair value, deferral, or accrual basis, depending upon the nature of the hedge strategy, the method used to account for the hedged item and the derivative used. Derivatives that are not designated as accounting hedges are accounted for on a fair value basis. If, subsequent to entering into a hedge transaction, the derivative becomes ineffective (including if the hedged item is sold or otherwise extinguished or the occurrence of a hedged anticipatory transaction is no longer probable), the Company terminates the derivative position. Gains and losses on these terminations are reported in realized capital gains and losses in the period they occur. The Company may also terminate derivatives as a result of other events or circumstances. Gains and losses on these terminations are deferred and amortized over the remaining life of either the hedge or the hedged item, whichever is shorter. FAIR VALUE ACCOUNTING Under fair value accounting, realized and unrealized gains and losses on derivatives are recognized in either earnings or shareholder's equity when they occur. The Company accounts for certain of its interest rate swaps, equity-indexed options, equity-indexed futures, and foreign currency swaps and forwards as hedges on a fair value basis when specific criteria are met. For swaps or options, the derivative must reduce the primary market risk exposure (e.g., interest rate risk, equity price risk or foreign currency risk) of the hedged item in conjunction with the specific hedge strategy; be designated as a hedge at the inception of the 8 transaction; and have a notional amount and term that does not exceed the carrying value and expected maturity, respectively, of the hedged item. In addition, options must have a reference index (e.g., S&P 500) that is the same as, or highly correlated with, the reference index of the hedged item. For futures or forward contracts, the derivative must reduce the primary market risk exposure on an enterprise or transaction basis in conjunction with the hedge strategy; be designated as a hedge at the inception of the transaction; and be highly correlated with the fair value of, or interest income or expense associated with, the hedged item at inception and throughout the hedge period. For such interest rate swaps, equity-indexed options, foreign currency swaps, and forwards, changes in fair value are reported net of tax in shareholder's equity, exclusive of interest accruals. Changes in fair value of certain equity-indexed options are reflected as an adjustment of the hedged item. Accrued interest receivable and payable on swaps are reported in net investment income. Premiums paid for certain equity-indexed options are reported as equity securities and amortized to net investment income over the lives of the agreements. The Company also has certain derivatives which are used for risk management purposes for which hedge accounting is not applied and are therefore accounted for on a fair value basis. These derivatives primarily consist of equity-indexed instruments and certain interest rate futures. Based upon certain interest rate or equity price risk reduction strategies, gains and losses on these derivatives are recognized in net investment income, realized gains or losses or interest credited to contractholders' balances during the period on a current basis. DEFERRAL ACCOUNTING Under deferral accounting, gains and losses on derivatives are deferred and recognized in earnings in conjunction with earnings on the hedged item. The Company accounts for interest rate futures and certain foreign currency forwards as hedges using deferral accounting for anticipatory investment purchases, sales and capital infusions, when the criteria for futures and forwards (discussed above) are met. In addition, anticipated transactions must be probable of occurrence and their significant terms and characteristics identified. Changes in fair values of these derivatives are initially deferred and reported as other liabilities and accrued expenses. Once the anticipated transaction occurs, the deferred gains or losses are considered part of the cost basis of the asset and reported net of tax in shareholder's equity or recognized as a gain or loss from disposition of the asset, as appropriate. The Company reports initial margin deposits on futures in short-term investments. Fees and commissions paid on these derivatives are also deferred as an adjustment to the carrying value of the hedged item. ACCRUAL ACCOUNTING Under accrual accounting, interest income or expense related to the derivative is accrued and recorded as an adjustment to the interest income or expense on the hedged item. The Company accounts for certain interest rate swaps, caps and floors, and certain foreign currency swaps as hedges on an accrual basis when the criteria for swaps or options (discussed above) are met. Premiums paid for interest rate caps and floors are reported as investments and amortized to net investment income over the lives of the agreements. RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS, AND INTEREST CREDITED Traditional life insurance products consist principally of products with fixed and guaranteed premiums and benefits, primarily term and whole life insurance products. Premiums from these products are recognized as revenue when due. Benefits are recognized in relation to such revenue so as to result in the recognition of profits over the life of the policy and are reflected in contract benefits. Interest-sensitive life contracts are insurance contracts whose terms are not fixed and guaranteed. The terms that may be changed include premiums paid by the contractholder, interest credited to the contractholder account balance and one or more amounts assessed against the contractholder. Premiums from these contracts are reported as deposits to contractholder funds. Life and annuity contract charges consist of fees assessed against the contractholder account balance for cost of insurance (mortality risk), contract administration and surrender charges. Contract benefits include interest credited to contracts and claims incurred in excess of the related contractholder account balance. Immediate annuities with life contingencies and single premium life insurance products are limited payment contracts, as these contracts provide insurance protection over a period that extends beyond the period during which premiums are collected. Gross premiums in excess of the net premium on limited payment contracts are deferred and recognized over the contract period. Contract benefits are recognized in relation to such revenue so as to result in the recognition of profits over the life of the policy. Contracts that do not subject the Company to significant risk arising from mortality or morbidity are referred to as investment contracts. Fixed rate annuities, market value adjusted annuities, indexed annuities, immediate annuities without life contingencies, certain guaranteed investment contracts and funding agreements are considered investment 9 contracts. Deposits received for such contracts are reported as deposits to contractholder funds. Life and annuity contract charges for investment contracts consist of charges assessed against the contractholder account balance for contract administration and surrenders. Contract benefits include interest credited and claims incurred in excess of the related contractholder account balance. Crediting rates for fixed rate annuities and interest sensitive life contracts are adjusted periodically by the Company to reflect current market conditions. Crediting rates for indexed annuities and indexed life products are based on an interest rate index, such as LIBOR or an equity index, such as the S&P 500. Investment contracts also include variable annuity, variable life and certain guaranteed investment contracts which are sold as Separate Accounts products. The assets supporting these products are legally segregated and available only to settle Separate Accounts contract obligations. Deposits received are reported as Separate Accounts liabilities. Life and annuity contract charges for these contracts consist of charges assessed against the Separate Accounts fund balances for contract maintenance, administration, mortality, expense and surrenders. Property-liability premiums written are deferred and earned on a pro rata basis over the terms of the policies. The portion of premiums written applicable to the unexpired terms of the policies is recorded as unearned premiums. Claims and claims expense for property-liability include paid losses and changes in claim reserves. DEFERRED POLICY ACQUISITION COSTS Certain costs which vary with and are primarily related to acquiring life and savings business, principally agents' and brokers' remuneration, premium taxes, certain underwriting costs and direct mail solicitation expenses, are deferred and amortized into income. Deferred policy acquisition costs are periodically reviewed as to recoverability and written down where necessary. For traditional life insurance and limited payment contracts, these costs are amortized in proportion to the estimated revenue on such business. Assumptions relating to estimated revenue, as well as to all other aspects of the deferred acquisition costs and reserve calculations, are determined based upon conditions as of the date of policy issue and are generally not revised during the life of the policy. Any deviations from projected business inforce, resulting from actual policy terminations differing from expected levels, and any estimated premium deficiencies change the rate of amortization in the period such events occur. Generally, the amortization period for these contracts approximates the estimated lives of the policies. For interest-sensitive life and investment contracts, these costs are amortized in proportion to the estimated gross profits on such business over the estimated lives of the contract periods. Gross profits are determined at the date of policy issue and comprise estimated investment, mortality, expense margins and surrender charges. Assumptions underlying the gross profits are periodically updated to reflect actual experience, and changes in the amount or timing of estimated gross profits will result in adjustments to the cumulative amortization of these costs. The present value of future profits inherent in acquired blocks of insurance is classified as a component of deferred policy acquisition costs. The present value of future profits is amortized over the life of the blocks of insurance using current crediting rates. To the extent unrealized gains or losses on fixed income securities carried at fair value would result in an adjustment of estimated gross profits had those gains or losses actually been realized, the related unamortized deferred acquisition costs, including the present value of future profits, are adjusted together with unrealized net capital gains included in shareholder's equity. Certain costs which vary with and are primarily related to acquiring property-liability insurance business, principally agents' remuneration, premium taxes and inspection costs, are deferred and amortized to income as premiums are earned. Future investment income is considered in determining the recoverability of deferred policy acquisition costs. REINSURANCE RECOVERABLE In the normal course of business, the Company seeks to limit aggregate and single exposure to losses on large risks by purchasing reinsurance from other insurers (see Note 8). The amounts reported in the consolidated statements of financial position include amounts billed to reinsurers on losses paid as well as estimates of amounts expected to be recovered from reinsurers on incurred losses that have not yet been paid. Reinsurance recoverables on unpaid losses are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Insurance liabilities, including life contingent policy reserves, are reported gross of reinsurance recoverables. Prepaid reinsurance premiums are deferred and reflected in income in a manner consistent with the recognition of premiums on the reinsured contracts. Reinsurance does not extinguish the Company's primary liability 10 under the policies written and therefore reinsurers and amounts recoverable therefrom are regularly evaluated by the Company and allowances for uncollectible reinsurance are established as appropriate. INCOME TAXES The income tax provision is calculated under the liability method. 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 insurance reserves and deferred policy acquisition costs. Deferred income taxes also arise from unrealized capital gains and losses on equity securities and fixed income securities carried at fair value, and unrealized foreign currency translation adjustments. SEPARATE ACCOUNTS The Company issues deferred variable annuities, variable life contracts and certain guaranteed investment contracts, the assets and liabilities of which are legally segregated and recorded as assets and liabilities of the Separate Accounts. Absent any guarantees wherein the Company contractually guarantees either a minimum return or account value to the beneficiaries of the contractholders in the form of a death benefit, variable annuity and variable life contractholders bear the investment risk that the Separate Accounts' funds may not meet their stated investment objectives. The assets of the Separate Accounts are carried at fair value. Separate Accounts liabilities represent the contractholders' claim to the related assets and are carried at the fair value of the assets. In the event that the asset value of certain contractholder accounts are projected to be below the value guaranteed by the Company, a liability is established through a charge to earnings. Investment income and realized capital gains and losses of the Separate Accounts accrue directly to the contractholders and therefore, are not included in the Company's consolidated statements of operations. Revenues to the Company from the Separate Accounts consist of contract maintenance and administration fees, and mortality, surrender and expense risk charges. CONTRACTHOLDER FUNDS Contractholder funds arise from the issuance of individual or group policies and contracts that include an investment component, including most fixed annuities, interest-sensitive life policies and certain other investment contracts. Deposits received are recorded as interest-bearing liabilities. Contractholder funds are equal to deposits received, net of commissions, and interest credited to the benefit of the contractholder less withdrawals, mortality charges and administrative expenses. Detailed information on crediting rates and surrender and withdrawal protection on contractholder funds are outlined in Note 7. RESERVES FOR LIFE-CONTINGENT CONTRACT BENEFITS The reserve for life-contingent contract benefits, which relates to traditional life insurance, group retirement annuities and immediate annuities with life contingencies is computed on the basis of assumptions as to mortality, future investment yields, terminations and expenses at the time the policy is issued. These assumptions, which for traditional life insurance are applied using the net level premium method, 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. To the extent that unrealized gains on fixed income securities would result in a premium deficiency had those gains actually been realized, the related increase in reserves is recorded as a reduction of the unrealized net capital gains included in shareholder's equity. PROPERTY-LIABILITY CLAIMS AND CLAIMS EXPENSE The property-liability reserve for claims and claims expense is the estimated amount necessary to settle both reported and unreported claims of insured property-liability losses, based upon the facts in each case and the Company's experience with similar cases. Estimated amounts of salvage and subrogation are deducted from the reserve for claims and claims expense. The establishment of appropriate reserves, including reserves for catastrophes, is an inherently uncertain process. Reserve estimates are regularly reviewed and updated, using the most current information available. Any resulting adjustments are reflected in current operations (see Note 7). These adjustments may be material. OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS Commitments to invest, commitments to extend mortgage loans and credit guarantees have only off-balance-sheet risk because their contractual amounts are not recorded in the Company's consolidated statements of financial position. The contractual amounts and fair values of these instruments are outlined in Note 5. 11 FOREIGN CURRENCY TRANSLATION The Company has a foreign subsidiary, AICC, where the local currency is deemed to be the functional currency in which AICC operates. The financial statements of AICC are translated into U.S. dollars at the exchange rate in effect at the end of a reporting period for assets and liabilities and at the average exchange rates during the period for results of operations. The unrealized gains or losses from the translation of the net assets are recorded as unrealized foreign currency translation adjustments, and included in accumulated other comprehensive income in the consolidated statements of financial position. Changes in unrealized foreign currency translation adjustments are included in other comprehensive income. Gains and losses from foreign currency transactions are reported in operating costs and expenses and have not been significant. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles 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 June, 1999, the Financial Accounting Standards Board ("FASB") delayed the effective date of Statement of Financial Accounting Standard ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS 133 replaces existing pronouncements and practices with a single, integrated accounting framework for derivatives and hedging activities. This statement requires that all derivatives be recognized on the balance sheet at fair value. Derivatives that are not hedges must be adjusted to fair value through income. If the derivative is a hedge, depending on the nature of the hedge, changes in the fair value of derivatives will either be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings. Additionally, the change in fair value of a derivative which is not effective as a hedge will be immediately recognized in earnings. The delay was effected through the issuance of SFAS 137, which extends the SFAS No. 133 requirements to fiscal years beginning after June 15, 2000. As such, the Company expects to adopt the provisions of SFAS No. 133 as of January 1, 2001. The impact of this statement is dependent upon the Company's derivative positions and market conditions existing at the date of adoption. Based on existing interpretations of the requirements of SFAS No. 133, the impact of adoption of this statement is not expected to be material to financial position, however, may be material to results of operations. 3. RELATED PARTY TRANSACTIONS BUSINESS OPERATIONS The Company utilizes services performed and business facilities owned or leased and operated by AIC in conducting its business activities. In addition, ALIC and its domestic subsidiaries share the services of employees with AIC. The Company reimburses AIC 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, retirement and other benefit programs allocated to the Company were $199 million, $166 million, and $140 million in 1999, 1998 and 1997, respectively. A portion of these expenses relate to the acquisition of business which are deferred and amortized into income. STRUCTURED SETTLEMENT ANNUITIES The Company issued $61 million, $64 million and $52 million of structured settlement annuities, a type of immediate annuity, in 1999, 1998 and 1997, respectively, at prices determined based upon interest rates in effect at the time of purchase, to fund structured settlements in matters involving AIC. Of these amounts, $17 million, $23 million and $17 million relate to structured settlement annuities with life contingencies and are included in premium income for 1999, 1998, and 1997, respectively. In most cases, these annuities were issued under a "qualified assignment," which means the Company assumed AIC's obligation to make the future payments. AIC has issued surety bonds, in return for premiums of $476 thousand, $469 thousand, $396 thousand in 1999, 1998 and 1997, respectively, to guarantee the payment of structured settlement benefits assumed and funded by certain annuity contracts issued by the Company (from both AIC and non-related parties). The Company has entered into a General Indemnity Agreement pursuant to which it has indemnified AIC for any losses associated with the surety bonds and has granted AIC certain collateral security rights with respect to the annuities and certain other rights in the event of any defaults covered by the surety bonds. 12 Reserves recorded by the Company for annuities related to the surety bonds were $4.50 billion and $4.14 billion at December 31, 1999 and 1998, respectively. REINSURANCE TRANSACTIONS The Company has entered into a modified coinsurance contract with Allstate Reinsurance, Ltd. ("Allstate Re"), an affiliate of the Company, to cede 50% of certain fixed annuity business issued under a distribution agreement with PNC Bank NA. Under the terms of the contract, a trust has been established to provide protection to the Company for ceded liabilities. This agreement is continuous but may be terminated by either party with 60 days notice. The Company has entered into a contract to reinsure 100% of all credit insurance written by AIC. This agreement is continuous but may be terminated by either party with 60 days notice. The Company enters into certain intercompany reinsurance transactions with its wholly owned subsidiaries within the Life and Savings segment. The Company enters into these transactions in order to maintain underwriting control and spread risk among various legal entities. These reinsurance agreements have been approved by the appropriate regulatory authorities. All significant intercompany transactions have been eliminated in consolidation. At December 31, 1999, $1.98 billion of the Company's investments are held in a trust for the benefit of Northbrook Life Insurance Company, a wholly owned subsidiary, to permit it to meet policyholder obligations under its reinsurance agreement with the Company. AICC has entered into an excess of loss reinsurance agreement with AIC covering certain property policies. Under the current contract, the aggregate limit for which AIC would indemnify AICC for all loss occurrences during the term of the current contract is $66 million. The amount has been translated into U.S. dollars utilizing the exchange rate as of December 31, 1999. Starting January 1, 1999, AICC has entered into a contract to reinsure personal automobile business written by Pembridge Insurance Company ("Pembridge"), a subsidiary of the Corporation. Under the renewable excess of loss contract, AICC reinsures Pembridge for personal auto business that provides third party and accident coverages. For each loss occurrence, the contract contains two layers of loss. In the first layer of loss protection, losses in excess of $1 million up to $3 million will be covered by AICC. In the second layer of loss protection, AICC covers losses in excess of the first $3 million layer up to $7 million. For each loss occurrence, the maximum amount AICC will indemnify Pembridge in both layers for third party liability is $689 thousand. All amounts have been translated into U.S. dollars utilizing the exchange rate as of December 31, 1999. The impact to the Company's consolidated statement of operations from related party reinsurance transactions are as follows: ($ in millions)
ASSUMED: CEDED: ---------------------------- ---------------------------- CLAIMS AND CLAIMS CLAIMS AND CLAIMS YEAR ENDED EXPENSE AND EXPENSE AND DECEMBER 31, PREMIUMS CONTRACT BENEFITS PREMIUMS CONTRACT BENEFITS - ------------------------ -------- ----------------- -------- ----------------- 1999 $ 25 $23 $2 $ 1 1998 23 20 1 10 1997 117 15 2 -
The reinsurance recoverable and reinsurance payable balances pertaining to related party reinsurance agreements were not material at December 31, 1999 and 1998, respectively. 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. There was no outstanding balance at December 31, 1999 and 1998, respectively. The Company has access to two credit facilities maintained by the Corporation as a potential source of funds to manage short-term liquidity. These include a $1.50 billion, five-year revolving line of credit, expiring in 2001 and a $50 million, one-year revolving line of credit expiring in 2000. The ability of the Company to borrow from the five-year line of credit is predicated upon AIC maintaining a specified statutory surplus level and the Corporation's debt to equity ratio (as 13 defined in the agreement) must not exceed a designated level. The Company has not drawn upon either credit facility during 1999 or 1998. 4. INVESTMENTS FAIR VALUES The amortized cost, gross unrealized gains and losses, and fair value for fixed income securities are as follows: ($ in millions)
GROSS UNREALIZED AMORTIZED ----------------- FAIR COST GAINS LOSSES VALUE --------- ------- ------- ------- AT DECEMBER 31, 1999 U.S. government and agencies $ 1,957 $ 225 $ (9) $ 2,173 Municipal 736 10 (15) 731 Corporate 16,059 430 (434) 16,055 Foreign government 536 15 (9) 542 Mortgage-backed securities 5,612 86 (110) 5,588 Asset-backed securities 2,389 6 (24) 2,371 Redeemable preferred stock 65 - (2) 63 ------- ------ ----- ------- Total fixed income securities $27,354 $ 772 $(603) $27,523 ======= ====== ===== ======= AT DECEMBER 31, 1998 U.S. government and agencies $ 2,022 $ 751 $ (1) $ 2,772 Municipal 552 47 - 599 Corporate 13,595 1,223 (76) 14,742 Foreign government 264 6 - 270 Mortgage-backed securities 5,773 237 (1) 6,009 Asset-backed securities 2,355 36 (6) 2,385 Redeemable preferred stock 69 12 - 81 ------- ------ ----- ------- Total fixed income securities $24,630 $2,312 $ (84) $26,858 ======= ====== ===== =======
SCHEDULED MATURITIES The scheduled maturities for fixed income securities are as follows at December 31, 1999: ($ in millions)
AMORTIZED FAIR COST VALUE --------- ------- Due in one year or less $ 693 $ 694 Due after one year through five years 5,519 5,538 Due after five years through ten years 6,425 6,291 Due after ten years 6,716 7,041 ------- ------- 19,353 19,564 Mortgage- and asset-backed securities 8,001 7,959 ------- ------- Total $27,354 $27,523 ======= =======
Actual maturities may differ from those scheduled as a result of prepayments by the issuers. 14 ($ in millions)
NET INVESTMENT INCOME 1999 1998 1997 YEAR ENDED DECEMBER 31, ------ ------ ------ Fixed income securities $1,947 $1,860 $1,825 Mortgage loans 279 253 265 Equity securities 17 32 18 Other 67 40 46 ------ ------ ------ Investment income, before expense 2,310 2,185 2,154 Investment expense 45 46 36 ------ ------ ------ Net investment income $2,265 $2,139 $2,118 ====== ====== ======
($ in millions)
REALIZED CAPITAL GAINS AND LOSSES 1999 1998 1997 YEAR ENDED DECEMBER 31, ---- ---- ---- Fixed income securities $ 11 $ 92 $ 43 Equity securities 94 59 123 Other investments 90 181 26 ---- ---- ---- Realized capital gains and losses 195 332 192 Income taxes 69 121 67 ---- ---- ---- Realized capital gains and losses, after-tax $126 $211 $125 ==== ==== ====
Excluding calls and prepayments, gross gains of $120 million, $68 million and $41 million and gross losses of $109 million, $32 million and $44 million were realized on sales of fixed income securities during 1999, 1998 and 1997, respectively. UNREALIZED NET CAPITAL GAINS Unrealized net capital gains on fixed income and equity securities included in shareholder's equity at December 31, 1999, are as follows: ($ in millions)
GROSS UNREALIZED COST/ ----------------- UNREALIZED AMORTIZED COST FAIR VALUE GAINS LOSSES NET GAINS -------------- ---------- ------- ------- ---------- Fixed income securities $27,354 $27,523 $ 772 $(603) $ 169 Equity securities 503 743 264 (24) 240 ------- ------- ------ ----- ----- Total $27,857 $28,266 $1,036 $(627) 409 ======= ======= ====== ===== Deferred income taxes, deferred policy acquisition costs and other (189) ----- Unrealized net capital gains $ 220 =====
At December 31, 1998, equity securities had gross unrealized gains of $320 million and gross unrealized losses of $18 million. ($ in millions)
CHANGE IN UNREALIZED NET CAPITAL GAINS AND LOSSES 1999 1998 1997 YEAR ENDED DECEMBER 31, ------- ----- ----- Fixed income securities $(2,059) $ 317 $ 743 Equity securities (62) (30) 116 ------- ----- ----- Total (2,121) 287 859 Deferred income taxes, deferred policy acquisition costs and other 1,477 (214) (609) ------- ----- ----- (Decrease) increase in unrealized net capital gains $ (644) $ 73 $ 250 ======= ===== =====
15 INVESTMENT LOSS PROVISIONS AND VALUATION ALLOWANCES Pretax provisions for investment losses, principally relating to other than temporary declines in value of fixed income securities and equity securities, and valuation allowances on mortgage loans were $20 million, $17 million and $15 million in 1999, 1998 and 1997, respectively. MORTGAGE LOAN IMPAIRMENT A mortgage loan is impaired when it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The components of impaired loans at December 31 are as follows: ($ in millions)
1999 1998 ---- ---- Impaired loans With valuation allowances $25 $35 Less: valuation allowances (7) (9) Without valuation allowances 11 36 --- --- Net carrying value of impaired loans $29 $62 === ===
The net carrying value of impaired loans at December 31, 1999 and 1998 comprise $22 million and $60 million, respectively, measured at the fair value of the collateral, and $7 million and $2 million, respectively, measured at the present value of the loan's expected future cash flows discounted at the loan's effective interest rate. Impaired loans without valuation allowances include collateral dependent loans where the fair value of the collateral is greater than the recorded investment in the loans. Interest income is recognized on a cash basis for impaired loans carried at the fair value of the collateral, beginning at the time of impairment. For other impaired loans, interest is accrued based on the net carrying value. The Company recognized interest income of $2 million, $5 million and $8 million on impaired loans during 1999, 1998 and 1997, respectively, of which $2 million, $5 million and $7 million was received in cash during 1999, 1998 and 1997, respectively. The average balance of impaired loans was $43 million, $53 million and $103 million during 1999, 1998 and 1997, respectively. Valuation allowances for mortgage loans at December 31, 1999, 1998 and 1997, were $13 million, $15 million and $32 million, respectively. For the years ended December 31, 1998 and 1997, releases of mortgage loan valuation allowances for dispositions of impaired mortgage loans were $1 million and $8 million, respectively. No mortgage loans valuation allowances were released due to dispositions of impaired mortgage loans during 1999. For the years ended December 31, 1999, 1998 and 1997, net reductions to mortgage loan valuation allowances were $2 million, $16 million, $25 million, respectively. INVESTMENT CONCENTRATION FOR COMMERCIAL MORTGAGE PORTFOLIOS AND OTHER INVESTMENT INFORMATION The Company's mortgage loans are collateralized by a variety of commercial real estate property types located throughout the United States. Substantially all of the commercial mortgage loans are non-recourse to the borrower. The states with the largest portion of the commercial mortgage loan portfolio are listed below. Except for the following, holdings in no other state exceeded 5% of the portfolio at December 31, 1999: (% OF COMMERCIAL MORTGAGE PORTFOLIO CARRYING VALUE)
1999 1998 ----- ----- California 20.6% 23.7% Illinois 7.9 7.8 Florida 7.9 5.8 New York 7.4 9.2 Texas 5.8 4.9 New Jersey 5.7 4.1 Pennsylvania 5.1 4.9
16 The types of properties collateralizing the commercial mortgage loans at December 31, are as follows: (% OF COMMERCIAL MORTGAGE PORTFOLIO CARRYING VALUE)
1999 1998 ------ ------ Office buildings 31.5% 26.5% Retail 26.9 31.2 Apartment complex 17.2 17.1 Warehouse 16.8 17.0 Industrial 2.2 2.6 Other 5.4 5.6 ------ ------ 100.0% 100.0% ====== ======
The contractual maturities of the commercial mortgage loan portfolio as of December 31, 1999, for loans that were not in foreclosure are as follows: ($ in millions)
NUMBER CARRYING OF LOANS VALUE PERCENT -------- -------- ------- 2000 40 $ 239 6.3% 2001 50 214 5.6 2002 63 273 7.2 2003 71 282 7.4 2004 55 280 7.4 Thereafter 515 2,513 66.1 --- ------ ------ Total 794 $3,801 100.0% === ====== ======
In 1999, $190 million of commercial mortgage loans were contractually due. Of these, 81.4% were paid as due, 15.9% were refinanced at prevailing market terms, 0.3% were foreclosed or are in the process of foreclosure, and 2.4% were in the process of refinancing or restructuring discussions. At December 31, 1999, there were no investments, excluding equity securities, that were non-income producing during 1999. At December 31, 1999, fixed income securities with a carrying value of $61 million were on deposit with regulatory authorities as required by law. 5. FINANCIAL INSTRUMENTS In the normal course of business, the Company invests in various financial assets, incurs various financial liabilities and enters into agreements involving derivative financial instruments and other off-balance-sheet financial instruments. The fair value estimates of financial instruments presented below are not necessarily indicative of the amounts the Company might pay or receive in actual market transactions. Potential taxes and other transaction costs have not been considered in estimating fair value. The disclosures that follow do not reflect the fair value of the Company as a whole since a number of the Company's significant assets (including deferred policy acquisition costs and reinsurance recoverables) and liabilities (including traditional life, interest-sensitive life and property-liability reserves and deferred income taxes) are not considered financial instruments and are not carried at fair value. Other assets and liabilities considered financial instruments such as accrued investment income and cash are generally of a short-term nature. Their carrying values are assumed to approximate fair value. 17 FINANCIAL ASSETS The carrying value and fair value of financial assets at December 31, are as follows: ($ in millions)
1999 1998 ------------------ ------------------ CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE -------- ------- -------- ------- Fixed income securities $27,523 $27,523 $26,858 $26,858 Mortgage loans 3,801 3,704 3,285 3,483 Equity securities 743 743 748 748 Short-term investments 711 711 742 742 Policy loans 606 606 569 569 Separate Accounts 13,857 13,857 10,098 10,098
CARRYING VALUE AND FAIR VALUE INCLUDE THE EFFECTS OF DERIVATIVE FINANCIAL INSTRUMENTS WHERE APPLICABLE. Fair values for fixed income securities are based on quoted market prices where available. Non-quoted securities are valued based on discounted cash flows using current interest rates for similar securities. Equity securities are valued based principally on quoted market prices. Mortgage loans are valued based on discounted contractual cash flows. Discount rates are selected using current rates at which similar loans would be made to borrowers with similar characteristics, using similar properties as collateral. Loans that exceed 100% loan-to-value are valued at the estimated fair value of the underlying collateral. Short-term investments are highly liquid investments with maturities of less than one year whose carrying value are deemed to approximate fair value. The carrying value of policy loans are deemed to approximate fair value. The Separate Accounts assets are carried in the consolidated statements of financial position at fair value based on quoted market prices. FINANCIAL LIABILITIES The carrying value and fair value of financial liabilities at December 31, are as follows: ($ in millions)
1999 1998 ------------------ ------------------ CARRYING FAIR CARRYING FAIR VALUE VALUE VALUE VALUE -------- ------- -------- ------- Contractholder funds on investment contracts $18,587 $17,918 $16,757 $16,509 Separate Accounts 13,857 13,857 10,098 10,098
The fair value of contractholder funds on investment contracts is based on the terms of the underlying contracts. Reserves on investment contracts with no stated maturities (single and flexible premium deferred annuities) are valued at the account balance less surrender charges. The fair value of immediate annuities and annuities without life contingencies with fixed terms is estimated using discounted cash flow calculations based on interest rates currently offered for contracts with similar terms and durations. Separate Accounts liabilities are carried at the fair value of the underlying assets. DERIVATIVE FINANCIAL INSTRUMENTS Derivative financial instruments include swaps, futures, forwards and options, including caps and floors. The Company primarily uses derivative financial instruments to reduce its exposure to market risk (principally interest rate, equity price and foreign currency risk) and in conjunction with asset/liability management, in the Life and Savings segment. The Company does not hold or issue these instruments for trading purposes. 18 The following table summarizes the contract or notional amount, credit exposure, fair value and carrying value of the Company's derivative financial instruments at December 31, as follows: ($ in millions)
1999 -------------------------------------------- CARRYING CONTRACT VALUE /NOTIONAL CREDIT FAIR ASSETS/ AMOUNT EXPOSURE VALUE (LIABILITIES) --------- -------- ----- ------------- INTEREST RATE CONTRACTS Interest rate swap agreements Pay floating rate, receive fixed rate $ 409 $ 9 $ 7 $ 3 Pay fixed rate, receive floating rate 1,170 37 37 19 Pay floating rate, receive floating rate 71 - - - Financial futures and forward contracts 2,466 - (1) 4 Interest rate cap and floor agreements 1,861 4 4 2 ------ ---- ---- ---- Total interest rate contracts 5,977 50 47 28 EQUITY AND OTHER CONTRACTS Options, warrants and financial futures 1,120 116 99 99 FOREIGN CURRENCY CONTRACTS Foreign currency swap agreements 535 - (1) - ------ ---- ---- ---- Total derivative financial instruments $7,632 $166 $145 $127 ====== ==== ==== ====
($ in millions)
1998 -------------------------------------------- CARRYING CONTRACT VALUE /NOTIONAL CREDIT FAIR ASSETS/ AMOUNT EXPOSURE VALUE (LIABILITIES) --------- -------- ----- ------------- INTEREST RATE CONTRACTS Interest rate swap agreements Pay floating rate, receive fixed rate $ 474 $ 14 $ 30 $ 24 Pay fixed rate, receive floating rate 965 - (32) (17) Pay floating rate, receive floating rate 73 - (1) - Financial futures and forward contracts 227 - - - Interest rate cap and floor agreements 3,049 2 2 3 ------ ---- ---- ---- Total interest rate contracts 4,788 16 (1) 10 EQUITY AND OTHER CONTRACTS Options, warrants and financial futures 723 205 205 205 FOREIGN CURRENCY CONTRACTS Foreign currency swap agreements 79 - (3) (3) ------ ---- ---- ---- Total derivative financial instruments $5,590 $221 $201 $212 ====== ==== ==== ====
CREDIT EXPOSURE INCLUDES THE EFFECTS OF LEGALLY ENFORCEABLE MASTER NETTING AGREEMENTS. CREDIT EXPOSURE AND FAIR VALUE INCLUDE ACCRUED INTEREST WHERE APPLICABLE. CARRYING VALUE IS REPRESENTATIVE OF DEFERRED GAINS AND LOSSES, UNAMORTIZED PREMIUM, ACCRUED INTEREST AND/OR UNREALIZED GAINS AND LOSSES DEPENDING ON THE ACCOUNTING FOR THE DERIVATIVE FINANCIAL INSTRUMENT. The contract or notional amounts are used to calculate the exchange of contractual payments under the agreements and are not representative of the potential for gain or loss on these agreements. Credit exposure represents the Company's potential loss if all of the counterparties failed to perform under the contractual terms of the contracts and all collateral, if any, became worthless. This exposure is measured by the fair value of contracts with a positive fair value at the reporting date reduced by the effect, if any, of master netting agreements. 19 The Company manages its exposure to credit risk by utilizing highly rated counterparties, establishing risk control limits, executing legally enforceable master netting agreements and obtaining collateral where appropriate. To date, the Company has not incurred any losses on derivative financial instruments due to counterparty nonperformance. Fair value is the estimated amount that the Company would receive (pay) to terminate or assign the contracts at the reporting date, thereby taking into account the current unrealized gains or losses of open contracts. Dealer and exchange quotes are used to value the Company's derivatives. INTEREST RATE SWAP AGREEMENTS involve the exchange, at specified intervals, of interest payments calculated by reference to an underlying notional amount. The Company generally enters into swap agreements to change the interest rate characteristics of existing assets to more closely match the interest rate characteristics of the corresponding liabilities. The Company did not record any material deferred gains or losses on swaps nor realize any material gains or losses on swap terminations in 1999, 1998 or 1997. The Company paid a weighted average floating interest rate of 5.3% and 5.6% and received a weighted average fixed interest rate of 7.1% and 6.8% in 1999 and 1998, respectively. The Company paid a weighted average fixed interest rate of 5.7% and 6.5% and received a weighted average floating interest rate of 5.0% and 6.0% in 1999 and 1998, respectively. FINANCIAL FUTURES AND FORWARD CONTRACTS are commitments to either purchase or sell designated financial instruments at a future date for a specified price or yield. They may be settled in cash or through delivery. As part of its asset/liability management, the Company generally utilizes futures and forward contracts to manage its market risk related to fixed income securities, equity securities, certain annuity contracts and anticipatory investment purchases and sales. Futures and forwards used as hedges of anticipatory transactions pertain to identified transactions which are probable to occur and are generally completed within 90 days. Futures contracts have limited off-balance-sheet credit risk as they are executed on organized exchanges and require security deposits, as well as the daily cash settlement of margins. INTEREST RATE CAP AND FLOOR AGREEMENTS give the holder the right to receive at a future date, the amount, if any, by which a specified market interest rate exceeds the fixed cap rate or falls below the fixed floor rate, applied to a notional amount. The Company purchases interest rate cap and floor agreements to reduce its exposure to rising or falling interest rates relative to certain existing assets and liabilities in conjunction with asset/liability management. EQUITY-INDEXED OPTION CONTRACTS AND EQUITY-INDEXED FINANCIAL FUTURES provide returns based on a specified equity index applied to the instrument's notional amount. The Company utilizes these instruments to achieve equity appreciation, to reduce the market risk associated with certain annuity contracts and for other risk management purposes. Where required, counterparties post collateral to minimize credit risk. DEBT WARRANTS provide the right to purchase a specified new issue of debt at a predetermined price. The Company purchases debt warrants to protect against long-term call risk. FOREIGN CURRENCY CONTRACTS involve the future exchange or delivery of foreign currency on terms negotiated at the inception of the contract. The Company enters into these agreements primarily to manage the currency risk associated with investing in securities and issuing obligations which are denominated in foreign currencies. Market risk is the risk that the Company will incur losses due to adverse changes in market rates and prices. Market risk exists for all of the derivative financial instruments that the Company currently holds, as these instruments may become less valuable due to adverse changes in market conditions. The Company mitigates this risk through established risk control limits set by senior management. In addition, the change in the value of the Company's derivative financial instruments designated as hedges is generally offset by the change in the value of the related assets and liabilities. OFF-BALANCE-SHEET FINANCIAL INSTRUMENTS A summary of the contractual amounts and fair values of off-balance-sheet financial instruments at December 31, follows: ($ in millions)
1999 1998 ------------------- ------------------- CONTRACTUAL FAIR CONTRACTUAL FAIR AMOUNT VALUE AMOUNT VALUE ----------- ----- ----------- ----- Commitments to invest $28 - $34 - Commitments to extend mortgage loans 95 1 87 1 Credit guarantees 89 - 93 -
20 Except for credit guarantees, the contractual amounts represent the amount at risk if the contract is fully drawn upon, the counterparty defaults and the value of any underlying security becomes worthless. Unless noted otherwise, the Company does not require collateral or other security to support off-balance-sheet financial instruments with credit risk. Commitments to invest generally represent commitments to acquire financial interests or instruments. The Company enters into these agreements to allow for additional participation in certain limited partnership investments. Because the equity investments in the limited partnerships are not actively traded, it is not practicable to estimate the fair value of these commitments. Commitments to extend mortgage loans are agreements to lend to a borrower provided there is no violation of any condition established in the contract. The Company enters these agreements to commit to future loan fundings at predetermined interest rates. Commitments generally have fixed expiration dates or other termination clauses. Commitments to extend mortgage loans, which are secured by the underlying properties, are valued based on estimates of fees charged by other institutions to make similar commitments to similar borrowers. Credit guarantees written represent conditional commitments to exchange identified AAA or AA rated credit risk for identified A rated credit risk upon bankruptcy or other event of default of the referenced credits. The Company receives fees, which are reported in net investment income over the lives of the commitments, for assuming the referenced credit risk. The Company enters into these transactions in order to achieve higher yields than if the referenced credits were directly owned. The Company's maximum amount at risk, assuming bankruptcy or other default of the referenced credits and the value of the referenced credits becomes worthless, is the fair value of the identified AAA or AA rated securities. The identified AAA or AA rated securities had a fair value of $88 million at December 31, 1999. The Company includes the impact of credit guarantees in its analysis of credit risk, and the referenced credits were current with respect to their contractual terms at December 31, 1999 6. DEFERRED POLICY ACQUISITION COSTS Certain costs of acquiring business which were deferred and amortized for the years ended December 31, 1999 and 1998 are as follows: ($ in millions)
1999 1998 YEAR ENDED DECEMBER 31: ------ ------ Balance, beginning of year $2,195 $1,992 Acquisition costs deferred 677 666 Amortization charged to income (366) (343) Adjustment from unlocking (43) (69) Effect on DPAC from unrealized gains/(losses) 231 (50) Foreign currency translation 1 (1) ------ ------ Balance, end of year $2,695 $2,195 ====== ======
7. INSURANCE LIABILITIES At December 31, the reserve for life-contingent contract benefits consists of the following: ($ in millions)
1999 1998 ------ ------ Immediate annuities: Structured settlement annuities $4,254 $4,694 Other immediate annuities 1,513 1,669 Traditional life 1,267 1,125 Other 114 113 ------ ------ Total reserve for life-contingent contract benefits $7,148 $7,601 ====== ======
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; the 1983 group 21 annuity mortality table for other immediate annuities; and actual Company experience plus a provision for adverse deviation for traditional life. Interest rate assumptions vary from 3.5% to 11.7% for immediate annuities and 4.0% to 11.3% for traditional life. Other estimation methods used include the present value of contractually fixed future benefits for structured settlement annuities, the present value of expected future benefits based on historical experience for other immediate annuities and the net level premium reserve method using the Company's withdrawal experience rates for traditional life. Premium deficiency reserves are established, if necessary, and have been recorded for certain immediate annuities with life contingencies, to the extent the unrealized gains on fixed income securities would result in a premium deficiency had those gains actually been realized. A liability of $65 million and $933 million is included in the reserves for life-contingent contract benefits with respect to this deficiency for the years ended December 31, 1999 and 1998, respectively. The decrease in this liability in 1999 reflects declines in unrealized capital gains on fixed income securities. At December 31, contractholder funds consists of the following: ($ in millions)
1999 1998 ------- ------- Interest-sensitive life $ 5,036 $ 4,395 Fixed annuities: Immediate annuities 1,748 1,641 Deferred annuities 12,695 10,874 Guaranteed investment contracts 2,953 3,233 Other investment contracts 1,563 990 ------- ------- Total contractholder funds $23,995 $21,133 ======= =======
Contractholder funds are equal to deposits received, net of commissions, and interest credited to the benefit of the contractholder less withdrawals, mortality charges and administrative expenses. Interest rates credited range from 4.0% to 8.5% for interest-sensitive life contracts; 3.5% to 10.0% for immediate annuities; 1.6% to 26.2% for deferred annuities (which include equity-indexed annuities that are hedged, see Note 2 and Note 5); 4.9% to 9.9% for guaranteed investment contracts and 5.3% to 6.6% for other investment contracts. 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 10% of deferred annuities are subject to a market value adjustment. PROPERTY-LIABILITY CONTRACTS For the Property-Liability segment, the Company establishes reserves for claims and claims expense on reported and unreported claims of insured losses. These reserve estimates are based on known facts and interpretation of circumstances, including the Company's experience with similar cases and historical trends involving claim payment patterns, loss payments, pending levels of unpaid claims and product mix, as well as other factors including court decisions, economic conditions and public attitudes. The effects of inflation are implicitly considered in the reserving process. The establishment of appropriate reserves, including reserves for catastrophes, is an inherently uncertain process. The Company regularly updates its reserve estimates as new facts become known and further events occur which may impact the resolution of unsettled claims. Changes in prior year reserve estimates, which may be material, are reflected in the results of operations in the period such changes are determinable. 22 Activity in the reserve for property-liability insurance claims and claims expense is summarized as follows: ($ in millions)
1999 1998 1997 ---- ---- ---- Balance at January 1 $313 $348 $387 Less reinsurance recoverables 20 16 15 ---- ---- ---- Net balance at January 1 293 332 372 Incurred claims and claims expense related to: Current year 247 233 227 Prior years (25) (38) (48) ---- ---- ---- Total incurred 222 195 179 Claims and claims expense paid related to: Current year 144 148 129 Prior years 73 64 73 ---- ---- ---- Total paid 217 212 202 Foreign currency translation adjustment 17 (22) (17) ---- ---- ---- Net balance at December 31 315 293 332 Plus reinsurance recoverables 53 20 16 ---- ---- ---- Balance at December 31 $368 $313 $348 ==== ==== ====
Incurred claims and claims expense represents the sum of paid losses and reserve changes in the calendar year. This expense includes losses from catastrophes of $6 million, $31 million and $6 million in 1999, 1998 and 1997, respectively. A "catastrophe" is defined by the Company as an event that produces pretax losses before reinsurance in excess of $1 million, and involves multiple first party policyholders. Catastrophes are an inherent risk of the property-liability insurance business and could contribute to material year-to-year fluctuations in the Company's results of operations and financial position. The level of catastrophe loss experienced in any year cannot be predicted and could be material to results of operations and financial position. Catastrophe exposures for AICC primarily comprise wind, hail, earthquakes, and ice. The major areas in Canada with exposure to potential earthquake losses include areas surrounding faults in British Columbia and Quebec. The Company continues to evaluate alternative business strategies to more effectively manage its exposure to catastrophe losses in these and other areas. Management believes that the reserve for claims and claims expense, net of reinsurance recoverables, at December 31, 1999 and 1998 is appropriately established in the aggregate and adequate to cover the ultimate net cost of reported and unreported claims arising from losses which had occurred by that date. The Property-Liability segment has exposure to environmental, asbestos and other mass tort claims that stem principally from commercial business written from 1972 through 1985, including substantial general liabilities on Canadian Fortune 500 equivalent companies. Reserves for environmental claims were $4 million, net of reinsurance recoverables of $2 million, and $3 million at December 31, 1999 and 1998, respectively. Reserves for asbestos claims were $2 million and $2 million at December 31, 1999 and 1998, respectively. Management believes its net loss reserves for environmental, asbestos and other mass tort claims are appropriately established based on available facts, technology, laws and regulations. However, due to the risks inherent in major litigation and other uncertainties, the ultimate cost of these claims may vary materially from the amounts currently recorded, resulting in an increase in the loss reserves. In addition, while the Company believes improved actuarial techniques and databases have assisted in its ability to estimate environmental, asbestos and other mass tort net loss reserves, these refinements may subsequently prove to be inadequate indicators of the extent of probable loss. Due to the uncertainties and factors described above, management believes it is not practicable to develop a meaningful range for any such additional net loss reserves that may be required. 8. REINSURANCE The Company purchases reinsurance to limit aggregate and single losses on large risks. The Company continues to have primary liability as a direct insurer for risks reinsured. Estimating amounts of reinsurance recoverable is impacted by the 23 uncertainties involved in the establishment of loss reserves. Failure of reinsurers to honor their obligations could result in losses to the Company. The Company's Life and Savings' segment assumes risk from, and reinsures certain of its risks to other reinsurers under yearly renewable term, coinsurance, and modified coinsurance agreements. Yearly renewable term and coinsurance agreements result in the passing of a portion of the risk to the reinsurer. Generally, the reinsurer receives a proportionate amount of the premiums less commissions and is liable for a corresponding proportionate amount of all benefit payments. Modified coinsurance is similar to coinsurance except that the cash and investments that support the liability for contract benefits are not transferred to the assuming company, and settlements are made on a net basis between the companies. The Company cedes 90% of the mortality risk on certain term life policies to a pool of ten reinsurers. Beginning in November, 1998, the Company cedes mortality risk on new business in excess of $2 million per life for individual coverage. For business sold prior to October, 1998, the Company ceded mortality risk in excess of $1 million per life for individual life. As of December 31, 1999 $102.15 billion of life insurance in force was ceded to other companies. During 1998, the Company entered into an administrative services agreement with respect to a block of variable annuity contracts. Pursuant to the terms of the agreement, the Company is to provide insurance contract administration and financial services. As part of the agreement, the Company assumed via coinsurance 100% of the general account portion of these contracts (85% for business written in New York) with an aggregate account value of $32 million as of December 31, 1999. The Company paid $65 million, which was capitalized as present value of future profits and will be subsequently amortized into income over 20 years, for the right to receive future contract charges and fees on the block of variable annuity contracts, which has an aggregate account value of $1.77 billion as of December 31, 1999. During 1999, the Company earned contract charges and fees assessed to contractholders' fund balances of $15 million. The Company's Property-Liability segment cedes certain of its risks to AIC under excess of loss reinsurance agreements. These agreements provide that for certain premiums, the Company will be reimbursed by AIC for losses in excess of predetermined amounts. See Note 4 "Related Parties" for more information on these agreements. The Property-Liability segment also ceded certain commercial business risks under excess of loss agreements to third party reinsurers. Although the Company stopped writing commercial business in 1992, related claims continue to be submitted and settlements are pending. The Company has entered into reinsurance agreements in conjunction with the disposition of certain blocks of business. Amounts recoverable from reinsurers are estimated based upon assumptions consistent with those used in establishing the liabilities related to the underlying reinsured contracts. Management believes the recoverables are appropriately established. No single reinsurer has a material obligation to the Company nor is the Company's business substantially dependent upon any reinsurance contract. 24 The effects of reinsurance on premiums written and earned for the years ended December 31, are as follows: ($ in millions)
1999 1998 1997 ------ ------ ------ LIFE AND ANNUITY PREMIUMS Direct $1,042 $1,043 $1,032 Assumed 37 24 117 Ceded (241) (178) (194) ------ ------ ------ Life insurance premiums, net of reinsurance $ 838 $ 889 $ 955 ====== ====== ====== LIFE AND ANNUITY CONTRACT CHARGES Direct $ 706 $ 625 $ 547 Assumed 17 5 - Ceded - - - ------ ------ ------ Life insurance contract charges, net of reinsurance $ 723 $ 630 $ 547 ====== ====== ====== PROPERTY-LIABILITY PREMIUMS WRITTEN Direct $ 317 $ 280 $ 276 Assumed 1 1 - Ceded (3) (1) (3) ------ ------ ------ Property-Liability premiums written, net of reinsurance $ 315 $ 280 $ 273 ====== ====== ====== PROPERTY-LIABILITY PREMIUMS EARNED Direct $ 291 $ 268 $ 278 Assumed 1 1 - Ceded (3) (1) (3) ------ ------ ------ Property-Liability premiums earned, net of reinsurance $ 289 $ 268 $ 275 ====== ====== ======
Reinsurance recoverables in the Company's consolidated statements of financial position, at December 31, were as follows: ($ in millions)
1999 1998 ---- ---- Life and Savings $434 $230 Property-Liability 61 24 ---- ---- Total $495 $254 ==== ====
9. CORPORATION RESTRUCTURING On November 10, 1999 the Corporation announced a series of strategic initiatives to aggressively expand its selling and service capabilities. The Corporation also announced that it is implementing a program to reduce expenses by approximately $600 million. The reduction will result in the elimination of approximately 4,000 current non-agent positions, across all employment grades and categories by the end of 2000, or approximately 10% of the Corporation's non-agent work force. The impact of the reduction in employee positions is not expected to materially impact the results of operations of the Company. These cost reductions are part of a larger initiative to redeploy the cost savings to finance new initiatives including investments in direct access and internet channels for new sales and service capabilities, new competitive pricing and underwriting techniques, new agent and claim technology and enhanced marketing and advertising. As a result of the cost reduction program, the Corporation recorded restructuring and related charges of $81 million pretax during the fourth quarter of 1999. The Corporation anticipates that additional pretax restructuring related charges of approximately $100 million will be expensed as incurred throughout 2000. The Company's allocable share of these expenses were immaterial in 1999 and are expected to be immaterial in 2000. 25 10. COMMITMENTS AND CONTINGENT LIABILITIES LEASES The Company leases certain office facilities and computer equipment. Total rent expense for all leases was $16 million, $18 million and $13 million in 1999, 1998 and 1997, respectively. Minimum rental commitments under noncancelable operating leases with an initial or remaining term of more than one year as of December 31, are as follows: ($ in millions)
1999 ---- 2000 $ 5 2001 4 2002 3 2003 2 2004 1 --- $15 ===
SHARED MARKETS As a condition of its license to do business in various Canadian provinces, AICC is required to participate in mandatory property-liability shared market mechanisms or pooling arrangements, which provide various insurance coverages to individuals or other entities that otherwise are unable to purchase such coverage voluntarily from private insurers. Underwriting results related to these organizations have been immaterial to the results of operations. GUARANTY FUNDS Under state insurance guaranty fund laws, insurers doing business in a state can be assessed, up to prescribed limits, for certain obligations of insolvent insurance companies to policyholders and claimants. The Company's expenses related to these funds have been immaterial. REGULATION AND LEGAL PROCEEDINGS The Company's business is subject to the effects of a changing social, economic and regulatory environment. Public and regulatory initiatives have varied and have included employee benefit regulation, controls on medical care costs, removal of barriers preventing banks from engaging in the securities and insurance business, tax law changes affecting the taxation of insurance companies, the tax treatment of insurance products and its impact on the relative desirability of various personal investment vehicles, and proposed legislation to prohibit the use of gender in determining insurance rates and benefits. The ultimate changes and eventual effects, if any, of these initiatives are uncertain. 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 responsibility, if any, arising from such pending or threatened litigation is not expected to have a material effect on the results of operations, liquidity or financial position of the Company. MARKETING AND COMPLIANCE ISSUES Companies operating in the insurance and financial services markets have come under the scrutiny of regulators with respect to market conduct and compliance issues. Under certain circumstances, companies have been held responsible for providing incomplete or misleading sales materials and for replacing existing policies with policies that were less advantageous to the policyholder. The Company monitors its sales materials and enforces compliance procedures to mitigate any exposure to potential litigation. The Company's life insurance subsidiaries are members of the Insurance Marketplace Standards Association, an organization which advocates ethical market conduct. 11. INCOME TAXES Eligible domestic subsidiaries of the Company (the "Allstate Life Group") join with the Corporation (the "Allstate Group") in the filing of a consolidated federal income tax return and are party to a federal income tax allocation agreement (the "Allstate Tax Sharing Agreement"). Under the Allstate Tax Sharing Agreement, the Allstate Life Group 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 Allstate Life Group in the consolidated federal income tax return. Effectively, this 26 results in the Allstate Life Group's annual income tax provision being computed, with adjustments, as if the Allstate Life Group filed a separate return. Foreign subsidiaries of the Company file a tax return in their respective country. 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 Corporation'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: ($ in millions)
1999 1998 ----- ------- DEFERRED ASSETS Life and annuity reserves $ 606 $ 589 Other assets 86 115 ----- ------- Total deferred assets 692 704 DEFERRED LIABILITIES Deferred policy acquisition costs (722) (665) Unrealized net capital gains (119) (463) Other liabilities (22) (28) ----- ------- Total deferred liabilities (863) (1,156) ----- ------- Net deferred liability $(171) $ (452) ===== =======
The components of income tax expense for the year ended December 31, are as follows: ($ in millions)
1999 1998 1997 ---- ---- ---- Current $213 $282 $272 Deferred 57 28 12 ---- ---- ---- Total income tax expense $270 $310 $284 ==== ==== ====
The Company paid income taxes of $198 million, $284 million, and $180 million in 1999, 1998 and 1997, respectively. The Company had a current income tax liability of $36 million and $24 million at December 31, 1999 and 1998, respectively. A reconciliation of the statutory federal income tax rate to the effective income tax rate on income from operations for the year ended December 31, is as follows: ($ in millions)
1999 1998 1997 ----- ----- ----- Statutory federal income tax rate 35.0% 35.0% 35.0% Dividends received deduction (1.3) (1.0) (.4) Other .9 1.8 .9 ----- ----- ----- Effective income tax rate 34.6% 35.8% 35.5% ===== ===== =====
Prior to January l, 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, 1999, approximately $94 million, will result in federal income taxes payable of $33 million 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 the Tax Reform Act of 1984. 27 12. PREFERRED STOCK The Company has issued two series of non-voting, redeemable preferred stock. Series A preferred stock was issued to a subsidiary of AIC, while Series B preferred stock was issued directly to AIC. Both series of preferred stock are redeemable at the option of the Company at any time five years after the issuance date at a price of $100 per share plus cumulative accrued and unpaid dividends. If the Company is liquidated or dissolved, holders of the preferred stock will be entitled to payments of $100 per share plus cumulative accrued and unpaid dividends. For Series A preferred stock, the Company's Board of Directors declare and pay a cash dividend from time to time, but not more frequently than quarterly. The dividend is based on the three month LIBOR rate. Dividends of $4 million, $3 million and $2 million were paid during 1999, 1998, and 1997, respectively. Accrued and unpaid dividends were $349 thousand on Series A preferred stock at December 31, 1999. For Series B preferred stock, cash dividends of 6.9% per annum are payable annually in arrears on the last business day of each year to the shareholder of record on the immediately preceding business day. Dividends of $8 million were paid in 1999, 1998 and 1997. There were no accrued and unpaid dividends for Series B preferred stock at December 31, 1999. 13. STATUTORY FINANCIAL INFORMATION The following table reconciles consolidated net income for the year ended December 31, and shareholder's equity at December 31, as reported herein in conformity with generally accepted accounting principles with combined statutory net income and capital and surplus of ALIC and its domestic subsidiaries, determined in accordance with statutory accounting practices prescribed or permitted by insurance regulatory authorities: ($ in millions)
SHAREHOLDER'S NET INCOME EQUITY --------------------- --------------- 1999 1998 1997 1999 1998 ----- ----- ----- ------ ------ Balance per generally accepted accounting principles $ 511 $ 556 $ 517 $4,574 $4,792 Undistributed net income of certain subsidiaries (5) (8) (11) (196) (179) Unrealized gain/loss on fixed income securities - - - (284) (2,336) Deferred policy acquisition costs (262) (254) (218) (2,675) (2,181) Deferred income taxes 104 35 51 192 469 Employee benefits 1 (6) (6) (11) (4) Reserves and non-admitted assets (72) 60 70 1,441 1,972 Other 27 3 (33) (471) (108) ----- ----- ----- ------ ------ Balance per statutory accounting practices $ 304 $ 386 $ 370 $2,570 $2,425 ===== ===== ===== ====== ======
AICC is a foreign subsidiary of the Company; accordingly, its net income is not included in the statutory basis net income of the Company. However, the Company's investment in AICC is reflected in the statutory capital and surplus of the Company. PERMITTED STATUTORY ACCOUNTING PRACTICES ALIC and each of its domestic subsidiaries prepare their statutory financial statements in accordance with accounting practices prescribed or permitted by the insurance department of the applicable state of domicile. 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. Certain domestic subsidiaries of the Company follow permitted statutory accounting practices which differ from those prescribed by regulatory authorities. The use of such permitted statutory accounting practices does not have a significant impact on statutory surplus or statutory net income. The NAIC's codification initiative has produced a comprehensive guide of revised statutory accounting principles, which the Company will implement in January 1, 2001. The requirements are not expected to have a material impact on the statutory surplus of ALIC and its domestic subsidiaries. 28 DIVIDENDS The ability of ALIC to pay dividends is dependent on business conditions, income, cash requirements of ALIC, receipt of dividends from its subsidiaries and other relevant factors. The payment of shareholder dividends by ALIC to AIC without the prior approval of the state insurance regulator is limited to formula amounts based on net income and capital and surplus, determined in accordance with statutory accounting practices, as well as the timing and amount of dividends paid in the preceding twelve months. In the twelve month period beginning January 1, 1999, ALIC paid dividends of $100 million. Based on 1999 ALIC statutory net income, the maximum amount of dividends ALIC will be able to pay under Illinois insurance law without the approval of Illinois Department of Insurance during 2000 is $267 million. RISK-BASED CAPITAL The NAIC has a standard for assessing the solvency of domestic insurance companies, which is referred to as risk-based capital ("RBC"). The requirement consists of a formula for determining each insurer's RBC and a model law specifying regulatory actions if an insurer's RBC falls below specified levels. The RBC formula for life insurance companies establishes capital requirements relating to insurance, business, asset and interest rate risks. At December, 31 1999, RBC for each of the Company's domestic insurance subsidiaries was significantly above levels that would require regulatory action. 14. BENEFIT PLANS PENSION AND OTHER POSTRETIREMENT PLANS Defined benefit pension plans, sponsored by AIC, cover domestic full-time employees and certain part-time employees. Benefits under the pension plans are based upon the employee's length of service, average annual compensation and estimated social security retirement benefits. AIC's funding policy for the pension plans is to make annual contributions in accordance with accepted actuarial cost methods. The cost (benefit) to the Company included in net income was $(1) million, $9 million, and $8 million for the pension plans in 1999, 1998, 1997, respectively. AIC also provides certain health care and life insurance benefits for retired employees. Qualified employees may become eligible for these benefits if they retire in accordance with AIC's established retirement policy and are continuously insured under AIC's group plans or other approved plans for ten or more years prior to retirement. AIC shares the cost of the retiree medical benefits with retirees based on years of service, with AIC's share being subject to a 5% limit on annual medical cost inflation after retirement. AIC's postretirement benefit plans currently are not funded. AIC has the right to modify or terminate these plans. The cost to the Company included in net income was $1 million, $3 million and $3 million for postretirement benefits other than pension plans in 1999, 1998, and 1997 respectively. AICC has its own defined benefit pension plans which cover its full-time employees and certain part-time employees. Benefits under the pension plans are based upon the employee's length of service, average annual compensation and estimated social security retirement benefits. AICC's funding policy for the pension plans is to make annual contributions in accordance with accepted actuarial cost methods. The net periodic benefit cost (benefit) for AICC pension plans was $1 million, $(1) million and $(1) million for the years ended December 31, 1999, 1998, and 1997, respectively. The projected benefit obligation for the AICC pension plans was $108 million and $107 million at December 31, 1999 and 1998, respectively. The fair value of pension plan assets supporting the projected benefit obligation was $130 million and $123 million at December 31, 1999 and 1998, respectively. AICC also provides certain health care and life insurance benefits for retired employees. Qualified employees may become eligible for these benefits if they retire in accordance with AICC's established retirement policy and are continuously insured under AICC's group plans or other approved plans for ten or more years prior to retirement. AICC pays the cost of the retiree medical benefits not provided by the government plans. AICC's postretirement benefit plans are currently not funded. AICC has the right to modify or terminate these plans. The net periodic benefit cost for AICC's postretirement plans was $2 million for the years ended December 31, 1999, 1998, and 1997, respectively. The projected benefit obligation for the AICC postretirement plans was $16 million and $17 million at December 31, 1999 and 1998, respectively. PROFIT SHARING FUND Employees of the Corporation and its domestic subsidiaries, including the Company are also eligible to become members of The Savings and Profit Sharing Fund of Allstate Employees ("Allstate Plan"). The Corporation's contributions are based on the Corporation's matching obligation and performance. 29 The Company paid $4 million, $12 million and $3 million in 1999, 1998 and 1997, respectively for profit sharing. Employees of AICC participate in the Allstate Canada Employees' Profit Sharing Program ("Allstate Canada Plan"). The Allstate Canada Plan is a cash plan based on AICC's performance as well as the employees' level of performance and length of service. Profit sharing expense under the Allstate Canada Plan was $1 million, $2 million, and $3 million in 1999, 1998, and 1997, respectively. 15. BUSINESS SEGMENTS The Company's management is organized around products and services, and this structure was considered in identifying its two reportable segments. These segments and their respective operations are as follows: Life and Savings markets a broad line of life and savings products primarily in the United States. Life insurance products primarily include traditional life, including term and whole-life, and interest-sensitive life insurance. Savings products consist of fixed annuity products, including indexed, market value adjusted and immediate annuities, as well as variable annuities. Revenues generated outside the United States were immaterial with respect to Life and Savings' total revenue for the years ended December 31, 1999, 1998 and 1997, respectively. The Company evaluates the results of this segment based upon invested asset growth, face amounts of policies in force and net income. Property-Liability sells primarily private passenger auto and homeowners insurance to individuals in Canada. The Company evaluates the results of this segment based upon premium growth and underwriting results. Management reviews assets at the Life and Savings and Property-Liability levels for decision making purposes. The accounting policies of the business segments are the same as those described in Note 2. The effects of certain intersegment transactions are excluded from segment performance evaluation and therefore eliminated in the segment results. Summarized revenue data for each of the Company's business segments for the year ended December 31, are as follows: ($ in millions)
1999 1998 1997 ------ -------- ------ REVENUES LIFE AND SAVINGS Premiums $ 838 $ 889 $ 955 Contract charges 723 630 547 Net investment income 2,239 2,113 2,074 Realized capital gains and losses 192 323 194 ------ -------- ------ Total Life and Savings 3,992 3,955 3,770 PROPERTY-LIABILITY Premiums earned 289 268 275 Net investment income 26 26 44 Realized capital gains and losses 3 9 (2) ------ -------- ------ Total Property-Liability 318 303 317 ------ -------- ------ Consolidated $4,310 $ 4,258 $4,087 ====== ======== ======
30 Summarized financial performance data for each of the Company's reportable segments for the year ended December 31, are as follows: ($ in millions)
1999 1998 1997 ------ ------ ------ NET INCOME FROM OPERATIONS LIFE AND SAVINGS Premiums $ 838 $ 889 $ 955 Contract charges 723 630 547 Net investment income 2,239 2,113 2,074 Realized capital gains and losses 192 323 194 Contract benefits 1,251 1,225 1,239 Interest credited 1,260 1,190 1,167 Operating costs and expenses 712 702 619 ------ ------ ------ Life and Savings income from operations before income taxes 769 838 745 PROPERTY-LIABILITY Underwriting income (loss) (17) (7) 14 Net investment income 26 26 44 Realized capital gains and losses 3 9 (2) ------ ------ ------ Property-Liability income from operations before income taxes 12 28 56 ------ ------ ------ Consolidated $ 781 $ 866 $ 801 ====== ====== ======
Additional significant financial performance data for each of the Company's reportable segments for the year ended December 31, are as follows: ($ in millions)
1999 1998 1997 ---- ---- ---- AMORTIZATION OF DEFERRED POLICY ACQUISITION COSTS Life and Savings $367 $377 $298 Property-Liability 42 35 35 ---- ---- ---- Consolidated $409 $412 $333 ==== ==== ==== INCOME TAX EXPENSE Life and Savings $265 $298 $257 Property-Liability 5 12 27 ---- ---- ---- Consolidated $270 $310 $284 ==== ==== ====
Capital expenditures for long-lived assets are generally made by AIC. A portion of the long-lived assets are leased by entities included in the Life and Savings and Property-Liability segments. 31 Summarized data for total assets and investments for each of the Company's reportable segments as of December 31, are as follows: ($ in millions)
1999 1998 ------- ------- AT DECEMBER 31, ASSETS Life and Savings $50,463 $44,926 Property-Liability 710 614 ------- ------- Consolidated $51,173 $45,540 ======= ======= INVESTMENTS Life and Savings $32,879 $31,749 Property-Liability 530 479 ------- ------- Consolidated $33,409 $32,228 ======= =======
16. OTHER COMPREHENSIVE INCOME The components of other comprehensive income on a pretax and after-tax basis for the year ended December 31, are as follows: ($ in millions)
1999 1998 1997 ------------------------------- ------------------------------- ------------------------------- PRETAX TAX AFTER-TAX PRETAX TAX AFTER-TAX PRETAX TAX AFTER-TAX -------- -------- --------- -------- -------- --------- -------- -------- --------- UNREALIZED CAPITAL GAINS AND LOSSES: Unrealized holding gains (losses) arising during the period $(808) $283 $(525) $349 $(122) $227 $513 $(180) $333 Less: reclassification adjustments 183 (64) 119 237 (83) 154 128 (45) 83 ----- ---- ----- ---- ----- ---- ---- ----- ---- Unrealized net capital gains (losses) (991) 347 (644) 112 (39) 73 385 (135) 250 UNREALIZED FOREIGN CURRENCY TRANSLATION ADJUSTMENTS: Unrealized foreign currency translation adjustments arising during the period 11 (4) 7 2 (1) 1 (12) 4 (8) ----- ---- ----- ---- ----- ---- ---- ----- ---- Other comprehensive income $(980) $343 $(637) $114 $ (40) $ 74 $373 $(131) $242 ===== ==== ===== ==== ===== ==== ==== ===== ====
32 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES SCHEDULE I - SUMMARY OF INVESTMENTS OTHER THAN INVESTMENTS IN RELATED PARTIES DECEMBER 31, 1999 - -------------------------------------------------------------------------------- ($ in millions)
FAIR CARRYING TYPE OF INVESTMENT COST VALUE VALUE - ------------------ ------- ------- -------- Fixed Income Securities, Available for Sale: Bonds: United States government, government agencies and authorities $ 1,957 $ 2,173 $ 2,173 States, municipalities and political subdivisions 736 731 731 Foreign governments 536 542 542 Public utilities 1,704 1,750 1,750 Convertibles and bonds with warrants attached 458 519 519 All other corporate bonds 13,897 13,786 13,786 Mortgage-backed securities 5,612 5,588 5,588 Asset-backed securities 2,389 2,371 2,371 Redeemable preferred stocks 65 63 63 ------- ------- ------- Total fixed income securities 27,354 $27,523 27,523 ------- ======= ------- Equity Securities: Common Stocks: Public utilities 7 $ 6 6 Banks, trusts and insurance companies 22 31 31 Industrial, miscellaneous and all other 412 654 654 Nonredeemable preferred stocks 62 52 52 ------- ------- ------- Total equity securities 503 $ 743 743 ------- ======= ------- Mortgage loans on real estate 3,801 3,801 Policy loans 606 606 Other long-term investments 25 25 Short-term investments 711 711 ------- ------- Total investments $33,000 $33,409 ======= =======
33 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION - -------------------------------------------------------------------------------- ($ IN MILLIONS)
AT DECEMBER 31, --------------------------------------------- DEFERRED POLICY RESERVES FOR CLAIMS, ACQUISITION CLAIMS EXPENSE AND UNEARNED SEGMENT COSTS CONTRACT BENEFITS PREMIUMS - ------- ----------- -------------------- -------- 1999 Life and savings operations $2,675 $31,143 $ 18 Property-liability operations 20 368 137 ------ ------- ---- Total $2,695 $31,511 $155 ====== ======= ==== 1998 Life and savings operations $2,181 $28,734 $ 47 Property-liability operations 14 313 105 ------ ------- ---- Total $2,195 $29,047 $152 ====== ======= ==== 1997 Life and savings operations $1,982 $27,482 $ 64 Property-liability operations 10 349 100 ------ ------- ---- Total $1,992 $27,831 $164 ====== ======= ====
34 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES SCHEDULE III - SUPPLEMENTARY INSURANCE INFORMATION - -------------------------------------------------------------------------------- ($ IN MILLIONS)
FOR THE YEAR ENDED DECEMBER 31, --------------------------------------------------------------------------------- CLAIMS, PREMIUM CLAIMS REVENUE EXPENSE AMORTIZATION OTHER AND NET AND OF POLICY OPERATING PREMIUMS CONTRACT INVESTMENT CONTRACT ACQUISITION COSTS AND WRITTEN SEGMENT CHARGES INCOME BENEFITS COSTS EXPENSES (EXCLUDING LIFE) - ------- -------- ---------- ----------- ------------ --------- ---------------- 1999 Life and savings operations $1,561 $2,239 $2,511 $367 $345 $ - Property-liability operations 289 26 222 42 42 315 ------ ------ ------ ---- ---- ---- Total $1,850 $2,265 $2,733 $409 $387 $315 ====== ====== ====== ==== ==== ==== 1998 Life and savings operations $1,519 $2,113 $2,415 $377 $325 $ - Property-liability operations 268 26 195 35 45 280 ------ ------ ------ ---- ---- ---- Total $1,787 $2,139 $2,610 $412 $370 $280 ====== ====== ====== ==== ==== ==== 1997 Life and savings operations $1,502 $2,074 $2,406 $298 $321 $ - Property-liability operations 275 44 179 35 47 273 ------ ------ ------ ---- ---- ---- Total $1,777 $2,118 $2,585 $333 $368 $273 ====== ====== ====== ==== ==== ====
35 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES SCHEDULE IV - REINSURANCE - -------------------------------------------------------------------------------- ($ in millions)
PERCENT OF CEDED ASSUMED AMOUNT GROSS TO OTHER FROM OTHER NET ASSUMED AMOUNT COMPANIES COMPANIES AMOUNT TO NET -------- --------- ----------- -------- ------- YEAR ENDED DECEMBER 31, 1999 Life insurance in force $307,225 $102,153 $ 1 $205,073 0.0% ======== ======== ==== ======== Premiums and contract charges: Life insurance $ 1,511 $ 221 $ 18 $ 1,308 1.4% Accident-health insurance 237 20 36 253 14.2% Property-liability insurance 291 3 1 289 0.3% -------- -------- ---- -------- Total premiums and contract charges $ 2,039 $ 244 $ 55 $ 1,850 3.0% ======== ======== ==== ======== YEAR ENDED DECEMBER 31, 1998 Life insurance in force $276,029 $ 73,769 $ 7 $202,267 0.0% ======== ======== ==== ======== Premiums and contract charges: Life insurance $ 1,433 $ 176 $ 5 $ 1,262 0.4% Accident-health insurance 235 2 24 257 9.3% Property-liability insurance 268 1 1 268 0.4% -------- -------- ---- -------- Total premiums and contract charges. $ 1,936 $ 179 $ 30 $ 1,787 1.7% ======== ======== ==== ======== YEAR ENDED DECEMBER 31, 1997 Life insurance in force $247,048 $ 52,760 $144 $194,432 0.1% ======== ======== ==== ======== Premiums and contract charges: Life insurance $ 1,427 $ 193 $ -- $ 1,234 --% Accident-health insurance 152 1 117 268 43.7% Property-liability insurance 278 3 -- 275 0.0% -------- -------- ---- -------- Total premiums and contract charges $ 1,857 $ 197 $117 $ 1,777 6.6% ======== ======== ==== ========
36 ALLSTATE LIFE INSURANCE COMPANY AND SUBSIDIARIES SCHEDULE V - VALUATION ALLOWANCE AND QUALIFYING ACCOUNTS - -------------------------------------------------------------------------------- ($ IN MILLIONS)
ADDITIONS ------------------------- BALANCE AT CHARGED TO BALANCE BEGINNING COSTS AND OTHER AT END DESCRIPTION OF PERIOD EXPENSES ADDITIONS DEDUCTIONS (1) OF PERIOD ----------- ---------- ----------- ---------- -------------- --------- YEAR ENDED DECEMBER 31, 1999 Allowance for estimated losses on mortgage loans and real estate $15 $ 2 $ 4 $13 Allowance for deferred tax assets -- 1 -- 1 YEAR ENDED DECEMBER 31, 1998 Allowance for estimated losses on mortgage loans and real estate $37 $ (16) $ 6 $15 YEAR ENDED DECEMBER 31, 1997 Allowance for estimated losses on mortgage loans and real estate $72 $ (22) $13 $37
(1) Deductions in allowance for estimated losses on mortgage loans include amounts transferred to real estate. Deductions in allowance for reinsurance recovered represent write-offs, net of recoveries, of amounts determined to be uncollectible. 37 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A FINANCIAL STATEMENTS AS OF DECEMBER 31, 1999 AND FOR THE PERIOD FROM MAY 3, 1999 TO DECEMBER 31, 1999 AND INDEPENDENT AUDITORS' REPORT INDEPENDENT AUDITORS' REPORT To the Board of Directors and Shareholder of Allstate Life Insurance Company: We have audited the accompanying statement of net assets of Allstate Life Insurance Company Separate Account A as of December 31, 1999, (including the assets of each of the individual sub-accounts which comprise the Account as disclosed in Note 1), and the related statements of operations and changes in net assets for the period from May 3, 1999 (date of inception) to December 31, 1999 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 audit. We conducted our audit in accordance with generally accepted auditing standards. 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, 1999 by correspondence with the account 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 audit provides a reasonable basis for our opinion. In our opinion, such financial statements present fairly, in all material respects, the financial position of Allstate Life Insurance Company Separate Account A as of December 31, 1999 (including the assets of each of the individual sub-accounts which comprise the Account), and the results of operations for each of the individual sub-accounts and the changes in their net assets for the period from May 3, 1999 (date of inception) to December 31, 1999 in conformity with generally accepted accounting principles. /s/ Deloitte & Touche LLP Chicago, Illinois March 27, 2000 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A STATEMENT OF NET ASSETS DECEMBER 31, 1999 - --------------------------------------------------------------------------------
ASSETS Allocation to Sub-Accounts investing in the Putnam Variable Trust: Asia Pacific Growth, 278,466 shares (cost $3,789,956) $ 4,803,532 Diversified Income, 1,514,137 shares (cost $14,764,040) 15,005,098 The George Putnam Fund of Boston, 2,907,045 shares (cost $30,051,532) 29,012,305 Global Asset Allocation, 142,637 shares (cost $2,627,570) 2,795,686 Global Growth, 559,039 shares (cost $12,776,277) 17,000,389 Growth & Income, 4,691,832 shares (cost $128,157,309) 125,506,496 Health Sciences, 1,349,491 shares (cost $13,570,021) 14,156,162 High Yield, 818,296 shares (cost $8,868,651) 9,066,725 Income, 982,477 shares (cost $12,309,230) 12,290,785 International Growth, 1,234,900 shares (cost $21,528,251) 26,698,544 International Growth and Income, 470,967 shares (cost $6,838,545) 7,168,122 International New Opportunities, 409,062 shares (cost $7,108,499) 9,522,959 Investors, 5,495,714 shares (cost $71,619,605) 83,150,151 Money Market, 16,872,573 shares (cost $16,872,573) 16,872,573 New Opportunities, 1,114,500 shares (cost $36,579,176) 48,413,875 New Value, 566,900 shares (cost $6,938,279) 6,717,771 OTC & Emerging Growth, 765,986 shares (cost $12,690,975) 17,433,843 Research, 1,540,836 shares (cost $20,578,934) 22,604,065 Small Cap Value, 594,274 shares (cost $5,970,846) 6,121,017 Utilities Growth and Income, 435,290 shares (cost $7,511,540) 7,378,168 Vista, 701,266 shares (cost $12,342,960) 14,481,152 Voyager, 1,683,119 shares (cost $86,527,295) 111,271,035 ---------------- Total Assets 607,470,454 LIABILITIES Payable to Allstate Life Insurance Company Accrued contract maintenance charges 68,839 ---------------- Net Assets $ 607,401,615 ================
See notes to financial statements 2 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A STATEMENTS OF OPERATIONS FOR THE PERIOD BEGINNING MAY 3, 1999 AND ENDED DECEMBER 31, 1999 - --------------------------------------------------------------------------------
Putnam Variable Trust Sub-Accounts -------------------------------------------------------------------------------------------- The George Asia Putnam Fund Global Pacific Diversified of Asset Global Growth Income Boston Allocation Growth ----------------- ----------------- ----------------- ----------------- ----------------- INVESTMENT INCOME Dividends $ - $ - $ 603,870 $ 289 $ - Charges from Allstate Life Insurance Company: Mortality and expense risk (8,332) (42,429) (88,415) (7,001) (39,047) ----------------- ----------------- ----------------- ----------------- ----------------- Net investment income (loss) (8,332) (42,429) 515,455 (6,712) (39,047) REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 19,811 36,175 156,014 7,214 109,185 Cost of investments sold 18,686 35,881 156,846 7,217 101,580 ----------------- ----------------- ----------------- ----------------- ----------------- Net realized gains (losses) 1,125 294 (832) (3) 7,605 ----------------- ----------------- ----------------- ----------------- ----------------- Change in unrealized gains (losses) 1,013,576 241,058 (1,039,227) 168,116 4,224,112 ----------------- ----------------- ----------------- ----------------- ----------------- Net gains (losses) on investments 1,014,701 241,352 (1,040,059) 168,113 4,231,717 ----------------- ----------------- ----------------- ----------------- ----------------- CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $1,006,369 $ 198,923 $ (524,604) $ 161,401 $4,192,670 ================= ================= ================= ================= =================
See notes to financial statements. 3 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A STATEMENTS OF OPERATIONS FOR THE PERIOD BEGINNING MAY 3, 1999 AND ENDED DECEMBER 31, 1999 - --------------------------------------------------------------------------------
Putnam Variable Trust Sub-Accounts --------------------------------------------------------------------------------------------- Growth & Health High International Income Sciences Yield Income Growth ------------------ ------------------ ------------------ ------------------ ------------------ INVESTMENT INCOME Dividends $ - $ 4,849 $ - $ - $ - Charges from Allstate Life Insurance Company: Mortality and expense risk (398,152) (38,903) (25,156) (35,910) (60,294) ------------------ ------------------ ------------------ ------------------ ------------------ Net investment income (loss) (398,152) (34,054) (25,156) (35,910) (60,294) REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 78,513 120,049 736,350 181,921 193,345 Cost of investments sold 126,369 122,899 727,602 182,722 182,340 ------------------ ------------------ ------------------ ------------------ ------------------ Net realized gains (losses) (47,856) (2,850) 8,748 (801) 11,005 ------------------ ------------------ ------------------ ------------------ ------------------ Change in unrealized gains (losses) (2,650,813) 586,141 198,074 (18,445) 5,170,293 ------------------ ------------------ ------------------ ------------------ ------------------ Net gains (losses) on investments (2,698,669) 583,291 206,822 (19,246) 5,181,298 ------------------ ------------------ ------------------ ------------------ ------------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ (3,096,821) $ 549,237 $ 181,666 $ (55,156) $5,121,004 ================== =================== ================= =================== =================
See notes to financial statements. 4 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A STATEMENTS OF OPERATIONS FOR THE PERIOD BEGINNING MAY 3, 1999 AND ENDED DECEMBER 31, 1999 - --------------------------------------------------------------------------------
Putnam Variable Trust Sub-Accounts ---------------------------------------------------------------------------------------------- International International Growth and New Money New Income Opportunities Investors Market Opportunities ------------------ ------------------ ------------------ ------------------ ------------------ INVESTMENT INCOME Dividends $ - $ - $ - $ 153,816 $ - Charges from Allstate Life Insurance Company: Mortality and expense risk (19,894) (17,878) (217,860) (47,820) (108,364) ------------------ ------------------ ------------------ ------------------ ------------------ Net investment income (loss) (19,894) (17,878) (217,860) 105,996 (108,364) REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 463,154 373,826 129,574 3,625,107 20,054 Cost of investments sold 442,666 346,771 118,977 3,625,107 18,865 ------------------ ------------------ ------------------ ------------------ ------------------ Net realized gains (losses) 20,488 27,055 10,597 - 1,189 ------------------ ------------------ ------------------ ------------------ ------------------ Change in unrealized gains (losses) 329,577 2,414,460 11,530,546 - 11,834,699 ------------------ ------------------ ------------------ ------------------ ------------------ Net gains (losses) on investments 350,065 2,441,515 11,541,143 - 11,835,888 ------------------ ------------------ ------------------ ------------------ ------------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ 330,171 $2,423,637 $11,323,283 $ 105,996 $11,727,524 ================== =================== ================= =================== =================
See notes to financial statements. 5 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A STATEMENTS OF OPERATIONS FOR THE PERIOD BEGINNING MAY 3, 1999 AND ENDED DECEMBER 31, 1999 - --------------------------------------------------------------------------------
Putnam Variable Trust Sub-Accounts ---------------------------------------------------------------------------------------------- OTC & Utilities New Emerging Small Growth and Value Growth Research Cap Value Income ------------------ ------------------ ------------------------------------ ------------------ INVESTMENT INCOME Dividends $ - $ 36,702 $ 504,319 $ 17,808 $ - Charges from Allstate Life Insurance Company: Mortality and expense risk (23,561) (30,805) (60,946) (17,840) (21,930) ------------------ ------------------ ------------------------------------ ------------------ Net investment income (loss) (23,561) 5,897 443,373 (32) (21,930) REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 511,204 244,974 104,735 343,642 57,562 Cost of investments sold 537,223 192,485 104,647 357,046 58,296 ------------------ ------------------ ------------------------------------ ------------------ Net realized gains (losses) (26,019) 52,489 88 (13,404) (734) ------------------ ------------------ ------------------------------------ ------------------ Change in unrealized gains (losses) (220,508) 4,742,868 2,025,131 150,171 (133,372) ------------------ ------------------ ------------------------------------ ------------------ Net gains (losses) on investments (246,527) 4,795,357 2,025,219 136,767 (134,106) ------------------ ------------------ ------------------------------------ ------------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $ (270,088) $4,801,254 $2,468,592 $ 136,735 $ (156,036) ================== =================== ================= =================== =================
See notes to financial statements. 6 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS FOR THE PERIOD BEGINNING MAY 3, 1999 AND ENDED DECEMBER 31, 1999 - ------------------------------------------------------------------------------------------------------------- Putnam Variable Trust Sub-Accounts --------------------------------------------- Vista Voyager ------------------ ------------------ INVESTMENT INCOME Dividends $ 930,830 $ - Charges from Allstate Life Insurance Company: Mortality and expense risk (33,727) (273,748) ------------------ ------------------ Net investment income (loss) 897,103 (273,748) REALIZED AND UNREALIZED GAINS (LOSSES) ON INVESTMENTS Realized gains (losses) from sales of investments: Proceeds from sales 96,344 5,467 Cost of investments sold 89,711 7,862 ------------------ ------------------ Net realized gains (losses) 6,633 (2,395) ------------------ ------------------ Change in unrealized gains (losses) 2,138,192 24,743,740 ------------------ ------------------ Net gains (losses) on investments 2,144,825 24,741,345 ------------------ ------------------ CHANGE IN NET ASSETS RESULTING FROM OPERATIONS $3,041,928 $24,467,597 ================== ==================
See notes to financial statements. 7 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD BEGINNING MAY 3, 1999 AND ENDED DECEMBER 31, 1999 - --------------------------------------------------------------------------------
Putnam Variable Trust Sub-Accounts -------------------------------------------------------------------------------------------- The George Asia Putnam Fund Global Pacific Diversified of Asset Global Growth Income Boston Allocation Growth ----------------- ------------------ ------------------- ---------------- ------------------ FROM OPERATIONS Net investment income (loss) $ (8,332) $ (42,429) $ 515,455 $ (6,712) $ (39,047) Net realized gains (losses) 1,125 294 (832) (3) 7,605 Change in unrealized gains (losses) 1,013,576 241,058 (1,039,227) 168,116 4,224,112 ----------------- ------------------ ------------------- ---------------- ------------------ Change in net assets resulting from operations 1,006,369 198,923 (524,604) 161,401 4,192,670 ----------------- ------------------ ------------------- --------------- ------------------ FROM CAPITAL TRANSACTIONS Deposits 2,747,456 5,717,042 12,891,820 1,240,444 6,205,016 Benefit payments - (3,417) - - (378) Payments on termination (11,734) (161,343) (304,746) (11,684) (63,561) Contract maintenance charges (544) (1,700) (3,288) (317) (1,926) Transfers among the sub-accounts and with the Fixed Account - net 1,061,441 9,253,893 16,949,835 1,405,526 6,666,642 ----------------- ------------------ ------------------- ---------------- ------------------ Change in net assets resulting from capital transactions 3,796,619 14,804,475 29,533,621 2,633,969 12,805,793 ----------------- ------------------ ------------------- ---------------- ------------------ INCREASE (DECREASE) IN NET ASSETS 4,802,988 15,003,398 29,009,017 2,795,370 16,998,463 NET ASSETS AT BEGINNING OF PERIOD - - - - - ----------------- ------------------ ------------------- ---------------- ------------------ NET ASSETS AT END OF PERIOD $ 4,802,988 $ 15,003,398 $ 29,009,017 $ 2,795,370 $ 16,998,463 ================= ================== =================== ================ =================
See notes to financial statements. 8 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD BEGINNING MAY 3, 1999 AND ENDED DECEMBER 31, 1999 - --------------------------------------------------------------------------------
Putnam Variable Trust Sub-Accounts --------------------------------------------------------------------------------------------- Growth & Health High International Income Sciences Yield Income Growth ------------- ------------- ------------- ------------- ------------- FROM OPERATIONS Net investment income (loss) $ (398,152) $ (34,054) $(25,156) $(35,910) $(60,294) Net realized gains (losses) (47,856) (2,850) 8,748 (801) 11,005 Change in unrealized gains (losses) (2,650,813) 586,141 198,074 (18,445) 5,170,293 ------------- ------------- ------------- ------------- ------------- Change in net assets resulting from operations (3,096,821) 549,237 181,666 (55,156) 5,121,004 ------------- ------------- ------------- ------------- ------------- FROM CAPITAL TRANSACTIONS Deposits 66,564,874 6,876,229 4,841,415 4,349,939 11,178,109 Benefit payments (37,062) (15,210) - - - Payments on termination (1,216,975) (92,242) (104,534) (95,887) (121,259) Contract maintenance charges (14,223) (1,604) (1,027) (1,393) (3,025) Transfers among the sub-accounts and with the Fixed Account - net 63,292,481 6,838,148 4,148,178 8,091,890 10,520,690 ------------- ------------- ------------- ------------- ------------- Change in net assets resulting from capital transactions 128,589,095 13,605,321 8,884,032 12,344,549 21,574,515 ------------- ------------- ------------- ------------- ------------- INCREASE (DECREASE) IN NET ASSETS 125,492,274 14,154,558 9,065,698 12,289,393 26,695,519 NET ASSETS AT BEGINNING OF PERIOD - - - - - ------------- ------------- ------------- ------------- ------------- NET ASSETS AT END OF PERIOD $125,492,274 $14,154,558 $9,065,698 $ 12,289,393 $26,695,519 =============== ============== ============ =============== ============
See notes to financial statements. 9 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD BEGINNING MAY 3, 1999 AND ENDED DECEMBER 31, 1999 - --------------------------------------------------------------------------------
Putnam Variable Trust Sub-Accounts --------------------------------------------------------------------------------------------- International International Growth and New Money New Income Opportunities Investors Market Opportunities ------------- ------------- ------------- ------------- ------------- FROM OPERATIONS Net investment income (loss) $ (19,894) $ (17,878) $ (217,860) $ 105,996 $ (108,364) Net realized gains (losses) 20,488 27,055 10,597 - 1,189 Change in unrealized gains (losses) 329,577 2,414,460 11,530,546 - 11,834,699 ----------- ----------- ----------- ----------- ----------- Change in net assets resulting from operations 330,171 2,423,637 11,323,283 105,996 11,727,524 ----------- ----------- ----------- ----------- ----------- FROM CAPITAL TRANSACTIONS Deposits 3,618,618 3,838,306 36,262,504 10,542,789 21,115,643 Benefit payments - - (30,501) (670,189) (23,210) Payments on termination (46,787) (23,171) (582,482) (551,414) (181,269) Contract maintenance charges (812) (1,079) (9,423) (1,912) (5,486) Transfers among the sub-accounts and with the Fixed Account - net 3,266,120 3,284,187 36,177,347 7,445,391 15,775,186 ----------- ----------- ----------- ----------- ----------- Change in net assets resulting from capital transactions 6,837,139 7,098,243 71,817,445 16,764,665 36,680,864 ----------- ----------- ----------- ----------- ----------- INCREASE (DECREASE) IN NET ASSETS 7,167,310 9,521,880 83,140,728 16,870,661 48,408,388 NET ASSETS AT BEGINNING OF PERIOD - - - - - ----------- ----------- ----------- ----------- ----------- NET ASSETS AT END OF PERIOD $7,167,310 $9,521,880 $83,140,728 $16,870,661 $48,408,388 ============ ============ ============ ============ ============
See notes to financial statements. 10 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD BEGINNING MAY 3, 1999 AND ENDED DECEMBER 31, 1999 - --------------------------------------------------------------------------------
Putnam Variable Trust Sub-Accounts ------------------------------------------------------------------------------------- OTC & Utilities New Emerging Small Growth and Value Growth Research Cap Value Income ----------- ----------- ---------- ---------- ---------- FROM OPERATIONS Net investment income (loss) $ (23,561) $ 5,897 $ 443,373 $ (32) $(21,930) Net realized gains (losses) (26,019) 52,489 88 (13,404) (734) Change in unrealized gains (losses) (220,508) 4,742,868 2,025,131 150,171 (133,372) ----------- ----------- ---------- ---------- ---------- Change in net assets resulting from operations (270,088) 4,801,254 2,468,592 136,735 (156,036) ----------- ----------- ---------- ---------- ---------- FROM CAPITAL TRANSACTIONS Deposits 4,631,791 7,611,399 10,121,156 3,738,103 3,637,575 Benefit payments - - (19,019) - (1,534) Payments on termination (71,977) (58,463) (144,741) (41,066) (64,952) Contract maintenance charges (761) (1,975) (2,562) (694) (836) Transfers among the sub-accounts and with the Fixed Account - net 2,428,045 5,079,652 10,178,077 2,287,245 3,963,115 ----------- ----------- ---------- ---------- ---------- Change in net assets resulting from capital transactions 6,987,098 12,630,613 20,132,911 5,983,588 7,533,368 ----------- ----------- ---------- ---------- ---------- INCREASE (DECREASE) IN NET ASSETS 6,717,010 17,431,867 22,601,503 6,120,323 7,377,332 NET ASSETS AT BEGINNING OF PERIOD - - - - - ----------- ----------- ---------- ---------- ---------- NET ASSETS AT END OF PERIOD $6,717,010 $17,431,867 $22,601,503 $6,120,323 $7,377,332 =========== ============ ============ ============ ==========
See notes to financial statements. 11 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A STATEMENTS OF CHANGES IN NET ASSETS FOR THE PERIOD BEGINNING MAY 3, 1999 AND ENDED DECEMBER 31, 1999 - --------------------------------------------------------------------------------
Putnam Variable Trust Sub-Accounts --------------------------------------------- Vista Voyager ----------------- -------------------- FROM OPERATIONS Net investment income (loss) $ 897,103 $ (273,748) Net realized gains (losses) 6,633 (2,395) Change in unrealized gains (losses) 2,138,192 24,743,740 ----------------- -------------------- Change in net assets resulting from operations 3,041,928 24,467,597 ----------------- -------------------- FROM CAPITAL TRANSACTIONS Deposits 6,530,416 47,654,070 Benefit payments (3,766) (28,233) Payments on termination (72,861) (760,755) Contract maintenance charges (1,641) (12,609) Transfers among the sub-accounts and with the Fixed Account - net 4,985,435 39,938,356 ----------------- -------------------- Change in net assets resulting from capital transactions 11,437,583 86,790,829 ----------------- -------------------- INCREASE (DECREASE) IN NET ASSETS 14,479,511 111,258,426 NET ASSETS AT BEGINNING OF PERIOD - - ----------------- -------------------- NET ASSETS AT END OF PERIOD $14,479,511 $ 111,258,426 ================= ====================
See notes to financial statements. 12 ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A NOTES TO FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. ORGANIZATION Allstate Life Insurance Company Separate Account A (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 Allstate Life Insurance Company ("Allstate"). The assets of the Account are legally segregated from those of Allstate. Allstate is a wholly owned subsidiary of Allstate Insurance Company, which is wholly owned by The Allstate Corporation. Allstate issues the Putnam Allstate Advisor ("Advisor") and Putnam Allstate Advisor A ("Advisor A") contracts, the deposits of which are invested at the direction of contractholders in sub-accounts that comprise the Account. Absent any contract provisions wherein Allstate contractually guarantees either a minimum return or account value to the beneficiaries of the contractholders in the form of a death benefit, the contractholders bear the investment risk that the sub-accounts may not meet their stated objectives. The sub-accounts invest in the following underlying mutual fund portfolios of the Putnam Variable Trust (the "Funds"). Asia Pacific Growth International New Opportunities Diversified Income Investors The George Putnam Fund of Boston Money Market Global Asset Allocation New Opportunities Global Growth New Value Growth & Income OTC & Emerging Growth Health Sciences Research High Yield Small Cap Value Income Utilities Growth and Income International Growth Vista International Growth and Income Voyager Allstate provides insurance and administrative services to the contractholders for a fee. Allstate also maintains a fixed account ("Fixed Account"), to which contractholders may direct their deposits and receive a fixed rate of return. Allstate has sole discretion to invest the assets of the Fixed Account, subject to applicable law. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES VALUATION OF INVESTMENTS - Investments consist of shares of the Funds and are stated at fair value based on quoted market prices at December 31, 1999. INVESTMENT INCOME - Investment income consists of dividends declared by the Funds and is recognized on the ex-dividend date. REALIZED GAINS AND LOSSES - Realized gains and losses represent the difference between the proceeds from sales of portfolio shares by the Account and the cost of such shares, which is determined on a weighted average basis. 13 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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 with and taxed as a part of Allstate. Allstate 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 generally accepted accounting principles 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. 3. EXPENSES CONTRACT MAINTENANCE CHARGE - Allstate deducts from the contractholder's account an annual maintenance charge of $30 on each Advisor contract anniversary and guarantees that this charge will not increase over the life of the contract. This charge will be waived if certain conditions are met. There is no contract maintenance charge on the Advisor A contract. MORTALITY AND EXPENSE RISK CHARGE - Allstate assumes mortality and expense risks related to the operations of the Account and deducts charges the daily based on the average daily net assets of the Account. The mortality and expense risk charge covers insurance benefits available with the contract and certain expenses of the contract. It also covers the risk that the current charges will not be sufficient in the future to cover the cost of administering the contract. Allstate guarantees that the amount of this charge will not increase over the life of the contract. At the contractholder's discretion, additional options, primarily death benefits, may be purchased for an additional charge. 14 4. UNITS ISSUED AND REDEEMED (Units in whole amounts)
Putnam Allstate Advisor -------------------------------------------------------------------------------------- Unit activity during 1999: --------------------------------------------- Accumulated Units Outstanding Units Units Units Outstanding Unit Value May 3, 1999 Issued Redeemed December 31, 1999 December 31, 1999 ------------------- ---------- ------------ ------------------- ------------------- Investments in the Putnam Variable Trust Sub-Accounts: Asia Pacific Growth - 242,895 (1,554) 241,341 $ 17.44 Diversified Income - 1,129,582 (17,469) 1,112,113 9.87 The George Putnam Fund of Boston - 2,668,746 (39,341) 2,629,405 9.30 Global Asset Allocation - 219,025 (2,236) 216,789 10.70 Global Growth - 818,866 (9,295) 809,571 15.66 Growth and Income - 10,579,710 (133,163) 10,446,547 9.17 Health Sciences - 1,054,327 (16,379) 1,037,948 10.60 High Yield - 757,423 (68,918) 688,505 9.93 Income - 1,020,041 (25,728) 994,313 9.71 International Growth - 1,437,326 (20,835) 1,416,491 14.43 International Growth and Income - 574,760 (59,267) 515,493 10.97 International New Opportunities - 422,689 (33,644) 389,045 18.13 Investors - 5,580,875 (63,258) 5,517,617 12.17 Money Market - 1,735,261 (473,615) 1,261,646 10.23 New Opportunities - 2,379,571 (27,681) 2,351,890 15.69 New Value - 642,694 (15,877) 626,817 8.80 OTC & Emerging Growth - 722,095 (25,088) 697,007 19.84 Research - 1,588,829 (12,936) 1,575,893 11.60 Small Cap Value - 471,685 (20,187) 451,498 10.30 Utilities Growth and Income - 592,529 (7,405) 585,124 9.99 Vista - 835,166 (10,511) 824,655 14.09 Voyager - 6,067,583 (60,695) 6,006,888 14.33 Units relating to accrued contract maintenance charges are included in units redeemed.
15 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Putnam Allstate Advisor with Enhanced Beneficiary Protection -------------------------------------------------------------------------------------- Unit activity during 1999: --------------------------------------------- Accumulated Units Outstanding Units Units Units Outstanding Unit Value May 3, 1999 Issued Redeemed December 31, 1999 December 31, 1999 ------------------- ---------- ------------ ------------------- ------------------- Investments in the Putnam Variable Trust Sub-Accounts: Asia Pacific Growth - 33,423 (745) 32,678 $ 17.42 Diversified Income - 414,195 (5,618) 408,577 9.86 The George Putnam Fund of Boston - 513,469 (25,504) 487,965 9.29 Global Asset Allocation - 44,571 (6) 44,565 10.69 Global Growth - 284,398 (9,781) 274,617 15.65 Growth and Income - 3,298,917 (73,609) 3,225,308 9.16 Health Sciences - 302,531 (8,640) 293,891 10.59 High Yield - 238,503 (14,895) 223,608 9.92 Income - 286,146 (15,063) 271,083 9.70 International Growth - 439,462 (9,997) 429,465 14.41 International Growth and Income - 137,929 (1,278) 136,651 10.96 International New Opportunities - 137,537 (3,596) 133,941 18.12 Investors - 1,333,984 (24,460) 1,309,524 12.16 Money Market - 463,082 (76,351) 386,731 10.22 New Opportunities - 737,732 (7,556) 730,176 15.68 New Value - 190,246 (53,202) 137,044 8.79 OTC & Emerging Growth - 186,416 (4,747) 181,669 19.82 Research - 375,492 (6,422) 369,070 11.59 Small Cap Value - 165,987 (25,691) 140,296 10.29 Utilities Growth and Income - 156,153 (2,501) 153,652 9.98 Vista - 202,831 (822) 202,009 14.07 Voyager - 1,782,652 (30,541) 1,752,111 14.31 Units relating to accrued contract maintenance charges are included in units redeemed.
16 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Putnam Allstate Advisor A -------------------------------------------------------------------------------------- Unit activity during 1999: --------------------------------------------- Accumulated Units Outstanding Units Units Units Outstanding Unit Value May 3, 1999 Issued Redeemed December 31, 1999 December 31, 1999 ------------------- ---------- ------------ ------------------- ------------------- Investments in the Putnam Variable Trust Sub-Accounts: Asia Pacific Growth - 1,911 - 1,911 $ 13.36 Diversified Income - 409 - 409 10.19 The George Putnam Fund of Boston - 2,578 - 2,578 9.78 Global Asset Allocation - - - - - Global Growth - 1,404 - 1,404 13.56 Growth and Income - 11,861 (2) 11,859 9.69 Health Sciences - 4,191 - 4,191 10.63 High Yield - 691 - 691 10.38 Income - - - - - International Growth - 5,441 (1) 5,440 12.86 International Growth and Income - 1,515 - 1,515 10.58 International New Opportunities - 2,774 - 2,774 14.53 Investors - 7,390 (1) 7,389 11.61 Money Market - 938 - 938 10.07 New Opportunities - 4,105 - 4,105 13.47 New Value - - - - - OTC & Emerging Growth - 312 - 312 15.16 Research - 3,617 - 3,617 11.06 Small Cap Value - 2,352 - 2,352 10.78 Utilities Growth and Income - 106 - 106 9.61 Vista - 1,448 - 1,448 13.01 Voyager - 9,327 (1) 9,326 12.95 Units relating to accrued contract maintenance charges are included in units redeemed.
17 4. UNITS ISSUED AND REDEEMED (CONTINUED) (Units in whole amounts)
Putnam Allstate Advisor A with Enhanced Beneficiary Protection -------------------------------------------------------------------------------------- Unit activity during 1999: --------------------------------------------- Accumulated Units Outstanding Units Units Units Outstanding Unit Value May 3, 1999 Issued Redeemed December 31, 1999 December 31, 1999 ------------------- ---------- ------------ ------------------- ------------------- Investments in the Putnam Variable Trust Sub-Accounts: Asia Pacific Growth - - - - $ - Diversified Income - - - - - The George Putnam Fund of Boston - - - - - Global Asset Allocation - - - - - Global Growth - - - - - Growth and Income - 1,229 - 1,229 9.68 Health Sciences - - - - - High Yield - - - - - Income - - - - - International Growth - - - - - International Growth and Income - - - - - International New Opportunities - - - - - Investors - - - - - Money Market - - - - - New Opportunities - - - - - New Value - - - - - OTC & Emerging Growth - - - - - Research - 808 - 808 11.06 Small Cap Value - - - - - Utilities Growth and Income - - - - - Vista - - - - - Voyager - 694 - 694 12.95 Units relating to accrued contract maintenance charges are included in units redeemed.
18 APPENDIX A PUTNAM ALLSTATE ADVISOR CONTRACT The performance figures shown reflect the deduction of current Contract charges, which include a maximum withdrawal charge of 7% that declines to zero after 7 years (not shown for non-standardized total returns), an annual contract maintenance charge of $30 (not shown for non-standardized total returns), and total Variable Account annual expenses of: o 1.25% (without any optional benefit riders), or o 1.40% with the Enhanced Beneficiary Protection Option. In addition, where Retirement Income Guarantee Rider 2 is included, the performance shown reflects the deduction of the annual Rider fee equal to 0.30% of the Income Base, assuming Income Base B is in effect and assuming no additional purchase payments or withdrawals. See the Expense Table in the Prospectus for more details. Standardized Total Returns Set out below are the standardized total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since its inception through December 31, 1999. All of the Variable Sub-Accounts commenced operations on April 30, 1999 except for the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts, which commenced operations on February 4, 2000.
(Without the Enhanced Beneficiary Protection Option or Retirement Income Guarantee Rider) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 117.40% Putnam Diversified Income -10.76% The George Putnam Fund -18.78% Putnam Global Asset Allocation 1.43% Putnam Global Growth 84.18% Putnam Growth and Income -20.55% Putnam Growth Opportunities N/A Putnam Health Sciences -0.07% Putnam High Yield -9.79% Putnam Income -12.94% Putnam International Growth 62.08% Putnam International Growth and Income 5.51% Putnam International New Opportunities 130.96% Putnam Investors 24.22% Putnam Money Market -5.47% Putnam New Opportunities 84.68% Putnam New Value -25.70% Putnam OTC & Emerging Growth 165.19% Putnam Research 15.20% Putnam Small Cap Value -4.44% Putnam Utilities Growth and Income -9.03% Putnam Vista 56.19% Putnam Voyager 60.31% (With the Enhanced Beneficiary Protection Option) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 117.05% Putnam Diversified Income -10.91% The George Putnam Fund -18.92% Putnam Global Asset Allocation 1.27% Putnam Global Growth 83.89% Putnam Growth and Income -20.68% Putnam Growth Opportunities N/A Putnam Health Sciences -0.23% Putnam High Yield -9.94% Putnam Income -13.08% Putnam International Growth 61.82% Putnam International Growth and Income 5.34% Putnam International New Opportunities 130.60% Putnam Investors 24.02% Putnam Money Market -5.62% Putnam New Opportunities 84.39% Putnam New Value -25.82% Putnam OTC & Emerging Growth 164.78% Putnam Research 15.02% Putnam Small Cap Value -4.59% Putnam Utilities Growth and Income -9.18% Putnam Vista 55.94% Putnam Voyager 60.06% (With Retirement Income Guarantee Rider 2) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 116.78% Putnam Diversified Income -11.22% The George Putnam Fund -19.23% Putnam Global Asset Allocation 0.96% Putnam Global Growth 83.60% Putnam Growth and Income -20.99% Putnam Growth Opportunities N/A Putnam Health Sciences -0.55% Putnam High Yield -10.25% Putnam Income -13.39% Putnam International Growth 61.52% Putnam International Growth and Income 5.03% Putnam International New Opportunities 130.34% Putnam Investors 23.71% Putnam Money Market -5.93% Putnam New Opportunities 84.10% Putnam New Value -26.13% Putnam OTC & Emerging Growth 164.54% Putnam Research 14.71% Putnam Small Cap Value -4.91% Putnam Utilities Growth and Income -9.49% Putnam Vista 55.64% Putnam Voyager 59.76% (With the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 116.44% Putnam Diversified Income -11.37% The George Putnam Fund -19.36% Putnam Global Asset Allocation 0.79% Putnam Global Growth 83.31% Putnam Growth and Income -21.12% Putnam Growth Opportunities N/A Putnam Health Sciences -0.71% Putnam High Yield -10.39% Putnam Income -13.53% Putnam International Growth 61.27% Putnam International Growth and Income 4.86% Putnam International New Opportunities 129.97% Putnam Investors 23.52% Putnam Money Market -6.09% Putnam New Opportunities 83.81% Putnam New Value -26.25% Putnam OTC & Emerging Growth 164.12% Putnam Research 14.52% Putnam Small Cap Value -5.06% Putnam Utilities Growth and Income -9.64% Putnam Vista 55.39% Putnam Voyager 59.51%
Non-Standardized Total Returns Set out below are the non-standardized total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since its inception through December 31, 1999. All of the Variable Sub-Accounts commenced operations on April 30, 1999 except for the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts, which commenced operations on February 4, 2000. The non-standardized total returns shown below do not reflect withdrawal charges or the $30 annual contract maintenance charge that may be imposed under the Putnam Allstate Advisor Contract. No non-standardized performance is shown for Contracts with Retirement Income Guarantee Rider 2.
(Without the Enhanced Beneficiary Protection Option or Retirement Income Guarantee Rider) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 128.95% Putnam Diversified Income -1.99% The George Putnam Fund -10.26% Putnam Global Asset Allocation 10.57% Putnam Global Growth 95.17% Putnam Growth and Income -12.08% Putnam Growth Opportunities N/A Putnam Health Sciences 9.02% Putnam High Yield -0.98% Putnam Income -4.23% Putnam International Growth 72.64% Putnam International Growth and Income 14.76% Putnam International New Opportunities 142.73% Putnam Investors 33.95% Putnam Money Market 3.47% Putnam New Opportunities 95.67% Putnam New Value -17.41% Putnam OTC & Emerging Growth 177.46% Putnam Research 24.71% Putnam Small Cap Value 4.53% Putnam Utilities Growth and Income -0.20% Putnam Vista 66.63% Putnam Voyager 70.84% (With the Enhanced Beneficiary Protection Option) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 128.60% Putnam Diversified Income -2.14% The George Putnam Fund -10.40% Putnam Global Asset Allocation 10.40% Putnam Global Growth 94.87% Putnam Growth and Income -12.22% Putnam Growth Opportunities N/A Putnam Health Sciences 8.85% Putnam High Yield -1.13% Putnam Income -4.38% Putnam International Growth 72.38% Putnam International Growth and Income 14.59% Putnam International New Opportunities 142.36% Putnam Investors 33.75% Putnam Money Market 3.31% Putnam New Opportunities 95.38% Putnam New Value -17.53% Putnam OTC & Emerging Growth 177.04% Putnam Research 24.52% Putnam Small Cap Value 4.37% Putnam Utilities Growth and Income -0.35% Putnam Vista 66.38% Putnam Voyager 70.58%
Adjusted Historical Total Returns Set out below are the adjusted historical total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since the Fund's inception through December 31, 1999. Adjusted historical total returns are computed in the same manner as standardized total returns, except that the performance figures shown are based on the Funds' historical performance since the inception of the Funds rather than the inception of the Variable Sub-Accounts.
(Without the Enhanced Beneficiary Protection Option or a Retirement Income Guarantee Rider) Ten Years or Five Years Since Inception* Variable Sub-Account One Year Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 98.49% N/A 12.19% Putnam Diversified Income -5.54% 4.96% 3.36% The George Putnam Fund -7.67% N/A -3.01% Putnam Global Asset Allocation 4.35% 15.05% 10.67% Putnam Global Growth 58.34% 25.35% 15.66% Putnam Growth and Income -5.82% 17.43% 12.37% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -11.20% N/A -1.95% Putnam High Yield -1.53% 6.83% 9.25% Putnam Income -9.40% 5.34% 6.02% Putnam International Growth 52.02% N/A 27.38% Putnam International Growth and Income 16.78% N/A 15.39% Putnam International New Opportunities 94.26% N/A 30.03% Putnam Investors 22.34% N/A 23.48% Putnam Money Market -2.62% 3.20% 3.46% Putnam New Opportunities 60.97% 30.82% 28.33% Putnam New Value -7.01% N/A 4.78% Putnam OTC & Emerging Growth 117.61% N/A 59.21% Putnam Research 20.08% N/A 33.54% Putnam Small Cap Value N/A N/A -4.44% Putnam Utilities Growth and Income -8.04% 15.16% 11.02% Putnam Vista 44.66% N/A 28.27% Putnam Voyager 50.03% 29.60% 20.57% - -------------- * Each of the above Funds (Class IB shares) corresponding to the Variable Sub-Accounts commenced operations on April 30, 1998, except for the Putnam VT Diversified Income, Growth and Income, and International Growth Funds, which commenced operations on April 6, 1998, the Putnam VT Research Fund, which commenced operations September 30, 1998, the Putnam VT Small Cap Value Fund, which commenced operations April 30, 1999, and the Putnam VT American Government Fund and Putnam VT Growth Opportunities Fund, which commenced operations on January 31, 2000. For periods prior to the inception dates of the Funds (Class IB shares), the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are as follows: Global Asset Allocation, Growth and Income, Income, High Yield, Money Market, and Voyager commenced operations on February 1, 1988; Global Growth commenced operations on May 1, 1990; Utilities Growth and Income commenced operations on May 1, 1992; Diversified Income commenced operations on September 15, 1993; New Opportunities commenced operations on May 2, 1994; Asia Pacific Growth commenced operations on May 1, 1995; International Growth, International Growth and Income, International New Opportunities, New Value and Vista commenced operations on January 2, 1997; The George Putnam Fund of Boston, Health Sciences, Investors and OTC & Emerging Growth commenced operations on April 30, 1998. (With the Enhanced Beneficiary Protection Option)* Five Years Ten Years or Variable Sub-Account One Year Since Fund Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 98.18% N/A 12.02% Putnam Diversified Income -5.69% 4.80% 3.20% The George Putnam Fund -7.82% N/A -3.16% Putnam Global Asset Allocation 4.19% 14.88% 10.50% Putnam Global Growth 56.24% 24.87% 15.35% Putnam Growth and Income -5.97% 17.25% 12.20% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -11.35% N/A -2.11% Putnam High Yield -1.69% 6.66% 9.09% Putnam Income -9.55% 5.18% 5.86% Putnam International Growth 51.78% N/A 27.19% Putnam International Growth and Income 16.59% N/A 15.21% Putnam International New Opportunities 93.96% N/A 29.83% Putnam Investors 22.15% N/A 23.29% Putnam Money Market -2.78% 3.04% 3.31% Putnam New Opportunities 60.72% 30.62% 28.13% Putnam New Value -7.16% N/A 4.61% Putnam OTC & Emerging Growth 117.27% N/A 58.96% Putnam Research 19.89% N/A 33.33% Putnam Small Cap Value N/A N/A -4.59% Putnam Utilities Growth and Income -8.19% 14.99% 10.85% Putnam Vista 44.44% N/A 28.07% Putnam Voyager 49.79% 29.41% 20.38% - -------------- * Performance figures have been adjusted to reflect the current charge for the Enhanced Beneficiary Protection Option as if that feature had been available throughout the periods shown. ** The inception dates for the Funds appear in the first footnote to the preceding table. For periods prior to the inception dates of the Funds (Class IB shares), the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are shown on the first note to the first table above. (With Retirement Income Guarantee Rider 2)* Ten Years or Five Years Since Fund Variable Sub-Account One Year Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 98.17% N/A 11.79% Putnam Diversified Income -5.86% 4.66% 2.98% The George Putnam Fund -7.99% N/A -3.39% Putnam Global Asset Allocation 4.04% 14.79% 10.38% Putnam Global Growth 56.17% 24.78% 15.21% Putnam Growth and Income -6.14% 17.20% 12.10% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -11.52% N/A -2.36% Putnam High Yield -1.85% 6.54% 8.99% Putnam Income -9.72% 5.04% 5.72% Putnam International Growth 51.70% N/A 27.08% Putnam International Growth and Income 16.46% N/A 15.09% Putnam International New Opportunities 93.94% N/A 29.68% Putnam Investors 22.03% N/A 23.11% Putnam Money Market -2.94% 2.86% 3.11% Putnam New Opportunities 60.65% 30.59% 28.08% Putnam New Value -7.33% N/A 4.47% Putnam OTC & Emerging Growth 117.29% N/A 58.78% Putnam Research 19.76% N/A 33.00% Putnam Small Cap Value N/A N/A -4.91% Putnam Utilities Growth and Income -8.36% 14.92% 10.72% Putnam Vista 44.35% N/A 27.98% Putnam Voyager 49.71% 29.37% 20.33% - -------------- * Performance figures have been adjusted to reflect the current charge for Retirement Income Guarantee Rider 2 as if that feature had been available throughout the periods shown. For purposes of computing the Rider fee, we assumed that Income Base B applied, that there were no additional purchase payments or withdrawals, and that the Contract Issue Date coincided with the inception date of the Fund (Class IA shares). ** The inception dates for the Funds appear in the first footnote to the first table under Adjusted Historical Total Returns. For periods prior to the inception dates of the Funds (Class IB shares, the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are shown on the first note to the first table above. (With the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2)* Five Years Ten Years or Variable Sub-Account One Year Since Fund Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 97.86% N/A 11.62% Putnam Diversified Income -6.01% 4.49% 2.81% The George Putnam Fund -8.14% N/A -3.55% Putnam Global Asset Allocation 3.87% 14.61% 10.21% Putnam Global Growth 55.93% 24.59% 15.03% Putnam Growth and Income -6.29% 17.02% 11.93% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -11.67% N/A -2.52% Putnam High Yield -2.01% 6.37% 8.82% Putnam Income -9.87% 4.87% 5.56% Putnam International Growth 51.46% N/A 26.88% Putnam International Growth and Income 16.27% N/A 14.91% Putnam International New Opportunities 93.64% N/A 29.48% Putnam Investors 21.83% N/A 22.91% Putnam Money Market -3.10% 2.70% 2.95% Putnam New Opportunities 60.40% 30.39% 27.88% Putnam New Value -7.48% N/A 4.30% Putnam OTC & Emerging Growth 116.95% N/A 58.53% Putnam Research 19.57% N/A 32.79% Putnam Small Cap Value N/A N/A -5.06% Putnam Utilities Growth and Income -8.51% 14.74% 10.55% Putnam Vista 44.12% N/A 27.78% Putnam Voyager 49.47% 29.17% 20.15% - --------------
* Performance figures have been adjusted to reflect the current charge for the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2 as if those features had been available throughout the periods shown. ** The inception dates for the Funds appear in the first footnote to the first table under Adjusted Historical Total Returns. For periods prior to the inception dates of the Funds (Class IB shares), the performance shown is based on the historical performance of the Funds (Class IA shares, adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are shown on the first note to the preceding table. APPENDIX B PUTNAM ALLSTATE ADVISOR APEX CONTRACT Putnam Allstate Advisor Apex Contracts were first offered to the public on October 25, 1999. Accordingly, performance shown for periods prior to that date reflects the performance of the Variable Sub-Accounts, adjusted to reflect the current charges under the Contracts that would have applied had they been in existence at the time. These Contract charges include a maximum sales charge of 5.75% of purchase payments (not reflected in non-standardized total returns) and total Variable Account annual expenses of: o 0.80% (without any optional benefit riders), or o 0.95% if you select the Enhanced Beneficiary Protection Option. In addition, where Retirement Income Guarantee Rider 2 is included, the performance shown reflects the deduction of the annual Rider fee equal to 0.30% of the Income Base, assuming Income Base B is in effect and assuming no additional purchase payments or withdrawals. The performance shown does not reflect the maximum withdrawal charge of 0.50%, which applies only during the first Contract Year and only to Contracts under which purchase payments of at least a $1 million have been made. If such charge were reflected, the performance shown would be lower. See the Expense Table in the Prospectus for more details. Standardized Total Returns Set out below are the standardized total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since its inception through December 31, 1999. All of the Variable Sub-Accounts commenced operations on April 30, 1999 except for the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts, which commenced operations on February 4, 2000.
(Without the Enhanced Beneficiary Protection Option or Retirement Income Guarantee Rider) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 281.10% Putnam Diversified Income -20.80% The George Putnam Fund -37.74% Putnam Global Asset Allocation 2.21% Putnam Global Growth 315.23% Putnam Growth and Income -41.05% Putnam Growth Opportunities N/A Putnam Health Sciences 1.01% Putnam High Yield -11.95% Putnam Income -31.24% Putnam International Growth 204.81% Putnam International Growth and Income -1.80% Putnam International New Opportunities 518.95% Putnam Investors 68.85% Putnam Money Market -25.94% Putnam New Opportunities 298.59% Putnam New Value -40.27% Putnam OTC & Emerging Growth 690.43% Putnam Research 27.32% Putnam Small Cap Value 9.37% Putnam Utilities Growth and Income -43.79% Putnam Vista 226.38% Putnam Voyager 217.53% (With the Enhanced Beneficiary Protection Option) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 280.53% Putnam Diversified Income -20.92% The George Putnam Fund -37.83% Putnam Global Asset Allocation 2.06% Putnam Global Growth 314.61% Putnam Growth and Income -41.14% Putnam Growth Opportunities N/A Putnam Health Sciences 0.86% Putnam High Yield -12.09% Putnam Income -31.34% Putnam International Growth 204.35% Putnam International Growth and Income -1.95% Putnam International New Opportunities 518.02% Putnam Investors 68.60% Putnam Money Market -26.05% Putnam New Opportunities 297.99% Putnam New Value -40.36% Putnam OTC & Emerging Growth 689.25% Putnam Research 27.12% Putnam Small Cap Value 9.21% Putnam Utilities Growth and Income -43.88% Putnam Vista 225.89% Putnam Voyager 217.05% (With Retirement Income Guarantee Rider 2) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 275.87% Putnam Diversified Income -22.22% The George Putnam Fund -38.90% Putnam Global Asset Allocation 0.46% Putnam Global Growth 309.62% Putnam Growth and Income -42.17% Putnam Growth Opportunities N/A Putnam Health Sciences -0.73% Putnam High Yield -13.51% Putnam Income -32.50% Putnam International Growth 200.47% Putnam International Growth and Income -3.50% Putnam International New Opportunities 511.14% Putnam Investors 66.19% Putnam Money Market -27.28% Putnam New Opportunities 293.16% Putnam New Value -41.40% Putnam OTC & Emerging Growth 680.86% Putnam Research 25.21% Putnam Small Cap Value 7.51% Putnam Utilities Growth and Income -44.86% Putnam Vista 221.78% Putnam Voyager 213.03% (With the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 275.31% Putnam Diversified Income -22.34% The George Putnam Fund -38.99% Putnam Global Asset Allocation 0.31% Putnam Global Growth 309.01% Putnam Growth and Income -42.26% Putnam Growth Opportunities N/A Putnam Health Sciences -0.88% Putnam High Yield -13.64% Putnam Income -32.60% Putnam International Growth 200.02% Putnam International Growth and Income -3.65% Putnam International New Opportunities 510.22% Putnam Investors 65.94% Putnam Money Market -27.40% Putnam New Opportunities 292.57% Putnam New Value -41.49% Putnam OTC & Emerging Growth 679.69% Putnam Research 25.02% Putnam Small Cap Value 7.35% Putnam Utilities Growth and Income -44.95% Putnam Vista 221.30% Putnam Voyager 212.56%
Non-Standardized Total Returns Set out below are the non-standardized total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since its inception through December 31, 1999. All of the Variable Sub-Accounts commenced operations on April 30, 1999 except for the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts, which commenced operations on February 4, 2000. The non-standardized total returns shown below do not reflect the withdrawal charges that may be imposed under the Putnam Allstate Advisor Apex Contracts. No non-standardized performance is shown for Contracts with Retirement Income Guarantee Rider 2.
(Without the Enhanced Beneficiary Protection Option or Retirement Income Guarantee Rider) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 436.60% Putnam Diversified Income 11.64% The George Putnam Fund -12.22% Putnam Global Asset Allocation 44.05% Putnam Global Growth 484.62% Putnam Growth and Income -16.90% Putnam Growth Opportunities N/A Putnam Health Sciences 42.36% Putnam High Yield 24.09% Putnam Income -3.07% Putnam International Growth 329.25% Putnam International Growth and Income 38.39% Putnam International New Opportunities 771.20% Putnam Investors 137.88% Putnam Money Market 4.39% Putnam New Opportunities 461.20% Putnam New Value -15.80% Putnam OTC & Emerging Growth 1012.38% Putnam Research 79.40% Putnam Small Cap Value 54.13% Putnam Utilities Growth and Income -20.76% Putnam Vista 359.60% Putnam Voyager 347.14% (With the Enhanced Beneficiary Protection Option) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 435.79% Putnam Diversified Income 11.47% The George Putnam Fund -12.35% Putnam Global Asset Allocation 43.83% Putnam Global Growth 483.74% Putnam Growth and Income -17.02% Putnam Growth Opportunities N/A Putnam Health Sciences 42.14% Putnam High Yield 23.91% Putnam Income -3.21% Putnam International Growth 328.60% Putnam International Growth and Income 38.18% Putnam International New Opportunities 769.90% Putnam Investors 137.52% Putnam Money Market 4.24% Putnam New Opportunities 460.36% Putnam New Value -15.92% Putnam OTC & Emerging Growth 1010.72% Putnam Research 79.13% Putnam Small Cap Value 53.90% Putnam Utilities Growth and Income -20.88% Putnam Vista 358.91% Putnam Voyager 346.47%
Adjusted Historical Total Returns Set out below are the adjusted historical total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since the Fund's inception through December 31, 1999. Adjusted historical total returns are computed in the same manner as standardized total returns, except that the performance figures shown are based on the Funds' historical performance since the inception of the Funds rather than the inception of the Variable Sub-Accounts.
(Without the Enhanced Beneficiary Protection Option or a Retirement Income Guarantee Rider) Ten Year or Five Years Since Fund Variable Sub-Account One Year Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 93.63% N/A 11.83% Putnam Diversified Income -4.87% 4.66% 3.15% The George Putnam Fund -6.89% N/A -2.40% Putnam Global Asset Allocation 4.50% 14.55% 10.56% Putnam Global Growth 53.86% 24.41% 15.40% Putnam Growth and Income -5.14% 16.89% 12.26% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -10.23% N/A -1.40% Putnam High Yield -1.07% 6.49% 9.15% Putnam Income -8.53% 5.04% 5.92% Putnam International Growth 49.63% N/A 26.54% Putnam International Growth and Income 16.26% N/A 14.95% Putnam International New Opportunities 89.63% N/A 29.12% Putnam Investors 21.53% N/A 22.77% Putnam Money Market -2.78% 2.81% 3.31% Putnam New Opportunities 58.10% 30.09% 27.76% Putnam New Value -6.26% N/A 4.76% Putnam OTC & Emerging Growth 111.72% N/A 56.96% Putnam Research 19.39% N/A 32.27% Putnam Small Cap Value N/A N/A -3.86% Putnam Utilities Growth and Income -7.24% 14.66% 10.72% Putnam Vista 42.67% N/A 27.40% Putnam Voyager 47.74% 28.88% 20.44% - -------------- * Each of the above Funds (Class IB shares) corresponding to the Variable Sub-Accounts commenced operations on April 30, 1998, except for the Putnam VT Diversified Income, Growth and Income, and International Growth Funds, which commenced operations on April 6, 1998, the Putnam VT Research Fund, which commenced operations September 30, 1998, the Putnam VT Small Cap Value Fund, which commenced operations April 30, 1999, and the Putnam VT American Government Fund and Putnam VT Growth Opportunities Fund, which commenced operations on January 31, 2000. For periods prior to the inception dates of the Funds (Class IB shares), the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are as follows: Global Asset Allocation, Growth and Income, Income, High Yield, Money Market, and Voyager commenced operations on February 1, 1988; Global Growth commenced operations on May 1, 1990; Utilities Growth and Income commenced operations on May 1, 1992; Diversified Income commenced operations on September 15, 1993; New Opportunities commenced operations on May 2, 1994; Asia Pacific Growth commenced operations on May 1, 1995; International Growth, International Growth and Income, International New Opportunities, New Value and Vista commenced operations on January 2, 1997; The George Putnam Fund of Boston, Health Sciences, Investors and OTC & Emerging Growth commenced operations on April 30, 1998. (With the Enhanced Beneficiary Protection Option)* Five Years Ten Years or Variable Sub-Account One Year Since Fund Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 93.34% N/A 11.66% Putnam Diversified Income -5.02% 4.51% 2.99% The George Putnam Fund -7.03% N/A -2.55% Putnam Global Asset Allocation 4.34% 14.38% 10.40% Putnam Global Growth 53.63% 24.23% 15.22% Putnam Growth and Income -5.28% 16.71% 12.09% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -10.37% N/A -1.55% Putnam High Yield -1.22% 6.33% 8.98% Putnam Income -8.67% 4.88% 5.76% Putnam International Growth 49.40% N/A 26.35% Putnam International Growth and Income 16.09% N/A 14.78% Putnam International New Opportunities 89.34% N/A 28.92% Putnam Investors 21.35% N/A 22.59% Putnam Money Market -2.93% 2.66% 3.15% Putnam New Opportunities 57.86% 29.89% 27.57% Putnam New Value -6.40% N/A 4.60% Putnam OTC & Emerging Growth 111.40% N/A 56.72% Putnam Research 19.21% N/A 32.07% Putnam Small Cap Value N/A N/A -4.00% Putnam Utilities Growth and Income -7.38% 14.48% 10.55% Putnam Vista 42.45% N/A 27.21% Putnam Voyager 47.52% 28.69% 20.26% - -------------- * Performance figures have been adjusted to reflect the current charge for the Enhanced Beneficiary Protection Option as if that feature had been available throughout the periods shown. ** The inception dates for the Funds appear in the first footnote to the preceding table. For periods prior to the inception dates of the Funds (Class IB shares, the performance shown is based on the historical performance of the Funds (Class IA shares, adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are shown on the first note to the first table above. (With Retirement Income Guarantee Rider 2)* Five Years Ten Years or Variable Sub-Account One Year Since Fund Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 93.33% N/A 11.44% Putnam Diversified Income -5.17% 4.37% 2.78% The George Putnam Fund -7.19% N/A -2.77% Putnam Global Asset Allocation 4.20% 14.30% 10.28% Putnam Global Growth 53.56% 24.14% 15.09% Putnam Growth and Income -5.44% 16.66% 12.00% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -10.53% N/A -1.78% Putnam High Yield -1.37% 6.21% 8.89% Putnam Income -8.83% 4.75% 5.63% Putnam International Growth 49.33% N/A 26.25% Putnam International Growth and Income 15.96% N/A 14.66% Putnam International New Opportunities 89.33% N/A 28.78% Putnam Investors 21.23% N/A 22.42% Putnam Money Market -3.08% 2.49% 2.96% Putnam New Opportunities 57.80% 29.86% 27.51% Putnam New Value -6.56% N/A 4.47% Putnam OTC & Emerging Growth 111.42% N/A 56.55% Putnam Research 19.09% N/A 31.76% Putnam Small Cap Value N/A N/A -4.30% Putnam Utilities Growth and Income -7.54% 14.42% 10.43% Putnam Vista 42.37% N/A 27.12% Putnam Voyager 47.44% 28.65% 20.21% - -------------- * Performance figures have been adjusted to reflect the current charge for Retirement Income Guarantee Rider 2 as if that feature had been available throughout the periods shown. For purposes of computing the Rider fee, we assumed that Income Base B applied, that there were no additional purchase payments or withdrawals, and that the Contract Issue Date coincided with the inception date of the Fund (Class IA shares). ** The inception dates for the Funds appear in the first footnote to the first table under Adjusted Historical Total Returns. For periods prior to the inception dates of the Funds (Class IB shares), the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares are shown on the first note to the first table above. (With the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2)* Five Years Ten Years or Variable Sub-Account One Year Since Fund Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 93.04% N/A 11.27% Putnam Diversified Income -5.31% 4.21% 2.62% The George Putnam Fund -7.33% N/A -2.91% Putnam Global Asset Allocation 4.04% 14.12% 10.11% Putnam Global Growth 53.33% 23.95% 14.91% Putnam Growth and Income -5.58% 16.48% 11.83% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -10.67% N/A -1.93% Putnam High Yield -1.52% 6.05% 8.73% Putnam Income -8.96% 4.59% 5.47% Putnam International Growth 49.10% N/A 26.06% Putnam International Growth and Income 15.79% N/A 14.49% Putnam International New Opportunities 89.04% N/A 28.59% Putnam Investors 21.05% N/A 22.23% Putnam Money Market -3.23% 2.33% 2.80% Putnam New Opportunities 57.56% 29.66% 27.32% Putnam New Value -6.70% N/A 4.31% Putnam OTC & Emerging Growth 111.10% N/A 56.32% Putnam Research 18.91% N/A 31.56% Putnam Small Cap Value N/A N/A -4.44% Putnam Utilities Growth and Income -7.68% 14.25% 10.26% Putnam Vista 42.15% N/A 26.93% Putnam Voyager 47.22% 28.46% 20.03% - --------------
* Performance figures have been adjusted to reflect the current charge for the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2 as if those features had been available throughout the periods shown. ** The inception dates for the Funds appear in the first footnote to the first table under Adjusted Historical Total Returns. For periods prior to the inception dates of the Funds (Class IB shares, the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares are shown on the first note to the preceding table. APPENDIX C PUTNAM ALLSTATE ADVISOR PLUS CONTRACT Putnam Allstate Advisor Plus Contracts were first offered to the public on February 4, 2000. Accordingly, performance shown for periods prior to that date reflects the performance of the Variable Sub-Accounts, adjusted to reflect the current charges under the Contracts that would have applied had they been in existence at the time. These Contract charges include a maximum withdrawal charge of 8% that declines to zero after seven years (not reflected in non-standardized total returns), and total Variable Account annual expenses of: o 1.60% (without any optional benefit riders), or o 1.75% with the Enhanced Beneficiary Protection Option. In addition, where Retirement Income Guarantee Rider 2 is included, the performance shown reflects the deduction of the annual Rider fee equal to 0.30% of the Income Base, assuming Income Base B is in effect and assuming no additional purchase payments or withdrawals. The standardized total returns shown below also include the 4% credit enhancement available under the Putnam Allstate Advisor Plus Contract. See the Expense Table in the Prospectus for more details. Standardized Total Returns Set out below are the standardized total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since its inception through December 31, 1999. All of the Variable Sub-Accounts commenced operations on April 30, 1999 except for the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts, which commenced operations on February 4, 2000.
(Without the Enhanced Beneficiary Protection Option or Retirement Income Guarantee Rider) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 128.62% Putnam Diversified Income -6.54% The George Putnam Fund -14.99% Putnam Global Asset Allocation 6.30% Putnam Global Growth 97.81% Putnam Growth and Income -16.84% Putnam Growth Opportunities N/A Putnam Health Sciences 4.72% Putnam High Yield -5.51% Putnam Income -8.83% Putnam International Growth 70.24% Putnam International Growth and Income 10.61% Putnam International New Opportunities 142.91% Putnam Investors 30.32% Putnam Money Market -2.04% Putnam New Opportunities 94.08% Putnam New Value -22.27% Putnam OTC & Emerging Growth 178.99% Putnam Research 20.82% Putnam Small Cap Value 0.13% Putnam Utilities Growth and Income -4.70% Putnam Vista 64.03% Putnam Voyager 68.38% (With the Enhanced Beneficiary Protection Option) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 128.27% Putnam Diversified Income -6.69% The George Putnam Fund -15.13% Putnam Global Asset Allocation 6.13% Putnam Global Growth 97.80% Putnam Growth and Income -16.98% Putnam Growth Opportunities N/A Putnam Health Sciences 4.55% Putnam High Yield -5.67% Putnam Income -8.98% Putnam International Growth 69.97% Putnam International Growth and Income 10.43% Putnam International New Opportunities 142.53% Putnam Investors 30.11% Putnam Money Market -2.20% Putnam New Opportunities 93.77% Putnam New Value -22.39% Putnam OTC & Emerging Growth 178.55% Putnam Research 20.62% Putnam Small Cap Value -0.02% Putnam Utilities Growth and Income -4.85% Putnam Vista 63.77% Putnam Voyager 68.11% (With Retirement Income Guarantee Rider 2) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 127.98% Putnam Diversified Income -7.02% The George Putnam Fund -15.45% Putnam Global Asset Allocation 5.80% Putnam Global Growth 97.19% Putnam Growth and Income -17.31% Putnam Growth Opportunities N/A Putnam Health Sciences 4.22% Putnam High Yield -6.00% Putnam Income -9.31% Putnam International Growth 69.66% Putnam International Growth and Income 10.10% Putnam International New Opportunities 142.25% Putnam Investors 29.79% Putnam Money Market -2.53% Putnam New Opportunities 93.46% Putnam New Value -22.72% Putnam OTC & Emerging Growth 178.29% Putnam Research 20.29% Putnam Small Cap Value -0.35% Putnam Utilities Growth and Income -5.18% Putnam Vista 63.45% Putnam Voyager 67.79% (With the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 127.62% Putnam Diversified Income -7.18% The George Putnam Fund -15.59% Putnam Global Asset Allocation 5.63% Putnam Global Growth 97.18% Putnam Growth and Income -17.44% Putnam Growth Opportunities N/A Putnam Health Sciences 4.05% Putnam High Yield -6.15% Putnam Income -9.46% Putnam International Growth 69.39% Putnam International Growth and Income 9.92% Putnam International New Opportunities 141.87% Putnam Investors 29.58% Putnam Money Market -2.69% Putnam New Opportunities 93.16% Putnam New Value -22.85% Putnam OTC & Emerging Growth 177.85% Putnam Research 20.10% Putnam Small Cap Value -0.51% Putnam Utilities Growth and Income -5.34% Putnam Vista 63.19% Putnam Voyager 67.52%
Non-Standardized Total Returns Set out below are the non-standardized total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since its inception through December 31, 1999. All of the Variable Sub-Accounts commenced operations on April 30, 1999 except for the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts, which commenced operations on February 4, 2000. The non-standardized total returns shown below do not include the 4% credit enhancement available under the Putnam Allstate Advisor Plus Contract or the withdrawal charge that may be imposed under the Contract. No non-standardized performance is shown for Contracts with Retirement Income Guarantee Rider 2.
(Without the Enhanced Beneficiary Protection Option or Retirement Income Guarantee Rider) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 128.18% Putnam Diversified Income -2.33% The George Putnam Fund -10.58% Putnam Global Asset Allocation 10.17% Putnam Global Growth 98.57% Putnam Growth and Income -12.39% Putnam Growth Opportunities N/A Putnam Health Sciences 8.63% Putnam High Yield -1.33% Putnam Income -4.57% Putnam International Growth 72.04% Putnam International Growth and Income 14.35% Putnam International New Opportunities 141.89% Putnam Investors 33.47% Putnam Money Market 2.04% Putnam New Opportunities 94.98% Putnam New Value -17.70% Putnam OTC & Emerging Growth 176.46% Putnam Research 24.26% Putnam Small Cap Value 4.17% Putnam Utilities Growth and Income -0.54% Putnam Vista 66.04% Putnam Voyager 70.24% (With the Enhanced Beneficiary Protection Option) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 127.84% Putnam Diversified Income -2.48% The George Putnam Fund -10.71% Putnam Global Asset Allocation 10.00% Putnam Global Growth 98.57% Putnam Growth and Income -12.53% Putnam Growth Opportunities N/A Putnam Health Sciences 8.46% Putnam High Yield -1.48% Putnam Income -4.72% Putnam International Growth 71.78% Putnam International Growth and Income 14.18% Putnam International New Opportunities 141.53% Putnam Investors 33.27% Putnam Money Market 1.89% Putnam New Opportunities 94.69% Putnam New Value -17.82% Putnam OTC & Emerging Growth 176.04% Putnam Research 24.07% Putnam Small Cap Value 4.01% Putnam Utilities Growth and Income -0.69% Putnam Vista 65.79% Putnam Voyager 69.98%
Adjusted Historical Total Returns Set out below are the adjusted historical total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since the Fund's inception through December 31, 1999. Adjusted historical total returns are computed in the same manner as standardized total returns, except that the performance figures shown are based on the Funds' historical performance since the inception of the Funds rather than the inception of the Variable Sub-Accounts. The adjusted historical total returns shown below include the 4% credit enhancement available under the Putnam Allstate Advisor Plus Contract as well as the applicable withdrawal charge under the Contract.
(Without the Enhanced Beneficiary Protection Option or a Retirement Income Guarantee Rider) Five Years Ten Years or Variable Sub-Account One Year Since Fund Inception* Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 105.16% N/A 12.59% Putnam Diversified Income -2.68% 5.06% 3.48% The George Putnam Fund -4.89% N/A -1.36% Putnam Global Asset Allocation 7.57% 15.31% 10.75% Putnam Global Growth 63.98% 25.81% 15.80% Putnam Growth and Income -2.96% 17.72% 12.45% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -8.54% N/A -0.28% Putnam High Yield 1.47% 6.96% 9.33% Putnam Income -6.67% 5.45% 6.11% Putnam International Growth 56.98% N/A 28.35% Putnam International Growth and Income 20.45% N/A 16.17% Putnam International New Opportunities 100.77% N/A 31.04% Putnam Investors 26.22% N/A 25.71% Putnam Money Market -0.38% 3.12% 3.48% Putnam New Opportunities 66.25% 31.26% 28.72% Putnam New Value -4.19% N/A 5.38% Putnam OTC & Emerging Growth 124.94% N/A 62.22% Putnam Research 23.87% N/A 36.93% Putnam Small Cap Value N/A N/A 0.13% Putnam Utilities Growth and Income -5.26% 15.42% 11.07% Putnam Vista 49.35% N/A 29.25% Putnam Voyager 54.91% 30.03% 20.65% - -------------- * Each of the above Funds (Class IB shares) corresponding to the Variable Sub-Accounts commenced operations on April 30, 1998, except for the Putnam VT Diversified Income, Growth and Income, and International Growth Funds, which commenced operations on April 6, 1998, the Putnam VT Research Fund, which commenced operations September 30, 1998, the Putnam VT Small Cap Value Fund, which commenced operations April 30, 1999, and the Putnam VT American Government Fund and Putnam VT Growth Opportunities Fund, which commenced operations on January 31, 2000. For periods prior to the inception dates of the Funds (Class IB shares, the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are as follows: Global Asset Allocation, Growth and Income, Income, High Yield, Money Market, and Voyager commenced operations on February 1, 1988; Global Growth commenced operations on May 1, 1990; Utilities Growth and Income commenced operations on May 1, 1992; Diversified Income commenced operations on September 15, 1993; New Opportunities commenced operations on May 2, 1994; Asia Pacific Growth commenced operations on May 1, 1995; International Growth, International Growth and Income, International New Opportunities, New Value and Vista commenced operations on January 2, 1997; The George Putnam Fund of Boston, Health Sciences, Investors and OTC & Emerging Growth commenced operations on April 30, 1998. (With the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2)* Five Years Ten Years or Variable Sub-Account One Year Since Fund Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 104.51% N/A 12.00% Putnam Diversified Income -3.16% 4.58% 2.92% The George Putnam Fund -5.37% N/A -1.92% Putnam Global Asset Allocation 7.07% 14.86% 10.29% Putnam Global Growth 63.56% 25.35% 15.31% Putnam Growth and Income -3.45% 17.30% 12.00% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -9.02% N/A -0.86% Putnam High Yield 0.98% 6.49% 8.90% Putnam Income -7.16% 4.96% 5.63% Putnam International Growth 56.40% N/A 27.84% Putnam International Growth and Income 19.93% N/A 15.68% Putnam International New Opportunities 100.12% N/A 30.48% Putnam Investors 25.68% N/A 25.12% Putnam Money Market -0.88% 2.61% 2.96% Putnam New Opportunities 65.66% 30.82% 28.26% Putnam New Value -4.68% N/A 4.89% Putnam OTC & Emerging Growth 124.25% N/A 61.52% Putnam Research 23.34% N/A 36.16% Putnam Small Cap Value N/A N/A -0.51% Putnam Utilities Growth and Income -5.74% 14.99% 10.60% Putnam Vista 48.79% N/A 28.75% Putnam Voyager 54.33% 29.59% 20.22% - -------------- * Performance figures have been adjusted to reflect the current charge for the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2 as if those features had been available throughout the periods shown. ** The inception dates for the Funds appear in the first footnote to the preceding table. For periods prior to the inception dates of the Funds (Class IB shares), the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are shown on the first note to the preceding table. (With the Enhanced Beneficiary Protection Option)* Five Years Ten Years or Variable Sub-Account One Year Since Fund Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 104.84% N/A 12.41% Putnam Diversified Income -2.83% 4.89% 3.32% The George Putnam Fund -5.04% N/A -1.52% Putnam Global Asset Allocation 7.402 15.13% 10.58% Putnam Global Growth 63.89% 25.64% 15.64% Putnam Growth and Income -3.12% 17.54% 12.28% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -8.69% N/A -0.44% Putnam High Yield 1.31% 6.79% 9.17% Putnam Income -6.83% 5.28% 5.94% Putnam International Growth 56.73% N/A 28.15% Putnam International Growth and Income 20.26% N/A 15.99% Putnam International New Opportunities 100.45% N/A 30.84% Putnam Investors 26.01% N/A 25.51% Putnam Money Market -0.55% 2.96% 3.33% Putnam New Opportunities 65.99% 31.06% 28.52% Putnam New Value -4.35% N/A 5.21% Putnam OTC & Emerging Growth 124.58% N/A 61.96% Putnam Research 23.67% N/A 36.71% Putnam Small Cap Value N/A N/A -0.02% Putnam Utilities Growth and Income -5.41% 15.24% 10.90% Putnam Vista 49.12% N/A 29.05% Putnam Voyager 54.66% 29.83% 20.46% - -------------- * Performance figures have been adjusted to reflect the current charge for the Enhanced Beneficiary Protection Option as if that feature had been available throughout the periods shown. ** The inception dates for the Funds appear in the first footnote to the first table under Adjusted Historical Total Returns. For periods prior to the inception dates of the Funds (Class IB shares), the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are shown on the first note to the first table above. (With Retirement Income Guarantee Rider 2)* Ten Years or Five Years Since Fund Variable Sub-Account One Year Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 104.83% N/A 12.18% Putnam Diversified Income -3.00% 4.74% 3.09% The George Putnam Fund -5.21% N/A -1.76% Putnam Global Asset Allocation 7.24% 15.04% 10.46% Putnam Global Growth 63.65% 25.52% 15.48% Putnam Growth and Income -3.29% 17.48% 12.18% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -8.87% N/A -0.70% Putnam High Yield 1.14% 6.66% 9.07% Putnam Income -7.01% 5.13% 5.80% Putnam International Growth 56.65% N/A 28.04% Putnam International Growth and Income 20.12% N/A 15.86% Putnam International New Opportunities 100.43% N/A 30.69% Putnam Investors 25.89% N/A 25.33% Putnam Money Market -0.72% 2.77% 3.12% Putnam New Opportunities 65.92% 31.02% 28.46% Putnam New Value -4.52% N/A 5.06% Putnam OTC & Emerging Growth 124.61% N/A 61.78% Putnam Research 23.54% N/A 36.38% Putnam Small Cap Value N/A N/A -0.35% Putnam Utilities Growth and Income -5.59% 15.17% 10.77% Putnam Vista 49.02% N/A 28.95% Putnam Voyager 54.58% 29.79% 20.41% - --------------
* Performance figures have been adjusted to reflect the current charge for Retirement Income Guarantee Rider 2 as if that feature had been available throughout the periods shown. For purposes of computing the Rider fee, we assumed that Income Base B applied, that there were no additional purchase payments or withdrawals, and that the Contract Issue Date coincided with the inception date of the Fund (Class IA shares). ** The inception dates for the Funds appear in the first footnote to the first table under Adjusted Historical Total Returns. For periods prior to the inception dates of the Funds (Class IB shares, the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are shown on the first note to the first table above. APPENDIX D PUTNAM ALLSTATE ADVISOR PREFERRED CONTRACT Putnam Allstate Advisor Preferred Contracts were first offered to the public as of the date of this Statement of Additional Information. Accordingly, performance shown for periods prior to that date reflects the performance of the Variable Sub-Accounts, adjusted to reflect the current charges under the Contracts that would have applied had they been in existence at the time. These Contract charges include a maximum withdrawal charge of 2% that declines to zero after two years (not reflected in non-standardized total returns), and total Variable Account annual expenses of: o 1.65% (without any optional benefit riders), or o 1.80% with the Enhanced Beneficiary Protection Option. In addition, where Retirement Income Guarantee Rider 2 is included, the performance shown reflects the deduction of the annual Rider fee equal to 0.30% of the Income Base, assuming Income Base B is in effect and assuming no additional purchase payments or withdrawals. See the Expense Table in the Prospectus for more details. Standardized Total Returns Set out below are the standardized total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since its inception through December 31, 1999. All of the Variable Sub-Accounts commenced operations on April 30, 1999 except for the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts, which commenced operations on February 4, 2000.
(Without the Enhanced Beneficiary Protection Option or Retirement Income Guarantee Rider) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 124.30% Putnam Diversified Income -5.33% The George Putnam Fund -13.49% Putnam Global Asset Allocation 7.06% Putnam Global Growth 94.94% Putnam Growth and Income -15.28% Putnam Growth Opportunities N/A Putnam Health Sciences 5.53% Putnam High Yield -4.34% Putnam Income -7.54% Putnam International Growth 68.46% Putnam International Growth and Income 11.20% Putnam International New Opportunities 137.94% Putnam Investors 30.17% Putnam Money Market -0.99% Putnam New Opportunities 91.27% Putnam New Value -20.53% Putnam OTC & Emerging Growth 172.36% Putnam Research 21.03% Putnam Small Cap Value 1.11% Putnam Utilities Growth and Income -3.55% Putnam Vista 62.51% Putnam Voyager 66.67% (With the Enhanced Beneficiary Protection Option) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 123.96% Putnam Diversified Income -5.48% The George Putnam Fund -13.62% Putnam Global Asset Allocation 6.89% Putnam Global Growth 94.93% Putnam Growth and Income -15.42% Putnam Growth Opportunities N/A Putnam Health Sciences 5.37% Putnam High Yield -4.49% Putnam Income -7.69% Putnam International Growth 68.20% Putnam International Growth and Income 11.03% Putnam International New Opportunities 137.58% Putnam Investors 29.96% Putnam Money Market -1.14% Putnam New Opportunities 90.98% Putnam New Value -20.65% Putnam OTC & Emerging Growth 171.94% Putnam Research 20.84% Putnam Small Cap Value 0.95% Putnam Utilities Growth and Income -3.70% Putnam Vista 62.25% Putnam Voyager 66.41% (With Retirement Income Guarantee Rider 2) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 123.68% Putnam Diversified Income -5.79% The George Putnam Fund -13.94% Putnam Global Asset Allocation 6.57% Putnam Global Growth 94.35% Putnam Growth and Income -15.73% Putnam Growth Opportunities N/A Putnam Health Sciences 5.05% Putnam High Yield -4.80% Putnam Income -8.00% Putnam International Growth 67.90% Putnam International Growth and Income 10.71% Putnam International New Opportunities 137.31% Putnam Investors 29.65% Putnam Money Market -1.46% Putnam New Opportunities 90.69% Putnam New Value -20.97% Putnam OTC & Emerging Growth 171.70% Putnam Research 20.52% Putnam Small Cap Value 0.63% Putnam Utilities Growth and Income -4.02% Putnam Vista 61.95% Putnam Voyager 66.11% (With the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 123.34% Putnam Diversified Income -5.94% The George Putnam Fund -14.07% Putnam Global Asset Allocation 6.41% Putnam Global Growth 94.34% Putnam Growth and Income -15.86% Putnam Growth Opportunities N/A Putnam Health Sciences 4.89% Putnam High Yield -4.95% Putnam Income -8.15% Putnam International Growth 67.64% Putnam International Growth and Income 10.54% Putnam International New Opportunities 136.95% Putnam Investors 29.45% Putnam Money Market -1.61% Putnam New Opportunities 90.39% Putnam New Value -21.09% Putnam OTC & Emerging Growth 171.28% Putnam Research 20.34% Putnam Small Cap Value 0.48% Putnam Utilities Growth and Income -4.17% Putnam Vista 61.70% Putnam Voyager 65.85%
Non-Standardized Total Returns Set out below are the non-standardized total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since its inception through December 31, 1999. All of the Variable Sub-Accounts commenced operations on April 30, 1999 except for the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts, which commenced operations on February 4, 2000. The non-standardized total returns shown below do not reflect the withdrawal charge that may be imposed under the Putnam Allstate Advisor Preferred Contract. No non-standardized performance is shown for Contracts with Retirement Income Guarantee Rider 2.
(Without the Enhanced Beneficiary Protection Option or Retirement Income Guarantee Rider) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 128.07% Putnam Diversified Income -2.38% The George Putnam Fund -10.62% Putnam Global Asset Allocation 10.11% Putnam Global Growth 98.57% Putnam Growth and Income -12.44% Putnam Growth Opportunities N/A Putnam Health Sciences 8.57% Putnam High Yield -1.38% Putnam Income -4.62% Putnam International Growth 71.95% Putnam International Growth and Income 14.29% Putnam International New Opportunities 141.77% Putnam Investors 33.41% Putnam Money Market 1.99% Putnam New Opportunities 94.89% Putnam New Value -17.74% Putnam OTC & Emerging Growth 176.32% Putnam Research 24.20% Putnam Small Cap Value 4.11% Putnam Utilities Growth and Income -0.59% Putnam Vista 65.96% Putnam Voyager 70.15% (With the Enhanced Beneficiary Protection Option) Variable Sub-Account Since Inception of Sub-Account Putnam American Government Income N/A Putnam Asia Pacific Growth 127.73% Putnam Diversified Income -2.53% The George Putnam Fund -10.76% Putnam Global Asset Allocation 9.94% Putnam Global Growth 98.56% Putnam Growth and Income -12.57% Putnam Growth Opportunities N/A Putnam Health Sciences 8.41% Putnam High Yield -1.53% Putnam Income -4.76% Putnam International Growth 71.69% Putnam International Growth and Income 14.12% Putnam International New Opportunities 141.41% Putnam Investors 33.20% Putnam Money Market 1.83% Putnam New Opportunities 94.59% Putnam New Value -17.86% Putnam OTC & Emerging Growth 175.90% Putnam Research 24.01% Putnam Small Cap Value 3.96% Putnam Utilities Growth and Income -0.74% Putnam Vista 65.71% Putnam Voyager 69.89%
Adjusted Historical Total Returns Set out below are the adjusted historical total returns for each Variable Sub-Account (other than the Putnam American Government Income and Putnam Growth Opportunities Variable Sub-Accounts) since the Fund's inception through December 31, 1999. Adjusted historical total returns are computed in the same manner as standardized total returns, except that the performance figures shown are based on the Funds' historical performance since the inception of the Funds rather than the inception of the Variable Sub-Accounts.
(Without the Enhanced Beneficiary Protection Option or a Retirement Income Guarantee Rider) Ten Years or Five Years Since Fund Variable Sub-Account One Year Inception* Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 101.70% N/A 12.28% Putnam Diversified Income -1.93% 5.00% 3.23% The George Putnam Fund -4.05% N/A -0.34% Putnam Global Asset Allocation 7.92% 14.92% 10.26% Putnam Global Growth 62.18% 25.17% 15.28% Putnam Growth and Income -2.21% 17.26% 11.95% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -7.57% N/A 0.69% Putnam High Yield 2.06% 6.83% 8.85% Putnam Income -5.77% 5.37% 5.64% Putnam International Growth 55.40% N/A 27.96% Putnam International Growth and Income 20.29% N/A 16.24% Putnam International New Opportunities 97.48% N/A 30.57% Putnam Investors 25.84% N/A 25.60% Putnam Money Market 0.26% 3.14% 3.03% Putnam New Opportunities 64.31% 30.51% 27.99% Putnam New Value -3.39% N/A 5.94% Putnam OTC & Emerging Growth 120.71% N/A 60.79% Putnam Research 23.58% N/A 36.74% Putnam Small Cap Value N/A N/A 1.11% Putnam Utilities Growth and Income -4.41% 15.03% 10.62% Putnam Vista 48.07% N/A 28.83% Putnam Voyager 53.41% 29.30% 20.11% - -------------- * Each of the above Funds (Class IB shares) corresponding to the Variable Sub-Accounts commenced operations on April 30, 1998, except for the Putnam VT Diversified Income, Growth and Income, and International Growth Funds, which commenced operations on April 6, 1998, the Putnam VT Research Fund, which commenced operations September 30, 1998, the Putnam VT Small Cap Value Fund, which commenced operations April 30, 1999, and the Putnam VT American Government Fund and Putnam VT Growth Opportunities Fund, which commenced operations on January 31, 2000. For periods prior to the inception dates of the Funds (Class IB shares, the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are as follows: Global Asset Allocation, Growth and Income, Income, High Yield, Money Market, and Voyager commenced operations on February 1, 1988; Global Growth commenced operations on May 1, 1990; Utilities Growth and Income commenced operations on May 1, 1992; Diversified Income commenced operations on September 15, 1993; New Opportunities commenced operations on May 2, 1994; Asia Pacific Growth commenced operations on May 1, 1995; International Growth, International Growth and Income, International New Opportunities, New Value and Vista commenced operations on January 2, 1997; The George Putnam Fund of Boston, Health Sciences, Investors and OTC & Emerging Growth commenced operations on April 30, 1998. (With the Enhanced Beneficiary Protection Option)* Five Years Ten Years or Variable Sub-Account One Year Since Fund Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 101.39% N/A 12.11% Putnam Diversified Income -2.08% 4.84% 3.07% The George Putnam Fund -4.20% N/A -0.49% Putnam Global Asset Allocation 7.75% 14.74% 10.10% Putnam Global Growth 62.10% 25.01% 15.11% Putnam Growth and Income -2.36% 17.08% 11.78% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -7.71% N/A 0.53% Putnam High Yield 1.90% 6.67% 8.68% Putnam Income -5.92% 5.21% 5.47% Putnam International Growth 55.16% N/A 27.77% Putnam International Growth and Income 20.11% N/A 16.06% Putnam International New Opportunities 97.18% N/A 30.37% Putnam Investors 25.64% N/A 25.40% Putnam Money Market 0.10% 2.99% 2.87% Putnam New Opportunities 64.06% 30.31% 27.80% Putnam New Value -3.54% N/A 5.77% Putnam OTC & Emerging Growth 120.37% N/A 60.55% Putnam Research 23.39% N/A 36.53% Putnam Small Cap Value N/A N/A 0.95% Putnam Utilities Growth and Income -4.56% 14.85% 10.45% Putnam Vista 47.84% N/A 28.63% Putnam Voyager 53.17% 29.10% 19.93% - -------------- * Performance figures have been adjusted to reflect the current charge for the Enhanced Beneficiary Protection Option as if that feature had been available throughout the periods shown. ** The inception dates for the Funds appear in the first footnote to the preceding table. For periods prior to the inception dates of the Funds (Class IB shares), the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are shown on the first note to the first table above. (With Retirement Income Guarantee Rider 2)* Ten Years or Five Years Since Fund Variable Sub-Account One Year Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 101.38% N/A 11.88% Putnam Diversified Income -2.25% 4.70% 2.84% The George Putnam Fund -4.37% N/A -0.72% Putnam Global Asset Allocation 7.60% 14.66% 9.97% Putnam Global Growth 61.87% 24.89% 14.96% Putnam Growth and Income -2.52% 17.03% 11.68% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -7.88% N/A 0.28% Putnam High Yield 1.74% 6.54% 8.58% Putnam Income -6.09% 5.07% 5.33% Putnam International Growth 55.08% N/A 27.66% Putnam International Growth and Income 19.98% N/A 15.94% Putnam International New Opportunities 97.16% N/A 30.22% Putnam Investors 25.52% N/A 25.23% Putnam Money Market -0.05% 2.81% 2.66% Putnam New Opportunities 63.99% 30.27% 27.74% Putnam New Value -3.71% N/A 5.63% Putnam OTC & Emerging Growth 120.39% N/A 60.37% Putnam Research 23.26% N/A 36.20% Putnam Small Cap Value N/A N/A 0.63% Putnam Utilities Growth and Income -4.73% 14.78% 10.32% Putnam Vista 47.75% N/A 28.54% Putnam Voyager 53.09% 29.06% 19.88% - -------------- * Performance figures have been adjusted to reflect the current charge for Retirement Income Guarantee Rider 2 as if that feature had been available throughout the periods shown. For purposes of computing the Rider fee, we assumed that Income Base B applied, that there were no additional purchase payments or withdrawals, and that the Contract Issue Date coincided with the inception date of the Fund (Class IA shares). ** The inception dates for the Funds appear in the first footnote to the first table under Adjusted Historical Total Returns. For periods prior to the inception dates of the Funds (Class IB shares), the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are shown on the first note to the first table above. (With the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2)* Five Years Ten Years or Variable Sub-Account One Year Since Fund Inception** Putnam American Government Income N/A N/A N/A Putnam Asia Pacific Growth 101.08% N/A 11.71% Putnam Diversified Income -2.40% 4.54% 2.68% The George Putnam Fund -4.52% N/A -0.87% Putnam Global Asset Allocation 7.43% 14.48% 9.80% Putnam Global Growth 61.78% 24.72% 14.79% Putnam Growth and Income -2.68% 16.85% 11.51% Putnam Growth Opportunities N/A N/A N/A Putnam Health Sciences -8.03% N/A 0.13% Putnam High Yield 1.58% 6.38% 8.42% Putnam Income -6.24% 4.91% 5.17% Putnam International Growth 54.84% N/A 27.47% Putnam International Growth and Income 19.79% N/A 15.77% Putnam International New Opportunities 96.86% N/A 30.02% Putnam Investors 25.32% N/A 25.03% Putnam Money Market -0.20% 2.65% 2.50% Putnam New Opportunities 63.74% 30.07% 27.54% Putnam New Value -3.86% N/A 5.47% Putnam OTC & Emerging Growth 120.05% N/A 60.12% Putnam Research 23.07% N/A 35.99% Putnam Small Cap Value N/A N/A 0.48% Putnam Utilities Growth and Income -4.88% 14.61% 10.15% Putnam Vista 47.53% N/A 28.35% Putnam Voyager 52.86% 28.86% 19.69% - --------------
*Performance figures have been adjusted to reflect the current charge for the Enhanced Beneficiary Protection Option and Retirement Income Guarantee Rider 2 as if those features had been available throughout the periods shown. ** The inception dates for the Funds appear in the first footnote to the first table under Adjusted Historical Total Returns. For periods prior to the inception dates of the Funds (Class IB shares), the performance shown is based on the historical performance of the Funds (Class IA shares), adjusted to reflect the current expenses of the Funds (Class IB shares). The inception dates for the Funds (Class IA shares) are shown on the first note to the preceding table. PART C OTHER INFORMATION 24A. FINANCIAL STATEMENTS The financial statements of Allstate Life Insurance Company ("Allstate" or "Depositor") and Allstate Life Insurance Company Separate Account A ("Separate Account") are filed herewith in Part B of this Registration Statement. 24B. EXHIBITS The following exhibits, correspond to those required by paragraph (b) of item 24 as to exhibits in Form N-4: (1) Resolution of the Board of Directors of Allstate Life Insurance Company authorizing establishment of the Allstate Life Insurance Company Separate Account A* (2) Not Applicable (3)(a) Form of Underwriting Agreement with ALFS, Inc. (formerly known as Allstate Life Financial Services, Inc.)** (b) Underwriting Agreement with Allstate Distributors, L.L.C (4) Form of Putnam Allstate Advisor Preferred Contract**** (5) Form of Application for Putnam Allstate Advisor Preferred Contract**** (6)(a) Articles of Incorporation of Allstate Life Insurance Company* (b) By-laws of Allstate Life Insurance Company* (7) Not applicable (8) Participation Agreement among Putnam Variable Trust, Putnam Mutual Funds Corp., and Allstate Life Insurance Company (9) Opinion of Michael J. Velotta, Vice President, Secretary and General Counsel of Allstate Life Insurance Company regarding the legality of the securities being registered (10)(a) Independent Auditors' Consent (b) Consent of Freedman, Levy, Kroll & Simonds (11) Not applicable (12) Not applicable (13) Performance Data Calculations (14) Not applicable (99)(a) Powers of Attorney for Thomas J. Wilson, II, Kevin R. Slawin, Casey J. Sylla, Marla G. Friedman and John C. Lounds* (b) Power of Attorney for Samuel H. Pilch*** - ----------- * Incorporated herein by reference to the initial filing, dated February 9, 1999, of Registrant's Form N-4 registration statement (File No. 333-72017). ** Incorporated herein by reference to Pre-Effective Amendment No. 1, dated April 16, 1999, to Registrant's Form N-4 registration statement (File No. 333-72017). *** Incorporated herein by reference to Post-Effective Amendment No. 1, dated August 31, 1999, to Registrant's Form N-4 registration statement (File No. 333-72017). **** Previously filed in the initial filing of this Form N-4 registration statement (File No. 333-31288) on February 29, 2000. 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR Name and Principal Positions and Offices with Business Address* Depositor of the Separate Account
Thomas J. Wilson, II Director, Chairman of the Board and President Michael J. Velotta Director, Senior Vice President, Secretary and General Counsel Marla G. Friedman Director and Senior Vice President John L. Carl Director Richard I. Cohen Director T. O'Neal Douglas Director Margaret G. Dyer Director and Senior Vice President Edward M. Liddy Director John C. Lounds Director and Senior Vice President Robert W. Pike Director J. Kevin McCarthy Director and Senior Vice President Kevin R. Slawin Director and Senior Vice President Casey J. Sylla Director and Chief Investment Officer Charles F. Thalheimer Director and Vice President B. Eugene Wraith Director and Vice President John R. Hunter Vice President Karen C. Gardner Vice President Patricia A. Coffey Vice President Moses Hardie Vice President Mary J. McGinn Vice President and Assistant Secretary Leonard G. Sherman Vice President Steven C. Verney Vice President James P. Zils Treasurer Samuel H. Pilch Vice President and Controller C. Nelson Strom Assistant Vice President and Corporate Actuary Patricia W. Wilson Assistant Vice President, Assistant Secretary and Assistant Treasurer Denis Bailey Assistant Vice President Richard L. Baker Vice President Lisa Cochrane Assistant Vice President D. Steven Boger Assistant Vice President Lawrence W. Dahl Assistant Vice President Sarah R. Donahue Assistant Vice President Thomas W. Evans Assistant Vice President Douglas F. Gaer Assistant Vice President Brent H. Hamann Assistant Vice President Ronald A. Johnson Assistant Vice President Robert L. Park Assistant Vice President Barry S. Paul Assistant Vice President and Assistant Treasurer Robert E. Rich Assistant Vice President Linda L. Shumilas Assistant Vice President Robert E. Transon Assistant Vice President Timothy N. Vander Pas Assistant Vice President G. Craig Whitehead Assistant Vice President Laura R. Zimmerman Assistant Vice President Joanne M. Derrig Assistant Secretary, Assistant General Counsel and Chief Compliance Officer Emma M. Kalaidjian Assistant Secretary Paul N. Kierig Assistant Secretary
*The principal business address of the foregoing directors and officers is 3100 Sanders Road, Northbrook, Illinois 60062. 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH DEPOSITOR OR REGISTRANT Information in response to this item is incorporated by reference to the Form 10-K Annual Report of The Allstate Corporation (File #1-11840). 27. NUMBER OF CONTRACT OWNERS As of the date of this amended Registration Statement, the offering of the Putnam Allstate Advisor Preferred Variable Annuity had not commenced. 28. INDEMNIFICATION The by-laws of Allstate provide for the indemnification of its directors, officers and controlling persons, against expenses, judgments, fines and amounts paid in settlement as incurred by such person, if such person acted properly. No indemnification shall be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable for negligence or misconduct in the performance of a duty to Allstate, unless a court determines such person is entitled to such indemnity. Insofar as indemnification for liability arising out of the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than payment by the registrant of expenses incurred by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of is counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. 29A. RELATIONSHIP OF PRINCIPAL UNDERWRITER TO OTHER INVESTMENT COMPANIES ALFS, Inc. (formerly known as Allstate Life Financial Services, Inc.) ("ALFS") will serve as principal underwriter of the Separate Account until May 1, 2000. Beginning May 1, 2000, Allstate Distributors, L.L.C. ("Allstate Distributors"), will serve as principal underwriter of the Separate Account. ALFS also serves as principal underwriter to the following other investment companies: Allstate Financial Advisors Separate Account I Allstate Life of New York Separate Account A Glenbrook Life and Annuity Company Separate Account A Glenbrook Life and Annuity Company Variable Annuity Account Glenbrook Life Variable Life Separate Account A Glenbrook Life Multi-Manager Variable Account Glenbrook Life Scudder Variable Account (A) Glenbrook Life AIM Variable Life Separate Account A Lincoln Benefit Life Variable Annuity Account Lincoln Benefit Life Variable Account Charter National Variable Annuity Account Charter National Variable Account Intramerica Variable Annuity Account Allstate Distributors serves as principal underwriter to the following investment companies: Allstate Life Insurance Company Separate Account A Allstate Life of New York Variable Separate Account A 29B. PRINCIPAL UNDERWRITER Name and Principal Business Positions and Offices Address* with Underwriter Allstate Life Financial Services, Inc.
Thomas J. Wilson, II Director Kevin R. Slawin Director Michael J. Velotta Director and Secretary John R. Hunter Director, President and Chief Executive Officer Janet M. Albers Vice President and Controller Brent H. Hamann Vice President Andrea J. Schur Vice President Terry R. Young General Counsel and Assistant Secretary James P. Zils Treasurer Lisa A. Burnell Assistant Vice President and Compliance Officer Joanne M. Derrig Assistant Secretary and Assistant General Counsel Emma M. Kalaidjian Assistant Secretary Carol S. Watson Assistant Secretary Barry S. Paul Assistant Treasurer
*The principal business address of the foregoing directors and officers is 3100 Sanders Road, Northbrook, Illinois 60062. Allstate Distributors
John R. Hunter Executive Committee Member, Chairperson, Managing Director Brent H. Hamann Executive Committee Member, Secretary, General Manager Jane M. Mancini Executive Committee Member, Chairperson Vincent Esposito Executive Committee Member Thomas Turpin Executive Committee Member Eric Levy Secretary Albert Dal Porto Senior Vice President Karen C. Gardner Vice President Evelyn Cooper Vice President Lisa A. Burnell Chief Compliance Officer Janet M. Albers Controller Michael J. Velotta Assistant Secretary James P. Zils Treasurer Barry S. Paul Assistant Treasurer
*The principal business address of Jane M. Mancini, Vincent Esposito, Thomas Turpin and Eric Levy is One Post Office Square, Boston, Massachusetts 02109. The principal business address of every other foregoing committee member and officer is 3100 Sanders Road, Northbrook, IL 60062. 29C. COMPENSATION OF PRINCIPAL UNDERWRITER Not applicable. 30. LOCATION OF ACCOUNTS AND RECORDS Allstate is located at 3100 Sanders Road, Northbrook, Illinois 60062. The principal underwriter of the Separate Account (ALFS until May 1, 2000; Allstate Distributors beginning May 1, 2000) is located at 3100 Sanders Road, Northbrook, Illinois 60062. 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 Registrant promises 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 application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or a toll-free number included in the prospectus that the applicant can use to request for a Statement of Additional Information. Finally, 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. 33. REPRESENTATIONS PURSUANT TO SECTION 403(B) OF THE INTERNAL REVENUE CODE Allstate represents that it is relying upon the letter, dated November 28, 1988, from the Commission staff to the American Council of Life Insurance and that it intends to comply with the provisions of paragraphs 1-4 of that letter. 34. REPRESENTATION REGARDING CONTRACT EXPENSES Allstate 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 Allstate under the Contracts. Allstate 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 Allstate to earn a profit; the degree to which the Contracts include innovative features; and the regulatory standards for exemptive relief under the Investment Company Act of 1940 used prior to October 1996, including the range of industry practice. This representation applies to all Contracts sold pursuant to this Registration Statement, including those sold on the terms specifically described in the prospectus contained herein, or any variations therein, based on supplements, endorsements, or riders to any Contracts or prospectus, or otherwise. SIGNATURES As required by the Securities Act of 1933 and the Investment Company Act of 1940, Registrant, Allstate Life Insurance Company Separate Account A, has caused this amended Registration Statement to be signed on its behalf, in the Township of Northfield, State of Illinois, on the 27th day of April, 2000. ALLSTATE LIFE INSURANCE COMPANY SEPARATE ACCOUNT A (REGISTRANT) BY: ALLSTATE LIFE INSURANCE COMPANY (DEPOSITOR) By:/s/ Michael J. Velotta --------------------------------- Michael J. Velotta Senior Vice President, Secretary and General Counsel As required by the Securities Act of 1933, this amended Registration Statement has been signed below by the following directors and officers of Allstate Life Insurance Company on the 27th day of April, 2000.
*/THOMAS J. WILSON, II Chairman of the Board and President, Director - ---------------------- Thomas J. Wilson, II (Principal Executive Officer) /s/MICHAEL J. VELOTTA Senior Vice President, Secretary, General - --------------------- Michael J. Velotta Counsel and Director */KEVIN R. SLAWIN Senior Vice President and Director - ------------------ Kevin R. Slawin (Principal Financial Officer) */CASEY J. SYLLA Chief Investment Officer and Director - ---------------- Casey J. Sylla */SAMUEL H. PILCH Vice President and Controller - ----------------- Samuel H. Pilch (Principal Accounting Officer) */MARLA G. FRIEDMAN Senior Vice President and Director - ------------------- Marla G. Friedman */JOHN C. LOUNDS Senior Vice President and Director - ----------------- John C. Lounds
*/ By Michael J. Velotta, pursuant to Powers of Attorney previously filed. Exhibit Index Exhibit No. Exhibit (3)(b) Form of Underwriting Agreement with Allstate Distributors, L.L.C. (8) Participation Agreement among Putnam Variable Trust Putnam Mutual Funds Corp. And Allstate Life Insurance Company (9) Opinion of Michael J. Velotta, Vice President, Secretary and General Counsel of Allstate Life Insurance Company regarding the legality of the securities being registered (10)(a) Independent Auditors' Consent (10)(b) Consent of Freedman, Levy, Kroll & Simonds (13) Performance Data Calculations EX-3 2 UNDERWRITING AGREEMENT Exhibit 3(b) PRINCIPAL UNDERWRITING AGREEMENT This Principal Underwriting Agreement (hereinafter "Agreement") is made and entered into as of this ___ day of ______, 1999, by and between Allstate Life Insurance Company ( "Allstate Life") a life insurance company organized under the laws of the state of Illinois on its own and on behalf of each separate account of Allstate Life set forth on Attachment A, as such Attachment may be amended from time (each such account herein referred to as the "Account"), and Allstate Distributors, L.L.C. ("Distributors"), a limited liability corporation organized under the laws of the state of Delaware. In consideration of the mutual promises and covenants exchanged by the parties in this Agreement, Allstate Life grants to Distributors the right to be and Distributors agrees to serve as Principal Underwriter for the sale of variable insurance products and other insurance and investment products during the term of this Agreement and the parties agree as follows: ARTICLE I DISTRIBUTORS DUTIES AND OBLIGATIONS 1.01 Distributors, a broker-dealer registered under the Securities Exchange Act of 1934 (the "1934 Act") and a member of the National Association of Securities Dealers, Inc. ("NASD"), will serve as principal underwriter and distributor for the variable insurance contracts (contracts listed in Attachment A , herein, the "Contracts") which will be issued by Allstate Life. 1.02 Distributors shall be duly registered or licensed or otherwise qualified under the insurance and securities laws of the states in which the Contracts are authorized for sale. 1.03 Distributors proposes to act as principal underwriter on an agency best efforts basis in the marketing and distribution of the Contracts. Distributors will use its best efforts to provide information and marketing assistance to licensed insurance agents and broker-dealers ("Selling Broker-Dealers") on a continuing basis. 1.04 Distributors shall be responsible for compliance with the requirements of state broker-dealer regulations and the 1934 Act as each applies to Distributors in connection with its duties as distributor of the Contracts. Moreover, Distributors shall conduct its affairs in accordance with the Rules of Fair Practice of the NASD. 1.05 As a principal underwriter, Distributors shall permit the offer and sale of Contracts to the public only by and through persons who are appropriately licensed under the securities laws and who are appointed in writing by Allstate Life to be authorized insurance agents (unless such persons are exempt from such licensing and appointment requirements); 1.06 To the extent that any statements made in the Registration Statement, or any amendment or supplement thereto, are made in reliance upon and in conformity with written information furnished to Allstate Life by Distributors expressly for use therein, such statements will, when they become effective or are filed with the SEC, as the case may be, conform in all material respects to the requirements of the 1933 Act and the rules and regulations of the Commission thereunder, and will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading. 1.07 Subject to agreement with Allstate Life, Distributors may enter into selling agreements with broker-dealers which are registered under the 1934 Act and/or authorized by applicable law or exemptions to sell the Contracts. Any such contractual arrangement is expressly made subject to this Agreement, and Distributors will at all times be responsible to Allstate Life for supervision of compliance with federal securities laws regarding distribution of the Contracts. ARTICLE II ALLSTATE LIFE'S DUTIES AND OBLIGATIONS 2.01 Allstate Life is validly existing as a stock life insurance company in good standing under the laws of the State of Illinois, and has been duly qualified for the transaction of business and is in good standing under the laws of each other jurisdiction in which it owns or leases properties or conducts any business. 2.02 Allstate Life represents that: a) Registration Statements for each of the Contracts identified in Attachment A shall have been filed with the Securities and Exchange Commission ("SEC") in the form previously delivered to Distributors and that copies of any and all amendments thereto will be forwarded to Distributors at the time that they are filed with the SEC; b) Each Account is a duly organized, validly existing separate account, established by resolution of the Board of Directors of Allstate Life, on the date shown for such Account on Attachment A, for the purpose of issuing the Contracts; and c) Allstate Life has registered or will register the Account as a unit investment trust under the Investment Company Act of 1940 (the "1940 Act"). 2.03 The Registration Statement and any further amendments or supplements thereto will, when they became effective, conform in all material respects to the requirements of the Securities Act of 1933 (the "1933 Act") and the 1940 Act, and the rules and regulations of the Commission under such Acts and will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statement or omission made in reliance upon and in conformity with information furnished in writing to Allstate Life by Distributors expressly for use therein. 2.04 Allstate Life shall be responsible for the licensing and appointing of registered representatives of Selling Broker-Dealers as required by state insurance laws. ARTICLE III RECORDS 3.01 Distributors shall keep, in a manner and form approved by Allstate Life and in accordance with Rules 17a-3 and 17a-4 under the 1934 Act, accurate records and books of account as required to be maintained by a registered broker-dealer, acting as principal underwriter, of all transactions entered into on behalf of Allstate Life with respect its activities under this Agreement. Distributors shall make such records of account available for inspection by the SEC and Allstate Life shall have the right to inspect, make copies of or take possession of such records and books of account at any time upon demand. 3.02 Subject to applicable SEC or NASD restrictions, Allstate Life will send confirmations of Contract transactions to Contract owners. Allstate Life will make such confirmations and records of transactions available to Distributors upon request. Allstate Life will also maintain Contract Owner records on behalf of Distributors to the extent permitted by applicable securities law. 3.03 Distributors and Allstate Life shall keep confidential the records, books of account and other information concerning the Contract owners, annuitants, insureds, beneficiaries or any persons who have rights arising out of the Contracts. Distributors or Allstate Life may disclose the Records and such information only if the other has authorized disclosure and if the disclosure is required by applicable law. In the event Distributors or Allstate Life is served with a subpoena, court order or demand from a regulatory organization which mandates disclosure of the Records or such information, such party must notify the other and allow such other party sufficient time to authorize disclosure or to intervene in the judicial proceeding or matter so as to protect its interest. 3.04 Unless otherwise agreed to, no party to this Agreement shall voluntarily disclose to any third party other than Putnam Investments, Inc. and its affiliates, any books, reference manuals, instructions, information or data which concern the other party's business and which are exchanged during the negotiation and performance of this Agreement. When this Agreement terminates or expires, the parties shall return all such books, reference manuals, instructions, information or data in their possession. 3.05 For the purpose of determining the other party's compliance with this Agreement, each party to this Agreement shall have reasonable access during normal business hours to any records and books of account which concern the Contracts and which are maintained by the other party. 3.06 Both Allstate Life and Distributors agree to keep all information required by applicable laws, to maintain the books, accounts and records as to clearly and accurately disclose the precise nature and details of the transaction and to assist one another in the timely perpetration of any reports required by law. 3.07 Distributors and Allstate Life shall furnish to the other any reports and information which the other may request for the purpose of meeting reporting and recordkeeping requirements under the laws of Illinois or any other state or jurisdiction. ARTICLE IV SALES MATERIALS 4.01 Distributors will utilize the currently effective prospectus relating to the Contracts in connections with its underwriting, marketing and distribution efforts. As to other types of sales material, Distributors hereby agrees and will require Selling Broker-Dealers to agree to use only sales materials which have been authorized for use by Allstate Life, which conform to the requirements of federal and state laws and regulations, and which have been filed where necessary with the appropriate regulatory authorities including the NASD. 4.02 Distributors will not distribute any prospectus, sales literature or any other printed matter or material in the underwriting and distribution or any Contract if, to the knowledge of Distributors, any of the foregoing misstates the duties, obligation or liabilities of Allstate Life or Distributors. ARTICLE V COMPENSATION 5.01 Allstate Life shall pay to Distributors commissions described in Attachment B , attached hereto and made a part hereof. Distributors shall not be obligated to pay another broker/dealer for sales of Contracts pursuant to its selling agreement with such broker/dealer until Distributors has received its commissions for the sale of such Contracts from Allstate Life. 5.02 In compensating Distributors, Allstate Life reserves the right to withhold commissions from Distributors if it determines Distributors is not paying commissions to its Selling Broker-Dealers in accordance with applicable laws. 5.03 Distributors shall direct how commissions are paid, provided such direction is in accordance with applicable law. 5.04 Allstate Life agrees to pay Distributors for direct expenses incurred on behalf of Allstate Life. Such direct expenses shall include, but not be limited to, the costs of goods and services purchased from outside vendors, travel expenses and state and federal regulatory fees incurred on behalf of Allstate Life. 5.05 Distributors shall present a statement after the end of the quarter showing the apportionment of services rendered and the direct expenses incurred. Settlements are due and payable within thirty days. ARTICLE VI UNDERWRITING TERMS 6.01 Distributors makes no representations or warranties regarding the number of contracts to be sold by Selling Broker-Dealer and the registered representatives of Selling Broker-Dealer or the amount to be paid thereunder. Distributors does, however, represent that it will actively engage in its duties under this Agreement on a continuous basis while there is an effective Registration Statement with the SEC. 6.02 Distributors will use its best efforts to ensure that the Contracts shall be offered for sale by registered broker-dealers and registered representatives (who are duly licensed as insurance agents) on the terms described in the currently effective prospectus describing such Contracts. 6.03 Allstate Life will use its best efforts to assure that the Contracts are continuously registered under the 1933 Act (and under any applicable state "blue sky" laws) and to file for approval under state insurance laws when necessary. ARTICLE VII LEGAL AND REGULATORY ACTIONS 7.01 Allstate Life agrees to advise Distributors immediately of: a) any request by the SEC for amendment of the Registration Statement or for additional information relating to the Contracts; b) the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement relating to the Contracts or the initiation of any proceedings for that purpose; and c) the happening of any known material event which makes untrue any statement made in the Registration Statement relating to the Contracts or which requires the making of a change therein in order to make any statement made therein not misleading. 7.02 Each of the undersigned parties agrees to notify the other in writing upon being apprised of the institution of any proceeding, investigation or hearing involving the offer or sale of the subject Contracts. 7.03 During any legal action or inquiry, Allstate Life will furnish to Distributors such information with respect to the Contracts in such form and signed by such of its officers as Distributors may reasonably request and will warrant that the statements therein contained when so signed are true and correct. 7.04 If changes in insurance laws or regulations could reasonably be expected to affect the sales and administration of Contracts under this Agreement, Allstate Life shall notify Distributors within a reasonable time after Allstate Life receives notice of those changes. Such notice shall be in writing except, if circumstances so require, the notice may be communicated by telephone or facsimile and confirmed in writing. ARTICLE VIII TERMINATION 8.01 This Agreement shall terminate at either Party's option, without penalty: (a) without case, on not less than 180 days' prior written notice to the other Party; (b) upon the mutual written consent of the Parties; (c) upon written notice of one Party to the other in the event of bankruptcy or insolvency of the Party to which notice is given; (d) upon the suspension or revocation of any material license or permit held by a Party by the appropriate governmental agency or authority; however, such termination shall extend only to the jurisdiction(s) where the Party is prohibited from doing business; or (e) upon the finding by any regulatory body in a formal proceeding of material wrongdoing by a Party regarding its duties under this Agreement. 8.02 If either Party breaches this Agreement or is in default in the performance of any of its duties and obligations hereunder (the "defaulting Party"), the non-defaulting Party may give written notice thereof to the defaulting Party, and if such breach or default is not remedied within 60 days after such written notice is given, then the non-defaulting Party may terminate this Agreement by giving 30 days' prior written notice of such termination to the defaulting Party. 8.03 The Parties agree to cooperate and give reasonable assistance to one another in effecting an orderly transition following termination. ARTICLE IX INDEMNIFICATION 9.01 Scope of Indemnification (a) Each Party (the "Indemnifying Party") agrees to indemnify and hold harmless the other (the "Indemnified Party") against any loss, liability, claim, damage or expense (including the reasonable cost of investigating or defending any alleged loss, liability, claim, damage or expense, and reasonable counsel fees incurred in connection therewith) arising by reason of any person's acquiring any Contract, which may be based upon any law: (i) on the ground that the Indemnifying Party, its directors, officers, employees, agents, or subcontractors failed to comply with any applicable laws and regulations in connection with its rendering of duties or services under this Agreement; or (ii) on the ground of negligence or misconduct by the Indemnifying Party or its directors, officers, employees, agents, or subcontractors, in the performance of its duties hereunder, or breach by the Indemnifying Party of any representation or warranty hereunder. The foregoing indemnities shall, upon the same terms and conditions, extend to and inure to the benefit of each director, officer and employee of the Indemnified Party and any person controlling or controlled by the Indemnified Party within the meaning of Section 15 of the Securities Act of 1933 or Section 20 of the 1934 Act. (b) In no case shall the indemnity in favor of the Indemnified Party, including such controlling or controlled persons, be deemed to protect the Indemnified Party against any liability to the Indemnifying Party to which it would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of reckless disregard of its obligations and duties under this Agreement. In addition, in no case shall the Indemnifying Party be liable under its indemnity agreement contained in Section 4.1(a) hereof with respect to any claim made against an Indemnified Party, unless the Indemnified Party shall have notified the Indemnifying Party in writing by fax or overnight mail giving information of the nature of the claim within two (2) business days after the summons or other first legal process shall have been served upon the Indemnified Party (or after the Indemnified Party shall have received notice of such service on any designated agent), but failure to notify the Indemnifying Party of any such claim shall not relieve it from any liability which it may have to the Indemnified Party against whom such action is brought otherwise than on account of its indemnity agreement contained in Section 4.1(a) hereof. The Indemnifying Party shall be entitled to participate at its own expense in the defense, or, if it so elects, to assume the defense of any suit brought to enforce such liability. If the Indemnifying Party elects to assume the defense, such defense shall be conducted by counsel chosen by it and satisfactory to the Indemnified Party. In the event the Indemnifying Party elects to assume the defense of any such suit and retains such counsel, the Indemnified Party shall bear the fees and expenses of any additional counsel retained by it, but, in case the Indemnifying Party does not elect to assume the defense of any such suit, it shall reimburse the Indemnified Party for the reasonable fees and expense of any counsel retained by the Indemnified Party. The Indemnifying Party shall promptly notify the Indemnified Party of the commencement of any litigation or proceedings against the Indemnifying Party or any of its officers, directors, employees or subcontractors in connection with the issuance or sale of the Contracts. 9.02 Limitation on Liability In no event shall either Party be liable for lost profits or for exemplary, special, punitive or consequential damages alleged to have been sustained by the other Party, as opposed to a third party. 9.03 Injunctive Relief The Parties each agree that monetary damages may be an inadequate remedy in the event of a breach by either Party of any of the covenants in this Agreement, and that any such breach by a Party may cause the other Party great and irreparable injury and damage. Accordingly, nothing in this Agreement shall limit a Party's right to obtain equitable relief when appropriate. ARTICLE X GENERAL PROVISIONS 10.01 This Agreement shall be subject to the laws of the state of Illinois. 10.02 This Agreement, along with any schedules attached hereto and incorporated herein by reference, may be amended from time to time by mutual agreement and consent of the under signed parties. 10.03 In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. IN WITNESS WHEREOF, the undersigned parties have caused this Agreement to be duly executed, to be effective as of _____________, 1999 Allstate Life Insurance Company (and the Account(s) set forth on Attachment A) By: ___________________________ ______________________ Title Date Allstate Distributors, L. L. C. By: ___________________________ _______________________ Title Date ATTACHMENT A Separate Account Effective Date Contract Form # -------------- -------- ------ ATTACHMENT B Distributors shall be entitled to remuneration for its services as shown below for all variable annuity purchase payments received on policies issued by Allstate Life. Such remuneration shall be reduced by the amount of commissions payable to broker/dealers receiving compensation pursuant to selling agreements with Allstate Life and Distributors. - ------------------------ ----------------------- --------------------- Schedule A - ------------------------ ----------------------- --------------------- Issue Age: 0-80 7.30% - ------------------------ ----------------------- --------------------- - ------------------------ ----------------------- --------------------- 81-85 5.80% - ------------------------ ----------------------- --------------------- - ------------------------ ----------------------- --------------------- 86-90 4.30% - ------------------------ ----------------------- ---------------------
- ------------------------ ----------------------- --------------------- Schedule B Up-Front Trail - ------------------------ ----------------------- --------------------- -------------------- Issue Age: 0-80 6.30% 25 bps - ------------------------ ----------------------- --------------------- -------------------- - ------------------------ ----------------------- --------------------- -------------------- 81-85 5.05% 25 bps - ------------------------ ----------------------- --------------------- -------------------- - ------------------------ ----------------------- --------------------- -------------------- 86-90 3.80% 25 bps - ------------------------ ----------------------- --------------------- -------------------- - ----------------------------------------- ------------------------------------------------------------------- Charge Back Schedule - ----------------------------------------- ------------------------------------------------------------------- Full or partial Withdrawal 100% Charge Back due to "Right to Cancel" provision. - ----------------------------------------- ------------------------------------------------------------------- - ----------------------------------------- ------------------------------------------------------------------- Early Annuitization Year 1 Only, Charge Back to Annuitization Level Commission (TBD) - ----------------------------------------- ------------------------------------------------------------------- An additional 1% override is available up-front to Distributors on sales for the first $1 billion or through 5/1/2000, if earlier.
EX-8 3 PARTICIPATION AGREEMENT Exhibit 8 PARTICIPATION AGREEMENT Among PUTNAM VARIABLE TRUST PUTNAM MUTUAL FUNDS CORP. and ALLSTATE LIFE INSURANCE COMPANY THIS AGREEMENT, made and entered into as of this 1st day of March, 1999, among Allstate Life Insurance Company (the "Company"), an Illinois corporation, on its own behalf and on behalf of each separate account of the Company set forth on Schedule A hereto, as such Schedule may be amended from time to time (each such account hereinafter referred to as the "Account"), PUTNAM VARIABLE TRUST (the "Trust"), a Massachusetts business trust, and PUTNAM MUTUAL FUNDS CORP. (the "Underwriter"), a Massachusetts corporation. WHEREAS, the Trust is an open-end diversified management investment company and is available to act as the investment vehicle for separate accounts established for variable life insurance policies and variable annuity contracts (collectively, the "Variable Insurance Products") to be offered by insurance companies which have entered into Participation Agreements with the Trust and the Underwriter (the "Participating Insurance Companies"); and WHEREAS, the beneficial interest in the Trust is divided into several series of shares, each designated a "Fund" and representing the interest in a particular managed portfolio of securities and other assets; and WHEREAS, the Trust has obtained an order from the Securities and Exchange Commission ("SEC"), dated December 29, 1993 (File No. 812-8612), granting the variable annuity and variable life insurance separate accounts participating in the Trust exemptions from the provisions of sections 9(a), 13(a), 15(a) and 15(b) of the Investment Company Act of 1940, as amended (the "1940 Act"), and Rules 6e-2(b)(15) and 6e-3(T)(b)(15) thereunder, to the extent necessary to permit shares of the Trust to be sold to and held by variable annuity and variable life insurance separate accounts of the Participating Insurance Companies (the "Shared Funding Exemptive Order"); and WHEREAS, the Trust is registered as an open-end management investment company under the 1940 Act and the sale of its shares is registered under the Securities Act of 1933, as amended (the " 1933 Act"); and WHEREAS, the Company has registered or will register certain variable life and/or variable annuity contracts under the 1933 Act and any applicable state securities and insurance law; and WHEREAS, each Account is a duly organized, validly existing separate account, established by resolution of the Board of Directors of the Company, on the date shown for such Account on Schedule A hereto, to set aside and invest assets attributable to one or more variable insurance contracts (the "Contracts"); and WHEREAS, the Company has registered or will register the Account as a unit investment trust under the 1940 Act; and WHEREAS, the Underwriter is registered as a broker dealer with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended (the " 1934 Act"), and is a member in good standing of the National Association of Securities Dealers, Inc. (the "NASD"); and WHEREAS, to the extent permitted by applicable insurance laws and regulations, the Company intends to purchase shares in certain Funds ("Authorized Funds") on behalf of each Account to fund certain of the Contracts and the Underwriter is authorized to sell such shares to unit investment trusts such as each Account at net asset value; NOW, THEREFORE, in consideration of the promises herein, the Company, the Trust and the Underwriter agree as follows: ARTICLE 1. Sale of Trust Shares 1.1 The Underwriter agrees, subject to the Trust's rights under Section 1.2 and otherwise under this Agreement, to sell to the Company those Trust shares representing interests in Authorized Funds which each Account orders, executing such orders on a daily basis at the net asset value next computed after receipt by the Trust or its designee of the order for the shares of the Trust. For purposes of this Section 1. 1, the Company shall be the designee of the Trust for receipt of such orders from each Account and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice of such order by 8:30 a.m. Eastern 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 Trust calculates its net asset value pursuant to the rules of the SEC. The initial Authorized Funds are set forth in Schedule B, as such schedule is amended from time to time. 1.2 The Trust agrees to make its shares available indefinitely for purchase at the applicable net asset value per share by the Company and its Accounts on those days on which the Trust calculates its net asset value pursuant to rules of the SEC and the Trust shall use reasonable efforts to calculate such net asset value on each day on which the New York Stock Exchange is open for trading. Notwithstanding the foregoing, the Trustees of the Trust (the "Trustees") may refuse to sell shares of any Fund to the Company or any other person, or suspend or terminate the offering of shares of any Fund if such action is required by law or by regulatory authorities having jurisdiction over the Trust or if the Trustees determine, in the exercise of their fiduciary responsibilities, that to do so would be in the best interests of shareholders. 1.3 The Trust and the Underwriter agree that shares of the Trust will be sold only to Participating Insurance Companies and their separate accounts. No shares of any Fund will be sold to the general public. 1.4 The Trust shall redeem its shares in accordance with the terms of its then current prospectus. For purposes of this Section 1.4, the Company shall be the designee of the Trust for receipt of requests for redemption from each Account and receipt by such designee shall constitute receipt by the Trust; provided that the Trust receives notice of such request for redemption by 8:30 a.m., Eastern time, on the next following Business Day. 1.5 The Company shall purchase and redeem the shares of Authorized Funds offered by the then current prospectus of the Trust in accordance with the provisions of such prospectus. 1.6 The Company shall pay for Trust shares on the next Business Day after an order to purchase Trust shares is made in accordance with the provisions of Section 1.1 hereof. Payment shall be in federal funds transmitted by wire. 1.7 Issuance and transfer of the Trust's shares will be by book entry only. Share certificates will not be issued to the Company or any Account. Shares ordered from the Trust will be recorded as instructed by the Company to the Underwriter in an appropriate title for each Account or the appropriate sub-account of each Account. 1.8 The Underwriter shall furnish prompt notice (by wire or telephone, followed by written confirmation) to the Company of the declaration of any income, dividends or capital gain distributions payable on the Trust's shares. The Company hereby elects to receive all such income dividends and capital gain distributions as are payable on the Fund shares in additional shares of that Fund. The Company reserves the right to revoke this election and therefore to receive all such income dividends and capital gain distributions in cash. The Underwriter shall notify the Company of the number of shares so issued as payment of such dividends and distributions. 1.9 The Underwriter shall make the net asset value per share for each Fund available to the Company on a daily basis as soon as reasonably practical after the Trust calculates its net asset value per share and each of the Trust and the Underwriter shall use its best efforts to make such net asset value per share available by 7:00 p.m. Eastern time. ARTICLE II. Representations and Warranties 2.1 The Company represents and warrants that (a) at all times during the term of this Agreement the Contracts are or will be registered under the 1933 Act; the Contracts will be issued and sold in compliance in all material respects with all applicable laws and the sale of the Contracts shall comply in all material respects with state insurance suitability laws and regulations. The Company further represents and warrants that it 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 separate account under applicable law 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; and (b) the Contracts are currently treated as endowment, annuity or life insurance contracts, under applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code"), and that it will make every effort to maintain such treatment and that it will notify the Trust and the Underwriter 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. 2.2 The Trust represents and warrants that (a) it is lawfully organized and validly existing under the laws of the Commonwealth of Massachusetts and that it does and will comply in all material respects with the 1940 Act. (b) it is currently qualified as a Regulated Investment Company under Subchapter M of the Code, and that it will use its best efforts to maintain such qualification (under Subchapter M or any successor 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; and (c) at all times during the term of this Agreement Trust shares sold pursuant to this Agreement shall be registered under the 1933 Act, duly authorized for issuance and sold by the Trust to the Company in compliance with all applicable laws, subject to the terms of Section 2.4 below, and the Trust is and shall remain registered under the 1940 Act. The Trust 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 Trust 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 Trust or the Underwriter in connection with their sale by the Trust to the Company and only as required by Section 2.4; 2.3 The Underwriter represents and warrants that (a) it is a member in good standing of the NASD; (b) is registered as a broker-dealer with the SEC; (c) it will sell and distribute the Trust shares in accordance with all applicable securities laws, including without limitation, the 1933 Act, the 1934 Act and the 1940 Act. 2.4 Notwithstanding any other provision of this Agreement, the Trust shall be responsible for the registration and qualification of its shares and of the Trust itself under the laws of any jurisdiction only in connection with the sales of shares directly to the Company through the Underwriter. The Trust shall not be responsible, and the Company shall take full responsibility, for determining any jurisdiction in which any qualification or registration of Trust shares or the Trust by the Trust may be required in connection with the sale of the Contracts or the indirect interest of any Contract in any shares of the Trust and advising the Trust thereof at such time and in such manner as is necessary to permit the Trust to comply. 2.5 The Trust 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. ARTICLE III. Prospectuses and Proxy Statements; Voting 3.1 The Trust shall provide such documentation (including a camera-ready copy of its prospectus) and other assistance as is reasonably necessary in order for the Company once each year (or more frequently if the prospectus for the Trust is amended) to have the prospectus for the Contracts and the Trust's prospectus printed together in one or more documents. The cost of printing prospectuses for the Contracts and the Trust for delivery in connection with the offering and sale of new Contracts will be at the Underwriter's expense. Printing of prospectuses for other purposes will be at the Company's expense. The Company will bear the expense of mailing prospectuses to new purchasers of Contracts. 3.2 The Trust's Prospectus shall state that the Statement of Additional Information for the Trust is available from the Underwriter or its designee (or in the Trust's discretion, the Prospectus shall state that such Statement is available from the Trust), and the Underwriter (or the Trust), at its expense, shall print and provide such Statement free of charge to the Company and free of charge to any owner of a Contract or prospective owner who requests such Statement. 3.3 The Trust, at its expense, shall provide the Company with copies of its reports to shareholders, proxy material and other communications to shareholders in such quantity as the Company shall reasonably require for distribution to the Contract owners, such distribution shall be at the expense of the Trust, provided that the Trust and the Company shall bear their proportional share of the distribution expenses of any report containing both the Trust's and the Accounts' financial reports. 3.4 The Company shall vote all Trust shares as required by law and the Shared Funding Exemptive Order. The Company reserves the right to vote Trust shares held in any separate account in its own right, to the extent permitted by law and the Shared Funding Exemptive Order. The Company shall be responsible for assuring that each of its separate accounts participating in the Trust calculates voting privileges in a manner consistent with all legal requirements and the Shared Funding Exemptive Order. 3.5 The Trust will comply with all applicable provisions of the 1940 Act requiring voting by shareholders, and in particular the Trust will either provide for annual meetings or comply with Section 16(c) of the 1940 Act (although the Trust is not one of the trusts described in Section 16(c) of that Act) as well as with Sections 16(a) and, if and when applicable, 16(b). Further, the Trust will act in accordance with the SEC's interpretation of the requirements of Section 16(a) with respect to periodic elections of trustees and with whatever rules the SEC may promulgate with respect thereto. ARTICLE IV. Sales Material and Information 4.1 Without limiting the scope or effect of Section 4.2 hereof, the Company shall furnish, or shall cause to be furnished, to the Underwriter each piece of sales literature or other promotional material (as defined hereafter) in which the Trust, its investment adviser or the Underwriter is named at least 10 days prior to its use. No such material shall be used if the Underwriter objects to such use within five Business Days after receipt of such material. 4.2 The Company shall not give any information or make any representations or statements on behalf of the Trust or concerning the Trust in connection with the sale of the Contracts other than the information or representations contained in the registration statement or prospectus for the Trust shares, as such registration statement and prospectus may be amended or supplemented from time to time, or in annual or semi-annual reports or proxy statements for the Trust, or in sales literature or other promotional material approved by the Trust or its designee or by the Underwriter, except with the written permission of the Trust or the Underwriter or the designee of either or as is required by law. 4.3 The Underwriter or its designee shall furnish, or shall cause to be furnished, to the Company or its designee, each piece of sales literature or other promotional material prepared by the Underwriter in which the Company and/or its separate account(s) is named at least 10 days prior to its use. No such material shall be used if the Company or its designee objects to such use within five Business Days after receipt of such material. 4.4 Neither the Trust nor the Underwriter shall give any information or make any representations on behalf of the Company concerning the Company, each Account, or the Contracts other than the information or representations contained in a registration statement or prospectus for the Contracts, as such registration statement and prospectus may be amended or supplemented from time to time, or in published reports for each Account which are in the public domain or approved by the Company for distribution to Contract owners, or in sales literature or other promotional material approved by the Company or its designee, except with the written permission of the Company or as is required by law. 4.5 For purposes of this Article IV, the phrase "sales literature or other promotional material" includes, but is not limited to, 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 billboards, motion pictures, or other public media), sales literature (i.e. any written communication distributed or made generally available to customers or the public, including brochures, circulars, research reports, market letters, form letters, seminar texts, reprints or excerpts of any other advertisement, sales literature, or published article), educational or training materials or other communications distributed or made generally available to some or all registered representatives. ARTICLE V. Fees and Expenses 5.1 Except as provided in Article VI, the Trust and Underwriter shall pay no fee or other compensation to the Company under this agreement. 5.2 All expenses incident to performance by the Trust under this Agreement shall be paid by the Trust. The Trust shall bear the expenses for the cost of registration and qualification of the Trust's shares, preparation and filing of the Trust's prospectus and registration statement, proxy materials and reports, setting the prospectus and shareholder reports in type, setting in type and printing the proxy materials, distributing reports and proxy statements to contractholders (provided that if the reports are combined with the Company's reports the Trust and the Company shall bear such share of the expense as its proportion of the joint report bears the the whole combined report) and the preparation of all statements and notices required by any federal or state law, in each case as may reasonably be necessary for the performance by it of its obligations under this Agreement. 5.3 The Company shall bear the expenses of printing the Trust's prospectus (other than those used in connection with the offering and sales of the Contracts) and of distributing the Trust's prospectuses to new purchasers of Contracts. Article VI. Service Fees 6.1 The Underwriter shall pay the Company a service fee (the "Service Fee") on shares of the Funds held in the Accounts at the annual rates specified in Schedule B (excluding any accounts for the Company's own corporate retirement plans), subject to Section 6.2 hereof. 6.2 The Company understands and agrees that all Service Fee payments are subject to the limitations contained in each Fund's Distribution Plan, which may be varied or discontinued at any time, and understands and agrees that it will cease to receive such Service Fee payments with respect to a Fund if the Fund ceases to pay fees to the Underwriter pursuant to its Distribution Plan. 6.3 (a) The Company's failure to provide the services described in Section 6.4 will render it ineligible to receive Service Fees; and (b) the Underwriter may, without the consent of the Company, amend this Article VI to change the amount of Service Fees or the terms on which Service Fees are paid or to terminate further payments of Service Fees upon written notice to the Company. 6.4 The Company will provide the following services to the Contract Owners purchasing Fund shares: (i) Maintaining regular contact with Contract owners and assisting in answering inquiries concerning the Funds; (ii) Assisting in the process of printing and distributing shareholder reports, prospectuses and other sale and service literature provided by the Underwriter; (iii) Assisting the Underwriter and its affiliates in the establishment and maintenance of Contract owner and shareholder accounts and records; (iv) Assisting Contract owners in effecting administrative changes, such as exchanging shares in or out of the Funds; (v) Assisting in processing purchase and redemption transactions; and (vi) Providing any other information or services as the Contract owners or the Underwriter may reasonably request. The Company will support the Underwriter's marketing and servicing efforts by granting reasonable requests for visits to the Company's offices by representatives of the Underwriter. 6.5 The Company's performance under the service requirement set forth in this Agreement will be evaluated from time to time by the Underwriter's monitoring of redemption levels of Fund shares held in any Account and by such other methods as the Underwriter deems appropriate. ARTICLE VII. Diversification 7.1 The Trust shall cause each Authorized Fund to maintain a diversified pool of investments that would, if such Fund were a segregated asset account, satisfy the diversification provisions of Treas. Reg. ss. 1.817-5(b)(1) or (2). 7.2 The Trust shall annually send the Company a certificate, in the form mutually agreed, certifying as to its compliance with Section 7.1. ARTICLE VIII. Potential Conflicts 8.1 The Trustees will monitor the Trust for the existence of any material irreconcilable conflict between the interests of the contract owners of all separate accounts investing in the Trust. 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 law 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 Fund are being managed; (e) a difference in voting instructions given by variable annuity contract and variable life insurance contract owners; or (f) a decision by an insurer to disregard the voting instructions of contract owners. The Trust shall promptly inform the Company if the Trustees determine that a material irreconcilable conflict exists and the implications thereof. 8.2 The Company will report any potential or existing conflicts of which it is aware to the Trustees. The Company will assist the Trustees in carrying out their responsibilities under the Shared Funding Exemptive Order, by providing the Trustees with all information reasonably necessary for the Trustees to consider any issues raised. This includes, but is not limited to, an obligation by the Company to inform the Trustees whenever Contract owner voting instructions are disregarded. 8.3 If it is determined by a majority of the Trustees, or a majority of the disinterested Trustees, that a material irreconcilable conflict exists, the Company shall to the extent reasonably practicable (as determined by a majority of the disinterested Trustees), take, at the Company's expense, whatever steps are necessary to remedy or eliminate the material irreconcilable conflict, up to and including: (1) withdrawing the assets allocable to some or all of the separate accounts from the Trust or any Fund and reinvesting such assets in a different investment medium, including (but not limited to) another Fund of the Trust, or submitting the question whether such segregation should be implemented to a vote of all affected contract owners and, as appropriate, segregating the assets of any appropriate group (i.e., annuity contract owners, life insurance contract owners, or variable contract owners of one or more Participating Insurance Companies) that votes in favor of such segregation, or offering to the affected contract owners the option of making such a change; and (2) establishing a new registered management investment company or managed separate account. 8.4 If a material irreconcilable conflict arises because of a decision by the Company to disregard Contract owner voting instructions and that decision represents a minority position or would preclude a majority vote, the Company may be required, at the Trust's election, to withdraw the affected Account's investment in one or more Authorized Funds of the Trust and terminate this Agreement with respect to such Account; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested Trustees. No charge or penalty shall be imposed as a result of such withdrawal. Any such withdrawal and termination must take place within six (6) months after the Trust gives written notice that this provision is being implemented, and until the end of that six month period the Underwriter and Trust shall, to the extent permitted by law and any exemptive relief previously granted to the Trust, continue to accept and implement orders by the Company for the purchase (or redemption) of shares of the Trust. 8.5 If a material irreconcilable conflict arises because of a particular state insurance regulator's decision applicable to the Company to disregard Contract owner voting instructions and that decision represents a minority position that would preclude a majority vote, then the Company may be required, at the Trust's direction, to withdraw the affected Account's investment in one or more Authorized Funds of the Trust; provided, however, that such withdrawal and termination shall be limited to the extent required by the foregoing material irreconcilable conflict as determined by a majority of the disinterested Trustees. Any such withdrawal and termination must take place within six (6) months after the Trust gives written notice that this provision is being implemented, unless a shorter period is required by law, and until the end of the foregoing six month period (or such shorter period if required by law), the Underwriter and Trust shall, to the extent permitted by law and any exemptive relief previously granted to the Trust, continue to accept and implement orders by the Company for the purchase (and redemption) of shares of the Trust. No charge or penalty will be imposed as a result of such withdrawal. 8.6 For purposes of Sections 8.3 through 8.6 of this Agreement, a majority of the disinterested Trustees shall determine whether any proposed action adequately remedies any material irreconcilable conflict. Neither the Trust nor the Underwriter shall be required to establish a new funding medium for the Contracts, nor shall the Company be required to do so, if an offer to do so has been declined by vote of a majority of Contract owners materially adversely affected by the material irreconcilable conflict. In the event that the Trustees determine that any proposed action does not adequately remedy any material irreconcilable conflict, then the Company will withdraw the Account's investment in one or more Authorized Funds of the Trust and terminate this Agreement within six (6) months (or such shorter period as may be required by law or any exemptive relief previously granted to the Trust) after the Trustees inform the Company in writing of the foregoing determination; provided, however, that such withdrawal and termination shall be limited to the extent required by any such material irreconcilable conflict as determined by a majority of the disinterested Trustees. No charge or penalty will be imposed as a result of such withdrawal. 8.7 The responsibility to take remedial action in the event of the Trustees' determination of a material irreconcilable conflict and to bear the cost of such remedial action shall be the obligation of the Company, and the obligation of the Company set forth in this Article VIII shall be carried out with a view only to the interests of Contract owners. 8.8 If and to the extent that Rule 6e-2 and Rule 6e-3(T) are amended, or Rule 6e-3 is adopted, to provide exemptive relief from any provision of the 1940 Act or the rules promulgated thereunder with respect to mixed or shared funding (as defined in the Shared Funding Exemptive Order) on terms and conditions materially different from those contained in the Shared Funding Exemptive Order, then (a) the Trust and/or the Participating Insurance Companies, as appropriate, shall take such steps as may be necessary to comply with Rules 6e-2 and 6e-3(T), as amended, and Rule 6e-3, as adopted, to the extent such rules are applicable; and (b) Sections 3.4, 3.5, 8.1, 8.2, 8.3, 8.4 and 8.5 of this Agreement shall continue in effect only to the extent that terms and conditions substantially identical to such Sections are contained in such Rule(s) as so amended or adopted. 8.9 The Company has reviewed the Shared Funding Exemption Order and hereby assumes all obligations referred to therein which are required, including, without limitation, the obligation to provide reports, material or data as the Trustees may request as conditions to such Order, to be assumed or undertaken by the Company. ARTICLE IX. Indemnification 9.1. Indemnification by the Company 9.1 (a). The Company shall indemnify and hold harmless the Trust and the Underwriter and each of the Trustees, directors of the Underwriter, officers, employees or agents of the Trust or the Underwriter and each person, if any, who controls the Trust or the Underwriter within the meaning of Section 15 of the 1933 Act (collectively, the "Indemnified Parties" for purposes of this Section 9.1) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Company which consent may not be unreasonably withheld) or litigation (including reasonable legal and other expenses), to which the Indemnified Parties may become subject under any statute, regulation or 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 Trust's shares or the Contracts or the performance by the parties of their obligations hereunder and: (i) arise out of or are based upon any untrue statements or alleged untrue statements of any material fact contained in a Registration Statement, Prospectus or Statement of Additional Information 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 Trust for use in the Registration Statement, Prospectus or Statement of Additional Information 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 Trust shares; or (ii) arise out of or as a result of written statements or representations (other than statements or representations contained in the Trust's Registration Statement or Prospectus, or in sales literature for Trust shares not supplied by the Company, or persons under its control) or wrongful conduct of the Company or persons under its control, with respect to the sale or distribution of the Contracts or Trust shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, Prospectus, or sales literature of the Trust 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 information furnished to the Trust or the Underwriter by or on behalf of the Company; or (iv) arise out of or result from any breach of any representation and/or warranty made by the Company in this Agreement or arise out of or result from any other breach of this Agreement by the Company, as limited by and in accordance with the provisions of Sections 9.1(b) and 9.1(c) hereof. 9.1 (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 to the extent 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 or to the Trust, whichever is applicable. 9.1 (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), on the basis of which the Indemnified Party should reasonably know of the availability of indemnity hereunder in respect of such claim 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 provision. 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 Indemnified Party named in the action. After notice from the Company to such Indemnified 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 Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof other than reasonable costs of investigation. 9.1 (d) The Underwriter shall promptly notify the Company of the commencement of any litigation or proceedings against the Trust or the Underwriter in connection with the issuance or sale of the Trust Shares or the Contracts or the operation of the Trust. 9. 1 (e) The provisions of this Section 9.1 shall survive any termination of this Agreement. 9.2 Indemnification by the Underwriter 9.2 (a) The Underwriter shall indemnify and hold harmless the Company and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act and any director, officer, employee or agent of the foregoing (collectively, the "Indemnified Parties" for purposes of this Section 9.2) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Underwriter which consent may not be unreasonably withheld) or litigation (including reasonable legal and other expenses) to which the Indemnified Parties may become subject under any statute, regulation or at common law, 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 Trust's shares or the Contracts or the performance by the parties of their obligations hereunder and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in the sales literature of the Trust prepared by or approved by the Trust or Underwriter (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 Underwriter or Trust by or on behalf of the Company for use in sales literature (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Trust shares; or (ii) arise out of or as a result of written statements or representations (other than statements or representations contained in the Registration Statement, Prospectus, Statement of Additional Information or sales literature for the Contracts not supplied by the Underwriter or persons under its control) of the Underwriter or persons under its control, with respect to the sale or distribution of the Contracts or Trust shares; or (iii) arise out of any untrue statement or alleged untrue statement of a material fact contained in a Registration Statement, Prospectus, Statement of Additional Information 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 Underwriter; or (iv) arise out of or result from any breach of any representation and/or warranty made by the Underwriter in this Agreement or arise out of or result from any other breach of this Agreement by the Underwriter or result from a breach of Article VII; as limited by and in accordance with the provisions of Sections 9.2(b) and 9.2(c) hereof. 9.2 (b) The Underwriter 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 for 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 or to each Company or the Account, whichever is applicable. 9.2 (c) The Underwriter 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 Underwriter 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) on the basis of which the Indemnified Party should reasonably know of the availability of indemnity hereunder in respect of such claim, but failure to notify the Underwriter of any such claim shall not relieve the Underwriter 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 Underwriter will be entitled to participate, at its own expense, in the defense thereof. The Underwriter also shall be entitled to assume the defense thereof, with counsel satisfactory to the Indemnified Party named in the action. After notice from the Underwriter to such Indemnified Party of the Underwriter'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 Underwriter will not be liable to such Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof other than reasonable costs of investigation. 9.2 (d) The Company shall promptly notify the Underwriter of the Trust 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. 9.2 (e) The provisions of this Section 9.2 shall survive any termination of this Agreement. 9.3 Indemnification by the Trust 9.3 (a) The Trust shall indemnify and hold harmless the Company, and each person, if any, who controls the Company within the meaning of Section 15 of the 1933 Act and any director, officer, employee or agent of the foregoing (collectively, the "Indemnified Parties" for purposes of this Section 9.3) against any and all losses, claims, damages, liabilities (including amounts paid in settlement with the written consent of the Trust which consent may not be unreasonably withheld) or litigation (including reasonable legal and other expenses) to which the Indemnified Parties may become subject under any statute, 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 operations of the Trust and: (i) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in a Registration Statement, Prospectus and Statement of Additional Information of the Trust (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 Underwriter or Trust by or on behalf of the Company for use in the Registration Statement, Prospectus, or Statement of Additional Information for the Trust (or any amendment or supplement) or otherwise for use in connection with the sale of the Contracts or Trust shares; or (ii) arise out of or result from any material breach of any representation and/or warranty made by the Trust in this Agreement or arise out of or result from any other material breach of this Agreement by the Trust (including Section 7.1 hereof), as limited by and in accordance with the provisions of Sections 9.3(b) and 9.3(c) hereof. 9.3 (b) The Trust shall not be liable under the indemnification provision with respect to any losses, claims, damages, liabilities or litigation incurred or assessed against an Indemnified Party for willful misfeasance, bad faith, or gross negligence or by reason of such Indemnified Party's reckless disregard of obligations and duties under this Agreement or to the Company, the Trust, the Underwriter or each Account, whichever is applicable. 9.3 (c) The Trust shall not be liable under this indemnification provision with respect to any claim made against any Indemnified Party unless such Indemnified Party shall have notified the Trust 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) on the basis of which the Indemnified Party should reasonably know of the availability of indemnity hereunder in respect of such claim, but failure to notify the Trust of any such claim shall not relieve the Trust 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 Trust will be entitled to participate, at its own expense, in the defense thereof. The Trust also shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to the Indemnified Party named in the action. After notice from the Trust to such Indemnified Party of the Trust'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 Trust will not be liable to such Indemnified Party under this Agreement for any legal or other expenses subsequently incurred by such Indemnified Party independently in connection with the defense thereof other than reasonable costs of investigation. 9.3 (d) The Company agrees promptly to notify the Trust of the commencement of any litigation or proceedings against it or any of its officers or directors, in connection with this Agreement, the issuance or sale of the Contracts or the sale or acquisition of shares of the Trust. 9.3 (e) The provisions of this Section 9.3 shall survive any termination of this Agreement. ARTICLE X. Applicable Law 10.1 This Agreement shall be construed and the provisions hereof interpreted under and in accordance with the laws of the Commonwealth of Massachusetts. 10.2 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 Shared Funding Exemptive Order) and the terms hereof shall be interpreted and construed in accordance therewith. ARTICLE XI. Termination 11.1.This Agreement shall terminate: (a) upon the second anniversary of the termination of the Joint Venture Agreement, dated March 1, 1999, between Putnam Investments, Inc. and the Allstate Corporation. (b) at the option of the Trust upon 180 days prior written notice, upon a decision by the Trustees of the Trust that termination of the Agreement is in the best interests of shareholders of the Trust; or (c) with respect to any Account, upon requisite vote of the Contract owners having an interest in such Account (or any subaccount) to substitute the shares of another investment company for the corresponding Fund shares of the Trust in accordance with the terms of the Contracts for which those Fund shares had been selected to serve as the underlying investment media. The Company will give 90 days' prior written notice to the Trust of the date of any proposed vote to replace the Trust's shares; or (d) with respect to any Authorized Fund, upon 60 days advance written notice from the Underwriter to the Company, upon a decision by the Underwriter to cease offering shares of the Fund for sale. 11.2. It is understood and agreed that the right of any party hereto to terminate this Agreement pursuant to Section 11.1 (a) may be exercised for any reason or for no reason. 11.3 No termination of this Agreement shall be effective unless and until the party terminating this Agreement gives prior written notice to all other parties to this Agreement of its intent to terminate, which notice shall set forth the basis for such termination. Such prior written notice shall be given in advance of the effective date of termination as required by this Article XI. 11.4 Notwithstanding any termination of this Agreement, subject to Section 1.2 of this Agreement, the Trust and the Underwriter shall, at the option of the Company, continue to make available additional shares of the Trust pursuant to the terms and conditions of this Agreement, for all Contracts in effect on the effective date of termination of this Agreement (hereinafter referred to as "Existing Contracts"). Specifically, without limitation, subject to Section 1.2 of this Agreement, the owners of the Existing Contracts shall be permitted to reallocate investments in the Trust, redeem investments in the Trust and/or invest in the Trust upon the making of additional purchase payments under the Existing Contracts. The parties agree that this Section 11.4 shall not apply to any termination under Article VIII and the effect of such Article VIII termination shall be governed by Article VIII of this Agreement. 11.5 The Company shall not redeem Trust shares attributable to the Contracts (as opposed to Trust shares attributable to the Company's assets held in either Account) except (i) as necessary to implement Contract owner initiated transactions, or (ii) as required by state and/or federal laws or regulations or judicial or other legal precedent of general application (hereinafter referred to as a "Legally required Redemption"). Upon request, the Company will promptly furnish to the Trust and the Underwriter an opinion of counsel for the Company, reasonably satisfactory to the Trust, to the effect that any redemption pursuant to clause (ii) above is a Legally Required Redemption. Furthermore, except in cases where permitted under the terms of the Contracts, subject to Section 1.2 of this Agreement, the Company shall not prevent Contract owners from allocating payments to an Authorized Fund that was otherwise available under the Contracts without first giving the Trust or the Underwriter 90 days notice of its intention to do. ARTICLE XII. 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 party. If to the Trust: One Post Office Square Boston, MA 02109 Attention: John R. Verani If to the Underwriter: One Post Office Square Boston, MA 02109 Attention: General Counsel If to the Company: Allstate Life Insurance Company 3100 Sanders Road, Suite J5B Northbrook, IL 60062 Attention: Michael J. Velotta, Esq. ARTICLE XIII. Miscellaneous 13.1 A copy of the Agreement and Declaration of Trust of the Trust is on file with the Secretary of State of the Commonwealth of Massachusetts, and notice is hereby given that this instrument is executed on behalf of the Trustees of the Trust as Trustees and not individually and that the obligations of or arising out of this instrument, including without limitation Article VII, are not binding upon any of the Trustees or shareholders individually but binding only upon the assets and property of the Trust. 13.2 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. 13.3 This Agreement may be executed simultaneously in two or more counterparts, each of which taken together shall constitute one and the same instrument. 13.4 If any provision of this Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected thereby. 13.5 Each party hereto shall cooperate with each other party and all appropriate governmental authorities (including without limitation the SEC, the NASD and state insurance regulators) and shall pertmit 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. 13.6 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. 13.7 Notwithstanding any other provision of this Agreement, the obligations of the Trust and the Underwriter are several and, without limiting in any way the generality of the foregoing, neither such party shall have any liability for any action or failure to act by the other party, or any person acting on such other party's behalf. IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be executed in its name and on its behalf by its duly authorized representative and its seal to be hereunder affixed hereto as of the date specified below. ALLSTATE LIFE INSURANCE COMPANY By its authorized officer, Name: /s/BRENT HAMANN Title: Asst. Vice President PUTNAM VARIABLE TRUST By its authorized officer, Name: /s/ JOHN R. VERANI Title: Vice President PUTNAM MUTUAL FUNDS CORP. By its authorized officer, Name: /s/ ERIC S. LEVY Title: Senior Vice President EX-9 4 OPINION OF GENERAL COUNSEL Exhibit 9 ALLSTATE 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 Senior Vice President, Secretary and General Counsel April 27, 2000 TO: ALLSTATE LIFE INSURANCE COMPANY NORTHBROOK, ILLINOIS 60062 FROM: MICHAEL J. VELOTTA SENIOR 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 NOS. 333-31288 and 811-09227 PUTNAM ALLSTATE ADVISOR PREFERRED VARIABLE ANNUITY With reference to the above-mentioned Registration Statement on Form N-4 ("Registration Statement") filed by Allstate Life Insurance Company (the "Company"), as depositor, and Allstate Life Insurance Company Separate Account A, as registrant, with the Securities and Exchange Commission covering the Flexible Premium Deferred Variable Annuity Contracts described therein, 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 26, 2000: 1. The Company is duly organized and existing under the laws of the State of Illinois and has been duly authorized to do business by the Director of Insurance of the State of Illinois. 2. The securities registered by the 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 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 Senior Vice President, Secretary and General Counsel EX-10 5 CONSENTS Exhibit 10(a) INDEPENDENT AUDITORS' CONSENT INDEPENDENT AUDITORS' CONSENT We consent to the use in this Pre-Effective Amendment No. 1 to Registration Statement No. 333-31288 of Allstate Life Insurance Company Seperate Account A of Allstate Life Insurance Company on Form N-4 of our report dated February 25, 2000 relating to the consolidated financial statements and the related financial statement schedules of Allstate Life Insurance Company, and our report dated March 27, 2000 relating to the financial statements of Allstate Life Insurance Company Seperate Account A, appearing in the Statement of Additional Information (which is incorporated by reference in the Prospectus of Allstate Life Insurance Company Seperate Account A of Allstate Life Insurance Company), which is part of such Registration Statement, and to the reference to us under the heading "Experts" in such Statement of Additional Information. Chicago, Illinois April 26, 2000 Exhibit 10(b) FREEDMAN, LEVY, KROLL & SIMONDS CONSENT OF FREEDMAN, LEVY, KROLL & SIMONDS We hereby consent to the reference to our firm under the caption "Legal Matters" in the prospectus contained in the Form N-4 Registration Statement (File No. 333-31288) of Allstate Life Insurance Company Separate Account A. /s/ Freedman, Levy, Kroll & Simonds - ----------------------------------- FREEDMAN, LEVY, KROLL & SIMONDS Washington, D.C. April 26, 2000 EX-13 6 PERFORMANCE DATA CALCULATIONS Exhibit 13
Putnam "L" without RIG Asia Pacific Growth 36160 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 4.909021 203.7066 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 203.7066 2037.066 1 FORMULA: 1000*(1+T)= 2037.066 - (1000 * 0.02) = 2017.066 T = 1.017066 R = 1.017066 Diversified Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.993382 100.0662 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 100.0662 1000.662 1 FORMULA: 1000*(1+T)= 1000.662 - (1000 * 0.02) = 980.6622 T = -0.01934 R = -0.01934 George Putnam Fund of Boston 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.20997 97.94351 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 97.94351 979.4351 1 FORMULA: 1000*(1+T)= 979.4351 - (1000 * 0.02) = 959.4351 T = -0.04056 R = -0.04056 Global Asset Allocation 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.097389 109.9216 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 109.9216 1099.216 1 FORMULA: 1000*(1+T)= 1099.216 - (1000 * 0.02) = 1079.216 T = 0.079216 R = 0.079216 Global Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.090517 164.1897 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 164.1897 1641.897 1 FORMULA: 1000*(1+T)= 1641.897 - (1000 * 0.02) = 1621.897 T = 0.621897 R = 0.621897 Growth & Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.0212 99.78843 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 99.78843 997.8843 1 FORMULA: 1000*(1+T)= 997.8843 - (1000 * 0.02) = 977.8843 T = -0.02212 R = -0.02212 Health Sciences 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.58992 94.42941 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 94.42941 944.2941 1 FORMULA: 1000*(1+T)= 944.2941 - (1000 * 0.02) = 924.2941 T = -0.07571 R = -0.07571 High Yield 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.609692 104.0616 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 104.0616 1040.616 1 FORMULA: 1000*(1+T)= 1040.616 - (1000 * 0.02) = 1020.616 T = 0.020616 R = 0.020616 Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.3928 96.2205 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 96.2205 962.205 1 FORMULA: 1000*(1+T)= 962.205 - (1000 * 0.02) = 942.205 T = -0.0578 R = -0.0578 International Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.353162 157.4019 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 157.4019 1574.019 1 FORMULA: 1000*(1+T)= 1574.019 - (1000 * 0.02) = 1554.019 T = 0.554019 R = 0.554019 International Growth & Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 8.176648 122.2995 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 122.2995 1222.995 1 FORMULA: 1000*(1+T)= 1222.995 - (1000 * 0.02) = 1202.995 T = 0.202995 R = 0.202995 International New Opportunities 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 5.012878 199.4862 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 199.4862 1994.862 1 FORMULA: 1000*(1+T)= 1994.862 - (1000 * 0.02) = 1974.862 T = 0.974862 R = 0.974862 Investors 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 7.822206 127.8412 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 127.8412 1278.412 1 FORMULA: 1000*(1+T)= 1278.412 - (1000 * 0.02) = 1258.412 T = 0.258412 R = 0.258412 Money Market 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.77844 102.2658 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 102.2658 1022.658 1 FORMULA: 1000*(1+T)= 1022.658 - (1000 * 0.02) = 1002.658 T = 0.002658 R = 0.002658 New Opportunities 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.012689 166.3149 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 166.3149 1663.149 1 FORMULA: 1000*(1+T)= 1663.149 - (1000 * 0.02) = 1643.149 T = 0.643149 R = 0.643149 New Value 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.14145 98.60526 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 98.60526 986.0526 1 FORMULA: 1000*(1+T)= 986.0526 - (1000 * 0.02) = 966.0526 T = -0.03395 R = -0.03395 OTC & Emerging Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 4.490012 222.7166 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 222.7166 2227.166 1 FORMULA: 1000*(1+T)= 2227.166 - (1000 * 0.02) = 2207.166 T = 1.207166 R = 1.207166 Research 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 7.962602 125.5871 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 125.5871 1255.871 1 FORMULA: 1000*(1+T)= 1255.871 - (1000 * 0.02) = 1235.871 T = 0.235871 R = 0.235871 Small Cap Value 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 #VALUE! #VALUE! FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 1 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.02) = #VALUE! T = N/A R = N/A Utilities Growth & Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.24796 97.58036 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 97.58036 975.8036 1 FORMULA: 1000*(1+T)= 975.8036 - (1000 * 0.02) = 955.8036 T = -0.0442 R = -0.0442 Vista 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.663264 150.0766 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 150.0766 1500.766 1 FORMULA: 1000*(1+T)= 1500.766 - (1000 * 0.02) = 1480.766 T = 0.480766 R = 0.480766 Voyager 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.434393 155.4148 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 155.4148 1554.148 1 FORMULA: 1000*(1+T)= 1554.148 - (1000 * 0.02) = 1534.148 T = 0.534148 R = 0.534148
Putnam "L" without RIG Asia Pacific Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 5.884266 0 FEE 12/31/96 0 6.304451 0 FEE 12/31/97 0 5.2837 0 FEE 12/31/98 0 4.909021 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A Diversified Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 7.833661 127.6542 FEE 12/31/95 0 9.164446 0 FEE 12/31/96 0 9.79259 0 FEE 12/31/97 0 10.32599 0 FEE 12/31/98 0 9.993382 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 127.6542 1276.542 5 FORMULA: 1000*(1+T)= 1276.542 = 1276.542 T = 0.050043 R = 0.276542 George Putnam Fund of Boston 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 #VALUE! #VALUE! FEE 12/31/98 0 10.20997 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A Global Asset Allocation 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 4.988305 200.4689 FEE 12/31/95 0 6.10914 0 FEE 12/31/96 0 6.936533 0 FEE 12/31/97 0 8.151802 0 FEE 12/31/98 0 9.097389 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 200.4689 2004.689 5 FORMULA: 1000*(1+T)= 2004.689 = 2004.689 T = 0.149236 R = 1.004689 Global Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 3.253786 307.3343 FEE 12/31/95 0 3.696095 0 FEE 12/31/96 0 4.254112 0 FEE 12/31/97 0 4.77642 0 FEE 12/31/98 0 6.090517 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 307.3343 3073.343 5 FORMULA: 1000*(1+T)= 3073.343 = 3073.343 T = 0.251763 R = 2.073343 Growth & Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 4.509577 221.7503 FEE 12/31/95 0 6.054455 0 FEE 12/31/96 0 7.24886 0 FEE 12/31/97 0 8.837727 0 FEE 12/31/98 0 10.0212 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 221.7503 2217.503 5 FORMULA: 1000*(1+T)= 2217.503 = 2217.503 T = 0.172662 R = 1.217503 Health Sciences 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 #VALUE! #VALUE! FEE 12/31/98 0 10.58992 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A High Yield 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 7.184307 139.1923 FEE 12/31/95 0 8.34775 0 FEE 12/31/96 0 9.247729 0 FEE 12/31/97 0 10.38396 0 FEE 12/31/98 0 9.609692 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 139.1923 1391.923 5 FORMULA: 1000*(1+T)= 1391.923 = 1391.923 T = 0.068373 R = 0.391923 Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 7.695397 129.9478 FEE 12/31/95 0 9.102092 0 FEE 12/31/96 0 9.154404 0 FEE 12/31/97 0 9.766532 0 FEE 12/31/98 0 10.3928 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 129.9478 1299.478 5 FORMULA: 1000*(1+T)= 1299.478 = 1299.478 T = 0.053789 R = 0.299478 International Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 5.452375 0 FEE 12/31/98 0 6.353162 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A International Growth & Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 7.476127 0 FEE 12/31/98 0 8.176648 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A International New Opportunities 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 4.416088 0 FEE 12/31/98 0 5.012878 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A Investors 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 #VALUE! #VALUE! FEE 12/31/98 0 7.822206 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A Money Market 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 8.564548 116.7604 FEE 12/31/95 0 8.869972 0 FEE 12/31/96 0 9.153435 0 FEE 12/31/97 0 9.458185 0 FEE 12/31/98 0 9.77844 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 116.7604 1167.604 5 FORMULA: 1000*(1+T)= 1167.604 = 1167.604 T = 0.031476 R = 0.167604 New Opportunities 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 2.640805 378.6724 FEE 12/31/95 0 3.757084 0 FEE 12/31/96 0 4.064824 0 FEE 12/31/97 0 4.921339 0 FEE 12/31/98 0 6.012689 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 378.6724 3786.724 5 FORMULA: 1000*(1+T)= 3786.724 = 3786.724 T = 0.305127 R = 2.786724 New Value 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 9.718134 0 FEE 12/31/98 0 10.14145 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A OTC & Emerging Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 #VALUE! #VALUE! FEE 12/31/98 0 4.490012 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A Research 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 #VALUE! #VALUE! FEE 12/31/98 0 7.962602 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A Small Cap Value 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 #VALUE! #VALUE! FEE 12/31/98 0 #VALUE! #VALUE! FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A Utilities Growth & Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 4.965254 201.3996 FEE 12/31/95 0 6.391486 0 FEE 12/31/96 0 7.268243 0 FEE 12/31/97 0 9.071815 0 FEE 12/31/98 0 10.24796 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 201.3996 2013.996 5 FORMULA: 1000*(1+T)= 2013.996 = 2013.996 T = 0.150302 R = 1.013996 Vista 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 0 #VALUE! #VALUE! FEE 12/31/96 0 #VALUE! #VALUE! FEE 12/31/97 0 5.669309 0 FEE 12/31/98 0 6.663264 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! = #VALUE! T = N/A R = N/A Voyager 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 2.766609 361.4533 FEE 12/31/95 0 3.82194 0 FEE 12/31/96 0 4.240001 0 FEE 12/31/97 0 5.267867 0 FEE 12/31/98 0 6.434393 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 361.4533 3614.533 5 FORMULA: 1000*(1+T)= 3614.533 = 3614.533 T = 0.293035 R = 2.614533
Putnam "L" without RIG Asia Pacific Growth 05/01/95 TO NO. YEARS 4.668036 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES INIT DEPOSIT 05/01/95 1000 5.822136 171.7583 FEE 05/01/96 0 6.21889 0 0.02 FEE 05/01/97 0 6.144656 0 0.01 FEE 05/01/98 0 5.166593 0 0 05/01/99 0 5.749735 0 0 12/31/99 0 10 0 0 N/A 0 N/A 0 0 N/A 0 N/A 0 0 N/A 0 N/A 0 0 N/A 0 N/A 0 0 N/A 0 N/A 0 0 N/A 0 N/A 0 0 N/A 0 N/A 0 0 N/A 0 N/A 0 0 FEE N/A 0 N/A 0 0 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 171.7583 1717.583 4.668036 FORMULA: 1000*(1+T)= 1717.583 = 1717.583 T = 0.122858 R = 0.717583 Diversified Income 09/15/93 TO NO. YEARS 6.291581 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 09/15/93 1000 8.185757 122.1634 1 FEE 09/15/94 0 7.948202 0 0.02 2 FEE 09/15/95 0 8.76222 0 0.01 3 FEE 09/15/96 0 9.391335 0 0 4 09/15/97 0 10.15158 0 0 5 09/15/98 0 9.8408 0 0 6 09/15/99 0 9.805504 0 0 7 12/31/99 0 10 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 122.1634 1221.634 6.291581 FORMULA: 1000*(1+T)= 1221.634 = 1221.634 T = 0.03233 R = 0.221634 George Putnam Fund of Boston 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 04/30/98 1000 9.95769 100.4249 1 FEE 04/30/99 0 10.78338 0 0.02 2 FEE 12/31/99 0 10 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 100.4249 1004.249 1.670089 FORMULA: 1000*(1+T)= 1004.249 = 994.249 T = -0.00345 R = -0.00575 Global Asset Allocation 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 3.76267 265.7687 FEE 12/31/90 0 3.701615 0 FEE 12/31/91 0 4.326351 0 FEE 12/31/92 0 4.515746 0 FEE 12/31/93 0 5.209692 0 FEE 12/31/94 0 4.988305 0 FEE 12/31/95 0 6.10914 0 FEE 12/31/96 0 6.936533 0 FEE 12/31/97 0 8.151802 0 FEE 12/31/98 0 9.097389 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 265.7687 2657.687 10 FORMULA: 1000*(1+T)= 2657.687 - (0.85 * 1000 * 0) = 2657.687 T = 0.102682 R = 1.657687 Global Growth 05/01/90 TO NO. YEARS 9.667351 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 05/01/90 1000 2.528845 395.4374 1 FEE 05/01/91 0 2.538962 0 0.02 2 FEE 05/01/92 0 2.634264 0 0.01 3 FEE 05/01/93 0 2.814637 0 0 4 05/01/94 0 3.318071 0 0 5 05/01/95 0 3.260566 0 0 6 05/01/96 0 3.953842 0 0 7 05/01/97 0 4.428705 0 0 8 05/01/98 0 5.611953 0 0 9 05/01/99 0 6.309867 0 0 10 12/31/99 0 10 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 395.4374 3954.374 9.667351 FORMULA: 1000*(1+T)= 3954.374 = 3954.374 T = 0.152822 R = 2.954374 Growth & Income 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 3.232362 309.3713 FEE 12/31/90 0 3.23653 0 FEE 12/31/91 0 3.783734 0 FEE 12/31/92 0 4.078131 0 FEE 12/31/93 0 4.576157 0 FEE 12/31/94 0 4.509577 0 FEE 12/31/95 0 6.054455 0 FEE 12/31/96 0 7.24886 0 FEE 12/31/97 0 8.837727 0 FEE 12/31/98 0 10.0212 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 309.3713 3093.713 10 FORMULA: 1000*(1+T)= 3093.713 - (0.85 * 1000 * 0) = 3093.713 T = 0.119562 R = 2.093713 Health Sciences 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 04/30/98 1000 9.789038 102.1551 1 FEE 04/30/99 0 9.46249 0 0.02 2 FEE 12/31/99 0 10 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 102.1551 1021.551 1.670089 FORMULA: 1000*(1+T)= 1021.551 = 1011.551 T = 0.0069 R = 0.011551 High Yield 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 4.280869 233.5974 FEE 12/31/90 0 3.784513 0 FEE 12/31/91 0 5.382771 0 FEE 12/31/92 0 6.289369 0 FEE 12/31/93 0 7.384956 0 FEE 12/31/94 0 7.184307 0 FEE 12/31/95 0 8.34775 0 FEE 12/31/96 0 9.247729 0 FEE 12/31/97 0 10.38396 0 FEE 12/31/98 0 9.609692 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 233.5974 2335.974 10 FORMULA: 1000*(1+T)= 2335.974 - (0.85 * 1000 * 0) = 2335.974 T = 0.088546 R = 1.335974 Income 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 5.776642 173.111 FEE 12/31/90 0 6.098838 0 FEE 12/31/91 0 7.02424 0 FEE 12/31/92 0 7.41477 0 FEE 12/31/93 0 8.102765 0 FEE 12/31/94 0 7.695397 0 FEE 12/31/95 0 9.102092 0 FEE 12/31/96 0 9.154404 0 FEE 12/31/97 0 9.766532 0 FEE 12/31/98 0 10.3928 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 173.111 1731.11 10 FORMULA: 1000*(1+T)= 1731.11 - (0.85 * 1000 * 0) = 1731.11 T = 0.05641 R = 0.73111 International Growth 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 01/02/97 1000 4.780694 209.1747 1 FEE 01/02/98 0 5.480454 0 0.02 2 FEE 01/02/99 0 6.353162 0 0.01 3 FEE 12/31/99 0 10 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 209.1747 2091.747 2.992471 FORMULA: 1000*(1+T)= 2091.747 = 2091.747 T = 0.279691 R = 1.091747 International Growth & Income 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 01/02/97 1000 6.373516 156.8993 1 FEE 01/02/98 0 7.507804 0 0.02 2 FEE 01/02/99 0 8.176648 0 0.01 3 FEE 12/31/99 0 10 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 156.8993 1568.993 2.992471 FORMULA: 1000*(1+T)= 1568.993 = 1568.993 T = 0.162441 R = 0.568993 International New Opportunities 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 01/02/97 1000 4.501127 222.1666 1 FEE 01/02/98 0 4.433384 0 0.02 2 FEE 01/02/99 0 5.012878 0 0.01 3 FEE 12/31/99 0 10 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 222.1666 2221.666 2.992471 FORMULA: 1000*(1+T)= 2221.666 = 2221.666 T = 0.305721 R = 1.221666 Investors 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 04/30/98 1000 6.787468 147.3303 1 FEE 04/30/99 0 8.24078 0 0.02 2 FEE 12/31/99 0 10 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 147.3303 1473.303 1.670089 FORMULA: 1000*(1+T)= 1473.303 = 1463.303 T = 0.256022 R = 0.463303 Money Market 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 7.418123 134.805 FEE 12/31/90 0 7.865913 0 FEE 12/31/91 0 8.18165 0 FEE 12/31/92 0 8.321512 0 FEE 12/31/93 0 8.399995 0 FEE 12/31/94 0 8.564548 0 FEE 12/31/95 0 8.869972 0 FEE 12/31/96 0 9.153435 0 FEE 12/31/97 0 9.458185 0 FEE 12/31/98 0 9.77844 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 134.805 1348.05 10 FORMULA: 1000*(1+T)= 1348.05 - (0.85 * 1000 * 0) = 1348.05 T = 0.030316 R = 0.34805 New Opportunities 05/02/94 TO NO. YEARS 5.664613 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 05/02/94 1000 2.470309 404.8077 1 FEE 05/02/95 0 2.824631 0 0.02 2 FEE 05/02/96 0 4.298116 0 0.01 3 FEE 05/02/97 0 3.974521 0 0 4 05/02/98 0 5.696983 0 0 5 05/02/99 0 6.389733 0 0 6 12/31/99 0 10 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 404.8077 4048.077 5.664613 FORMULA: 1000*(1+T)= 4048.077 = 4048.077 T = 0.279972 R = 3.048077 New Value 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 01/02/97 1000 8.414057 118.8487 1 FEE 01/02/98 0 9.750223 0 0.02 2 FEE 01/02/99 0 10.14145 0 0.01 3 FEE 12/31/99 0 10 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 118.8487 1188.487 2.992471 FORMULA: 1000*(1+T)= 1188.487 = 1188.487 T = 0.059403 R = 0.188487 OTC & Emerging Growth 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 04/30/98 1000 4.503377 222.0556 1 FEE 04/30/99 0 5.054763 0 0.02 2 FEE 12/31/99 0 10 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 222.0556 2220.556 1.670089 FORMULA: 1000*(1+T)= 2220.556 = 2210.556 T = 0.607968 R = 1.210556 Research 09/29/98 TO NO. YEARS 1.253936 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 09/29/98 1000 6.709075 149.0518 1 FEE 09/29/99 0 8.239571 0 0.02 2 FEE 12/31/99 0 10 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 149.0518 1490.518 1.253936 FORMULA: 1000*(1+T)= 1490.518 = 1480.518 T = 0.367424 R = 0.480518 Small Cap Value 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 04/30/99 1000 9.732664 102.7468 1 FEE 12/31/99 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 102.7468 1027.468 0.670773 FORMULA: 1000*(1+T)= 1027.468 = 1007.468 T = 0.011154 R = 0.007468 Utilities Growth & Income 05/01/92 TO NO. YEARS 7.665982 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 05/01/92 1000 4.61286 216.7852 1 FEE 05/01/93 0 5.210646 0 0.02 2 FEE 05/01/94 0 5.129627 0 0.01 3 FEE 05/01/95 0 5.339181 0 0 4 05/01/96 0 6.481804 0 0 5 05/01/97 0 7.248349 0 0 6 05/01/98 0 9.399769 0 0 7 05/01/99 0 10.04017 0 0 8 12/31/99 0 10 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 216.7852 2167.852 7.665982 FORMULA: 1000*(1+T)= 2167.852 = 2167.852 T = 0.106201 R = 1.167852 Vista 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 01/02/97 1000 4.68505 213.4449 1 FEE 01/02/98 0 5.631932 0 0.02 2 FEE 01/02/99 0 6.663264 0 0.01 3 FEE 12/31/99 0 10 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 213.4449 2134.449 2.992471 FORMULA: 1000*(1+T)= 2134.449 = 2134.449 T = 0.288363 R = 1.134449 Voyager 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 1.599055 625.3694 FEE 12/31/90 0 1.538441 0 FEE 12/31/91 0 2.207136 0 FEE 12/31/92 0 2.392 0 FEE 12/31/93 0 2.788292 0 FEE 12/31/94 0 2.766609 0 FEE 12/31/95 0 3.82194 0 FEE 12/31/96 0 4.240001 0 FEE 12/31/97 0 5.267867 0 FEE 12/31/98 0 6.434393 0 FEE 12/31/99 0 10 0 RESULTING VALUE 12/31/99 10 625.3694 6253.694 10 FORMULA: 1000*(1+T)= 6253.694 - (0.85 * 1000 * 0) = 6253.694 T = 0.201195 R = 5.253694
Putnam "L" Base with RIG 2 Asia Pacific Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 36160 1000 4.909021 203.7066 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 203.3886 2033.886 1 FORMULA: 1000*(1+T)= 2033.886 - (1000 * 0.02) = 2013.886 T = 1.013886 R = 1.013886 Diversified Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.993382 100.0662 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 99.74822 997.4822 1 FORMULA: 1000*(1+T)= 997.4822 - (1000 * 0.02) = 977.4822 T = -0.02252 R = -0.02252 George Putnam Fund of Boston 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.20997 97.94351 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 97.62551 976.2551 1 FORMULA: 1000*(1+T)= 976.2551 - (1000 * 0.02) = 956.2551 T = -0.04374 R = -0.04374 Global Asset Allocation 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.097389 109.9216 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 109.6036 1096.036 1 FORMULA: 1000*(1+T)= 1096.036 - (1000 * 0.02) = 1076.036 T = 0.076036 R = 0.076036 Global Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.090517 164.1897 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 163.8717 1638.717 1 FORMULA: 1000*(1+T)= 1638.717 - (1000 * 0.02) = 1618.717 T = 0.618717 R = 0.618717 Growth & Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.0212 99.78843 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 99.47043 994.7043 1 FORMULA: 1000*(1+T)= 994.7043 - (1000 * 0.02) = 974.7043 T = -0.0253 R = -0.0253 Health Sciences 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.58992 94.42941 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 94.11141 941.1141 1 FORMULA: 1000*(1+T)= 941.1141 - (1000 * 0.02) = 921.1141 T = -0.07889 R = -0.07889 High Yield 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.609692 104.0616 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 103.7436 1037.436 1 FORMULA: 1000*(1+T)= 1037.436 - (1000 * 0.02) = 1017.436 T = 0.017436 R = 0.017436 Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.3928 96.2205 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 95.9025 959.025 1 FORMULA: 1000*(1+T)= 959.025 - (1000 * 0.02) = 939.025 T = -0.06098 R = -0.06098 International Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.353162 157.4019 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 157.0839 1570.839 1 FORMULA: 1000*(1+T)= 1570.839 - (1000 * 0.02) = 1550.839 T = 0.550839 R = 0.550839 International Growth & Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 8.176648 122.2995 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 121.9815 1219.815 1 FORMULA: 1000*(1+T)= 1219.815 - (1000 * 0.02) = 1199.815 T = 0.199815 R = 0.199815 International New Opportunities 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 5.012878 199.4862 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 199.1682 1991.682 1 FORMULA: 1000*(1+T)= 1991.682 - (1000 * 0.02) = 1971.682 T = 0.971682 R = 0.971682 Investors 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 7.822206 127.8412 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 127.5232 1275.232 1 FORMULA: 1000*(1+T)= 1275.232 - (1000 * 0.02) = 1255.232 T = 0.255232 R = 0.255232 Money Market 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.77844 102.2658 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 101.9478 1019.478 1 FORMULA: 1000*(1+T)= 1019.478 - (1000 * 0.02) = 999.478 T = -0.00052 R = -0.00052 New Opportunities 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.012689 166.3149 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 165.9969 1659.969 1 FORMULA: 1000*(1+T)= 1659.969 - (1000 * 0.02) = 1639.969 T = 0.639969 R = 0.639969 New Value 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.14145 98.60526 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 98.28726 982.8726 1 FORMULA: 1000*(1+T)= 982.8726 - (1000 * 0.02) = 962.8726 T = -0.03713 R = -0.03713 OTC & Emerging Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 4.490012 222.7166 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 222.3986 2223.986 1 FORMULA: 1000*(1+T)= 2223.986 - (1000 * 0.02) = 2203.986 T = 1.203986 R = 1.203986 Research 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 7.962602 125.5871 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 125.2691 1252.691 1 FORMULA: 1000*(1+T)= 1252.691 - (1000 * 0.02) = 1232.691 T = 0.232691 R = 0.232691 Small Cap Value 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 #VALUE! #VALUE! FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 1 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.02) = #VALUE! T = N/A R = N/A Utilities Growth & Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.24796 97.58036 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 97.26236 972.6236 1 FORMULA: 1000*(1+T)= 972.6236 - (1000 * 0.02) = 952.6236 T = -0.04738 R = -0.04738 Vista 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.663264 150.0766 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 149.7586 1497.586 1 FORMULA: 1000*(1+T)= 1497.586 - (1000 * 0.02) = 1477.586 T = 0.477586 R = 0.477586 Voyager 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.434393 155.4148 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 155.0968 1550.968 1 FORMULA: 1000*(1+T)= 1550.968 - (1000 * 0.02) = 1530.968 T = 0.530968 R = 0.530968
Putnam "L" Base with RIG 2 Asia Pacific Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 34699 1000 #VALUE! #VALUE! FEE 35064 3.18 5.884266 0.540424 FEE 35430 3.3708 6.304451 0.53467 FEE 35795 3.573048 5.2837 0.67624 FEE 12/31/98 3.787431 4.909021 0.771525 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Diversified Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 7.833661 127.6542 FEE 12/31/95 3.18 9.164446 0.346993 FEE 12/31/96 3.3708 9.79259 0.344219 FEE 12/31/97 3.573048 10.32599 0.346025 FEE 12/31/98 3.787431 9.993382 0.378994 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 125.8365 1258.365 5 FORMULA: 1000*(1+T)= 1258.365 - (1000 * 0.0) = 1258.365 T = 0.047035 R = 0.258365 George Putnam Fund of Boston 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 10.20997 0.370954 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Global Asset Allocation 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 4.988305 200.4689 FEE 12/31/95 3.18 6.10914 0.520532 FEE 12/31/96 3.3708 6.936533 0.485949 FEE 12/31/97 3.573048 8.151802 0.438314 FEE 12/31/98 3.787431 9.097389 0.416321 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 198.2063 1982.063 5 FORMULA: 1000*(1+T)= 1982.063 - (1000 * 0.0) = 1982.063 T = 0.146631 R = 0.982063 Global Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 3.253786 307.3343 FEE 12/31/95 3.18 3.696095 0.860367 FEE 12/31/96 3.3708 4.254112 0.792363 FEE 12/31/97 3.573048 4.77642 0.74806 FEE 12/31/98 3.787431 6.090517 0.621857 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 303.9102 3039.102 5 FORMULA: 1000*(1+T)= 3039.102 - (1000 * 0.0) = 3039.102 T = 0.248961 R = 2.039102 Growth & Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 4.509577 221.7503 FEE 12/31/95 3.18 6.054455 0.525233 FEE 12/31/96 3.3708 7.24886 0.465011 FEE 12/31/97 3.573048 8.837727 0.404295 FEE 12/31/98 3.787431 10.0212 0.377942 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 219.5763 2195.763 5 FORMULA: 1000*(1+T)= 2195.763 - (1000 * 0.0) = 2195.763 T = 0.170354 R = 1.195763 Health Sciences 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 10.58992 0.357645 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A High Yield 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 7.184307 139.1923 FEE 12/31/95 3.18 8.34775 0.380941 FEE 12/31/96 3.3708 9.247729 0.3645 FEE 12/31/97 3.573048 10.38396 0.344093 FEE 12/31/98 3.787431 9.609692 0.394126 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 137.3071 1373.071 5 FORMULA: 1000*(1+T)= 1373.071 - (1000 * 0.0) = 1373.071 T = 0.065464 R = 0.373071 Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 7.695397 129.9478 FEE 12/31/95 3.18 9.102092 0.34937 FEE 12/31/96 3.3708 9.154404 0.368216 FEE 12/31/97 3.573048 9.766532 0.365846 FEE 12/31/98 3.787431 10.3928 0.364428 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 128.0985 1280.985 5 FORMULA: 1000*(1+T)= 1280.985 - (1000 * 0.0) = 1280.985 T = 0.050773 R = 0.280985 International Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 5.452375 0.65532 FEE 12/31/98 3.787431 6.353162 0.596149 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A International Growth & Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 7.476127 0.477928 FEE 12/31/98 3.787431 8.176648 0.463201 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A International New Opportunities 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 4.416088 0.809098 FEE 12/31/98 3.787431 5.012878 0.75554 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Investors 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 7.822206 0.48419 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Money Market 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 8.564548 116.7604 FEE 12/31/95 3.18 8.869972 0.358513 FEE 12/31/96 3.3708 9.153435 0.368255 FEE 12/31/97 3.573048 9.458185 0.377773 FEE 12/31/98 3.787431 9.77844 0.387325 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 114.8671 1148.671 5 FORMULA: 1000*(1+T)= 1148.671 - (1000 * 0.0) = 1148.671 T = 0.028109 R = 0.148671 New Opportunities 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 2.640805 378.6724 FEE 12/31/95 3.18 3.757084 0.846401 FEE 12/31/96 3.3708 4.064824 0.829261 FEE 12/31/97 3.573048 4.921339 0.726032 FEE 12/31/98 3.787431 6.012689 0.629906 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 375.2393 3752.393 5 FORMULA: 1000*(1+T)= 3752.393 - (1000 * 0.0) = 3752.393 T = 0.302752 R = 2.752393 New Value 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 9.718134 0.367668 FEE 12/31/98 3.787431 10.14145 0.373461 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A OTC & Emerging Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 4.490012 0.843524 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Research 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 7.962602 0.475652 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Small Cap Value 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 #VALUE! #VALUE! FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Utilities Growth & Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 4.965254 201.3996 FEE 12/31/95 3.18 6.391486 0.497537 FEE 12/31/96 3.3708 7.268243 0.463771 FEE 12/31/97 3.573048 9.071815 0.393863 FEE 12/31/98 3.787431 10.24796 0.369579 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 199.2733 1992.733 5 FORMULA: 1000*(1+T)= 1992.733 - (1000 * 0.0) = 1992.733 T = 0.147862 R = 0.992733 Vista 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 5.669309 0.630244 FEE 12/31/98 3.787431 6.663264 0.568405 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Voyager 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 2.766609 361.4533 FEE 12/31/95 3.18 3.82194 0.832038 FEE 12/31/96 3.3708 4.240001 0.795 FEE 12/31/97 3.573048 5.267867 0.678272 FEE 12/31/98 3.787431 6.434393 0.588623 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 358.1579 3581.579 5 FORMULA: 1000*(1+T)= 3581.579 - (1000 * 0.0) = 3581.579 T = 0.290669 R = 2.581579
Putnam "L" Base with RIG 2 Asia Pacific Growth 05/01/95 TO NO. YEARS 4.668036 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 05/01/95 1000 5.822136 171.7583 1 FEE 05/01/96 3.18 6.21889 0.511345 0.02 2 FEE 05/01/97 3.3708 6.144656 0.548574 0.01 3 FEE 05/01/98 3.573048 5.166593 0.691568 0 4 05/01/99 3.787431 5.749735 0.658714 0 5 12/31/99 4.014677 10 0.401468 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 168.9466 1689.466 4.668036 FORMULA: 1000*(1+T)= 1689.466 = 1689.466 T = 0.118895 R = 0.689466 Diversified Income 09/15/93 TO NO. YEARS 6.291581 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 09/15/93 1000 8.185757 122.1634 1 FEE 09/15/94 3.18 7.948202 0.40009 0.02 2 FEE 09/15/95 3.3708 8.76222 0.384697 0.01 3 FEE 09/15/96 3.573048 9.391335 0.380462 0 4 09/15/97 3.787431 10.15158 0.373088 0 5 09/15/98 4.014677 9.8408 0.407962 0 6 09/15/99 4.255557 9.805504 0.433997 0 7 12/31/99 4.510891 10 0.451089 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 119.332 1193.32 6.291581 FORMULA: 1000*(1+T)= 1193.32 = 1193.32 T = 0.02849 R = 0.19332 George Putnam Fund of Boston 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 04/30/98 1000 9.95769 100.4249 1 FEE 04/30/99 3.18 10.78338 0.294898 0.02 2 FEE 12/31/99 3.3708 10 0.33708 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 99.79292 997.9292 1.670089 FORMULA: 1000*(1+T)= 997.9292 = 987.9292 T = -0.00725 R = -0.01207 Global Asset Allocation 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 3.76267 265.7687 FEE 12/31/90 3.18 3.701615 0.859084 FEE 12/31/91 3.3708 4.326351 0.779132 FEE 12/31/92 3.573048 4.515746 0.791242 FEE 12/31/93 3.787431 5.209692 0.726997 FEE 12/31/94 4.014677 4.988305 0.804818 FEE 12/31/95 4.255557 6.10914 0.696589 FEE 12/31/96 4.510891 6.936533 0.650309 FEE 12/31/97 4.781544 8.151802 0.586563 FEE 12/31/98 5.068437 9.097389 0.557131 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 258.7796 2587.796 10 FORMULA: 1000*(1+T)= 2587.796 - (0.85 * 1000 * 0) = 2587.796 T = 0.099748 R = 1.587796 Global Growth 05/01/90 TO NO. YEARS 9.667351 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 05/01/90 1000 2.528845 395.4374 1 FEE 05/01/91 3.18 2.538962 1.25248 0.02 2 FEE 05/01/92 3.3708 2.634264 1.279598 0.01 3 FEE 05/01/93 3.573048 2.814637 1.269453 0 4 05/01/94 3.787431 3.318071 1.141456 0 5 05/01/95 4.014677 3.260566 1.231282 0 6 05/01/96 4.255557 3.953842 1.076309 0 7 05/01/97 4.510891 4.428705 1.018558 0 8 05/01/98 4.781544 5.611953 0.852029 0 9 05/01/99 5.068437 6.309867 0.803256 0 10 12/31/99 5.372543 10 0.537254 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 384.9758 3849.758 9.667351 FORMULA: 1000*(1+T)= 3849.758 = 3849.758 T = 0.149629 R = 2.849758 Growth & Income 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 3.232362 309.3713 FEE 12/31/90 3.18 3.23653 0.982534 FEE 12/31/91 3.3708 3.783734 0.890866 FEE 12/31/92 3.573048 4.078131 0.876148 FEE 12/31/93 3.787431 4.576157 0.827644 FEE 12/31/94 4.014677 4.509577 0.890256 FEE 12/31/95 4.255557 6.054455 0.70288 FEE 12/31/96 4.510891 7.24886 0.62229 FEE 12/31/97 4.781544 8.837727 0.541038 FEE 12/31/98 5.068437 10.0212 0.505771 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 301.9946 3019.946 10 FORMULA: 1000*(1+T)= 3019.946 - (0.85 * 1000 * 0) = 3019.946 T = 0.116863 R = 2.019946 Health Sciences 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 04/30/98 1000 9.789038 102.1551 1 FEE 04/30/99 3.18 9.46249 0.336064 0.02 2 FEE 12/31/99 3.3708 10 0.33708 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 101.4819 1014.819 1.670089 FORMULA: 1000*(1+T)= 1014.819 = 1004.819 T = 0.002883 R = 0.004819 High Yield 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 4.280869 233.5974 FEE 12/31/90 3.18 3.784513 0.840267 FEE 12/31/91 3.3708 5.382771 0.62622 FEE 12/31/92 3.573048 6.289369 0.568109 FEE 12/31/93 3.787431 7.384956 0.512858 FEE 12/31/94 4.014677 7.184307 0.558812 FEE 12/31/95 4.255557 8.34775 0.509785 FEE 12/31/96 4.510891 9.247729 0.487784 FEE 12/31/97 4.781544 10.38396 0.460474 FEE 12/31/98 5.068437 9.609692 0.52743 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 227.9684 2279.684 10 FORMULA: 1000*(1+T)= 2279.684 - (0.85 * 1000 * 0) = 2279.684 T = 0.085894 R = 1.279684 Income 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 5.776642 173.111 FEE 12/31/90 3.18 6.098838 0.521411 FEE 12/31/91 3.3708 7.02424 0.479881 FEE 12/31/92 3.573048 7.41477 0.481883 FEE 12/31/93 3.787431 8.102765 0.467425 FEE 12/31/94 4.014677 7.695397 0.521698 FEE 12/31/95 4.255557 9.102092 0.467536 FEE 12/31/96 4.510891 9.154404 0.492756 FEE 12/31/97 4.781544 9.766532 0.489585 FEE 12/31/98 5.068437 10.3928 0.487688 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 168.1638 1681.638 10 FORMULA: 1000*(1+T)= 1681.638 - (0.85 * 1000 * 0) = 1681.638 T = 0.053351 R = 0.681638 International Growth 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 01/02/97 1000 4.780694 209.1747 1 FEE 01/02/98 3.18 5.480454 0.580244 0.02 2 FEE 01/02/99 3.3708 6.353162 0.53057 0.01 3 FEE 12/31/99 3.573048 10 0.357305 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 207.7065 2077.065 2.992471 FORMULA: 1000*(1+T)= 2077.065 = 2077.065 T = 0.276683 R = 1.077065 International Growth & Income 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 01/02/97 1000 6.373516 156.8993 1 FEE 01/02/98 3.18 7.507804 0.423559 0.02 2 FEE 01/02/99 3.3708 8.176648 0.412247 0.01 3 FEE 12/31/99 3.573048 10 0.357305 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 155.7062 1557.062 2.992471 FORMULA: 1000*(1+T)= 1557.062 = 1557.062 T = 0.15948 R = 0.557062 International New Opportunities 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 01/02/97 1000 4.501127 222.1666 1 FEE 01/02/98 3.18 4.433384 0.717285 0.02 2 FEE 01/02/99 3.3708 5.012878 0.672428 0.01 3 FEE 12/31/99 3.573048 10 0.357305 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 220.4196 2204.196 2.992471 FORMULA: 1000*(1+T)= 2204.196 = 2204.196 T = 0.302281 R = 1.204196 Investors 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 04/30/98 1000 6.787468 147.3303 1 FEE 04/30/99 3.18 8.24078 0.385886 0.02 2 FEE 12/31/99 3.3708 10 0.33708 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 146.6074 1466.074 1.670089 FORMULA: 1000*(1+T)= 1466.074 = 1456.074 T = 0.252303 R = 0.456074 Money Market 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 7.418123 134.805 FEE 12/31/90 3.18 7.865913 0.404276 FEE 12/31/91 3.3708 8.18165 0.411995 FEE 12/31/92 3.573048 8.321512 0.429375 FEE 12/31/93 3.787431 8.399995 0.450885 FEE 12/31/94 4.014677 8.564548 0.468755 FEE 12/31/95 4.255557 8.869972 0.479771 FEE 12/31/96 4.510891 9.153435 0.492809 FEE 12/31/97 4.781544 9.458185 0.505546 FEE 12/31/98 5.068437 9.77844 0.518328 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 130.106 1301.06 10 FORMULA: 1000*(1+T)= 1301.06 - (0.85 * 1000 * 0) = 1301.06 T = 0.026667 R = 0.30106 New Opportunities 05/02/94 TO NO. YEARS 5.664613 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 05/02/94 1000 2.470309 404.8077 1 FEE 05/02/95 3.18 2.824631 1.125811 0.02 2 FEE 05/02/96 3.3708 4.298116 0.784251 0.01 3 FEE 05/02/97 3.573048 3.974521 0.898988 0 4 05/02/98 3.787431 5.696983 0.664813 0 5 05/02/99 4.014677 6.389733 0.628301 0 6 12/31/99 4.255557 10 0.425556 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 400.2799 4002.799 5.664613 FORMULA: 1000*(1+T)= 4002.799 = 4002.799 T = 0.277433 R = 3.002799 New Value 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 01/02/97 1000 8.414057 118.8487 1 FEE 01/02/98 3.18 9.750223 0.326146 0.02 2 FEE 01/02/99 3.3708 10.14145 0.332379 0.01 3 FEE 12/31/99 3.573048 10 0.357305 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 117.8329 1178.329 2.992471 FORMULA: 1000*(1+T)= 1178.329 = 1178.329 T = 0.056368 R = 0.178329 OTC & Emerging Growth 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 04/30/98 1000 4.503377 222.0556 1 FEE 04/30/99 3.18 5.054763 0.62911 0.02 2 FEE 12/31/99 3.3708 10 0.33708 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 221.0894 2210.894 1.670089 FORMULA: 1000*(1+T)= 2210.894 = 2200.894 T = 0.603756 R = 1.200894 Research 09/29/98 TO NO. YEARS 1.253936 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 09/29/98 1000 6.709075 149.0518 1 FEE 09/29/99 3.18 8.239571 0.385942 0.02 2 FEE 12/31/99 3.3708 10 0.33708 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 148.3288 1483.288 1.253936 FORMULA: 1000*(1+T)= 1483.288 = 1473.288 T = 0.362096 R = 0.473288 Small Cap Value 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 04/30/99 1000 9.732664 102.7468 1 FEE 12/31/99 3.18 10 0.318 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 102.4288 1024.288 0.670773 FORMULA: 1000*(1+T)= 1024.288 = 1004.288 T = 0.006399 R = 0.004288 Utilities Growth & Income 05/01/92 TO NO. YEARS 7.665982 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 05/01/92 1000 4.61286 216.7852 1 FEE 05/01/93 3.18 5.210646 0.610289 0.02 2 FEE 05/01/94 3.3708 5.129627 0.657124 0.01 3 FEE 05/01/95 3.573048 5.339181 0.669213 0 4 05/01/96 3.787431 6.481804 0.584317 0 5 05/01/97 4.014677 7.248349 0.553875 0 6 05/01/98 4.255557 9.399769 0.45273 0 7 05/01/99 4.510891 10.04017 0.449284 0 8 12/31/99 4.781544 10 0.478154 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 212.3303 2123.303 7.665982 FORMULA: 1000*(1+T)= 2123.303 = 2123.303 T = 0.103208 R = 1.123303 Vista 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 01/02/97 1000 4.68505 213.4449 1 FEE 01/02/98 3.18 5.631932 0.564637 0.02 2 FEE 01/02/99 3.3708 6.663264 0.505878 0.01 3 FEE 12/31/99 3.573048 10 0.357305 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 212.0171 2120.171 2.992471 FORMULA: 1000*(1+T)= 2120.171 = 2120.171 T = 0.285476 R = 1.120171 Voyager 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 1.599055 625.3694 FEE 12/31/90 3.18 1.538441 2.067028 FEE 12/31/91 3.3708 2.207136 1.527228 FEE 12/31/92 3.573048 2.392 1.493749 FEE 12/31/93 3.787431 2.788292 1.358334 FEE 12/31/94 4.014677 2.766609 1.451118 FEE 12/31/95 4.255557 3.82194 1.113455 FEE 12/31/96 4.510891 4.240001 1.063889 FEE 12/31/97 4.781544 5.267867 0.907681 FEE 12/31/98 5.068437 6.434393 0.78771 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 613.0619 6130.619 10 FORMULA: 1000*(1+T)= 6130.619 - (0.85 * 1000 * 0) = 6130.619 T = 0.19881 R = 5.130619
Putnam "L" Enhanced DB w/o RIG Asia Pacific Growth 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 36280 1000 5.755531 173.7459 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 173.7459 1737.459 0.670773 FORMULA: 1000*(1+T)= 1737.459 = 1717.459 T = 1.239611 R = 0.717459 Diversified Income 36280 TO NO. YEARS 0.670773 36525 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 36280 1000 10.17408 98.28902 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 98.28902 982.8902 0.670773 FORMULA: 1000*(1+T)= 982.8902 = 962.8902 T = -0.05482 R = -0.03711 George Putnam Fund of Boston 36280 TO NO. YEARS 0.670773 36525 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 36280 1000 10.79446 92.64014 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 92.64014 926.4014 0.670773 FORMULA: 1000*(1+T)= 926.4014 = 906.4014 T = -0.13628 R = -0.0936 Global Asset Allocation 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 36280 1000 9.383157 106.5739 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 106.5739 1065.739 0.670773 FORMULA: 1000*(1+T)= 1065.739 = 1045.739 T = 0.068949 R = 0.045739 Global Growth 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 6.310027 158.4779 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 158.4779 1584.779 0.670773 FORMULA: 1000*(1+T)= 1584.779 = 1564.779 T = 0.949368 R = 0.564779 Growth & Income 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 10.94405 91.37384 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 91.37384 913.7384 0.670773 FORMULA: 1000*(1+T)= 913.7384 = 893.7384 T = -0.15421 R = -0.10626 Health Sciences 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 9.472175 105.5724 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 105.5724 1055.724 0.670773 FORMULA: 1000*(1+T)= 1055.724 = 1035.724 T = 0.053722 R = 0.035724 High Yield 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 10.10465 98.9643 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 98.9643 989.643 0.670773 FORMULA: 1000*(1+T)= 989.643 = 969.643 T = -0.04492 R = -0.03036 Income 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 10.3335 96.77263 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 96.77263 967.7263 0.670773 FORMULA: 1000*(1+T)= 967.7263 = 947.7263 T = -0.07692 R = -0.05227 International Growth 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 6.957057 143.7389 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 143.7389 1437.389 0.670773 FORMULA: 1000*(1+T)= 1437.389 = 1417.389 T = 0.682064 R = 0.417389 International Growth & Income 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 9.151351 109.2735 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 109.2735 1092.735 0.670773 FORMULA: 1000*(1+T)= 1092.735 = 1072.735 T = 0.110347 R = 0.072735 International New Opportunities 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 5.534504 180.6847 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 180.6847 1806.847 0.670773 FORMULA: 1000*(1+T)= 1806.847 = 1786.847 T = 1.375833 R = 0.786847 Investors 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 8.249222 121.2236 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 121.2236 1212.236 0.670773 FORMULA: 1000*(1+T)= 1212.236 = 1192.236 T = 0.299696 R = 0.192236 Money Market 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 9.878432 101.2306 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 101.2306 1012.306 0.670773 FORMULA: 1000*(1+T)= 1012.306 = 992.3064 T = -0.01145 R = -0.00769 New Opportunities 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 6.396252 156.3416 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 156.3416 1563.416 0.670773 FORMULA: 1000*(1+T)= 1563.416 = 1543.416 T = 0.909824 R = 0.543416 New Value 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 11.41271 87.62158 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 87.62158 876.2158 0.670773 FORMULA: 1000*(1+T)= 876.2158 = 856.2158 T = -0.2066 R = -0.14378 OTC & Emerging Growth 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 5.059945 197.6306 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 197.6306 1976.306 0.670773 FORMULA: 1000*(1+T)= 1976.306 = 1956.306 T = 1.719435 R = 0.956306 Research 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 8.65484 115.5423 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 115.5423 1155.423 0.670773 FORMULA: 1000*(1+T)= 1155.423 = 1135.423 T = 0.208453 R = 0.135423 Small Cap Value 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 9.742543 102.6426 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 102.6426 1026.426 0.670773 FORMULA: 1000*(1+T)= 1026.426 = 1006.426 T = 0.009595 R = 0.006426 Utilities Growth & Income 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 10.05041 99.49846 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 99.49846 994.9846 0.670773 FORMULA: 1000*(1+T)= 994.9846 = 974.9846 T = -0.03706 R = -0.02502 Vista 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 7.124651 140.3578 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 140.3578 1403.578 0.670773 FORMULA: 1000*(1+T)= 1403.578 = 1383.578 T = 0.622596 R = 0.383578 Voyager 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 36280 1000 7.006384 142.727 1 FEE 36525 0 10 0 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 36525 10 142.727 1427.27 0.670773 FORMULA: 1000*(1+T)= 1427.27 = 1407.27 T = 0.664192 R = 0.40727
Putnam "L" Enhanced DB w/o RIG Non-Standardized Calculations Dates: Current: 12/31/99 3 Months Ago: 9/30/99 End of Last Year: 12/31/98 One Yr Ago: 12/31/98 Two Yrs Ago: 12/31/97 Three Yrs Ago: 12/31/96 Five Yrs Ago: 12/31/94 Ten Yrs Ago: 12/31/89 Inception Inception Ten Yr Five Yr Three Two One Yr YTD Fund Date AUV AUV AUV AUV AUV AUV AUV Asia Pacific Growth 4/30/99 5.755531 N/A N/A N/A N/A N/A N/A Diversified Income 4/30/99 10.17408 N/A N/A N/A N/A N/A N/A George Putnam of Boston 4/30/99 10.79446 N/A N/A N/A N/A N/A N/A Global Asset Allocation 4/30/99 9.383157 N/A N/A N/A N/A N/A N/A Global Growth 4/30/99 6.310027 N/A N/A N/A N/A N/A N/A Growth & Income 4/30/99 10.94405 N/A N/A N/A N/A N/A N/A Health Sciences 4/30/99 9.472175 N/A N/A N/A N/A N/A N/A High Yield 4/30/99 10.10465 N/A N/A N/A N/A N/A N/A Income 4/30/99 10.3335 N/A N/A N/A N/A N/A N/A International Growth 4/30/99 6.957057 N/A N/A N/A N/A N/A N/A International Growth & Income 4/30/99 9.151351 N/A N/A N/A N/A N/A N/A International New Opportunities 4/30/99 5.534504 N/A N/A N/A N/A N/A 10 Investors 4/30/99 8.249222 N/A N/A N/A N/A N/A 10 Money Market 4/30/99 9.878432 N/A N/A N/A N/A N/A 10 New Opportunities 4/30/99 6.396252 N/A N/A N/A N/A N/A 10 New Value 4/30/99 11.41271 N/A N/A N/A N/A N/A 10 OTC & Emerging Growth 4/30/99 5.059945 N/A N/A N/A N/A N/A 10 Research Fund 4/30/99 8.65484 N/A N/A N/A N/A N/A 10 Small Cap Value 4/30/99 9.742543 N/A N/A N/A N/A N/A 10 Utilities Growth & Income 4/30/99 10.05041 N/A N/A N/A N/A N/A 10 Vista 4/30/99 7.124651 N/A N/A N/A N/A N/A 10 Voyager 4/30/99 7.006384 N/A N/A N/A N/A N/A 10 3 Months Today's Inception Ten Years Five Years Three Years Two Years Fund AUV AUV Total Average Total Average Total Average Total Average Total Average Asia Pacific Growth 7.09309 10 0.737459 1.277319 N/A N/A N/A N/A N/A N/A N/A N/A Diversified Income 9.82284 10 -0.01711 -0.02538 N/A N/A N/A N/A N/A N/A N/A N/A George Putnam of Boston 9.955577 10 -0.0736 -0.10765 N/A N/A N/A N/A N/A N/A N/A N/A Global Asset Allocation 9.117068 10 0.065739 0.099498 N/A N/A N/A N/A N/A N/A N/A N/A Global Growth 6.791745 10 0.584779 0.985696 N/A N/A N/A N/A N/A N/A N/A N/A Growth & Income 9.831857 10 -0.08626 -0.12576 N/A N/A N/A N/A N/A N/A N/A N/A Health Sciences 9.199349 10 0.055724 0.084139 N/A N/A N/A N/A N/A N/A N/A N/A High Yield 9.683191 10 -0.01036 -0.01539 N/A N/A N/A N/A N/A N/A N/A N/A Income 10.06998 10 -0.03227 -0.0477 N/A N/A N/A N/A N/A N/A N/A N/A International Growth 7.420401 10 0.437389 0.716935 N/A N/A N/A N/A N/A N/A N/A N/A International Growth & Income 9.405612 10 0.092735 0.141246 N/A N/A N/A N/A N/A N/A N/A N/A International New Opportunities 6.394958 10 0.806847 1.414128 N/A N/A N/A N/A N/A N/A N/A N/A Investors 8.060505 10 0.212236 0.332072 N/A N/A N/A N/A N/A N/A N/A N/A Money Market 9.920953 10 0.012306 0.018389 N/A N/A N/A N/A N/A N/A N/A N/A New Opportunities 6.722518 10 0.563416 0.945948 N/A N/A N/A N/A N/A N/A N/A N/A New Value 9.893328 10 -0.12378 -0.1787 N/A N/A N/A N/A N/A N/A N/A N/A OTC & Emerging Growth 5.699143 10 0.976306 1.759068 N/A N/A N/A N/A N/A N/A N/A N/A Research Fund 8.362404 10 0.155423 0.240141 N/A N/A N/A N/A N/A N/A N/A N/A Small Cap Value 9.630864 10 0.026426 0.039623 N/A N/A N/A N/A N/A N/A N/A N/A Utilities Growth & Income 10.08147 10 -0.00502 -0.00746 N/A N/A N/A N/A N/A N/A N/A N/A Vista 7.111053 10 0.403578 0.657113 N/A N/A N/A N/A N/A N/A N/A N/A Voyager 7.108396 10 0.42727 0.698957 N/A N/A N/A N/A N/A N/A N/A N/A One Year YTD Three Months Fund Asia Pacific Growth N/A N/A 0.409823 Diversified Income N/A N/A 0.018036 George Putnam of Boston N/A N/A 0.004462 Global Asset Allocation N/A N/A 0.096844 Global Growth N/A N/A 0.472376 Growth & Income N/A N/A 0.017102 Health Sciences N/A N/A 0.087033 High Yield N/A N/A 0.032717 Income N/A N/A -0.00695 International Growth N/A N/A 0.347636 International Growth & Income N/A N/A 0.063195 International New Opportunities N/As 0 0.563732 Investors N/A 0 0.240617 Money Market N/A 0 0.007968 New Opportunities N/A 0 0.487538 New Value N/A 0 0.010782 OTC & Emerging Growth N/A 0 0.75465 Research Fund N/A 0 0.195828 Small Cap Value N/A 0 0.038328 Utilities Growth & Income N/A 0 -0.00808 Vista N/A 0 0.406261 Voyager N/A 0 0.406787
Putnam "L" Enhanced DB & RIG 2 Asia Pacific Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 36160 1000 4.916426 203.3998 FEE 36525 3.18 10 0.318 RESULTING VALUE 12/31/99 10 203.0818 2030.818 1 FORMULA: 1000*(1+T)= 2030.818 - (1000 * 0.02) = 2010.818 T = 1.010818 R = 1.010818 Diversified Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.00866 99.91344 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 99.59544 995.9544 1 FORMULA: 1000*(1+T)= 995.9544 - (1000 * 0.02) = 975.9544 T = -0.02405 R = -0.02405 George Putnam Fund of Boston 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.22557 97.79404 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 97.47604 974.7604 1 FORMULA: 1000*(1+T)= 974.7604 - (1000 * 0.02) = 954.7604 T = -0.04524 R = -0.04524 Global Asset Allocation 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.111294 109.7539 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 109.4359 1094.359 1 FORMULA: 1000*(1+T)= 1094.359 - (1000 * 0.02) = 1074.359 T = 0.074359 R = 0.074359 Global Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.093725 164.1032 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 163.7852 1637.852 1 FORMULA: 1000*(1+T)= 1637.852 - (1000 * 0.02) = 1617.852 T = 0.617852 R = 0.617852 Growth & Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.03651 99.63619 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 99.31819 993.1819 1 FORMULA: 1000*(1+T)= 993.1819 - (1000 * 0.02) = 973.1819 T = -0.02682 R = -0.02682 Health Sciences 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.60609 94.28543 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 93.96743 939.6743 1 FORMULA: 1000*(1+T)= 939.6743 - (1000 * 0.02) = 919.6743 T = -0.08033 R = -0.08033 High Yield 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.624382 103.9028 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 103.5848 1035.848 1 FORMULA: 1000*(1+T)= 1035.848 - (1000 * 0.02) = 1015.848 T = 0.015848 R = 0.015848 Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.4087 96.07346 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 95.75546 957.5546 1 FORMULA: 1000*(1+T)= 957.5546 - (1000 * 0.02) = 937.5546 T = -0.06245 R = -0.06245 International Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.362817 157.1631 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 156.8451 1568.451 1 FORMULA: 1000*(1+T)= 1568.451 - (1000 * 0.02) = 1548.451 T = 0.548451 R = 0.548451 International Growth & Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 8.189113 122.1133 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 121.7953 1217.953 1 FORMULA: 1000*(1+T)= 1217.953 - (1000 * 0.02) = 1197.953 T = 0.197953 R = 0.197953 International New Opportunities 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 5.020469 199.1846 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 198.8666 1988.666 1 FORMULA: 1000*(1+T)= 1988.666 - (1000 * 0.02) = 1968.666 T = 0.968666 R = 0.968666 Investors 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 7.83414 127.6464 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 127.3284 1273.284 1 FORMULA: 1000*(1+T)= 1273.284 - (1000 * 0.02) = 1253.284 T = 0.253284 R = 0.253284 Money Market 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 9.793376 102.1098 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 101.7918 1017.918 1 FORMULA: 1000*(1+T)= 1017.918 - (1000 * 0.02) = 997.9183 T = -0.00208 R = -0.00208 New Opportunities 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.021843 166.0621 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 165.7441 1657.441 1 FORMULA: 1000*(1+T)= 1657.441 - (1000 * 0.02) = 1637.441 T = 0.637441 R = 0.637441 New Value 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.15695 98.4548 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 98.1368 981.368 1 FORMULA: 1000*(1+T)= 981.368 - (1000 * 0.02) = 961.368 T = -0.03863 R = -0.03863 OTC & Emerging Growth 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 4.496868 222.377 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 222.059 2220.59 1 FORMULA: 1000*(1+T)= 2220.59 - (1000 * 0.02) = 2200.59 T = 1.20059 R = 1.20059 Research 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 7.974761 125.3956 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 125.0776 1250.776 1 FORMULA: 1000*(1+T)= 1250.776 - (1000 * 0.02) = 1230.776 T = 0.230776 R = 0.230776 Small Cap Value 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 #VALUE! #VALUE! FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 1 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.02) = #VALUE! T = N/A R = N/A Utilities Growth & Income 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 10.26356 97.43211 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 97.11411 971.1411 1 FORMULA: 1000*(1+T)= 971.1411 - (1000 * 0.02) = 951.1411 T = -0.04886 R = -0.04886 Vista 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.673406 149.8485 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 149.5305 1495.305 1 FORMULA: 1000*(1+T)= 1495.305 - (1000 * 0.02) = 1475.305 T = 0.475305 R = 0.475305 Voyager 12/31/98 NO. YEARS 1 TO 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/98 1000 6.444185 155.1787 FEE 12/31/99 3.18 10 0.318 RESULTING VALUE 12/31/99 10 154.8607 1548.607 1 FORMULA: 1000*(1+T)= 1548.607 - (1000 * 0.02) = 1528.607 T = 0.528607 R = 0.528607 Putnam "L" Enhanced DB & RIG 2 Asia Pacific Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 34699 1000 #VALUE! #VALUE! FEE 35064 3.18 5.920195 0.537144 FEE 35430 3.3708 6.333282 0.532236 FEE 35795 3.573048 5.299765 0.67419 FEE 36160 3.787431 4.916426 0.770363 FEE 36525 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Diversified Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 7.893684 126.6836 FEE 12/31/95 3.18 9.22059 0.34488 FEE 12/31/96 3.3708 9.83756 0.342646 FEE 12/31/97 3.573048 10.35759 0.344969 FEE 12/31/98 3.787431 10.00866 0.378415 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 124.8712 1248.712 5 FORMULA: 1000*(1+T)= 1248.712 - (1000 * 0.0) = 1248.712 T = 0.045424 R = 0.248712 George Putnam Fund of Boston 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 10.22557 0.370388 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Global Asset Allocation 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 5.026505 198.9454 FEE 12/31/95 3.18 6.146543 0.517364 FEE 12/31/96 3.3708 6.968363 0.483729 FEE 12/31/97 3.573048 8.176724 0.436978 FEE 12/31/98 3.787431 9.111294 0.415685 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 196.6902 1966.902 5 FORMULA: 1000*(1+T)= 1966.902 - (1000 * 0.0) = 1966.902 T = 0.144871 R = 0.966902 Global Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 3.275427 305.3037 FEE 12/31/95 3.18 3.715013 0.855986 FEE 12/31/96 3.3708 4.26936 0.789533 FEE 12/31/97 3.573048 4.786221 0.746528 FEE 12/31/98 3.787431 6.093725 0.62153 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 301.8887 3018.887 5 FORMULA: 1000*(1+T)= 3018.887 - (1000 * 0.0) = 3018.887 T = 0.247296 R = 2.018887 Growth & Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 4.544128 220.0642 FEE 12/31/95 3.18 6.091536 0.522036 FEE 12/31/96 3.3708 7.282121 0.462887 FEE 12/31/97 3.573048 8.864742 0.403063 FEE 12/31/98 3.787431 10.03651 0.377365 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 217.8974 2178.974 5 FORMULA: 1000*(1+T)= 2178.974 - (1000 * 0.0) = 2178.974 T = 0.168558 R = 1.178974 Health Sciences 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 10.60609 0.3571 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A High Yield 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 7.239335 138.1342 FEE 12/31/95 3.18 8.398863 0.378623 FEE 12/31/96 3.3708 9.290157 0.362836 FEE 12/31/97 3.573048 10.41572 0.343044 FEE 12/31/98 3.787431 9.624382 0.393525 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 136.2547 1362.547 5 FORMULA: 1000*(1+T)= 1362.547 - (1000 * 0.0) = 1362.547 T = 0.063825 R = 0.362547 Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 7.754376 128.9594 FEE 12/31/95 3.18 9.15787 0.347242 FEE 12/31/96 3.3708 9.196449 0.366533 FEE 12/31/97 3.573048 9.796422 0.36473 FEE 12/31/98 3.787431 10.4087 0.363872 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 127.1156 1271.156 5 FORMULA: 1000*(1+T)= 1271.156 - (1000 * 0.0) = 1271.156 T = 0.049155 R = 0.271156 International Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 5.469004 0.653327 FEE 12/31/98 3.787431 6.362817 0.595244 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A International Growth & Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 7.49896 0.476472 FEE 12/31/98 3.787431 8.189113 0.462496 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A International New Opportunities 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 4.42951 0.806646 FEE 12/31/98 3.787431 5.020469 0.754398 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Investors 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 7.83414 0.483452 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Money Market 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 8.630163 115.8727 FEE 12/31/95 3.18 8.924288 0.356331 FEE 12/31/96 3.3708 9.195446 0.366573 FEE 12/31/97 3.573048 9.487108 0.376621 FEE 12/31/98 3.787431 9.793376 0.386734 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 113.9849 1139.849 5 FORMULA: 1000*(1+T)= 1139.849 - (1000 * 0.0) = 1139.849 T = 0.026525 R = 0.139849 New Opportunities 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 2.661016 375.7963 FEE 12/31/95 3.18 3.780068 0.841255 FEE 12/31/96 3.3708 4.083448 0.825479 FEE 12/31/97 3.573048 4.936351 0.723824 FEE 12/31/98 3.787431 6.021843 0.628949 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 372.3753 3723.753 5 FORMULA: 1000*(1+T)= 3723.753 - (1000 * 0.0) = 3723.753 T = 0.300757 R = 2.723753 New Value 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 9.747848 0.366547 FEE 12/31/98 3.787431 10.15695 0.372891 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A OTC & Emerging Growth 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 4.496868 0.842238 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Research 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 7.974761 0.474927 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Small Cap Value 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 #VALUE! #VALUE! FEE 12/31/98 3.787431 #VALUE! #VALUE! FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Utilities Growth & Income 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 5.003242 199.8704 FEE 12/31/95 3.18 6.430564 0.494513 FEE 12/31/96 3.3708 7.301544 0.461656 FEE 12/31/97 3.573048 9.099487 0.392665 FEE 12/31/98 3.787431 10.26356 0.369017 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 197.7511 1977.511 5 FORMULA: 1000*(1+T)= 1977.511 - (1000 * 0.0) = 1977.511 T = 0.146103 R = 0.977511 Vista 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 #VALUE! #VALUE! FEE 12/31/95 3.18 #VALUE! #VALUE! FEE 12/31/96 3.3708 #VALUE! #VALUE! FEE 12/31/97 3.573048 5.686604 0.628327 FEE 12/31/98 3.787431 6.673406 0.567541 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 #VALUE! #VALUE! 5 FORMULA: 1000*(1+T)= #VALUE! - (1000 * 0.0) = #VALUE! T = N/A R = N/A Voyager 12/30/94 TO NO. YEARS 5 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/94 1000 2.787772 358.7094 FEE 12/31/95 3.18 3.845312 0.826981 FEE 12/31/96 3.3708 4.259428 0.791374 FEE 12/31/97 3.573048 5.283933 0.67621 FEE 12/31/98 3.787431 6.444185 0.587728 FEE 12/31/99 4.014677 10 0.401468 RESULTING VALUE 12/31/99 10 355.4256 3554.256 5 FORMULA: 1000*(1+T)= 3554.256 - (1000 * 0.0) = 3554.256 T = 0.288694 R = 2.554256 Putnam "L" Enhanced DB & RIG 2 Asia Pacific Growth 05/01/95 TO NO. YEARS 4.668036 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 05/01/95 1000 5.863669 170.5417 1 FEE 05/01/96 3.18 6.253677 0.508501 0.02 2 FEE 05/01/97 3.3708 6.169627 0.546354 0.01 3 FEE 05/01/98 3.573048 5.179677 0.689821 0 4 05/01/99 3.787431 5.755531 0.658051 0 5 12/31/99 4.014677 10 0.401468 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 167.7375 1677.375 4.668036 FORMULA: 1000*(1+T)= 1677.375 = 1677.375 T = 0.117174 R = 0.677375 Diversified Income 09/15/93 TO NO. YEARS 6.291581 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 09/15/93 1000 8.264768 120.9955 1 FEE 09/15/94 3.18 8.012685 0.396871 0.02 2 FEE 09/15/95 3.3708 8.819842 0.382184 0.01 3 FEE 09/15/96 3.573048 9.438747 0.378551 0 4 09/15/97 3.787431 10.18719 0.371784 0 5 09/15/98 4.014677 9.860261 0.407157 0 6 09/15/99 4.255557 9.809885 0.433803 0 7 12/31/99 4.510891 10 0.451089 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 118.1741 1181.741 6.291581 FORMULA: 1000*(1+T)= 1181.741 = 1181.741 T = 0.026897 R = 0.181741 George Putnam Fund of Boston 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 04/30/98 1000 9.983135 100.1689 1 FEE 04/30/99 3.18 10.79446 0.294596 0.02 2 FEE 12/31/99 3.3708 10 0.33708 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 99.53726 995.3726 1.670089 FORMULA: 1000*(1+T)= 995.3726 = 985.3726 T = -0.00878 R = -0.01463 Global Asset Allocation 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 3.820542 261.743 FEE 12/31/90 3.18 3.752805 0.847366 FEE 12/31/91 3.3708 4.379498 0.769677 FEE 12/31/92 3.573048 4.56424 0.782835 FEE 12/31/93 3.787431 5.257607 0.720372 FEE 12/31/94 4.014677 5.026505 0.798701 FEE 12/31/95 4.255557 6.146543 0.69235 FEE 12/31/96 4.510891 6.968363 0.647339 FEE 12/31/97 4.781544 8.176724 0.584775 FEE 12/31/98 5.068437 9.111294 0.556281 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 254.806 2548.06 10 FORMULA: 1000*(1+T)= 2548.06 - (0.85 * 1000 * 0) = 2548.06 T = 0.098047 R = 1.54806 Global Growth 05/01/90 TO NO. YEARS 9.667351 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 05/01/90 1000 2.563869 390.0355 1 FEE 05/01/91 3.18 2.570199 1.237258 0.02 2 FEE 05/01/92 3.3708 2.662605 1.265978 0.01 3 FEE 05/01/93 3.573048 2.840597 1.257851 0 4 05/01/94 3.787431 3.343571 1.13275 0 5 05/01/95 4.014677 3.280597 1.223764 0 6 05/01/96 4.255557 3.972056 1.071374 0 7 05/01/97 4.510891 4.442324 1.015435 0 8 05/01/98 4.781544 5.620627 0.850714 0 9 05/01/99 5.068437 6.310027 0.803235 0 10 12/31/99 5.372543 10 0.537254 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 379.6399 3796.399 9.667351 FORMULA: 1000*(1+T)= 3796.399 = 3796.399 T = 0.147971 R = 2.796399 Growth & Income 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 3.282081 304.6847 FEE 12/31/90 3.18 3.281306 0.969126 FEE 12/31/91 3.3708 3.830233 0.880051 FEE 12/31/92 3.573048 4.121947 0.866835 FEE 12/31/93 3.787431 4.618259 0.820099 FEE 12/31/94 4.014677 4.544128 0.883487 FEE 12/31/95 4.255557 6.091536 0.698602 FEE 12/31/96 4.510891 7.282121 0.619447 FEE 12/31/97 4.781544 8.864742 0.539389 FEE 12/31/98 5.068437 10.03651 0.505 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 297.3655 2973.655 10 FORMULA: 1000*(1+T)= 2973.655 - (0.85 * 1000 * 0) = 2973.655 T = 0.115139 R = 1.973655 Health Sciences 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 04/30/98 1000 9.814041 101.8948 1 FEE 04/30/99 3.18 9.472175 0.33572 0.02 2 FEE 12/31/99 3.3708 10 0.33708 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 101.222 1012.22 1.670089 FORMULA: 1000*(1+T)= 1012.22 = 1002.22 T = 0.001329 R = 0.00222 High Yield 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 4.346672 230.0611 FEE 12/31/90 3.18 3.836827 0.82881 FEE 12/31/91 3.3708 5.44887 0.618624 FEE 12/31/92 3.573048 6.356903 0.562074 FEE 12/31/93 3.787431 7.452884 0.508183 FEE 12/31/94 4.014677 7.239335 0.554564 FEE 12/31/95 4.255557 8.398863 0.506683 FEE 12/31/96 4.510891 9.290157 0.485556 FEE 12/31/97 4.781544 10.41572 0.45907 FEE 12/31/98 5.068437 9.624382 0.526625 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 224.4736 2244.736 10 FORMULA: 1000*(1+T)= 2244.736 - (0.85 * 1000 * 0) = 2244.736 T = 0.084218 R = 1.244736 Income 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 5.865502 170.4884 FEE 12/31/90 3.18 6.183215 0.514296 FEE 12/31/91 3.3708 7.110552 0.474056 FEE 12/31/92 3.573048 7.494434 0.47676 FEE 12/31/93 3.787431 8.177338 0.463162 FEE 12/31/94 4.014677 7.754376 0.51773 FEE 12/31/95 4.255557 9.15787 0.464689 FEE 12/31/96 4.510891 9.196449 0.490504 FEE 12/31/97 4.781544 9.796422 0.488091 FEE 12/31/98 5.068437 10.4087 0.486942 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 165.5749 1655.749 10 FORMULA: 1000*(1+T)= 1655.749 - (0.85 * 1000 * 0) = 1655.749 T = 0.051718 R = 0.655749 International Growth 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 01/02/97 1000 4.80256 208.2223 1 FEE 01/02/98 3.18 5.497123 0.578484 0.02 2 FEE 01/02/99 3.3708 6.362817 0.529765 0.01 3 FEE 12/31/99 3.573048 10 0.357305 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 206.7567 2067.567 2.992471 FORMULA: 1000*(1+T)= 2067.567 = 2067.567 T = 0.274729 R = 1.067567 International Growth & Income 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 01/02/97 1000 6.402695 156.1842 1 FEE 01/02/98 3.18 7.530671 0.422273 0.02 2 FEE 01/02/99 3.3708 8.189113 0.41162 0.01 3 FEE 12/31/99 3.573048 10 0.357305 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 154.993 1549.93 2.992471 FORMULA: 1000*(1+T)= 1549.93 = 1549.93 T = 0.157703 R = 0.54993 International New Opportunities 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 01/02/97 1000 4.521667 221.1574 1 FEE 01/02/98 3.18 4.446822 0.715117 0.02 2 FEE 01/02/99 3.3708 5.020469 0.671411 0.01 3 FEE 12/31/99 3.573048 10 0.357305 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 219.4135 2194.135 2.992471 FORMULA: 1000*(1+T)= 2194.135 = 2194.135 T = 0.300291 R = 1.194135 Investors 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES 0 INIT DEPOSIT 04/30/98 1000 6.804777 146.9556 1 FEE 04/30/99 3.18 8.249222 0.385491 0.02 2 FEE 12/31/99 3.3708 10 0.33708 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 146.233 1462.33 1.670089 FORMULA: 1000*(1+T)= 1462.33 = 1452.33 T = 0.250374 R = 0.45233 Money Market 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 7.532203 132.7633 FEE 12/31/90 3.18 7.974713 0.39876 FEE 12/31/91 3.3708 8.282169 0.406995 FEE 12/31/92 3.573048 8.410913 0.424811 FEE 12/31/93 3.787431 8.477279 0.446774 FEE 12/31/94 4.014677 8.630163 0.465191 FEE 12/31/95 4.255557 8.924288 0.476851 FEE 12/31/96 4.510891 9.195446 0.490557 FEE 12/31/97 4.781544 9.487108 0.504004 FEE 12/31/98 5.068437 9.793376 0.517537 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 128.0945 1280.945 10 FORMULA: 1000*(1+T)= 1280.945 - (0.85 * 1000 * 0) = 1280.945 T = 0.025069 R = 0.280945 New Opportunities 05/02/94 TO NO. YEARS 5.664613 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 05/02/94 1000 2.491743 401.3255 1 FEE 05/02/95 3.18 2.8448 1.117829 0.02 2 FEE 05/02/96 3.3708 4.322192 0.779882 0.01 3 FEE 05/02/97 3.573048 3.990692 0.895345 0 4 05/02/98 3.787431 5.711471 0.663127 0 5 05/02/99 4.014677 6.396252 0.627661 0 6 12/31/99 4.255557 10 0.425556 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 396.8161 3968.161 5.664613 FORMULA: 1000*(1+T)= 3968.161 = 3968.161 T = 0.275474 R = 2.968161 New Value 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 01/02/97 1000 8.452596 118.3068 1 FEE 01/02/98 3.18 9.779954 0.325155 0.02 2 FEE 01/02/99 3.3708 10.15695 0.331871 0.01 3 FEE 12/31/99 3.573048 10 0.357305 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 117.2925 1172.925 2.992471 FORMULA: 1000*(1+T)= 1172.925 = 1172.925 T = 0.054747 R = 0.172925 OTC & Emerging Growth 04/30/98 TO NO. YEARS 1.670089 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 04/30/98 1000 4.514881 221.4898 1 FEE 04/30/99 3.18 5.059945 0.628465 0.02 2 FEE 12/31/99 3.3708 10 0.33708 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 220.5242 2205.242 1.670089 FORMULA: 1000*(1+T)= 2205.242 = 2195.242 T = 0.601289 R = 1.195242 Research 09/29/98 TO NO. YEARS 1.253936 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 09/29/98 1000 6.721925 148.7669 1 FEE 09/29/99 3.18 8.242774 0.385792 0.02 2 FEE 12/31/99 3.3708 10 0.33708 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 148.044 1480.44 1.253936 FORMULA: 1000*(1+T)= 1480.44 = 1470.44 T = 0.359996 R = 0.47044 Small Cap Value 04/30/99 TO NO. YEARS 0.670773 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 04/30/99 1000 9.742543 102.6426 1 FEE 12/31/99 3.18 10 0.318 0.02 2 FEE N/A 0 N/A 0 0.01 3 FEE N/A 0 N/A 0 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 102.3246 1023.246 0.670773 FORMULA: 1000*(1+T)= 1023.246 = 1003.246 T = 0.004843 R = 0.003246 Utilities Growth & Income 05/01/92 TO NO. YEARS 7.665982 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 05/01/92 1000 4.667017 214.2696 1 FEE 05/01/93 3.18 5.263907 0.604114 0.02 2 FEE 05/01/94 3.3708 5.174172 0.651467 0.01 3 FEE 05/01/95 3.573048 5.377306 0.664468 0 4 05/01/96 3.787431 6.518119 0.581062 0 5 05/01/97 4.014677 7.277876 0.551628 0 6 05/01/98 4.255557 9.423674 0.451582 0 7 05/01/99 4.510891 10.05041 0.448827 0 8 12/31/99 4.781544 10 0.478154 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 209.8383 2098.383 7.665982 FORMULA: 1000*(1+T)= 2098.383 = 2098.383 T = 0.101511 R = 1.098383 Vista 01/02/97 TO NO. YEARS 2.992471 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE SURRENDER CHARGES - INIT DEPOSIT 01/02/97 1000 4.706479 212.4731 1 FEE 01/02/98 3.18 5.649066 0.562925 0.02 2 FEE 01/02/99 3.3708 6.673406 0.505109 0.01 3 FEE 12/31/99 3.573048 10 0.357305 0 4 N/A 0 N/A 0 0 5 N/A 0 N/A 0 0 6 N/A 0 N/A 0 0 7 N/A 0 N/A 0 0 8 N/A 0 N/A 0 0 9 N/A 0 N/A 0 0 10 N/A 0 N/A 0 0 11 N/A 0 N/A 0 0 12 N/A 0 N/A 0 0 13 N/A 0 N/A 0 0 14 FEE N/A 0 N/A 0 0 15 FEE N/A 0 N/A 0 0 RESULTING VALUE 12/31/99 10 211.0477 2110.477 2.992471 FORMULA: 1000*(1+T)= 2110.477 = 2110.477 T = 0.283509 R = 1.110477 Voyager 12/31/89 TO NO. YEARS 10 12/31/99 TRANSACTION DATE $ VALUE UNIT VALUE NO. UNITS END VALUE INIT DEPOSIT 12/31/89 1000 1.62363 615.9039 FEE 12/31/90 3.18 1.5597 2.038854 FEE 12/31/91 3.3708 2.23423 1.508708 FEE 12/31/92 3.573048 2.417678 1.477884 FEE 12/31/93 3.787431 2.813915 1.345965 FEE 12/31/94 4.014677 2.787772 1.440102 FEE 12/31/95 4.255557 3.845312 1.106687 FEE 12/31/96 4.510891 4.259428 1.059037 FEE 12/31/97 4.781544 5.283933 0.904921 FEE 12/31/98 5.068437 6.444185 0.786513 FEE 12/31/99 5.372543 10 0.537254 RESULTING VALUE 12/31/99 10 603.6979 6036.979 10 FORMULA: 1000*(1+T)= 6036.979 - (0.85 * 1000 * 0) = 6036.979 T = 0.196966 R = 5.036979
-----END PRIVACY-ENHANCED MESSAGE-----