INVESTORS
LIFE INSURANCE COMPANY
OF NORTH AMERICA
(Herein called Investors Life)
INA/PUTNAM SEPARATE ACCOUNT
FINANCIAL STATEMENTS
December 31, 1999
(Audited)
This report is submitted for the general information of owners of Investors Life
Insurance Company of North America INA/Putnam Separate Account variable annuity
contracts. The Separate Account does not accept new contracts; accordingly, this
report is not authorized for distribution to prospective purchasers of such
contracts.
Investors Life Insurance
Company of North America
Administrative Office: Austin, TX
<PAGE>
Report of Independent Accountants
To the Contract Owners of Investors Life Insurance Company of North America
INA/Putnam Separate Account and the Board of Directors of Investors Life
Insurance Company of North America
In our opinion, the accompanying combined balance sheet and the related
individual statements of operations and of changes in total assets present
fairly, in all material respects, the combined financial position of the
subdivisions comprising the Investors Life Insurance Company of North America
INA/Putnam Separate Account (the Separate Account) at December 31, 1999, the
results of each of their operations for the year then ended and the changes in
each of their total assets for the two years in the period then ended, in
conformity with generally accepted accounting principles in the United States.
These financial statements are the responsibility of the Separate Account's
Management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards in the
United States which 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, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits which included confirmation of securities at December 31, 1999 by
correspondence with the underlying funds provide a reasonable basis for the
opinion expressed above.
PricewaterhouseCoopers LLP
Dallas, Texas
February 22, 20000
<PAGE>
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
INA/PUTNAM SEPARATE ACCOUNT
COMBINED BALANCE SHEET
Period Ended December 31, 1999
ASSETS
Investments at Market Value (Notes 1 and 2):
PUTNAM DIVISIONS
Money Market
368,879 qualified shares (Cost $368,879) $ 368,879
833,153 non-qualified shares (Cost $833,153) 833,153
High Yield Trust
10,570 qualified shares (Cost $185,580) 109,400
187,103 non-qualified shares (Cost $2,987,303) 1,936,523
Equity Income Fund
7,047 qualified shares (Cost $36,554) 98,233
54,231 non-qualified shares (Cost $652,881) 755,978
Investors Trust
54,516 qualified shares (Cost $560,670) 1,043,999
84,827 non-qualified shares (Cost $819,406) 1,624,435
Income Fund
32,122 qualified shares (Cost $205,705) 204,297
39,006 non-qualified shares (Cost $197,580) 248,082
PUTNAM VARIABLE TRUST DIVISIONS
Putnam Variable Trust Money Market
6,530,340 non-qualified shares (Cost $6,530,340) 6,530,340
Putnam Variable Trust Growth and Income
161,078 non-qualified shares (Cost $3,011,699) 4,316,898
Putnam Variable Trust Income
(formerly U.S. Government and
High Quality Bond)
141,698 non-qualified shares (Cost $1,858,387) 1,774,062
Total Assets $ 19,844,279
The accompanying notes are an integral part of these financial statements
<PAGE>
CONTRACT OWNERS' EQUITY
Contract Owners' Equity (Notes 3 and 7):
PUTNAM DIVISIONS
Money Market
116,281 qualified accumulation
units outstanding ($3.1723080 Per Unit) $ 368,879
259,973 non-qualified accumulation
units outstanding ($3.2047680 Per Unit) 833,153
High Yield Trust
16,803 qualified accumulation
units outstanding ($6.5107240 Per Unit) 109,400
311,626 non-qualified accumulation
units outstanding ($6.2142540 Per Unit) 1,936,523
Equity Income Fund
12,870 qualified accumulation
units outstanding ($7.6326810 Per Unit) 98,233
98,218 non-qualified accumulation
units outstanding ($7.6969420 Per Unit) 755,978
Investors Trust
57,179 qualified accumulation
units outstanding ($18.2584280 Per Unit) 1,043,999
96,764 non-qualified accumulation
units outstanding ($16.7875980 Per Unit) 1,624,435
Income Fund
36,458 qualified accumulation
units outstanding ($5.6036150 Per Unit) 204,297
46,215 non-qualified accumulation
units outstanding ($5.3680040 Per Unit) 248,082
PUTNAM VARIABLE TRUST DIVISIONS
Putnam Variable Trust Money Market
2,473,443 non-qualified accumulation
units outstanding ($2.6401820 Per Unit) 6,530,340
Putnam Variable Trust Growth and Income
553,365 non-qualified accumulation
units outstanding ($7.8011770 Per Unit) 4,316,898
Putnam Variable Trust Income Fund
500,055 non-qualified accumulation
units outstanding ($3.5477330 Per Unit) 1,774,062
Contract Owners' Equity $ 19,844,279
The accompanying notes are an integral part of these financial statements
<PAGE>
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
INA/PUTNAM SEPARATE ACCOUNT
INDIVIDUAL STATEMENTS OF OPERATIONS
Year Ended December 31, 1999
Money Money
Market Market
Qualified Non-Qualified
Investment Income:
Dividends $18,574 $42,866
Expenses:
Mortality risk and expense fees guarantees
(Notes 1 and 3) 3,650 8,423
Investment income - net 14,924 34,443
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 0 0
Net realized gain (loss) on investments:
Proceeds from sale of shares 164,115 288,809
Cost of shares sold 164,115 288,809
Net realized gain (loss) on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net realized and unrealized gain (loss)
on investments 0 0
Net Increase (Decrease) in Net Assets
from Investment Operations $14,924 $34,443
High Yield High Yield
Trust Trust
Qualified Non-Qualified
Investment Income:
Dividends $18,960 $210,047
Expenses:
Mortality risk and expense fees guarantee
(Notes 1 and 3) 1,652 18,627
Investment income - net 17,308 191,420
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 0 0
Net realized gain (loss) on investments:
Proceeds from sale of shares 118,960 140,427
Cost of shares sold 164,194 140,967
Net realized gain (loss) on investments (45,234) (540)
Net unrealized gain (loss) on investments 38,290 (86,215)
Net realized and unrealized gain (loss)
on investments (6,944) (86,755)
Net Increase (Decrease) in Net Assets
from Investment Operations $10,364 $104,665
The accompanying notes are an integral part of these financial statements
<PAGE>
Equity Equity
Income Income
Qualified Non-Qualified
Investment Income:
Dividends $4,295 $33,139
Expenses:
Mortality risk and expense fees guarantees
(Notes 1and 3) 995 7,644
Investment income - net 3,300 25,495
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 7,090 54,582
Net realized gain (loss) on investments:
Proceeds from sale of shares 7,060 40,684
Cost of shares sold 6,719 38,824
Net realized gain (loss) on investments 341 1,860
Net unrealized gain (loss) on investments (10,368) (79,519)
Net realized and unrealized gain (loss)
on investments (2,937) (23,077)
Net Increase (Decrease) in Net Assets
from Investment Operations $363 $2,418
Investors Investors
Trust Trust
Qualified Non-Qualified
Investment Income:
Dividends $0 $0
Expenses:
Mortality risk and expense fees guarantees
(Notes 1 and 3) 8,982 13,796
Investment income - net ($8,982) ($13,796)
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 6,942 10,791
Net realized gain (loss) on investments:
Proceeds from sale of shares 310,108 333,139
Cost of shares sold 213,829 204,119
Net realized gain (loss) on investments 96,279 129,020
Net unrealized gain (loss) on investments 147,100 261,074
Net realized and unrealized gain
on investments 250,321 400,885
Net Increase (Decrease) in Net Assets
from Investment Operations $241,339 $387,089
The accompanying notes are an integral part of these financial statements
<PAGE>
Income Income
Fund Fund
Qualified Non-Qualified
Investment Income:
Dividends $15,030 $17,431
Expenses:
Mortality risk and expense fees guarantees
(Notes 1 and 3) 2,239 2,595
Investment income - net 12,791 14,836
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 0 0
Net realized gain (loss) on investments:
Proceeds from sale of shares 84,365 140,097
Cost of shares sold 85,661 137,764
Net realized gain (loss) on investments (1,296) 2,333
Net unrealized gain (loss) on investments (18,582) (25,745)
Net realized and unrealized gain (loss)
on investments (19,878) (23,412)
Net Increase (Decrease) in Net Assets
from Investment Operations ($7,087) ($8,576)
Putnam
Variable Trust
Money
Market
Non-Qualified
Investment Income:
Dividends $329,440
Expenses:
Mortality risk and expense fees guarantees
(Notes 1 and 3) 65,425
Investment income - net 264,015
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 0
Net realized gain (loss) on investments:
Proceeds from sale of shares 1,081,576
Cost of shares sold 1,081,576
Net realized gain (loss) on investments 0
Net unrealized gain (loss) on investments 0
Net realized and unrealized gain (loss) 0
on investments
Net Increase (Decrease) in Net Assets
from Investment Operations $264,015
The accompanying notes are an integral part of these financial statements
<PAGE>
Putnam Variable
Trust Growth
and Income
Non-Qualified
Investment Income:
Dividends $110,751
Expenses:
Mortality risk and expense fees guarantees
(Notes 1 and 3) 43,502
Investment income - net 67,249
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 259,426
Net realized gain (loss) on investments:
Proceeds from sale of shares 648,277
Cost of shares sold 619,661
Net realized gain (loss) on investments 28,616
Net unrealized gain (loss) on investments (339,821)
Net realized and unrealized gain (loss)
on investments (51,779)
Net Increase (Decrease) in Net Assets
from Investment Operations $15,470
The accompanying notes are an integral part of these financial statements
Putnam
Variable Trust
Income Fund
(formerly US Gov't and
High Quality Bond)
Non-Qualified
Investment Income:
Dividends $117,940
Expenses:
Mortality risk and expense fees guarantees
(Notes 1 and 3) 17,233
Investment income - net 100,707
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized capital gain distributions 10,374
Net realized gain (loss) on investments:
Proceeds from sale of shares 124,813
Cost of shares sold 121,514
Net realized gain (loss) on investments 3,299
Net unrealized gain (loss) on investments (171,035)
Net realized and unrealized gain (loss)
on investments (157,362)
Net Increase (Decrease) in Net Assets
from Investment Operations ($56,655)
The accompanying notes are an integral part of these financial statements
<PAGE>
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
INA/PUTNAM SEPARATE ACCOUNT
INDIVIDUAL STATEMENTS OF CHANGES IN TOTAL ASSETS
FOR YEAR ENDED DECEMBER 31, 1999
Money Market Money Market
Qualified Non-Qualified
(formerly Daily (formerly Daily
Dividend Trust) Dividend Trust)
Investment Operations:
Investment income-net $14,924 $34,443
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net increase (decrease) in net assets from
investment operations 14,924 34,443
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0 0
Net contract surrenders and transfers out
(Note 3) (56,763) (260,275)
Benefit payments to annuitants 0 (20,111)
Net increase (decrease) from accumulation unit
transactions (56,763) (280,386)
Net Increase (Decrease) in Net Assets (41,839) (245,943)
Net Assets:
Net assets at December 31, 1998 410,718 1,079,096
Net assets at December 31, 1999 $368,879 $833,153
Money Market Money Market
Qualified Non-Qualified
(formerly Daily (formerly Daily
Dividend Trust) Dividend Trust)
Investment Operations:
Investment income-net $18,638 $50,109
Realized capital gain distributions 0 0
Net realized gain (loss) on investments 0 0
Net unrealized gain (loss) on investments 0 0
Net increase (decrease) in net assets from
investment operations $18,638 $50,109
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0 0
Net contract surrenders and transfers out
(Note 3) (44,153) (218,307)
Benefit payments to annuitants (5,516) (2,828)
Net increase (Decrease) from accumulation
unit transactions (49,669) (221,135)
Net Increase (Decrease) in Net Assets (31,031) (171,026)
Net Assets:
Net assets at December 31, 1997 441,749 1,250,122
Net assets at December 31, 1998 $410,718 $1,079,096
The accompanying notes are an integral part of these financial statements
<PAGE>
High Yield High Yield
Trust Trust
Qualified Non-Qualified
Investment Operations:
Investment income-net $17,308 $191,420
Realized capital gain distributions 0 0
Net realized gain (loss) on investments (45,234) (540)
Net unrealized gain (loss) on investments 38,290 (86,215)
Net increase (decrease) in net assets from
investment operations 10,364 104,665
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0 0
Net contract surrenders and transfers out
(Note 3) (113,675) (119,447)
Benefit payments to annuitants (3,632) (2,353)
Net increase (decrease) from accumulation
unit transactions (117,307) (121,800)
Net Increase (Decrease) in Net Assets (106,943) (17,135)
Net Assets:
Net assets at December 31, 1998 216,343 1,953,658
Net assets at December 31, 1999 $109,400 $1,936,523
High Yield High Yield
Trust Trust
Qualified Non-Qualified
Investment Operations:
Investment income-net $25,021 $199,445
Realized capital gain distributions 0 0
Net realized gain (loss) on investments (10,214) 959
Net unrealized gain (loss) on investments (38,459) (390,368)
Net increase (decrease) in net assets from
investment operations ($23,652) ($189,964)
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0 0
Net contract surrenders and transfers out
(Note 3) (31,067) (132,954)
Benefit payments to annuitants (16,925) (7,967)
Net increase (Decrease) from accumulation
unit transactions (47,992) (140,921)
Net Increase (Decrease) in Net Assets (71,644) (330,885)
Net Assets:
Net assets at December 31, 1997 287,987 2,284,543
Net assets at December 31, 1998 $216,343 $1,953,658
The accompanying notes are an integral part of these financial statements
<PAGE>
Equity Equity
Income Income
Qualified Non-Qualified
Investment Operations:
Investment income-net $3,300 $25,495
Realized capital gain distributions 7,090 54,582
Net realized gain (loss) on investments 341 1,860
Net unrealized gain (loss) on investments (10,368) (79,519)
Net increase (decrease) in net assets from
investment operations $363 $2,418
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0 0
Net contract surrenders and transfers out
(Note 3) (40) (33,041)
Benefit payments to annuitants (6,025) 0
Net increase (decrease) from accumulation
unit transactions (6,065) (33,041)
Net Increase (Decrease) in Net Assets (5,702) (30,623)
Net Assets:
Net assets at December 31, 1998 103,935 786,601
Net assets at December 31, 1999 $98,233 $755,978
Equity Equity
Income Income
Qualified Non-Qualified
Investment Operations:
Investment income-net $2,791 $19,456
Realized capital gain distributions 7,435 56,280
Net realized gain (loss) on investments 10,561 153
Net unrealized gain (loss) on investments (4,687) 6,163
Net increase (decrease) in net assets
from investment operations $16,100 $82,052
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0 0
Net contract surrenders and transfers out
(Note 3) (51,834) (1,730)
Benefit payments to annuitants (7,327) 0
Net increase (Decrease) from accumulation
unit transactions (59,161) (1,730)
Net Increase (Decrease) in Net Assets (43,061) 80,322
Net Assets:
Net assets at December 31, 1997 146,996 706,279
Net assets at December 31, 1998 $103,935 $786,601
The accompanying notes are an integral part of these financial statements
<PAGE>
Investors Investors
Trust Trust
Qualified Non-Qualified
Investment Operations:
Investment income-net ($8,982) ($13,796)
Realized capital gain distributions 6,942 10,791
Net realized gain (loss) on investments 96,279 129,020
Net unrealized gain (loss) on investments 147,100 261,074
Net increase (decrease) in net assets from
investment operations 241,339 387,089
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0 0
Net contract surrenders and transfers out
(Note 3) (289,126) (313,529)
Benefit payments to annuitants (12,000) (5,814)
Net increase (decrease) from accumulation
unit transactions (301,126) (319,343)
Net Increase (Decrease) in Net Assets (59,787) 67,746
Net Assets:
Net assets at December 31, 1998 1,103,786 1,556,689
Net assets at December 31, 1999 $1,043,999 $1,624,435
Investors Investors
Trust Trust
Qualified Non-Qualified
Investment Operations:
Investment income-net ($9,964) ($12,568)
Realized capital gain distributions 27,728 39,075
Net realized gain (loss) on investments 34,798 3,214
Net unrealized gain (loss) on investments 254,375 368,836
Net increase (decrease) in net assets from
investment operations 306,937 398,557
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0 0
Net contract surrenders and transfers out
(Note 3) (126,892) (6,269)
Benefit payments to annuitants (14,715) (5,285)
Net increase (Decrease) from accumulation
unit transactions (141,607) (11,554)
Net Increase (Decrease) in Net Assets 165,330 387,003
Net Assets:
Net assets at December 31, 1997 938,456 1,169,686
Net assets at December 31, 1998 $1,103,786 $1,556,689
The accompanying notes are an integral part of these financial statements
<PAGE>
Income Income
Fund Fund
Qualified Non-Qualified
Investment Operations:
Investment income-net $12,791 $14,836
Realized capital gain distributions 0 0
Net realized gain (loss) on investments (1,296) 2,333
Net unrealized gain (loss) on investments (18,582) (25,745)
Net increase (decrease) in net assets from
investment operations ($7,087) ($8,576)
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0 0
Net contract surrenders and transfers out
(Note 3) (82,127) (68,196)
Benefit payments to annuitants 0 (602)
Net increase (decrease) from accumulation
unit transactions (82,127) (68,798)
Net Increase (Decrease) in Net Assets (89,214) (77,374)
Net Assets:
Net assets at December 31, 1998 293,511 325,456
Net assets at December 31, 1999 $204,297 $248,082
Income Income
Fund Fund
Qualified Non-Qualified
Investment Operations:
Investment income-net $15,591 $17,482
Realized capital gain distributions 0 0
Net realized gain (loss) on investments (6) (65)
Net unrealized gain (loss) on investments (7,876) (8,842)
Net increase (decrease) in net assets from
investment operations 7,709 8,575
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0 0
Net contract surrenders and transfers out
(Note 3) (3,180) (125)
Benefit payments to annuitants 0 (5,938)
Net increase (Decrease) from accumulation
unit transactions (3,180) (6,063)
Net Increase (Decrease) in Net Assets 4,529 2,512
Net Assets:
Net assets at December 31, 1997 288,982 322,944
Net assets at December 31, 1998 $293,511 $325,456
The accompanying notes are an integral part of these financial statements
<PAGE>
Putnam
Variable Trust
Money
Market
Non-Qualified
Investment Operations:
Investment income-net $264,015
Realized capital gain distributions 0
Net realized gain (loss) on investments 0
Net unrealized gain (loss) on investments 0
Net increase (decrease) in net assets from
investment operations 264,015
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 0
Net contract surrenders and transfers out
(Note 3) (959,586)
Benefit payments to annuitants (38,758)
Net increase (decrease) from accumulation
unit transactions (998,344)
Net Increase (Decrease) in Net Assets (734,329)
Net Assets:
Net assets at December 31, 1998 7,264,669
Net assets at December 31, 1999 $6,530,340
Putnam
Variable Trust
Money
Market
Non-Qualified
Investment Operations:
Investment income-net $309,830
Realized capital gain distributions 0
Net realized gain (loss) on investments 0
Net unrealized gain (loss) on investments 0
Net increase (decrease) in net assets from
investment operations 309,830
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 350,854
Net contract surrenders and transfers out
(Note 3) (1,253,011)
Benefit payments to annuitants (37,400)
Net increase (Decrease) from accumulation
unit transactions (939,557)
Net Increase (Decrease) in Net Assets (629,727)
Net Assets:
Net assets at December 31, 1997 7,894,396
Net assets at December 31, 1998 $7,264,669
The accompanying notes are an integral part of these financial statements
<PAGE>
Putnam Variable
Trust Growth
and Income
Non-Qualified
Investment Operations:
Investment income-net $67,249
Realized capital gain distributions 259,426
Net realized gain (loss) on investments 28,616
Net unrealized gain (loss) on investments (339,821)
Net increase (decrease) in net assets from
investment operations 15,470
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 286,339
Net contract surrenders and transfers out
(Note 3) (595,190)
Benefit payments to annuitants (15,627)
Net increase (decrease) from accumulation
unit transactions (324,478)
Net Increase (Decrease) in Net Assets (309,008)
Net Assets:
Net assets at December 31, 1998 4,625,906
Net assets at December 31, 1999 $4,316,898
Putnam Variable
Trust Growth
and Income
Non-Qualified
Investment Operations:
Investment income-net $136,497
Realized capital gain distributions 414,679
Net realized gain (loss) on investments 1,212
Net unrealized gain (loss) on investments 61,530
Net increase (decrease) in net assets from
investment operations 613,918
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 127,963
Net contract surrenders and transfers out
(Note 3) (656,777)
Benefit payments to annuitants (11,881)
Net increase (Decrease) from accumulation
unit transactions (540,695)
Net Increase (Decrease) in Net Assets 73,223
Net Assets:
Net assets at December 31, 1997 4,552,683
Net assets at December 31, 1998 $4,625,906
The accompanying notes are an integral part of these financial statements
<PAGE>
Putnam Variable
Trust Income Fund
(formerly US Gov't and
High Quality Bond)
Non-Qualified
Investment Operations:
Investment income-net $100,707
Realized capital gain distributions 10,374
Net realized gain (loss) on investments 3,299
Net unrealized gain (loss) on investments (171,035)
Net increase (decrease) in net assets from
investment operations ($56,655)
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 22,911
Net contract surrenders and transfers out
(Note 3) (88,480)
Benefit payments to annuitants (19,282)
Net increase (decrease) from accumulation
unit transactions (84,851)
Net Increase (Decrease) in Net Assets (141,506)
Net Assets:
Net assets at December 31, 1998 1,915,568
Net assets at December 31, 1999 $1,774,062
Putnam Variable
Trust Income Fund
(formerly US Gov't and
High Quality Bond)
Non-Qualified
Investment Operations:
Investment income-net $90,639
Realized capital gain distributions 0
Net realized gain (loss) on investments 7,127
Net unrealized gain (loss) on investments 36,901
Net increase (decrease) in net assets from
investment operations 134,667
Accumulation Unit Transactions:
Net contract considerations and transfers in
(Note 3) 37,328
Net contract surrenders and transfers out
(Note 3) (212,126)
Benefit payments to annuitants (20,534)
Net increase (Decrease) from accumulation
unit transactions (195,332)
Net Increase (Decrease) in Net Assets (60,665)
Net Assets:
Net assets at December 31, 1997 1,976,233
Net assets at December 31, 1998 $1,915,568
The accompanying notes are an integral part of these financial statements
<PAGE>
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA
INA/PUTNAM SEPARATE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
December 31, 1999
Note 1. Organization
Investors Life Insurance Company of North America - INA/Putnam Separate Account
(the "Separate Account"), a separate account of Investors Life Insurance Company
of North America ("Investors Life"), is registered under the Investment Company
Act of 1940, as amended, as a unit investment trust. The Separate Account
currently has five specific Putnam Divisions which correspond to five Putnam
mutual funds (the "Putnam Funds") and three Putnam Variable Trust Divisions
which correspond to three portfolios of the Putnam Variable Trust (formerly the
Putnam Capital Manager Trust") (and, collectively, the "Funds"). Each Division
contains two subdivisions, one for the allocation of tax qualified and one for
the allocation of non-tax qualified net payments made under variable annuity
contracts.
Amounts allocated to the Separate Account for variable annuity contracts can be
invested by Investors Life in up to three of the following mutual funds: Putnam
Income Fund, Inc., Putnam High Yield Trust, Putnam Equity Income Fund (formerly
Putnam Strategic Income Trust), Putnam Money Market Fund (which was known as the
Putnam Daily Dividend Trust prior to a name change which was effective September
1, 1994) and Putnam Investors Fund, Inc. (the "Putnam Divisions"). In addition,
variable annuity contract values transferred as a result of Revenue Ruling
81-225 (see Note 5), can be invested in up to three of the following portfolios
of Putnam Variable Trust: Putnam Variable Trust Money Market Fund, Putnam
Variable Trust Income Fund (formerly Putnam Variable Trust U.S. Government and
High Quality Bond Fund) and Putnam Variable Trust Growth and Income Fund (the
"Putnam Variable Trust Divisions"). The contract owners' equity of each
subdivision of the Separate Account is affected by the investment results of the
appropriate Putnam Fund, or Putnam Variable Trust Fund, shares designated for
the subdivision, the mortality risk and expense fees guarantees assessed on
Separate Account assets (see Note 3) and the administrative charge deductions.
Under the current provisions of the Internal Revenue Code (the "Code"),
transfers of contract values from one division of the Separate Account to
another division are not subject to current taxation. There can be no assurance
that future changes in the Code will not subject such transfers to current
taxation.
<PAGE>
Note 2. Significant Accounting Policies
Following is a summary of the significant accounting policies of the Separate
Account:
(a) the market value of investments is based on closing bid prices (net asset
value) at December 31, 1999; (b) investment transactions are accounted for on
the trade date and income is recorded on the ex-dividend date; (c) the cost of
investments sold is determined on the specific identification method. See Notes
4 through 6 with respect to income taxes.
Note 3. Contract Owner Transactions
Contract owners have limited rights to transfer their contract values between
Separate Account Divisions. Certain contract owners affected by Revenue Ruling
81-225 have limited rights to transfer their contract values to Divisions for
which one of the portfolios of Putnam Variable Trust serves as the underlying
investment vehicle (see Note 5). The amount of all transfers for the year ended
December 31, 1999 was $309,250. Payments for the year ended December 31, 1999
were $2,670,225 with respect to contract surrender benefits and $124,204 with
respect to annuity benefits. Investors Life charges a fee to each Separate
Account subdivision for assuming the mortality risk and expense fees guarantees.
The daily equivalent of the annual charges of 0.95% is made against the average
net value of the Separate Account.
Note 4. Income Taxes
Investors Life is taxed as a life insurance company under the Code. The Separate
Account is taxed as a part of Investors Life. Under the current provisions of
the Code, no federal income taxes are payable by Investors Life with respect to
investment income and capital gains on the assets of the Separate Account when
used to determine contract values. Investors Life retains the right to make
adjustments for taxes to Separate Account assets should future changes in the
Code so warrant.
Note 5. Effect of Revenue Ruling 81-225
Revenue Ruling 81-225 was issued by the Internal Revenue Service on September
25, 1981. The Ruling pertains to variable annuities, where the insurance
company, through a separate account, holds shares of mutual funds which also
offer their shares to the public independently. The Ruling also questioned the
tax treatment of variable annuity contracts where the underlying mutual funds
are not managed by the issuing insurance company or an affiliate, or where the
contract owner may initially allocate, and subsequently reallocate the contract
values among several underlying funds.
The Ruling adversely affected the tax status of the Separate Account variable
annuity contracts issued on a non-tax qualified basis after December 31, 1980,
and those issued after September 25, 1981 which were intended to qualify under
Internal Revenue Code Sections 403(a), 403(b) or 408(b).
As a result, Investors Life suspended new contract sales utilizing the Putnam
Division. A former affiliate of Investors Life sponsored the creation of a new
money market mutual fund called INA Annuity Fund Inc. This fund became the CIGNA
Annuity Fund, Inc. Money Market portfolio late in 1982 and three additional
portfolios were introduced. In October, 1985, the CIGNA Annuity
<PAGE>
Fund, Inc. was reorganized as the CIGNA Annuity Funds Group, pursuant to a plan
of reorganization approved by shareholders of the Fund. Contract owners who
transfer their Putnam Division contract values to the CIGNA Division cannot
later reverse the transfer back to any of the Putnam Divisions.
As of April 18, 1995, shares of the Putnam Variable Trust were substituted for
shares of the applicable CIGNA Fund as the underlying investment vehicle.
Investors Life obtained an order from the U.S. Securities and Exchange
Commission approving the provisions of the substitution. Thereafter, the
proposal was submitted to contractholders for their approval, in accordance with
the provisions of the variable annuity contracts. The substitution of shares of
certain portfolios of Putnam Variable Trust as the underlying investment vehicle
for the variable annuity contracts was effected by Investors Life's exchange of
shares of each of the portfolios of the CIGNA Funds for shares of the
corresponding portfolio of Putnam Variable Trust.
Note 6. Diversification Requirements
Under the provisions of Section 817(h) of the Code, a variable annuity contract,
other than a contract issued in connection with certain types of employee
benefit plans, will not be treated as an annuity contract for federal tax
purposes for any period for which the investments of the segregated asset
account on which the contract is based are not adequately diversified. The Code
provides that the "adequately diversified" requirement may be met if the
underlying investments satisfy either a statutory safe harbor test or
diversification requirements set forth in regulations issued by the Secretary of
Treasury.
The Internal Revenue Service has issued regulations under section 817(h) of the
Code. Investors Life believes that the Separate Account satisfies the current
requirements of the regulations, and it intends that the Separate Account will
continue to meet such requirements.
<PAGE>
INA/Putnam Separate Account
Note 7. Accumulation Units Transactions
For the Year Ended 12/31/99
The changes in the number of accumulation units (the measure of ownership in the
Separate Account) during the year ended December 31, 1999 and units outstanding
at December 31, 1999 were as follows:
Money Market Money Market
Qualified Non-Qualified
(formerly Daily (formerly Daily
Dividend Trust) Dividend Trust)
Units outstanding at December 31, 1998 $134,573 $349,907
Units purchased and transfers in 0 0
Benefits, surrenders and transfers out (18,292) (89,934)
Units outstanding at December 31, 1999 $116,281 $259,973
High Yield High Yield
Trust Trust
Qualified Non-Qualified
Units outstanding at December 31, 1998 $35,048 $331,566
Units purchased and transfers in 0 0
Benefits, surrenders and transfers out (18,245) (19,940)
Units outstanding at December 31, 1999 $16,803 $311,626
Equity Equity
Income Income
Qualified Non-Qualified
Units outstanding at December 31, 1998 $13,634 $102,352
Units purchased and transfers in 0 0
Benefits, surrenders and transfers out (764) (4,134)
Units outstanding at December 31, 1999 $12,870 $98,218
Investors Investors
Trust Trust
Qualified Non-Qualified
Units outstanding at December 31, 1998 $77,934 $119,546
Units purchased and transfers in 0 0
Benefits, surrenders and transfers out (20,755) (22,782)
Units outstanding at December 31, 1999 $57,179 $96,764
Income Income
Fund Fund
Qualified Non-Qualified
Units outstanding at December 31, 1998 $50,830 $58,838
Units purchased and transfers in 0 0
Benefits, surrenders and transfers out (14,372) (12,623)
Units outstanding at December 31, 1999 $36,458 $46,215
<PAGE>
Putnam
Variable Trust
Money
Market
Non-Qualified
Units outstanding at December 31, 1998 $2,858,428
Units purchased and transfers in 0
Benefits, surrenders and transfers out (384,985)
Units outstanding at December 31, 1999 $2,473,443
Putnam Variable
Trust Growth
and Income
Non-Qualified
Units outstanding at December 31, 1998 $596,576
Units purchased and transfers in 33,751
Benefits, surrenders and transfers out (76,962)
Units outstanding at December 31, 1999 $553,365
Putnam Variable
Trust Income Fund
(formerly US Gov't and
High Quality Bond)
Non-Qualified
Units outstanding at December 31, 1998 $523,878
Units purchased and transfers in 6,446
Benefits, surrenders and transfers out (30,269)
Units outstanding at December 31, 1999 $500,055
The accumulation units for ten of the subdivisions include units applicable to
contract owners who are "on benefit annuitants." At December 31, 1999 the number
of accumulation units, the aggregate value of the subdivisions' equity and the
number of monthly annuity units and value per unit of "on benefit annuitants"
are as follows:
Accumulation Aggregate
Units Value
Money Market Non-Qualified
(formerly Daily Dividend Trust) 114,104 $365,677
High Yield Trust Qualified 5,066 $ 32,983
High Yield Trust Non-Qualified 4,203 $ 26,119
Equity Income Fund Qualified 8,056 $ 61,489
Investors Trust Qualified 9,131 $166,718
Investors Trust Non-Qualified 3,580 $ 60,100
Income Fund Non-Qualified 1,363 $ 7,317
Putnam Variable Trust Money Market,
Non-Qualified 181,953 $480,389
Putnam Variable Trust Growth and Income
Fund, Non-Qualified 22,331 $174,208
Putnam Variable Trust Income Fund,
Non-Qualified 67,801 $240,540
<PAGE>
Monthly Annuity
Annuity Units Unit Value
Money Market Non-Qualified
(formerly Daily Dividend Trust) 1,980 $1.1302956
High Yield Trust Qualified 255 $3.3449665
High Yield Trust Non-Qualified 104 $3.2985971
Equity Income Fund Qualified 172 $2.9027333
Investors Trust Qualified 312 $6.9644632
Investors Trust Non-Qualified 217 $3.9888146
Income Fund Non-Qualified 23 $2.9841430
Putnam Variable Trust Money Market,
Non-Qualified 3,647 $1.3042551
Putnam Variable Trust Growth and Income,
Non-Qualified 505 $3.0293567
Putnam Variable Trust Income Fund,
Non-Qualified 1,136 $1.7141441
