<PAGE> 1
As filed with Securities and Exchange Commission on
November 9, 2000
Registration No. 33-88082
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-6
POST-EFFECTIVE AMENDMENT NO. 11
TO REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
-----------------------
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
(Exact Name of Trust)
NEW ENGLAND LIFE INSURANCE COMPANY
(Name of Depositor)
501 Boylston Street
Boston, Massachusetts 02117
(Address of depositor's principal executive offices)
---------------------
MARIE C. SWIFT
Second Vice President and Counsel
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02117
(Name and address of agent for service)
Copies to:
STEPHEN E. ROTH
Sutherland Asbill & Brennan LLP
1275 Pennsylvania Avenue, N.W.
Washington, D.C. 20004
---------------------------
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b)
[X] on November 13, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on (date)pursuant to paragraph (a)(1) of Rule 485
[ ] this post-effective amendment designates a new effective date for a
previously filed post-effective amendment
Title of Securities Being Registered: Units of Interest in Flexible Premium
Adjustable Variable Life Insurance Policies.
<PAGE> 2
This registration statement incorporates by reference the prospectus dated May
1, 2000, the supplement dated May 1, 2000 to the prospectuses dated October 25,
1999 and April 30, 1999 for the policies and the supplement dated May 1, 2000 to
the prospectus dated May 1, 2000, each as filed in Post-Effective Amendment No.
8 to the Registration Statement on Form S-6 (File No. 33-88082) filed on April
27, 2000.
<PAGE> 3
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT
REGISTRATION STATEMENT ON FORM S-6
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-8B-2
ITEM NO. CAPTION IN PROSPECTUS
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<S> <C>
1 Cover Page
2 Cover Page
3 Inapplicable
4 NELICO's Distribution Agreement
5 NELICO
6 The Variable Account
9 Inapplicable
10(a) Other Policy Features
10(b) Policy Values and Benefits
10(c), (d), (e) Death Benefit; Cash Value; 24 Month Right; Surrender; Partial Surrender; Right to Return
the Policy; Loan Provision; Transfer Option; Premiums
10(f), (g), (h) Voting Rights; Rights Reserved by NELICO
10(i) Limits to NELICO's Right to Challenge the Policy; Payment of Proceeds; Investment Options
11 The Variable Account
12 Investments of the Variable Account; NELICO's Distribution Agreement
13 Charges and Expenses; NELICO's Distribution Agreement; Charge for NELICO's Income Taxes;
Appendix A
14 Amount Provided for Investment Under the Policy; NELICO's Distribution Agreement
15 Premiums
16 Investments of the Variable Account
17 Captions referenced under Items 10(c), (d), (e) and (i) above
18 The Variable Account
19 Reports; NELICO's Distribution Agreement
20 Captions referenced under Items 6 and 10(g) above
21 Loan Provision
22 Inapplicable
23 NELICO's Distribution Agreement
24 Limits to NELICO's Right to Challenge the Policy
25 NELICO
26 NELICO's Distribution Agreement
</TABLE>
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<TABLE>
<CAPTION>
FORM N-8B-2
ITEM NO. CAPTION IN PROSPECTUS
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<S> <C>
27 NELICO
28 Management
29 NELICO
30 Inapplicable
31 Inapplicable
32 Inapplicable
33 Inapplicable
34 NELICO's Distribution Agreement
35 NELICO
36 Inapplicable
37 Inapplicable
38 NELICO's Distribution Agreement
39 NELICO's Distribution Agreement
40 NELICO's Distribution Agreement
41(a) NELICO's Distribution Agreement
42 Inapplicable
43 Inapplicable
44(a) Investments of the Variable Account; Amount Provided for Investment Under the Policy;
Deductions from Premiums; Flexible Premiums
44(b) Charges and Expenses
44(c) Flexible Premiums; Deductions from Premiums
45 Inapplicable
46 Investments of the Variable Account; Captions referenced under Items 10(c), (d) and (e)
above
47 Inapplicable
48 Inapplicable
49 Inapplicable
50 Inapplicable
51 Cover Page; Death Benefit; Lapse and Reinstatement; Charges and Expenses; Additional
Benefits by Rider; 24 Month Right; Payment Options; Policy Owner and Beneficiary;
Premiums; NELICO's Distribution Agreement
52 Rights Reserved by NELICO
53 Tax Considerations
54 Inapplicable
55 Inapplicable
59 Financial Statements
</TABLE>
<PAGE> 5
ZENITH FLEXIBLE LIFE I
Supplement dated November 13, 2000 to Prospectus dated November 13, 2000
For Policies purchased through payroll deductions:
If you elect to pay monthly planned premiums using payroll deductions
that your employer will remit to us, New England Life Insurance Company, on your
behalf, the following special provisions apply to you:
1. Policy Date. Your employer will begin making payroll deductions six
weeks in advance of your first monthly planned premium payment. The Policy Date
and the investment start date for your Policy will be the date when we receive
your first monthly planned premium payment.
2. Temporary Life Insurance Coverage. The insured under your Policy
will be covered by temporary life insurance for a limited period under the terms
of a temporary insurance agreement. Coverage will begin as of the date of the
temporary insurance agreement, which is generally the same date you sign your
application. (Refer to the temporary insurance agreement for details.)
3. Planned Premium Payments. You will be on a monthly planned premium
schedule that assumes your employer will remit 12 premium payments each year,
regardless of the frequency with which payroll deductions are made. The amount
of your monthly planned premium payments may vary from month to month, depending
on the amount of payroll deductions accumulated prior to each payment. Premiums
will be applied to your Policy on the day we receive them.
4. Lapse. Your monthly planned premium schedule is not necessarily
designed to keep your Policy in force. We will make Monthly Deductions from the
cash value of your Policy on the first day of each Policy month, beginning with
the Policy Date. (See "Monthly Deduction from Cash Value" for more information.)
Your Policy will be in default in any month when there is insufficient net cash
value for us to make a Monthly Deduction unless a Minimum Guaranteed Death
Benefit is in effect or your Policy is protected against lapse during the first
three Policy Years by payment of the Minimum Premium. (See "Monthly Deduction
from Cash Value," "Flexible Premiums" and "Lapse and Reinstatement" for more
information.) A default will occur if for any reason there is insufficient net
cash value in the Policy to pay a Monthly Deduction. A default may result, for
example, if you miss a payroll deduction. THE CASH VALUE OF PREMIUMS ALLOCATED
TO THE VARIABLE ACCOUNT IS NOT GUARANTEED, AND UNFAVORABLE INVESTMENT EXPERIENCE
CAN REDUCE IT TO ZERO. YOU WILL BEAR THE ENTIRE INVESTMENT RISK WITH RESPECT TO
CASH VALUE IN THE VARIABLE ACCOUNT. If a default occurs, we will issue a
pre-lapse notice to inform the Policy Owner of the amount due. The Policy
provides a 62 day grace period for payment of the amount due to prevent lapse.
To keep your Policy in force, you will need to pay the amount shown in the
pre-lapse notice directly to us.
5. Additional Payments and Loan Repayments. You cannot use payroll
deductions to make payments in addition to your planned premium payments or to
repay a Policy loan. Please contact us or your registered representative if you
would like to arrange either of these transactions.
<PAGE> 6
ZENITH FLEXIBLE LIFE I
Flexible Premium Adjustable
Variable Life Insurance Policies
Issued by
New England Variable Life Separate Account of
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
(617) 578-2000
This prospectus offers individual flexible premium adjustable variable life
insurance policies the ("Policies") issued by New England Life Insurance Company
("NELICO").
The Policy provides premium flexibility. You may choose between two death
benefit options. One provides a fixed death benefit equal to the Policy's face
amount. The other provides a death benefit that may vary daily with the
investment experience of the Eligible Funds. Cash value allocated to the
Eligible Funds is not guaranteed, and fluctuates daily with the investment
results of the Eligible Funds.
You allocate net premiums among the investment Sub-Accounts of NELICO's
Variable Life Separate Account (the "Variable Account"). Each Sub-Account of the
Variable Account invests in shares of an Eligible Fund. The Eligible Funds are:
NEW ENGLAND ZENITH FUND
Back Bay Advisors Bond Income Series
Back Bay Advisors Managed Series
Back Bay Advisors Money Market Series
Capital Growth Series
Westpeak Growth and Income Series
Westpeak Stock Index Series
Balanced Series
Loomis Sayles Small Cap Series
Alger Equity Growth Series
Davis Venture Value Series
Harris Oakmark Mid Cap Value Series
Morgan Stanley International Magnum Equity Series
MFS Investors Series
MFS Research Managers Series
METROPOLITAN SERIES FUND, INC.
Putnam Large Cap Growth Portfolio*
Janus Mid Cap Portfolio*
Russell 2000(R) Index Portfolio*
VARIABLE INSURANCE PRODUCTS FUND ("VIP")
Overseas Portfolio
Equity-Income Portfolio
High Income Portfolio
VARIABLE INSURANCE PRODUCTS FUND II ("VIP II")
Asset Manager Portfolio
---------------
* Subject to any necessary state insurance department approvals
You receive Zenith Money Market Sub-Account performance until the later of
45 days after the date Part 1 of the application is signed or 10 days after we
mail the Notice of Withdrawal Right. Thereafter, we invest the Policy's cash
value according to your instructions.
DURING THE FOURTH QUARTER OF 2000, WE ANTICIPATE REPLACING THE MORGAN
STANLEY INTERNATIONAL MAGNUM EQUITY SERIES WITH THE PUTNAM INTERNATIONAL STOCK
PORTFOLIO OF THE METROPOLITAN SERIES FUND, INC, SUBJECT TO REGULATORY APPROVALS.
You may also allocate net premiums to a Fixed Account in most states. Limits
apply to transfers to and from the Fixed Account.
You may cancel the Policy during the "Right to Return the Policy" period.
Replacing existing insurance with the Policy might not be to your advantage.
NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED THESE
POLICIES OR DETERMINED THAT THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE SECURITIES AND EXCHANGE COMMISSION MAINTAINS A WEB SITE THAT CONTAINS
THE STATEMENTS OF ADDITIONAL INFORMATION, MATERIAL INCORPORATED BY REFERENCE,
AND OTHER INFORMATION REGARDING REGISTRANTS THAT FILE ELECTRONICALLY WITH THE
SECURITIES AND EXCHANGE COMMISSION. THE ADDRESS OF THE SITE IS
HTTP://WWW.SEC.GOV.
THE ELIGIBLE FUND PROSPECTUSES ARE ATTACHED. PLEASE READ THEM AND KEEP THEM
FOR REFERENCE.
WE DO NOT GUARANTEE HOW ANY OF THE SUB-ACCOUNTS OR ELIGIBLE FUNDS WILL
PERFORM. THE POLICIES AND THE ELIGIBLE FUNDS ARE NOT DEPOSITS OR OBLIGATIONS OF,
OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION AND ARE NOT FEDERALLY
INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD
OR ANY OTHER GOVERNMENT AGENCY.
NOVEMBER 13, 2000
<PAGE> 7
TABLE OF CONTENTS
<TABLE>
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PAGE
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<S> <C>
GLOSSARY.................................................... A-4
INTRODUCTION TO THE POLICIES................................ A-5
The Policies............................................ A-5
Availability of the Policy.............................. A-6
Policy Charges.......................................... A-6
How the Policy Works.................................... A-10
Receipt of Communications and Payments at NELICO's Home
Office................................................. A-11
NELICO.................................................. A-11
POLICY VALUES AND BENEFITS.................................. A-12
Death Benefit........................................... A-12
Death Proceeds Payable.................................. A-12
Change in Death Benefit Option.......................... A-12
Extending the Maturity Date............................. A-12
Cash Value.............................................. A-13
Net Investment Experience............................... A-13
Allocation of Net Premiums.............................. A-13
Amount Provided for Investment under the Policy......... A-13
Right to Return the Policy.............................. A-14
State Variations........................................ A-14
CHARGES AND EXPENSES........................................ A-14
Deductions from Premiums................................ A-14
Surrender Charge........................................ A-15
Monthly Deduction from Cash Value....................... A-16
Charges Against the Eligible Funds and the Sub-Accounts
of the Variable Account................................ A-18
Group or Sponsored Arrangements......................... A-19
PREMIUMS.................................................... A-19
Flexible Premiums....................................... A-20
Lapse and Reinstatement................................. A-20
OTHER POLICY FEATURES....................................... A-20
Increase in Face Amount................................. A-20
Loan Provision.......................................... A-21
Surrender............................................... A-22
Partial Surrender....................................... A-22
Reduction in Face Amount................................ A-23
Investment Options...................................... A-23
Transfer Option......................................... A-23
Dollar Cost Averaging................................... A-24
Asset Rebalancing....................................... A-24
Substitution of Insured Person.......................... A-24
Payment of Proceeds..................................... A-25
24 Month Right.......................................... A-25
Payment Options......................................... A-26
Additional Benefits by Rider............................ A-26
Policy Owner and Beneficiary............................ A-26
THE VARIABLE ACCOUNT........................................ A-27
Investments of the Variable Account..................... A-27
Investment Management................................... A-29
</TABLE>
A-2
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<TABLE>
<CAPTION>
PAGE
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<S> <C>
THE FIXED ACCOUNT........................................... A-30
General Description..................................... A-30
Values and Benefits..................................... A-30
Policy Transactions..................................... A-30
NELICO'S DISTRIBUTION AGREEMENT............................. A-31
LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY............ A-31
Misstatement of Age or Sex.............................. A-31
Suicide................................................. A-31
TAX CONSIDERATIONS.......................................... A-32
Introduction............................................ A-32
Tax Status of the Policy................................ A-32
Tax Treatment of Policy Benefits........................ A-32
NELICO's Income Taxes................................... A-34
MANAGEMENT.................................................. A-34
VOTING RIGHTS............................................... A-36
RIGHTS RESERVED BY NELICO................................... A-37
TOLL-FREE NUMBERS........................................... A-37
REPORTS..................................................... A-37
ADVERTISING PRACTICES....................................... A-37
LEGAL MATTERS............................................... A-38
REGISTRATION STATEMENT...................................... A-38
EXPERTS..................................................... A-38
APPENDIX A: ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES,
NET CASH VALUE AND ACCUMULATED PREMIUMS................... A-39
APPENDIX B: INVESTMENT EXPERIENCE INFORMATION............... A-48
APPENDIX C: LONG TERM MARKET TRENDS......................... A-71
APPENDIX D: USES OF LIFE INSURANCE.......................... A-72
APPENDIX E: TAX INFORMATION................................. A-73
APPENDIX F: TAX LAW AND THE DEATH BENEFIT................... A-74
FINANCIAL STATEMENTS........................................ AA-1
</TABLE>
A-3
<PAGE> 9
GLOSSARY
ACCOUNT. A sub-account of the Variable Account or the Fixed Account.
AGE. The age of an insured refers to the insured's age at his or her
nearest birthday.
BASE POLICY. The Policy without riders.
CASH VALUE. A Policy's cash value includes the amount of its cash value
held in the Variable Account, the amount held in the Fixed Account and, if there
is an outstanding Policy loan, the amount of its cash value held in our general
account as a result of the loan.
COMMISSION BREAKPOINT PREMIUM. We use the Commission Breakpoint Premium to
measure sales commissions. It equals between 115.5% and 121% of a Target
Premium, depending on the insured's issue age, plus a portion of certain rider
premiums.
EXCESS POLICY LOAN. When Policy loans plus accrued interest exceed the
Policy's cash value less the applicable Surrender Charge.
FIXED ACCOUNT. The Fixed Account is a part of our general account to which
you may allocate net premiums. It provides guarantees of principal and interest.
INVESTMENT START DATE. This is the latest of the date we first receive a
premium payment for the Policy, the date Part II of the Policy application is
signed (if any is required) and the Policy Date.
MATURITY DATE. The Policy anniversary on which the insured is (or would
have been) age 100. The Policy will not mature on this date if the extended
maturity option has been added to the Policy.
NET CASH VALUE. The amount you receive if you surrender the Policy. It is
equal to the Policy's cash value reduced by any Surrender Charge that would
apply on surrender and by any outstanding Policy loan and accrued interest.
NET INVESTMENT EXPERIENCE. For any period, a Sub-Account's net investment
experience equals the investment experience of the underlying Eligible Fund's
shares for the same period, reduced by the amount of charges against the
Sub-Account for that period.
PLANNED PREMIUM. The Planned Premium is the premium payment schedule you
choose to help meet your future goals under the Policy. The Planned Premium is a
level amount that is subject to certain limits under the Policy. Payments in
addition to any Planned Premium are called unscheduled payments in the Policy
and can be paid at any time, subject to certain limits.
PREMIUMS. Premiums include all payments under the Policy, whether a Planned
Premium or an unscheduled payment.
POLICY DATE. If you make a premium payment with the application, the Policy
Date is generally the later of the date Part II of the application (if any) was
signed and receipt of the premium payment. If you choose to pay the initial
premium upon delivery of the Policy, we issue the Policy with a Policy Date
which is generally five days after issue.
TARGET PREMIUM. We use the Target Premium to determine the amount of
Deferred Sales Charge that may apply on a surrender, partial surrender, lapse or
face amount reduction. The Target Premium varies by issue age, sex and
underwriting class of the insured and the Policy's face amount. The Target
Premium is less than or equal to 75% of the annual premium necessary to maintain
a fixed benefit whole life insurance Policy for the same face amount on the life
of the insured. We calculate the annual whole life premium using an assumed
interest rate of 4%, guaranteed cost of insurance charges and the current level
of other Policy charges.
YOU. "You" refers to the Policy Owner.
A-4
<PAGE> 10
INTRODUCTION TO THE POLICIES
THE POLICIES
The Policies are designed to provide lifetime insurance coverage. They are
not offered primarily as an investment.
Here is a summary of the Policy's basic features. You should read the entire
prospectus for more complete information.
-- You can make premium payments under the Policy based on a schedule you
determine, subject to some limits. We can limit or prohibit unscheduled
payments in some situations, including cases where the insured is in a
substandard risk class. (See "Premiums".)
-- You can allocate net premiums to one or more of the Sub-Accounts of the
Variable Account corresponding to mutual fund portfolios after an
initial period in the Zenith Back Bay Money Market Sub-Account. (See
"Allocation of Net Premiums" and "Investment Options".)
-- The mutual fund portfolios available under the Policy include several
common stock funds, including funds which invest primarily in foreign
securities, two bond funds, two managed funds, a balanced fund, and a
money market fund. You may allocate your Policy's cash value to a
maximum of ten accounts (including the Fixed Account) at any one time.
(See "Investments of the Variable Account".)
-- If the Fixed Account is available in your state, you may also allocate
funds to that account. We provide guarantees of Fixed Account principal
and interest. SPECIAL LIMITS APPLY TO TRANSFERS OF CASH VALUE FROM THE
FIXED ACCOUNT. We have the right to restrict transfers of cash value and
allocations of premiums into the Fixed Account. (See "The Fixed
Account".)
-- The cash value of the Policy will vary daily based on the net investment
experience of your Policy's Sub-Accounts and the amount of interest
credited to your Policy's cash value in the Fixed Account. (See "Cash
Value", "Charges and Expenses", "Premiums", "Loan Provision" and
"Partial Surrender".)
-- The portion of the cash value in the Sub-Accounts is not guaranteed. You
bear the investment risk on this portion of the cash value. (See "Cash
Value".)
-- You may choose between two death benefit options under the Policy. The
level option death benefit equals the Policy's face amount. The variable
option death benefit equals the face amount plus any cash value, which
varies with the net investment experience of your Policy's Sub-Accounts
and the rate of interest credited on your cash value in the Fixed
Account. The death benefit in either case could increase to satisfy tax
law requirements if the cash value reaches certain levels. (See "Death
Benefit".)
-- Unless the extended maturity option is part of your Policy, if the
insured is alive and the Policy is in force on the Maturity Date, the
Policy will then terminate. In that case we pay you the Policy's net
cash value as of the Maturity Date. (See "Extending the Maturity Date".)
-- You may change your allocation of future net premiums at any time. (See
"Allocation of Net Premiums" and "Investment Options".)
-- After the "Right to Return the Policy" period, the Policy allows you to
transfer cash value among the Sub-Accounts and, generally, to the Fixed
Account up to four times in a Policy year (twelve times in a Policy year
for Policies issued in New York) without our consent. Currently, we do
not limit the number of sub-account transfers you may make in a Policy
year. Transfers and allocations involving the Fixed Account are subject
to some limits. (See "Transfer Option" and "The Fixed Account-- Policy
Transactions".)
-- A loan privilege and a partial surrender feature are available. (See
"Loan Provision" and "Partial Surrender".)
-- Death benefits paid to the beneficiary generally are not subject to
Federal income tax. Under current law, undistributed increases in cash
value generally are not taxable to you. (See "Tax Considerations".)
-- Loans, assignments and other pre-death distributions may have tax
consequences depending primarily on the amount which you have paid into
the Policy but also on any "material change" in the terms or benefits of
the Policy or any death benefit reduction. If premium payments, a death
benefit reduction, or a material change cause the Policy to become a
"modified endowment contract", then pre-death distributions (including
loans) will be included in income on an income first basis, and a 10%
penalty tax may be imposed on income distributed before the Policy Owner
attains age 59 1/2. Tax considerations may therefore influence the
amount and timing of premium payments and certain Policy transactions
which you choose to make. (See "Tax Considerations".)
A-5
<PAGE> 11
-- If the Policy is not a modified endowment contract, we believe that
loans under the Policy will generally not be taxable to you as long as
the Policy has not lapsed, been surrendered or terminated. With some
exceptions, other pre-death distributions under a Policy that is not a
modified endowment contract are includible in income only to the extent
they exceed your investment in the Policy. (See "Tax Considerations".)
-- During the "Right to Return the Policy" period you can return the Policy
for a refund. (See "Right to Return the Policy".)
-- Within 24 months after a Policy's date of issue, you may exercise the
Policy's 24 Month Right. If you do, we allocate all or part of your
Policy's cash value and future premiums to the Fixed Account. The
purpose of the 24 Month Right is to provide you with fixed Policy values
and benefits. (See "24 Month Right" for a description of this provision
and for a description of the variation which applies to Policies issued
in Maryland and New Jersey.)
In many respects the Policies are similar to fixed-benefit universal life
insurance. Like universal life insurance, the Policies offer death benefits and
provide flexible premiums, a cash value, and loan privileges.
The Policies are different from fixed-benefit universal life insurance in
that the death benefit may, and the cash value will, vary to reflect the
investment experience of the selected Sub-Accounts.
The Policies are designed to provide insurance protection. Although the
underlying mutual fund portfolios invest in securities similar to those in which
mutual funds available directly to the public invest, in many ways the Policies
differ from mutual fund investments. The main differences are:
-- The Policy provides a death benefit based on our assumption of an
actuarially calculated risk.
-- If the net cash value is not sufficient to pay a Monthly Deduction, the
Policy may lapse with no value unless you pay additional premiums. If
the Policy lapses when Policy loans are outstanding, adverse tax
consequences may result.
-- In addition to sales charges, insurance-related charges not associated
with mutual fund investments are deducted from the premiums and values
of the Policy. These charges include various insurance, risk,
administrative and premium tax charges. (See "Charges and Expenses".)
-- The Variable Account, not the Policy Owner, owns the mutual fund shares.
-- Federal income tax liability on any earnings is generally deferred until
you receive a distribution from the Policy. Transfers from one
underlying fund portfolio to another do not incur tax liability under
current law.
-- Dividends and capital gains are automatically reinvested.
For a discussion of some of the uses of the Policies, see "Appendix D: Uses
of Life Insurance".
AVAILABILITY OF THE POLICY
The Policies are available for insureds from the age of one to 80 on an
underwritten basis and from the age of 20 to 70 on an automatic issue basis. (We
issue automatic issue Policies based on very limited underwriting information.
Automatic issue Policies may not be available in New Jersey.) We may consent to
issue the Policies on insureds below the age of one and up to age 85. All
persons must meet our underwriting and other requirements.
The minimum face amount for the base Policy is $100,000 unless we consent to
a lower amount, but exceptions apply. The minimum base Policy face amount
available is $50,000 in business situations (situations in which two or more
Policies, on more than one life, are totally or partially funded, directly or
indirectly, by an employer) where the average face amount is at least $100,000,
and $25,000 for pension plans qualified under Section 401 of the Internal
Revenue Code ("tax-qualified pension plans"). Policies with a minimum face
amount of $50,000 may also be available for juvenile insureds in the state of
New Jersey. For a tax-qualified pension plan, the tax deferred accrual feature
is provided by the plan. Therefore, there should be reasons other than tax
deferral for acquiring a life insurance policy within a tax-qualified pension
plan.
We offer other variable life insurance policies, with different fees and
charges, that invest in the Eligible Funds. Your registered representative has
additional information.
POLICY CHARGES
PREMIUM-BASED CHARGES. We deduct the following charges from premiums:
-- A maximum sales charge of 4%. A 3% sales charge will apply to larger
Policies and to Policies sold in certain business situations or to
certain tax-qualified pension plans;
A-6
<PAGE> 12
-- A state premium tax charge of 2.5%;
-- A charge for federal taxes of 1%.
SURRENDER CHARGE. The Surrender Charge includes:
-- A deferred sales charge. This charge applies to a lapse, total or
partial surrender or face amount reduction during the first 11 Policy
years. For Policies covering insureds whose issue age is 55 or less at
issue, the maximum Deferred Sales Charge applies in Policy years two
through five. The maximum Deferred Sales Charge in those years equals
72% of one Target Premium. After the fifth Policy year, the maximum
Deferred Sales Charge declines on a monthly basis until it reaches 0% in
the last month of the eleventh Policy year. The charge may be less if
the issue age is above 55.
-- A deferred administrative charge. This charge applies to a lapse, total
or partial surrender or reduction in face amount during the first 11
Policy years. This charge is $2.50 per $1,000 of the base Policy's face
amount for the first Policy year, and then reduces monthly until it
reaches 0 at the end of the 11th Policy year. The charge will be less if
the issue age is greater than 65.
We deduct the Surrender Charge from the Policy's available cash value,
regardless of whether that cash value comes from premiums or investment
experience.
MONTHLY DEDUCTION FROM CASH VALUE. We deduct certain charges from the cash
value:
-- Monthly charge for the cost of insurance and for any benefits provided
by rider;
-- Monthly administrative charge, currently equal to $0.08 per $1,000 of
base Policy face amount per month for the first Policy year and $0.02
per $1,000 per month thereafter (guaranteed not to exceed $0.08 per
$1,000 of base Policy face amount per month in the first Policy year and
$0.04 per $1,000 per month thereafter). For tax-qualified pension plans
the monthly administrative charge after the first Policy year is
currently $0.03 per $1,000 of base Policy face amount per month rather
than $0.02. On a current basis, we intend not to charge more than $40
per month ($60 for tax-qualified pension plans) for the monthly
administrative charge after the first Policy year;
-- Monthly Policy fee, currently equal to $15.00 per month in the first
Policy year and $5.00 per month thereafter (guaranteed not to exceed
$15.00 per month in the first Policy year and $7.00 per month
thereafter). For Policies sold to tax-qualified pension plans the
monthly Policy fee after the first Policy year currently is $6.00 rather
than $5.00.
CHARGES DEDUCTED FROM THE VARIABLE ACCOUNT AND THE ELIGIBLE FUNDS. The
following charges are deducted from the Variable Account and Eligible Fund
assets:
-- Daily charge against the Sub-Account assets for our mortality and
expense risk, currently equal to an annual rate of .25% (guaranteed not
to exceed .50%). For larger Policies and Policies sold in certain
business situations or to certain tax-qualified pension plans, the
charge is currently at an annual rate of .20% rather than .25%;
-- Daily charges against the Eligible Fund portfolios for investment
advisory services and fund operating expenses.
Currently, we do not charge the Variable Account for any federal income
taxes. We may, however, impose such a charge in the future.
The following table shows the annual operating expenses for each New England
Zenith Fund series, based on actual expenses for 1999, after any applicable
expense cap or expense deferral arrangement:
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER ANY EXPENSE CAP)
<TABLE>
<CAPTION>
BACK BACK
BAY BAY BACK WESTPEAK LOOMIS
ADVISORS ADVISORS BAY WESTPEAK GROWTH SAYLES
CAPITAL BOND MONEY ADVISORS STOCK AND SMALL
GROWTH INCOME MARKET MANAGED INDEX INCOME CAP
SERIES SERIES SERIES SERIES SERIES SERIES SERIES*
------- -------- -------- -------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee........................ .62% .40% .35% .50% .25% .68% .90%
Other Expenses........................ .04% .08% .05% .08% .10% .06% .10%
--- --- --- --- --- --- ----
Total Series Operating
Expenses................... .66% .48% .40% .58% .35% .74% 1.00%
</TABLE>
A-7
<PAGE> 13
ANNUAL OPERATING EXPENSES
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER EXPENSE DEFERRAL)
<TABLE>
<CAPTION>
HARRIS MORGAN
OAKMARK STANLEY DAVIS ALGER MFS
MID CAP INTERNATIONAL VENTURE EQUITY MFS RESEARCH
VALUE BALANCED MAGNUM VALUE GROWTH INVESTORS MANAGERS
SERIES SERIES EQUITY SERIES SERIES SERIES SERIES* SERIES*
------- -------- -------------- ------- ------ --------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee........................... .75% .70% .90% .75% .75% .75% .75%
Other Expenses........................... .13% .07% .40% .06% .05% .15% .15%
--- --- ---- --- --- --- ---
Total Series Operating
Expenses...................... .88% .77% 1.30% .81% .80% .90% .90%
</TABLE>
------------
* Without the applicable expense cap or expense deferral arrangement (described
below), Total Series Operating Expenses for the year ended December 31, 1999
would have been: MFS Investors Series, 2.03%; and MFS Research Managers
Series, 2.03%, both on an annualized basis since the Series' start date of
April 30, 1999. In 1999 the management fee for the Loomis Sayles Small Cap
Series was 1.00%, and Total Series Operating Expenses were capped at 1.00%.
Without the expense cap, Total Series Operating Expenses would have been
1.10%.
Our affiliate, New England Investment Management, Inc., advises the series
of the Zenith Fund except for the Capital Growth Series. New England Investment
Management voluntarily limits the expenses (other than brokerage costs,
interest, taxes or extraordinary expenses) of certain series with either an
expense cap or expense deferral arrangement. Under the expense cap, New England
Investment Management bears expenses of the Loomis Sayles Small Cap Series that
exceed 1.00% of average daily net assets. Under the expense deferral agreement,
New England Investment Management bears expenses of the Harris Oakmark Mid Cap
Value, Morgan Stanley International Magnum Equity, MFS Investors, and MFS
Research Managers Series that exceed .90% of average daily net assets (1.30% for
the Morgan Stanley International Magnum Equity Series) in the year the series
incurs them and charges those expenses to the series in a future year if actual
expenses of the series are below the limit. New England Investment Management
may end these expense limits at any time.
MetLife is the investment advisor for the Portfolios of the Metropolitan
Series Fund, Inc. The Portfolios pay investment management fees to MetLife and
also bear other expenses. The chart below shows the total operating expenses of
the Portfolios based on the year ended December 31, 1999 and current expense
subsidies (in the case of the Putnam Large Cap Growth Portfolio, anticipated
expenses for 2000) as a percentage of Portfolio net assets.
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEES EXPENSES EXPENSES
--------- ---------- -------- ------------
<S> <C> <C> <C>
Putnam Large Cap Growth..................................... .80% .20% 1.00%*
Janus Mid Cap............................................... .67% .04% .71%
Russell 2000 Index.......................................... .25% .30% .55%*
</TABLE>
------------
* MetLife voluntarily pays expenses (other than the management fee, brokerage
commissions, taxes, interest and other loan costs, and any unusual one-time
expenses) of the Putnam Large Cap Growth Portfolio that exceed .20% of net
assets until the earlier of (i) July 1, 2002 and (ii) the date when the
Portfolio's net assets reach $100 million. Without this subsidy, the
anticipated total annual expenses of the Putnam Large Cap Growth Portfolio
would be 1.39%. MetLife also paid such expenses that exceeded .20% of net
assets for the Russell 2000 Index Portfolio until December 3, 1999. Without
this subsidy the total annual expenses of the Russell 2000 Index Portfolio for
1999 would have been .89%. Beginning February 22, 2000, MetLife is paying such
expenses that exceed .30% of the Russell 2000 Index Portfolio's net assets
until the earlier of (i) April 30, 2001 and (ii) the date when the Portfolio's
assets reach $200 million. Total Annual Expenses for the Russell 2000 Index
Portfolio are shown as if this subsidy was in effect for the entire current
year. MetLife can terminate these arrangements at any time upon notice to the
Board of Directors and to Fund shareholders.
A-8
<PAGE> 14
The investment adviser for VIP and VIP II is Fidelity Management & Research
Company ("FMR"). The Portfolios of VIP and VIP II pay investment management fees
to FMR and also bear other expenses. For the year ended December 31, 1999, the
total operating expenses of the Portfolios, as a percentage of Portfolio average
net assets, were:
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL ANNUAL
PORTFOLIO FEES EXPENSES EXPENSES
--------- ---------- -------- ------------
<S> <C> <C> <C>
VIP Equity-Income........................................... .48% .09% .57%*
VIP Overseas................................................ .73% .18% .91%*
VIP High Income............................................. .58% .11% .69%
VIP II Asset Manager........................................ .53% .10% .63%*
</TABLE>
------------
* Total annual expenses do not reflect certain expense reductions due to
directed brokerage arrangements and custodian interest credits. If we included
these reductions, total annual expenses would have been .56% for VIP
Equity-Income Portfolio, .87% for VIP Overseas Portfolio and .62% for VIP II
Asset Manager Portfolio.
An investment adviser or affiliates thereof may compensate NELICO and/or
certain affiliates for administrative, distribution, or other services relating
to Eligible Funds. This compensation is based on assets of the Eligible Funds
attributable to the Policies and certain other variable insurance products that
we and our affiliates issue. Some advisers and/or affiliates may pay us more
than others. New England Securities may also receive brokerage commissions on
securities transactions initiated by an investment adviser.
See "Charges and Expenses".
A-9
<PAGE> 15
HOW THE POLICY WORKS
PREMIUM PAYMENTS
* Flexible
* Planned premium options
- Minimum premium (in first five Policy years)
CHARGES FROM PREMIUM PAYMENTS
* Sales Load: 4% (3% for certain larger Policies and Policies sold in certain
business situations or to certain tax-qualified pension plans).
* State Premium Tax Charge: 2.5%
* Charge for Federal Taxes: 1%
LOANS
* After the free look period, you may borrow a portion of your cash value
* Loan interest charge is 5.5%. We transfer loaned funds out of the Eligible
Funds into the General Account where we credit them with not less than 4.0%
interest. (Currently we intend to credit 5.25% interest for Policy years 16
through 25, and 5.40% thereafter.)
RETIREMENT BENEFITS
* Fixed settlement options are available for policy proceeds
CASH VALUES
* Net premium payments invested in your choice of Eligible Fund investments or
the Fixed Account (after an initial period in the Zenith Money Market
Sub-Account)
* The cash value reflects investment experience, interest, premium payments,
policy charges and any distributions from the Policy
* We do not guarantee the cash value invested in the Eligible Funds
* Any earnings you accumulate are generally free of any current income taxes
* You may change the allocation of future net premiums at any time. You may
transfer funds among investment options (and to the Fixed Account) after the
free look period. Currently we do not limit the number of sub-account
transfers you can make in a Policy year. We limit the timing, frequency and
amount of transfers from (and in some cases to) the Fixed Account
* You may allocate your cash value among a maximum of ten accounts at any time
DEATH BENEFIT
* Level or Variable Death Benefit Options
* Guaranteed not to be less than face amount (less any loan balance) during
first five Policy years if the five-year Minimum Premium guarantee is in
effect.
* Income tax free to named beneficiary
DAILY DEDUCTIONS FROM ASSETS
* Mortality and expense risk charges of .25% (guaranteed not to exceed .50%) on
an annual basis are deducted from the cash value. For larger Policies and
Policies sold in certain business situations or to certain tax-qualified
pension plans, charge is currently .20% rather than .25%
* Investment advisory fees and other expenses are deducted from the Eligible
Fund values
BEGINNING OF MONTH CHARGES
* We deduct the cost of insurance protection (reflecting any substandard risk or
automatic issue rating) from the cash value each month
* Any Rider Charges
* Policy Fee: $15.00 (not to exceed $15.00) per month (first year) and $5.00
(not to exceed $7.00) per month thereafter. For Policies sold to tax-qualified
pension plans charge is currently $6.00 per month after first year.
* Administrative Charge: $.08 (guaranteed not to exceed $.08) per $1000 face
amount monthly (first year) and $.02 (guaranteed not to exceed $.04) per $1000
face amount monthly (after first year). For Policies sold to tax-qualified
pension plans charge is currently $.03 per $1,000 after first year.
SURRENDER CHARGES
* Deferred Sales Charge and Deferred Administrative Charge (see page A-15)
LIVING BENEFITS
* If policyholder has elected and qualified for benefits for disability and
becomes totally disabled, we will waive monthly charges during the period of
disability up to certain limits
* You may surrender the Policy at any time for its cash surrender value
* Deferred income taxes, including taxes on certain amounts borrowed, become
payable upon surrender
* Grace period for lapsing with no value is 62 days from the first date in which
Monthly Deduction was not paid due to insufficient cash value
* Subject to our rules, you may reinstate a lapsed Policy within seven years of
date of lapse if it has not been surrendered
A-10
<PAGE> 16
RECEIPT OF COMMUNICATIONS AND PAYMENTS AT NELICO'S HOME OFFICE
We will treat your request for a Policy transaction, or your submission of a
payment, as received by us if we receive a request conforming to our
administrative procedures or a payment at our Home Office before the close of
regular trading on the New York Stock Exchange on that day. If we receive it
after that time, or if the New York Stock Exchange is not open that day, then we
will treat it as received on the next day when the New York Stock Exchange is
open.
NELICO
NELICO was organized as a stock life insurance company in Delaware in 1980
and is licensed to sell life insurance in all states, the District of Columbia
and Puerto Rico. Originally, NELICO was a wholly-owned subsidiary of New England
Mutual Life Insurance Company ("New England Mutual"). On August 30, 1996, New
England Mutual merged into Metropolitan Life Insurance Company ("MetLife"), a
life insurance company whose principal office is One Madison Avenue, New York,
NY 10010. MetLife then became the parent of NELICO. MetLife is a wholly-owned
subsidiary of MetLife, Inc., a publicly-traded company. In connection with the
merger, NELICO changed its name from "New England Variable Life Insurance
Company" to "New England Life Insurance Company" and changed its domicile from
the State of Delaware to the Commonwealth of Massachusetts. NELICO's Home Office
is now at 501 Boylston Street, Boston, Massachusetts 02116. NELICO's mailing
address is: P.O. Box 9116, Boston, Massachusetts 02117.
The following chart illustrates the relationship of NELICO, the Fixed
Account, the Variable Account and the Eligible Funds.
NELICO
(Insurance company subsidiary of MetLife)
We deduct charges.
We allocate net premiums and net unscheduled payments to your choice of
sub-accounts in the Variable Account or to the Fixed Account.
Premiums and Unscheduled Payments
Fixed Account
VARIABLE ACCOUNT
Zenith Capital Growth Sub-Account
Zenith Back Bay Bond Income Sub-Account
Zenith Back Bay Money Market Sub-Account
Zenith Back Bay Managed Sub-Account
Zenith Westpeak Stock Index Sub-Account
Zenith Westpeak Growth and Income Sub-Account
Zenith Loomis Sayles Small Cap Sub-Account
Zenith Balanced Sub-Account
Zenith Alger Equity Growth Sub-Account
Zenith Davis Venture Value Sub-Account
Zenith Harris Oakmark Mid Cap Value Sub-Account
Zenith Morgan Stanley International Magnum Equity Sub-Account
Zenith MFS Investors Sub-Account
Zenith MFS Research Managers Sub-Account
Metropolitan Putnam Large Cap Growth Sub-Account
Metropolitan Janus Mid Cap Sub-Account
Metropolitan Russell 2000 Index Sub-Account
VIP Equity-Income Sub-Account
VIP Overseas Sub-Account
VIP High Income Sub-Account
VIP II Asset Manager Sub-Account
Sub-accounts buy shares of the Eligible Funds.
NEW ENGLAND ZENITH FUND
Capital Growth Series
Back Bay Advisors Bond Income Series
Back Bay Advisors Money Market Series
Back Bay Advisors Managed Series
Westpeak Stock Index Series
Westpeak Growth and Income Series
Loomis Sayles Small Cap Series
Balanced Series
Alger Equity Growth Series
Davis Venture Value Series
Harris Oakmark Mid Cap Value Series
Morgan Stanley International Magnum Equity Series
MFS Investors Series
MFS Research Managers Series
Metropolitan Series Fund, Inc.*
Putnam Large Cap Growth Portfolio
Janus Mid Cap Portfolio
Russell 2000 Index Portfolio
VIP
Equity-Income Portfolio
Overseas Portfolio
High Income Portfolio
VIP II
Asset Manager Portfolio
Eligible Funds buy portfolio investments to support values and benefits of the
Policies.
* Availability of the Portfolios of the Metropolitan Series Fund, Inc. is
subject to any necessary state insurance department approvals.
A-11
<PAGE> 17
POLICY VALUES AND BENEFITS
DEATH BENEFIT
If the insured dies while the Policy is in force, we pay a death benefit to
the beneficiary.
DEATH BENEFIT OPTIONS. When you apply for a Policy, you choose between two
death benefit options.
The Option 1 (Face Amount) death benefit is equal to the face amount of the
Policy. The Option 1 death benefit is fixed, subject to increases required by
the Internal Revenue Code.
The Option 2 (Face Amount Plus Cash Value) death benefit is equal to the
face amount of the Policy, plus the Policy's cash value, if any. The Option 2
death benefit is also subject to increases required by the Internal Revenue
Code.
To meet the Internal Revenue Code's definition of life insurance, the death
benefit will not be less than a certain multiple of the Policy's cash value,
including the portion of any Monthly Deduction made for a period beyond the date
of death. (See Appendix F.) This means that, if the cash value grows to certain
levels, the death benefit increases to satisfy tax law requirements. At that
point, any payment you make into the Policy will increase the death benefit by
more than it increases the cash value. (See "Premiums").
TERM RIDER "IN" OR "OUT." If you add a Level Term Insurance Rider to the
Policy, you can have the face amount of the rider added to the face amount of
the Policy for purposes of calculating the Option 1 or Option 2 death benefit.
Your election is irrevocable. If you include the rider coverage in the
calculation of the death benefit ("inside term"), the Policy may provide greater
potential for cash value to grow relative to the death benefit. If you do not
include the rider coverage in the calculation of the death benefit ("outside
term"), the Policy may provide greater potential for a higher death benefit
relative to the cash value (as described above); also, you may be able to
convert "outside term", (but not "inside term") coverage to permanent insurance.
If you choose "outside term", any death benefit increases required by the
Internal Revenue Code will be triggered earlier than would be the case with
"inside term". These increases lead to a higher death benefit and higher cost of
insurance charges.
DEATH PROCEEDS PAYABLE
The death proceeds we pay are equal to the death benefit on the date of the
insured's death, reduced by any outstanding loan and accrued loan interest on
that date. If the death occurs during the grace period, we reduce the proceeds
by the amount due, to cover unpaid Monthly Deductions to the date of death. (See
"Lapse and Reinstatement".) We increase the death proceeds (1) by any rider
benefits payable and (2) by any Monthly Deduction made for a period beyond the
date of death, unless we already included this amount in the death benefit
calculation because of Federal tax law requirements (see "Death Benefit Options"
above and Appendix F).
We may adjust the death proceeds if the insured's age or sex was misstated
in the application, if death results from the insured's suicide within two years
(less in some states) from the Policy's date of issue, or if a rider limits the
death benefit. (See "Limits to NELICO's Right to Challenge the Policy").
CHANGE IN DEATH BENEFIT OPTION
After the first Policy year, you may change your death benefit option by
written request to our Home Office. The request will be effective on the date we
receive it. A change in death benefit option may have tax consequences. (See
"Tax Considerations".)
If you change from Option 1 (Face Amount) to Option 2 (Face Amount Plus Cash
Value), we reduce the Policy's face amount if necessary so that the death
benefit is the same immediately before and after the change. A face amount
reduction below $100,000 requires our consent; however, special rules apply for
some business situations and for tax-qualified pension plans. We may also
decrease any rider benefits under the Policy. A partial surrender of cash value
may be necessary to meet Federal tax law limits on the amount of premiums that
you can pay into the Policy. There is no Surrender Charge for a face amount
reduction or partial surrender on a change from Option 1 to Option 2.
If you change from Option 2 (Face Amount Plus Cash Value) to Option 1 (Face
Amount), we increase the Policy's face amount, if necessary, so that the death
benefit is the same immediately before and after the change.
EXTENDING THE MATURITY DATE
In all states where it is approved, we will issue your Policy with an
extended maturity endorsement. If endorsed, the Policy will not mature until the
date of the insured's death. The death benefit we pay on and after the original
Maturity Date depends on the insured's issue age.
If the insured's issue age was below 81 the endorsement extends the face
amount of the Policy. It provides that the death benefit on and after the
original Maturity Date is the greater of (1) the cash value on the date of death
-------
and (2) the Policy face amount at the original Maturity Date, or at age 80,
whichever is less. If the insured's issue age was above 80 the death benefit we
pay on and after the original Maturity Date equals the cash value on the date of
death.
A-12
<PAGE> 18
Currently, we do not make Monthly Deduction charges after the original
Maturity Date. You cannot pay premiums after the original Maturity Date unless
necessary to prevent lapse of the Policy. All Policy riders (except the extended
maturity endorsement) terminate on the original Maturity Date.
The tax consequences of the endorsement are unclear, and you should consult
a tax advisor about them. For more information about the extended maturity
option, contact us or your registered representative.
CASH VALUE
Your Policy's total cash value includes its cash value in the Variable
Account and in the Fixed Account. If you have a Policy loan, the cash value also
includes the amount we hold in our general account as a result of the loan. The
cash value reflects:
-- net premium payments
-- the net investment experience of the Policy's sub-accounts
-- interest credited to cash value in the Fixed Account
-- interest credited to amounts held in the general account for a Policy
loan
-- the death benefit option you choose
-- Policy charges
-- partial surrenders
-- transfers among the sub-accounts and Fixed Account
We pay you the NET cash value if you surrender the Policy. It equals the
cash value minus any outstanding Policy loan (plus interest) and any Surrender
Charge that applies. We add to the net cash value the cost of insurance charge
for the remainder of the month. If you surrender in the grace period, we reduce
the net cash value by the Monthly Deduction that applies to the date of
surrender. (See "Loan Provision", "Surrender Charge", and "Monthly Deduction
from Cash Value".)
The Policy's cash value in the Variable Account may increase or decrease
daily depending on net investment experience. Poor investment experience can
reduce the cash value to zero. YOU HAVE THE ENTIRE INVESTMENT RISK FOR THE CASH
VALUE IN THE VARIABLE ACCOUNT.
NET INVESTMENT EXPERIENCE
The net investment experience of the Sub-Accounts affects the Policy's cash
value and, in some cases, the death benefit. We determine the net investment
experience of each Sub-Account as of the close of regular trading on the New
York Stock Exchange on each day when the Exchange is open for trading.
A Sub-Account's net investment experience for any period is based on the
investment experience of the underlying Eligible Fund shares for the same
period, reduced by the charges against the Sub-Account (currently only the
mortality and expense risk charge) for that period.
The investment experience of the Eligible Fund shares for any period is the
increase or decrease in their net asset value for the period, increased by the
amount of any dividends or capital gains distributions on the shares during the
period. Dividends and capital gains distributions on Eligible Fund shares are
reinvested in additional shares of the Eligible Fund.
ALLOCATION OF NET PREMIUMS
Your cash value is held in the general account of NELICO or an affiliate
until we issue the Policy. We credit the first net premium with net investment
experience equal to that of the Zenith Back Bay Money Market Sub-Account from
the investment start date until the later of 45 days after the date Part I of
the application is signed or 10 days after we mail the Notice of Withdrawal
Right. (The "investment start date" is defined below.) Then, we allocate the
cash value to the Sub-Accounts and/or the Fixed Account as you choose. You can
allocate to a maximum of ten accounts (including the Fixed Account) at any one
time.
AMOUNT PROVIDED FOR INVESTMENT UNDER THE POLICY
INVESTMENT START DATE. The investment start date is the latest of: the date
when we first receive a premium payment for the Policy, the date Part II of the
Policy application is signed (if any is required) and the Policy Date. (For this
purpose, receipt of the premium payment means receipt by your registered
representative, if the payment is made with the application; otherwise, it means
receipt by the Home Office or by a NELICO agency if earlier.)
PREMIUM WITH APPLICATION. If you make a premium payment with the
application, the Policy Date is generally the later of the date Part II (if any)
of the application is signed and receipt of the premium payment. In that case,
the Policy Date and investment start date are the same. The amount of premium
paid with the application must be at least 10% of the annual Planned Premium for
the Policy. You may only make one premium payment before the Policy is issued.
A-13
<PAGE> 19
If you make a premium payment with the application, we will cover the
insured under a temporary insurance agreement for a limited period that usually
begins when we receive the premium for the Policy (or, if later, on the date
when Part II of the application is signed). The maximum temporary coverage is
the lesser of the amount of insurance applied for and $500,000 for standard and
preferred risks ($250,000 for substandard risks and $50,000 for persons who are
determined to be uninsurable). These provisions vary in some states.
If we issue a Policy, Monthly Deductions begin from the Policy Date, even if
we delayed the Policy's issuance for underwriting. The deductions are for the
face amount of the Policy issued, even if the temporary insurance coverage
during underwriting was for a lower amount. If we decline an application, we
refund the premium payment made.
PREMIUM ON DELIVERY. If you pay the initial premium on delivery of the
Policy, the Policy Date is usually five days after issue. The investment start
date is the later of the Policy Date and the date we received the premium.
Monthly Deductions begin on the Policy Date. We credit interest at a 4% net rate
on the net Minimum Premium (see "Premiums") for any period between the Policy
Date and the investment start date. Insurance coverage under the Policy begins
when we receive the Minimum Premium due for the first quarter (or on receipt of
the number of monthly payments due under NELICO's Master Service Account
arrangement.)
BACKDATING. We may sometimes backdate a Policy, if you request, by
assigning a Policy Date earlier than the date the application is signed. You may
wish to backdate so that you can obtain lower cost of insurance rates, based on
a younger insurance age. Backdating in some cases causes a higher Surrender
Charge if it results in the Surrender Charge being based on a lower age bracket.
(See "Surrender Charge".) For a backdated Policy, you must also pay the Minimum
Premium payable for the period between the Policy Date and the investment start
date. As of the investment start date, we allocate to the Policy those net
premiums, adjusted for monthly Policy charges and interest at a 4% net rate for
that period.
RIGHT TO RETURN THE POLICY
You may cancel the Policy within 45 days after the date Part 1 of the
application is signed, within 10 days (more in some states) after you receive
the Policy or within 10 days after we mail the Notice of Withdrawal Right,
whichever is latest. You may return the Policy to us or your registered
representative. Insurance coverage ends as soon as you return the Policy
(determined by postmark, if the Policy is mailed). If you cancel the Policy, we
refund any premiums paid (or any other amount that is required by state
insurance law).
STATE VARIATIONS
Certain Policy features, such as the "Right to Return the Policy", may vary
by state. You should read the Policy carefully for any variations in your state.
CHARGES AND EXPENSES
The amount of a charge may not necessarily correspond to the costs of the
services or benefits that are implied by the name of the charge or that are
associated with the particular Policy. For example, the sales charge and
Deferred Sales Charge may not fully cover all of our sales and distribution
expenses, and we may use proceeds from other charges, including the mortality
and expense risk charge, to help cover those expenses. We can profit from
certain Policy charges.
DEDUCTIONS FROM PREMIUMS
We deduct a 4% sales charge from premiums.
The sales charge is 3% rather than 4% for:
-- Policies used in a business situation (defined in "Availability of the
Policy") or a tax-qualified pension plan where either (1) the average
face amount is at least $500,000 or (2) the Policies are issued on the
lives of at least 25 persons and the average face amount is at least
$250,000.
-- All other Policies with a face amount of at least $500,000.
For this purpose, the face amount includes the face amount of any Level Term
Insurance Rider.
During the first 11 Policy years (less for older insureds), if you surrender
or lapse the Policy, reduce the face amount or make a partial surrender that
reduces the face amount, a Deferred Sales Charge also applies. (See "Surrender
Charge" below.)
We may reduce sales charges for Policies sold to some group or sponsored
arrangements. We offer a program under which you may exchange certain
fixed-benefit life insurance policies that New England Mutual or NELICO issued
for the Policies without a deduction for the sales charge, state premium tax and
federal premium tax charges (see below) from the amount of cash value that you
transfer to the Policy. Eligibility conditions apply. Your registered
representative can advise you regarding terms and availability of the program.
A-14
<PAGE> 20
STATE PREMIUM TAX CHARGE. We deduct 2.5% from each premium for state
premium taxes and administrative expenses. Premium taxes vary from state to
state and the 2.5% charge reflects an average. Administrative expenses covered
by this charge include those related to premium tax and certain other state
filings.
FEDERAL PREMIUM TAX CHARGE. We deduct 1% from each premium for our federal
income tax liability related to premiums.
EXAMPLE: The following chart shows the net amount that we would allocate to
the Variable Account assuming a premium payment of $2,000.
<TABLE>
<CAPTION>
NET
PREMIUM PREMIUM
------- -------
<C> <C> <S>
$2,000 $2,000
- 150 (7.5% X 2,000 = total sales and premium tax charge)
-------
$1,850 Net Premium
</TABLE>
SURRENDER CHARGE
If, during the first eleven policy years, you surrender or lapse your
Policy, reduce the face amount, or make a partial surrender that reduces the
face amount, then we will deduct a Surrender Charge from the cash value. (For
insureds whose issue age is 66 to 75 at issue of the Policy, the Surrender
Charge period is nine years, and for insureds whose issue age is 76 to 85, five
years.) The Surrender Charge includes a Deferred Sales Charge and a Deferred
Administrative Charge. The maximum Surrender Charge is shown in your Policy.
DEFERRED SALES CHARGE. We base the Deferred Sales Charge on a percentage of
the Target Premium. The Target Premium varies by issue age, sex and underwriting
class of the insured and the Policy's face amount. (To determine the Target
Premium, we use the smoker and nonsmoker aggregate classes for all standard
smokers and nonsmokers. See "Monthly Charges for the Cost of Insurance" below.)
For Policies on insureds whose issue age is 55 or less at issue, the
Deferred Sales Charge that applies during the first Policy year is equal to 55%
of premiums paid up to one Target Premium. The Deferred Sales Charge during the
second through fifth Policy years is equal to 72% of premiums paid up to one
Target Premium. After the fifth Policy year, the maximum Deferred Sales Charge
declines on a monthly basis until it reaches 0% in the last month of the
eleventh Policy year. The charge will never exceed 72% of one Target Premium.
EXAMPLES -- DEFERRED SALES CHARGES
<TABLE>
<CAPTION>
HYPOTHETICAL MAXIMUM DEFERRED
INSURED TARGET PREMIUM SALES CHARGE
------- --------------------------- ----------------
<S> <C> <C>
Male, Age 40 3,785.00 2,725.20
Nonsmoker Preferred
Face Amount $500,000
Female, Age 45 1,101.00 792.72
Smoker Preferred
Face Amount $100,000
Male, Age 55 22,910.00 16,495.23
Smoker Standard
Face Amount $1,000,000
</TABLE>
A-15
<PAGE> 21
The table below shows the maximum Deferred Sales Charge that applies to
Policies covering insureds whose issue age is 55 or less at issue. The table
shows the charge that applies if the lapse, surrender or face reduction occurs
at the end of each of the Policy years shown.
<TABLE>
<CAPTION>
THE MAXIMUM DEFERRED
FOR POLICIES WHICH ARE SALES CHARGE IS THE FOLLOWING
SURRENDERED, LAPSED OR PERCENTAGE OF ONE TARGET
REDUCED DURING PREMIUM
---------------------- -----------------------------
<S> <C> <C>
Entire Policy Year 1 55%
2 72%
3 72%
4 72%
5 72%
Last Month of Policy Years 6 60%
7 48%
8 36%
9 24%
10 12%
11 0%
</TABLE>
For insureds whose issue age is above 55 at issue, the Deferred Sales Charge
percentages are less than or equal to those described above, with the maximum
charge occurring in Policy years one through five for insureds with an issue age
up through 65, in Policy years one through four for insureds with an issue age
from 66 through 75, and in Policy years one and two for insureds with an issue
age above 75.
In the case of a partial surrender or reduction in face amount, we deduct
any Deferred Sales Charge that applies from the Policy's remaining cash value in
an amount that is proportional to the amount of the Policy's face amount
surrendered. (See "Partial Surrender".) The charge reduces the Policy's cash
value in the Sub-Accounts and the Fixed Account in proportion to the amount of
the Policy's cash value in each.
DEFERRED ADMINISTRATIVE CHARGE. The table below shows the Deferred
Administrative Charge deducted if you totally or partially surrender, lapse or
reduce the face amount of the Policy during the first eleven Policy years.
<TABLE>
<CAPTION>
FOR POLICIES WHICH ARE
SURRENDERED, LAPSED DEFERRED ADMINISTRATIVE
OR REDUCED DURING THE CHARGE PER $1,000 OF
POLICY YEAR SHOWN BASE POLICY FACE AMOUNT
---------------------- -----------------------
<S> <C> <C>
Entire Policy year 1 $2.50
Last Month of Policy Year* 2 2.25
3 2.00
4 1.75
5 1.50
6 1.25
7 1.00
8 0.75
9 0.50
10 0.25
11 0.00
</TABLE>
------------
* The charge declines monthly after the end of the first Policy year.
For insureds whose issue age is above 65 at issue, the Deferred
Administrative Charge is less than or equal to that in the table above.
MONTHLY DEDUCTION FROM CASH VALUE
On the first day of each Policy month, starting with the Policy Date, we
deduct the "Monthly Deduction" from your cash value.
-- If your Policy is protected against lapse by the five year Minimum
Premium guarantee, we make the Monthly Deduction each month unless the
cash value equals zero. (See "Premiums".)
-- If the five year Minimum Premium guarantee is not in effect, we make the
Monthly Deduction as long as the net cash value is large enough to cover
the entire Monthly Deduction. If it is not large enough, the Policy will
be in default and may lapse. (See "Lapse and Reinstatement".)
A-16
<PAGE> 22
The Monthly Deduction reduces the cash value in each Sub-Account of the
Variable Account and in the Fixed Account in proportion to the cash value in
each.
The Monthly Deduction includes the following charges:
POLICY FEE. The Policy fee is currently equal to $15.00 per month in the
first Policy year and $5.00 per month thereafter (guaranteed not to exceed
$15.00 per month in the first Policy year and $7.00 per month thereafter). The
Policy fee is currently $6.00 per month rather than $5.00 after the first Policy
year for Policies sold to tax-qualified pension plans.
ADMINISTRATIVE CHARGE. The Administrative Charge is currently equal to
$0.08 per $1,000 of base Policy face amount per month in the first Policy year
and $0.02 per $1,000 of base Policy face amount per month thereafter (guaranteed
not to exceed $0.08 per $1,000 of base face amount per month in the first Policy
year and $0.04 per $1,000 of base face amount per month thereafter). For
tax-qualified pension plans the monthly administrative charge after the first
Policy year is currently $0.03 per $1,000 of face amount per month rather than
$0.02.
Currently we intend not to charge more than $40 per month ($60 for
tax-qualified pension plans) for the Administrative Charge after the first
Policy year. This means that after the first year the charge will not apply to
the portion of a Policy's face amount above $2 million.
MONTHLY CHARGES FOR THE COST OF INSURANCE. This charge covers the cost of
providing insurance protection under your Policy. The cost of insurance charge
for a Policy month is equal to the "amount at risk" under the Policy, multiplied
by the cost of insurance rate for that Policy month. We determine the amount at
risk on the first day of the Policy month after we process the Monthly
Deduction. The amount at risk is the amount by which the death benefit
(discounted at the monthly equivalent of 4% per year) exceeds the Policy's cash
value. The cost of insurance rate for your Policy changes from month to month.
The guaranteed cost of insurance rates for a Policy depend on the insured's
-- underwriting class
-- age on the first day of the Policy year
-- sex (if the Policy is sex-based).
The current cost of insurance rates will also depend on
-- the insured's age at issue
-- the Policy year
-- the face amount, including Level Term Insurance (for Policies not sold
in a business situation or to a tax-qualified pension plan)
-- the average face amount (including Level Term Insurance) sold to the
group and possibly the number of lives in the group (for Policies sold
in a business situation or to a tax-qualified pension plan).
We guarantee that the rates for underwritten Policies will not be higher
than rates based on
-- the 1980 Commissioners Standard Ordinary Mortality Tables (the "1980 CSO
Tables") with smoker/nonsmoker modifications, for Policies issued on
non-juvenile insureds (age 20 and above at issue)
-- the 1980 CSO Tables, for Policies issued on juvenile insureds (below age
20 at issue).
The actual rates we use may be lower than the maximum rates, depending on
our expectations about our future mortality and expense experience, lapse rates
and investment earnings. We review the adequacy of our cost of insurance rates
periodically and may adjust them. Any change will apply prospectively.
The underwriting classes we use are
-- for Policies issued on non-juvenile insureds: smoker preferred, smoker
standard, smoker aggregate, smoker substandard, nonsmoker preferred,
nonsmoker standard, nonsmoker aggregate, nonsmoker substandard,
automatic issue smoker and automatic issue nonsmoker
-- for Policies issued on juvenile insureds: standard and substandard.
Substandard and automatic issue ratings result in higher cost of insurance
deductions. We base the guaranteed maximum mortality charges for substandard
ratings on multiples of the 1980 CSO Tables. (See below for a discussion of
automatic issue Policies.)
A-17
<PAGE> 23
The three standard smoker and nonsmoker classes are available for
underwritten Policies as follows:
-- smoker and nonsmoker preferred and standard, for Policies with face
amounts (including any Level Term Insurance Rider) of $100,000 or more
where the issue age is 20 through 75
-- smoker and nonsmoker aggregate, for Policies with face amounts
(including any Level Term Insurance Rider) below $100,000 and for all
Policies where the issue age is above 75.
Within each standard category (smoker and nonsmoker), the preferred class
generally offers the best current cost of insurance rates and the standard class
generally offers the least favorable current cost of insurance rates.
Cost of insurance rates are generally lower for nonsmokers than for smokers
and generally lower for females than for males. Within a given underwriting
class, cost of insurance rates are generally lower for insureds with lower issue
ages. Where required by state law, and for Policies sold in connection with some
employee benefit plans, cost of insurance rates (and Policy values and benefits)
do not vary based on the sex of the insured. Within a given underwriting class,
different current cost of insurance rates will apply if the Policy is sold to a
tax-qualified pension plan.
Currently, the face amount of a Policy or the average Policy face amount for
a group may affect a Policy's cost of insurance rates. The current cost of
insurance rates generally will be more favorable for a particular insured if:
-- For a Policy not used in a business situation or in a tax-qualified
pension plan, the face amount (including any Level Term Insurance Rider)
is at least $500,000.
-- For a Policy used in a business situation or in a tax-qualified pension
plan, either (1) the average face amount (including Level Term
Insurance) is at least $500,000, or (2) the Policies are issued on the
lives of at least 25 persons and the average face amount (including
Level Term Insurance) is at least $250,000.
We may offer Policies on an automatic issue basis to certain group or
sponsored arrangements. We issue these Policies up to predetermined face amount
limits. Because we issue these Policies based on minimal underwriting
information, they may present a greater mortality cost to us than Policies in a
standard class. Therefore, these Policies have their own cost of insurance
rates. The automatic issue cost of insurance rates vary based on the same
factors that determine underwritten cost of insurance rates, except that the
preferred smoker and nonsmoker classes are not available. The cost of insurance
rates are guaranteed not to exceed 150% of the 1980 CSO (unisex) Tables (with
smoker/nonsmoker modifications for non-juvenile insureds.) Generally the current
automatic issue rates will exceed current cost of insurance rates for a
comparable underwritten Policy.
Some group or sponsored arrangements may be eligible to purchase Policies on
a simplified underwriting basis. They may elect simplified underwriting instead
of automatic issue or for amounts of insurance above our automatic issue limits.
However, they may not choose automatic issue for some members of the group and
simplified underwriting for others. There is no extra insurance charge for
Policies issued on a simplified underwriting basis. The preferred smoker and
nonsmoker classes are not available for these Policies.
CHARGES FOR ADDITIONAL BENEFITS AND SERVICES. We charge for the cost of any
additional rider benefits as described in the rider form. We also may charge you
a nominal fee, which we will bill directly to you, if you request a Policy
re-issue or re-dating.
CHARGES AGAINST THE ELIGIBLE FUNDS AND THE SUB-ACCOUNTS OF THE VARIABLE ACCOUNT
MORTALITY AND EXPENSE RISK CHARGE. We charge the Sub-Accounts of the
Variable Account for our mortality and expense risks.
Currently, the charge is made daily at an annual rate of .25% of the
Sub-Accounts' assets. The charge is reduced to an annual rate of .20% for:
-- A Policy not used in a business situation or in a tax-qualified pension
plan which has a face amount (including any Level Term Insurance Rider)
of at least $500,000;
-- A Policy used in a business situation or in a tax-qualified pension plan
where either (1) the average face amount (including Level Term Insurance)
is at least $500,000 or (2) the Policies are issued on the lives of at
least 25 persons and the average face amount (including Level Term
Insurance) is at least $250,000.
We have the right to increase the charge, up to a maximum annual rate of .50%.
The mortality risk we assume is that insureds may live for shorter periods of
time than we estimated. The expense risk is that our costs of issuing and
administering the Policies may be more than we estimated.
A-18
<PAGE> 24
CHARGES FOR INCOME TAXES. We currently do not charge the Variable Account
for income taxes, but in the future we may make such a charge, if appropriate.
We have the right to make a charge for any taxes imposed on the Policies in the
future. (See "Charge for NELICO's Income Taxes".)
ELIGIBLE FUND EXPENSES. Charges for investment advisory fees and other
expenses are deducted from the assets of the Eligible Funds. See the "Policy
Charges" section under "Introduction to the Policies".
GROUP OR SPONSORED ARRANGEMENTS
We may issue the Policies to group or sponsored arrangements, as well as on
an individual basis. A "group arrangement" includes a situation where a trustee,
employer or similar entity purchases individual Policies covering a group of
individuals. Examples of such arrangements are tax-qualified pension plans and
non-tax qualified deferred compensation plans. A "sponsored arrangement"
includes a situation where an employer or an association permits group
solicitation of its employees or members for the purchase of individual
Policies.
We may waive, reduce or vary any Policy charges under Policies sold to a
group or sponsored arrangement. We may also raise the interest rate credited to
loaned amounts under these Policies. The amount of the variations and our
eligibility rules may change from time to time. In general, they reflect cost
savings over time that we anticipate for Policies sold to the eligible group or
sponsored arrangements and relate to objective factors such as the size of the
group, its stability, the purpose of the funding arrangement and characteristics
of the group members. These variations of charges do not apply to Policies sold
in New York other than Policies sold to non-tax qualified deferred compensation
plans of various types. Consult your registered representative for any
variations that may be available and appropriate for your case.
The United States Supreme Court has ruled that insurance policies with
values and benefits that vary with the sex of the insured may not be used to
fund certain employee benefit programs. Therefore, we offer Policies that do not
vary based on the sex of the insured to certain employee benefit programs. We
recommend that employers consult an attorney before offering or purchasing the
Policies in connection with an employee benefit program.
PREMIUMS
FLEXIBLE PREMIUMS
Within limits, you choose the amount and frequency of premium payments. You
select a Planned Premium schedule, which is a level amount. This schedule
appears in your Policy. YOUR PLANNED PREMIUMS WILL NOT NECESSARILY KEEP YOUR
POLICY IN FORCE. You may skip Planned Premium payments or make additional
payments. Additional payments could be subject to underwriting. No payment can
be less than $25 ($10 for payments made through the Master Service Account,
described below, or certain other monthly payment arrangements). We limit the
total of Planned Premiums and other payments to our published maximum.
You can pay Planned Premiums on an annual, semi-annual or quarterly schedule
or, with our consent, monthly. You can change your Planned Premium schedule by
sending your request to us. However, you cannot increase the amount of your
Planned Premium unless we consent, and we may require underwriting.
You may make payments by check or money order. We will send premium notices
for annual, semi-annual or quarterly Planned Premiums. You may also choose to
have us withdraw your premium payments from your bank checking account or Nvest
Cash Management Trust account. (This is known as the Master Service Account
arrangement.)
Federal tax law limits the amount of premiums that you can pay under the
Policy. In addition, if any payments under the Policy exceed the "7-pay test"
under Federal tax law, your Policy will become a "modified endowment contract"
and you may have more adverse tax consequences with respect to certain
distributions than would otherwise be the case if premium payments did not
exceed the "7-pay test". (See "Tax Considerations".) You need our consent if,
because of tax law requirements, a payment would increase the Policy's death
benefit by more than it would increase cash value. We may require evidence of
insurability before accepting the payment.
We allocate net payments to your Policy's Sub-Accounts as of the date we
receive the payment. (See "Receipt of Communications and Payments at NELICO's
Home Office".)
Under our current processing, we treat a payment first as a Planned Premium,
second as repayment of Policy loan interest due, and last as an unscheduled
payment, unless you instruct us otherwise in writing. (For Policies issued in
New York, we treat a payment as a Planned Premium when a Policy loan is
outstanding only if the payment is in the exact amount of the Planned Premium
next due; otherwise, we treat it first as repayment of Policy loan interest due,
second as a Planned Premium, and last as an unscheduled payment.) We do not
treat a payment as repayment of a Policy loan unless you instruct us to.
A-19
<PAGE> 25
If you have a Policy loan, it may be better to repay the loan than to make a
premium payment, because the premium payment is subject to sales and tax
charges, whereas the loan repayment is not subject to any charges. (See "Loan
Provision" and "Deductions from Premiums".)
You can protect your Policy against lapse during the first five Policy years
by paying a Minimum Premium.
MINIMUM PREMIUMS. In general, if you pay the five-year Minimum Premium
amount on time, the Policy will not lapse even if the net cash value is less
than the Monthly Deduction in any month. If (a) the total premiums you have
paid, less all partial surrenders and any outstanding Policy loan balance, at
least equal (b) the total monthly Minimum Premiums for the Policy up to that
Policy month, the Policy will not lapse. The guarantee will not apply if you
substitute the insured or reinstate the Policy. We recalculate the Minimum
Premium if (1) you reduce the face amount or make a partial surrender that
reduces the face amount, (2) you increase or decrease rider coverage, or (3) the
rating classification for your Policy is improved. We base the Minimum Premium
amount (shown in your Policy) on your Policy's face amount, the age, sex (unless
unisex rates apply) and underwriting class of the insured, current Policy
charges and any riders to the Policy.
Under Policies issued in New Jersey, if you have met the requirements for
the five-year Minimum Premium death benefit guarantee at the end of the five
year guarantee period, the Minimum Premium death benefit guarantee will continue
to apply during the sixth Policy year as long as (a) payments made during that
Policy year, less partial surrenders and loans made in that year, equal (b) the
guaranteed maximum Policy charges plus the applicable Surrender Charge for the
sixth Policy year.
LAPSE AND REINSTATEMENT
LAPSE. Unless your Policy is protected by the five-year Minimum Premium
guarantee, any month that your Policy's net cash value is not large enough to
cover a Monthly Deduction, your Policy will be in default. Your Policy provides
a 62 day grace period for payment of a premium large enough to pay the amount
due. The amount due is the lesser of: a premium large enough to cover the
Monthly Deduction and all deductions from the premium; and a premium large
enough to permit the five-year Minimum Premium death benefit to be in effect. We
will tell you the amount due. You have insurance coverage during the grace
period, but if the insured dies before you have paid the premium, we deduct from
the death proceeds the amount due for the period before the date of death. If
you have not paid the required premium by the end of the grace period, your
Policy will lapse without value.
REINSTATEMENT. If your Policy has lapsed, you may reinstate it within seven
years after the date of lapse. If more than seven years have passed, or if you
have surrendered the Policy, you need our consent to reinstate. Reinstatement in
all cases requires payment of certain charges described in the Policy and
usually requires evidence of insurability that is satisfactory to us.
If we deducted a Surrender Charge on lapse, we credit it back to the
Policy's cash value on reinstatement. The Surrender Charge on the date of
reinstatement is the same as it was on the date of lapse. When we determine the
Surrender Charge and other charges that vary by duration of the Policy (unlike,
for example, cost of insurance charges that vary by age of the insured), we do
not count the amount of time that a Policy was lapsed.
OTHER POLICY FEATURES
INCREASE IN FACE AMOUNT
The Policy provides that, after the first Policy year, you may increase the
face amount. Currently, we administer requests for increases in face amount by
issuing a new Policy with a face amount equal to the requested increase in face
amount (an "Increase Policy"). Under Increase Policies, we generally waive the
monthly Policy Fee; we usually base the monthly administrative charge on the
Policy year of the initial Policy; the minimum required face amount for an
Increase Policy is $25,000; and you may reduce the face amount of the Increase
Policy to below $25,000. Otherwise, an Increase Policy is subject to the same
terms and conditions as Policies we are currently issuing at the time of the
increase unless we are required to issue a Policy with the same terms and
conditions as the Policy you purchased.
We may in the future administer face amount increases as increases in the
face amount of the initial Policy. A maximum Face Amount Increase Administrative
Charge of $2.50 per $1,000 of the face amount increase will apply to each
increase when it takes effect. Certain terms and conditions will apply to
increases in face amount, as outlined in the Policy. A separate Target Premium
amount will apply to the face amount increase, based on the insured's age and
underwriting class at the time of the increase. The Policy's Surrender Charge
schedule will apply separately to each face amount segment, starting with the
effective date of the face amount segment. Monthly Deductions (including cost of
insurance charges) will be based on the increase in coverage and will reflect,
in whole or in part, any change in risk classification of the insured, according
to our rules. (See
A-20
<PAGE> 26
"Charges and Expenses".) An increase in face amount may have tax consequences.
You should consult a tax advisor before increasing the face amount.
When increases in the face amount of the initial Policy are available, we
will give Policy Owners who have purchased Increase Policies an opportunity to
consolidate coverage under initial and Increase Policies. The Face Amount
Increase Administrative Charge will not apply to the consolidation.
Consolidation of coverage may raise issues under federal tax law. You should
consult a tax advisor before requesting a consolidation.
For Policies issued in some business situations on an automatic issue basis,
we may offer annual face amount increases which are related to increases in
salary or which are based on a fixed annual percentage (the "Salary Refresh"
program). We determine limits on the annual and/or total amount of face
increases per Policy that we will permit on an automatic issue basis at issue.
Increases over this limit will require underwriting. The Salary Refresh program
is not available for Policies with the Option 2 death benefit.
We may also offer the Salary Refresh program for Policies issued on an
underwritten basis in some business situations. Any Salary Refresh face amount
increases under these Policies are underwritten in connection with the
application for the initial face amount of the Policies, and are subject to
limits that we determine at that time.
The terms and conditions of the Salary Refresh program are contained in our
published rules which are furnished at the time of application.
LOAN PROVISION
You may borrow all or part of the Policy's "loan value" at any time after
the Right to Return the Policy period. We make the loan as of the date when we
receive a loan request. (See "Receipt of Communications and Payments at NELICO's
Home Office".) You should contact our Home Office or your registered
representative for information on loan procedures.
The Policy's loan value equals:
(i) 90% (or more if required by state law) of the Policy's "projected cash
value"; minus
(ii) the Policy's Surrender Charge on the next Planned Premium due date
or, if greater, on the date the loan is made; minus
(iii) loan interest to the next loan interest due date.
The "projected cash value" is the cash value projected to the next Policy
anniversary or, if earlier, to the next Planned Premium due date, at a 4% rate
and using current Policy charges. The loan value available is reduced by any
outstanding loan plus interest. We currently intend to base the loan value on
100% of the Policy's projected cash value, rather than 90%, for Policy years 16
and after.
EXAMPLE: Using the Policy illustrated on page A-40 assume that the Policy's
Planned Premiums have been paid and that the Policy's Sub-Accounts have earned a
constant 6% hypothetical gross annual rate of return (equal to a constant net
annual rate of return of 4.95%). After the premium payment on the 10th Policy
anniversary, the maximum amount that you could borrow would be determined as
follows under (i) an annual premium payment schedule and (ii) a quarterly
premium payment schedule:
<TABLE>
<CAPTION>
ANNUAL QUARTERLY
------- ---------
<S> <C> <C>
(1) Cash Value after Premium Payment on 10th Policy
Anniversary............................................... $15,494 $14,439
(2) Cash Value Projected at a Constant Annual Rate of
Return of 4% to the
(a) 11th Policy Anniversary............................ 15,911
(b) Next Planned Premium Due Date...................... 14,531
(3) 90% of Amount Calculated in (2)........................ 14,320 13,078
(4) Amount Calculated in (3), Reduced by the Applicable
Surrender Charge.......................................... 14,214 12,972
(5) Amount Calculated in (4), Reduced by Loan Interest to
the Next Interest Due Date................................ 13,473 12,296
</TABLE>
A Policy loan reduces the Policy's cash value in the Sub-Accounts by the
amount of the loan. A loan repayment increases the cash value in the
Sub-Accounts by the amount of the repayment. Unless you request otherwise, we
attribute Policy loans first to the Sub-Accounts of the Variable Account in
proportion to the cash value in each, and then the Fixed Account. We allocate
loan repayments first to the outstanding loan balance attributed to the Fixed
Account and then to the Sub-Accounts of the Variable Account in proportion to
the cash value in each.
A-21
<PAGE> 27
The interest rate charged on Policy loans is an effective rate of 5.5% per
year (using simple interest during the year). Interest accrues daily and is due
on the Policy anniversary. If not paid at that time, we add the interest accrued
to the loan amount, and we deduct an amount equal to the unpaid interest from
the Policy's cash value in the Sub-Accounts and the Fixed Account in proportion
to the amount in each. The amount we take from the Policy's Sub-Accounts as a
result of the loan earns interest (compounded daily) at an effective rate of not
less than 4% per year. The rate we currently credit is 4% per year for the first
15 Policy years, 5.25% for Policy years 16 through 25, and 5.40% thereafter.
(You should consult a tax advisor as to the tax consequences associated with a
Policy loan outstanding after the first 15 Policy years.) We credit this
interest amount to the Policy's Sub-Accounts annually, in proportion to the cash
value in each.
The amount taken from the Policy's Sub-Accounts as a result of a loan does
not participate in the investment experience of the Sub-Accounts. Therefore,
loans can permanently affect the death benefit and cash value of the Policy,
even if repaid. In addition, we reduce any proceeds payable under a Policy by
the amount of any outstanding loan plus accrued interest.
If a Policy loan is outstanding, it may be better to repay the loan than to
pay a premium, because the payment is subject to sales and premium tax charges,
and the loan repayment is not subject to charges. (See "Deductions from
Premiums".)
If Policy loans plus accrued interest at any time exceed the Policy's cash
value less the Surrender Charge on the next Policy loan interest due date (or,
if the Surrender Charge would be greater, on the date the calculation is made),
we notify you that the Policy is going to terminate. (This is called an "excess
Policy loan". We test for an excess Policy loan on each monthly processing date
and in connection with other Policy processing transactions.) The Policy
terminates without value 62 days after we mail the notice unless you pay us the
excess Policy loan amount within that time. If the Policy lapses with a loan
outstanding, adverse tax consequences may result. If your Policy is a "modified
endowment contract", loans under your Policy may be treated as taxable
distributions. (See "Tax Considerations" below.)
Department of Labor regulations impose requirements for participant loans
under tax-qualified pension plans. Therefore, plan loan provisions may differ
from Policy loan provisions. See "Tax Considerations".
SURRENDER
You may surrender a Policy for its net cash value at any time while the
insured is living. We determine the net cash value of the surrendered Policy as
of the date when we receive the surrender request. The net cash value equals the
cash value reduced by any Policy loan and accrued interest and by any applicable
Surrender Charge. (See "Surrender Charge".) We increase the net cash value paid
on surrender by the portion of any cost of insurance charge we deducted for the
period beyond the date of surrender. If you surrender the Policy during the
grace period, we reduce the net cash value by an amount to cover the Monthly
Deduction to the date of surrender. You may apply all or part of the net cash
value to a payment option. (See "Payment Options".) A surrender may result in
adverse tax consequences. (See "Tax Considerations" below.)
PARTIAL SURRENDER
You may make a partial surrender of the Policy after the Right to Return the
Policy period, to receive a portion of its net cash value. A partial surrender
reduces the Policy's death benefit and may reduce the Policy's face amount if
necessary so that the amount at risk under the Policy will not increase. Any
reduction in the face amount causes a proportionate reduction in the Policy's
Target Premium, on which we base any future Surrender Charges. A partial
surrender may also reduce rider benefits. We reserve the right to decline a
partial surrender request that would reduce the face amount below the Policy's
required minimum.
We have the right to limit partial surrenders in any one Policy year to 20%
of the Policy's net cash value on the date of the first partial surrender for
the Policy year or, if less, the Policy's available loan value. Currently, we
permit partial surrenders of up to 75% of the Policy's net cash value per year,
if there is sufficient available loan value. (In some business situations or for
some tax-qualified pension plans we may permit you to withdraw a higher
percentage of the net cash value.)
We deduct any Surrender Charge that applies to the partial surrender from
the Policy's remaining cash value in an amount proportional to the amount of the
Policy's face amount surrendered. The Surrender Charge applied reduces any
remaining Surrender Charge that can be applied under your Policy.
You may not reinvest cash value paid upon partial surrender in the Policy
except as premium payments, which are subject to the charges described under
"Deductions From Premiums".
A partial surrender first reduces the Policy's cash value in the
Sub-Accounts of the Variable Account, in proportion to the amount of cash value
in each, and then the Fixed Account, unless you request otherwise. (See "The
Fixed Account" below.) We determine the amount of net cash value paid upon
partial surrender as of the date when we receive a request. You can contact your
registered representative or the Home Office for information on partial
surrender procedures.
A-22
<PAGE> 28
A reduction in the death benefit as a result of a partial surrender may
create a "modified endowment contract" or have other adverse tax consequences.
If you are contemplating a partial surrender, you should consult your tax
advisor regarding the tax consequences. (See "Tax Considerations".)
REDUCTION IN FACE AMOUNT
You may reduce the face amount of your Policy without receiving a
distribution of any Policy cash value. (This feature differs from a partial
surrender, which pays a portion of the Policy's net cash value to you.)
If you decrease the face amount of your Policy, we also decrease the Target
Premium, on which we base any future Surrender Charges. We deduct any Surrender
Charge that applies from the Policy's cash value when you reduce its face
amount.
A face amount reduction usually decreases the Policy's death benefit.
(However, if we are increasing the death benefit to satisfy federal income tax
laws, a face amount reduction will not decrease the death benefit unless we
deducted a Surrender Charge from the cash value. A reduction in face amount in
this situation may not be advisable because it will not reduce your death
benefit or cost of insurance charges and may result in a Surrender Charge.) We
also may decrease any rider benefits attached to the Policy. The face amount
remaining after a reduction must meet our minimum face amount requirements for
issue, except with our consent; special rules apply in business situations.
A reduction in face amount reduces the Federal tax law limits on the amount
of premiums that you can pay under the Policy. In these cases, you may need a
partial surrender of cash value to comply with Federal tax law.
A face amount reduction takes effect as of the date when we receive a
request. You can contact your registered representative or the Home Office for
information on face reduction procedures.
A reduction in the face amount of a Policy may create a "modified endowment
contract" or have other adverse tax consequences. If you are contemplating a
reduction in face amount, you should consult your tax advisor regarding the tax
consequences of the transaction. (See "Tax Considerations".)
INVESTMENT OPTIONS
You can allocate your Policy's premiums among the Sub-Accounts of the
Variable Account and the Fixed Account in any combination, as long as you choose
no more than 10 accounts (including the Fixed Account) at any one time. The
Policy provides that you must allocate a minimum of 10% of the premium to each
Sub-Account selected in whole percentages; currently we will permit you to
allocate any whole percentage to a Sub-Account. You can allocate your Policy's
cash value among no more than 10 accounts (including the Fixed Account) at any
one time.
You make the initial premium allocation when you apply for a Policy. You can
change the allocation of future premiums at any time thereafter. The change will
be effective for premiums applied on or after the date when we receive your
request. You may request the change by telephone or by written request. (See
"Receipt of Communications and Payments at NELICO's Home Office.")
See "Transfer Option" below for information on how to request a transfer or
reallocation by telephone.
TRANSFER OPTION
After the Right to Return the Policy period, you may transfer your Policy's
cash value between Sub-Accounts. We reserve the right to limit sub-account
transfers to four per Policy year (twelve per Policy year for Policies issued in
New York). Currently we do not limit the number of sub-account transfers per
Policy year. We reserve the right to make a charge for transfers in excess of
twelve in a Policy year. We treat all Sub-Account transfer requests made at the
same time as a single request. The transfer is effective as of the date when we
receive the transfer request. (See "Receipt of Communications and Payments at
NELICO's Home Office".) For special rules regarding transfers involving the
Fixed Account, see "The Fixed Account".
We did not design the Policy's transfer privilege to give you a way to
speculate on short-term market movements. To prevent excessive transfers that
could disrupt the management of the Eligible Funds and increase transaction
costs, we may adopt procedures to limit excessive transfer activity. For
example, we may impose conditions and limits on, or refuse to accept, transfer
requests that we receive from third parties. Third parties include investment
advisors or registered representatives acting under power(s) of attorney from
one or more Policy owners. In addition, the Metropolitan Series Fund, Inc. may
restrict or refuse purchases or redemptions of shares in its Portfolios as a
result of certain market timing activities. You should read the prospectuses of
these Eligible Funds for more details.
You may request a Sub-Account transfer or reallocation of future premiums by
written request (which may be telecopied) to us or by telephoning us. To request
a transfer or reallocation by telephone, you should contact your registered
representative or
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<PAGE> 29
contact us at 1-800-200-2214. We use reasonable procedures to confirm that
instructions communicated by telephone are genuine. Any telephone instructions
that we reasonably believe to be genuine are your responsibility, including
losses arising from any errors in the communication of instructions.
DOLLAR COST AVERAGING
We plan to offer an automated transfer privilege called dollar cost
averaging. The same dollar amount is transferred to selected Sub-Accounts
(and/or the Fixed Account) periodically. Over time, more purchases of Eligible
Fund shares are made when the value of those shares is low, and fewer shares are
purchased when the value is high. As a result, a lower than average cost of
purchases may be achieved over the long term. This plan of investing allows you
to take advantage of investment fluctuations, but does not assure a profit or
protect against a loss in declining markets.
Under this feature, you may request that a certain amount of your cash value
be transferred on any selected business day of each period (or if not a day when
the New York Stock Exchange is open, the next such day), from any one
Sub-Account to one or more of the other Sub-Accounts (and/or the Fixed Account).
We limit your allocation of cash value to no more than 10 accounts (including
the Fixed Account) at any one time. You must transfer a minimum of $100 to each
account that you select under this feature. If we exercise our right to limit
the number of transfers in the future, transfers made under the dollar cost
averaging program may count against the transfers allowed in a Policy year. You
can select a dollar cost averaging program when you apply for the Policy or at a
later date by contacting our Home Office. You may participate in the dollar cost
averaging program while you are participating in the asset rebalancing program
as long as the Sub-Account from which you are transferring cash value under the
dollar cost averaging program is not included in the asset rebalancing program.
(See "Asset Rebalancing" below). You can cancel your use of the dollar cost
averaging program at any time before a transfer date. Transfers will continue
until you notify us to stop or there no longer is sufficient cash value in the
Sub-Account from which you are transferring. There is no extra charge for this
feature.
Ask your registered representative about the availability of this feature.
ASSET REBALANCING
We plan to offer an asset rebalancing program for cash value. Cash value
allocated to the Sub-Accounts can be expected to increase or decrease at
different rates. An asset rebalancing program automatically reallocates your
cash value among the Sub-Accounts periodically to return the allocation to the
allocation percentages you specify. Asset rebalancing is intended to transfer
cash value from those Sub-Accounts that have increased in value to those that
have declined, or not increased as much, in value. Asset rebalancing does not
guarantee profits, nor does it assure that you will not have losses.
You can select an asset rebalancing program when you apply for the Policy or
at a later date by contacting our Home Office. You specify the percentage
allocations by which your cash value will be reallocated among the Sub-Accounts.
You may participate in the asset rebalancing program while you are participating
in the dollar cost averaging program as long as the Sub-Account from which you
are transferring cash value under the dollar cost averaging program is not
included in the asset rebalancing program. (See "Dollar Cost Averaging" above).
On the last day of each period on which the New York Stock Exchange is open, we
will transfer cash value among the Sub-Accounts as necessary to return the
allocation to your specifications. Asset rebalancing will continue until you
notify us in writing or by telephone at our Home Office. If we exercise our
right to limit the number of transfers in the future, transfers made under the
asset rebalancing program may count against the transfers allowed in a Policy
year. There is no extra charge for this feature.
Ask your registered representative about the availability of this feature.
SUBSTITUTION OF INSURED PERSON
Subject to state insurance department approval, we offer a rider benefit
that permits you to substitute the insured person under your Policy, if you
provide satisfactory evidence that the person proposed to be insured is
insurable. The right to substitute the insured person is subject to some
restrictions and may result in a cost or credit to you. This feature is not
available to tax-qualified pension plans. A substitution of the insured person
is a taxable exchange. In addition, a substitution of the insured person could
reduce the amount of premiums you can pay into the Policy under Federal tax law
and, therefore, may require a partial surrender of cash value. (No Surrender
Charge will apply.)
Your registered representative can provide current information on the
availability of the rider. You should consult your tax advisor before
substituting the insured person under your Policy.
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PAYMENT OF PROCEEDS
We ordinarily pay any net cash value, loan value or death benefit proceeds
from the Sub-Accounts within seven days after we receive a request, or
satisfactory proof of death of the insured (and any other information we need to
pay the death proceeds). (See "Receipt of Communications and Payments at
NELICO's Home Office".) However, we may delay payment (except when a loan is
made to pay a premium to us) or transfers from the Sub-Accounts: (i) if the New
York Stock Exchange is closed for other than weekends or holidays, or if trading
on the New York Stock Exchange is restricted, (ii) if the SEC determines that an
emergency exists that makes payments or Sub-Account transfers impractical, or
(iii) at any other time when the Eligible Funds or the Variable Account have the
legal right to suspend payment.
We may withhold payment of surrender or loan proceeds if those proceeds are
coming from a Policy Owner's check, or from a Master Service Account premium
transaction, which has not yet cleared. We may also delay payment while we
consider whether to contest the Policy. We pay interest on the death benefit
proceeds from the date they become payable to the date we pay them.
The beneficiary can elect our Total Control Account program for payment of
death proceeds at any time before we pay them. We establish a Total Control
Account at a banking institution at the time for payment. The Total Control
Account gives convenient access to the proceeds, which are maintained in our
general account or that of an affiliate, through checkbook privileges with the
bank.
Normally we promptly make payments of cash value, or of any loan value
available, from cash value in the Fixed Account. However, we may delay those
payments for up to six months. We pay interest in accordance with state
insurance law requirements on delayed payments.
24 MONTH RIGHT
GENERAL RIGHT. Generally, during the first 24 months after the Policy's
issue date, you may convert the Policy, or a portion of it, to fixed benefit
coverage by transferring all or a portion of your Policy's cash value, and
allocating all or a portion of future premiums, to the Fixed Account. The
request to convert to fixed benefit coverage must be in written form
satisfactory to us. Increase Policies have the same 24 Month Right.
You may exercise this privilege only once within 24 months after issue.
Transfers of cash value back to one or more Sub-Accounts of the Variable Account
are subject to the Policy's general limits on transfers from the Fixed Account
(see "The Fixed Account").
The Policy permits us to limit allocations to the Fixed Account under some
circumstances. (See "The Fixed Account.") If we limit such allocations and you
then wish to exercise the 24 Month Right, you may continue to allocate to the
Fixed Account only the percentage of premiums that you allocated to the Fixed
Account pursuant to your exercise of the 24 Month Right. In addition, if you
have exercised this right, and we later limit such allocations, then you may
continue to allocate to the Fixed Account only the lowest percentage of premiums
that you allocated to the Fixed Account at any time since your exercise of the
24 Month Right.
FOR POLICIES ISSUED IN MARYLAND AND NEW JERSEY. Under Policies issued in
Maryland and New Jersey, you can exchange the face amount of your Policy for a
fixed benefit life insurance policy provided that you repay any policy loans and
(1) the Policy has not lapsed and (2) the exchange is made within 24 months
after the Policy's issue date. If you exercise this option, you will have to
make up any investment loss you had under the variable life insurance policy. We
make the exchange without evidence of insurability. The new policy will have the
same face amount as that being exchanged. The new policy will have the same
issue age, underwriting class and policy date as the variable life policy had.
We will attach any riders to the original Policy to the new policy if they are
available.
Contact us or your registered representative for more specific information
about the 24 Month Right in these states. The exchange may result in a cost or
credit to you. On the exchange, you may need to make an immediate premium
payment on the new policy in order to keep it in force.
GROUP OR SPONSORED ARRANGEMENTS. For a Policy issued to some group or
sponsored arrangements, we offer the additional option of exchanging the Policy
at any time during the first 36 months after the Policy's issue date, if the
Policy has not lapsed, to a fixed-benefit term life insurance policy issued by
us or an affiliate. (Availability of this feature depends on state insurance
department approval. It is not available to any tax-qualified pension plan.)
Contact us or your registered representative for more information about this
feature.
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<PAGE> 31
PAYMENT OPTIONS
We pay the Policy's death benefit and net cash value in one sum unless you
or the payee choose a payment option for all or part of the proceeds. You can
choose a combination of payment options. You can make, change or revoke the
selection of payee or payment option before the death of the insured. You can
contact your registered representative or the Home Office for the procedure to
follow. The payment options available are fixed benefit options only and are not
affected by the investment experience of the Variable Account. Once payments
under an option begin, withdrawal rights may be restricted.
The following payment options are available:
(i)INCOME FOR A SPECIFIED NUMBER OF YEARS. We pay proceeds in equal monthly
installments for up to 30 years, with interest at a rate not less than
3.5% a year, compounded yearly. Additional interest that we pay for any
year is added to the monthly payments for that year.
(ii)LIFE INCOME. We pay proceeds in equal monthly installments (i) during
the life of the payee, (ii) for the longer of the life of the payee or
10 years, or (iii) for the longer of the life of the payee or 20 years.
(iii)LIFE INCOME WITH REFUND. We pay proceeds in equal monthly installments
during the life of the payee. At the payee's death, we pay any unpaid
proceeds remaining either in one sum or in equal monthly installments
until we have paid the total proceeds.
(iv)INTEREST. We hold proceeds for the life of the payee or another agreed
upon period. We pay interest of at least 3.5% a year monthly or add it
to the principal annually. At the death of the payee, or at the end of
the period agreed to, we pay the balance of principal and any interest
in one sum.
(v)SPECIFIED AMOUNT OF INCOME. We pay proceeds plus accrued interest of at
least 3.5% a year in an amount and at a frequency elected until we have
paid total proceeds. We pay any amounts unpaid at the death of the payee
in one sum.
(vi)LIFE INCOME FOR TWO LIVES. We pay proceeds in equal monthly
installments (i) while either of two payees is living, (ii) for the
longer of the life of the surviving payee or 10 years, or (iii) while
the two payees are living and, after the death of one payee, we pay
two-thirds of the monthly amount for the life of the surviving payee.
You need our consent to use an option if the installment payments would be
less than $20.
ADDITIONAL BENEFITS BY RIDER
You can add additional benefits to the Policy by rider, subject to our
underwriting and issuance standards. These additional benefits usually require
an additional charge as part of the Monthly Deduction from cash value. The rider
benefits available with the Policies provide fixed benefits that do not vary
with the investment experience of the Variable Account.
There may be circumstances in which it will be to your economic advantage to
include a significant portion or percentage of your insurance coverage under a
level term insurance rider. In many other circumstances, it may be in your
interest to obtain a Policy without term rider coverage. These circumstances
depend on many factors, including the premium levels and amount and duration of
coverage you choose, as well as the age, sex and risk classification of the
insured.
Reductions in or elimination of term rider coverage do not trigger a
Surrender Charge, and use of a term rider generally reduces sales compensation.
Your registered representative can provide you more information on the uses of
term rider coverage.
The following riders are available:
LEVEL TERM INSURANCE, which provides term insurance.
WAIVER OF MONTHLY DEDUCTION, which provides for waiver of Monthly Deductions
upon the disability of the insured.
TEMPORARY TERM INSURANCE, which provides for insurance from the date of
issue to the Policy Date.
CHILDREN'S INSURANCE, which provides insurance on the life of the insured's
children.
Not all riders may be available to you and riders in addition to those
listed above may be made available. You should consult your registered
representative regarding the availability of riders.
POLICY OWNER AND BENEFICIARY
The Policy Owner is named in the application but may be changed from time to
time. At the death of the Policy Owner, his or her estate will become the Policy
Owner unless a successor Policy Owner has been named. The Policy Owner's rights
(except for rights to payment of benefits) terminate at the death of the
insured.
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<PAGE> 32
The beneficiary is also named in the application. You may change the
beneficiary at any time before the death of the insured. The beneficiary has no
rights under the Policy until the death of the insured and must survive the
insured in order to receive the death proceeds. If no named beneficiary survives
the insured, we pay proceeds to the Policy Owner.
A change of Policy Owner or beneficiary is subject to all payments made and
actions taken by us under the Policy before we receive a signed change form. You
can contact your registered representative or the Home Office for the procedure
to follow.
You may assign (transfer) your rights in the Policy to someone else. An
absolute assignment of the Policy is a change of Policy Owner and beneficiary to
the assignee. A collateral assignment of the Policy does not change the Policy
Owner or beneficiary, but their rights will be subject to the terms of the
assignment. Assignments are subject to all payments made and actions taken by us
under the Policy before we receive a signed copy of the assignment form. We are
not responsible for determining whether or not an assignment is valid. Changing
the Policy Owner or assigning the Policy may have tax consequences. (See "Tax
Considerations" below.)
THE VARIABLE ACCOUNT
We established the Variable Account as a separate investment account on
January 31, 1983 under Delaware law. It became subject to Massachusetts law when
we changed our domicile to Massachusetts on August 30, 1996. The Variable
Account is the funding vehicle for the Policies, and other NELICO variable life
insurance policies; these other policies impose different costs, and provide
different benefits, from the Policies. The Variable Account meets the definition
of a "separate account" under Federal securities laws, and is registered with
the Securities and Exchange Commission (the "SEC") as a unit investment trust
under the Investment Company Act of 1940. Registration with the SEC does not
involve SEC supervision of the Variable Account's management or investments.
However, the Massachusetts Insurance Commissioner regulates NELICO and the
Variable Account, which are also subject to the insurance laws and regulations
where the Policies are sold.
Although we own the assets of the Variable Account, applicable law provides
that the portion of the Variable Account assets equal to the reserves and other
liabilities of the Variable Account may not be charged with liabilities that
arise out of any other business we may conduct. We believe this means that the
assets of the Variable Account equal to the reserves and other liabilities of
the Variable Account are not available to meet the claims of our general
creditors, and may only be used to support the cash values under our variable
life insurance policies issued by the Variable Account. We may transfer to our
general account assets which exceed the reserves and other liabilities of the
Variable Account. We will consider any possible adverse impact such a transfer
might have on the Variable Account.
Income and realized and unrealized capital gains and losses of the Variable
Account are credited to the Variable Account without regard to any of our other
income or capital gains and losses.
INVESTMENTS OF THE VARIABLE ACCOUNT
Sub-Accounts of the Variable Account that are available in this Policy
invest in the following Eligible Funds:
The Zenith Back Bay Advisors Money Market Series. Its investment objective
is the highest possible level of current income consistent with preservation of
capital. An investment in the Money Market Series is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Money Market Series seeks to maintain a net asset value of $100 per
share, it is possible to lose money by investing in the Money Market Series.
The Zenith Back Bay Advisors Bond Income Series. Its investment objective is
a high level of current income consistent with protection of capital.
The Zenith Capital Growth Series. Its investment objective is the long-term
growth of capital through investment primarily in equity securities of companies
whose earnings are expected to grow at a faster rate than the United States
economy.
The Zenith Westpeak Stock Index Series. Its investment objective is
investment results that correspond to the composite price and yield performance
of the S&P 500 Index.
The Zenith Back Bay Advisors Managed Series. Its investment objective is a
favorable total return through investment in a diversified portfolio.
The Zenith Westpeak Growth and Income Series. Its investment objective is
long-term total return through investment in equity securities.
The Zenith Harris Oakmark Mid Cap Value Series (formerly, the Goldman Sachs
Midcap Value Series). Its investment objective is long-term capital
appreciation.
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<PAGE> 33
The Zenith Loomis Sayles Small Cap Series. Its investment objective is
long-term capital growth from investments in common stocks or their equivalents.
The Zenith Balanced Series (formerly, the Loomis Sayles Balanced Series).
Its investment objective is long-term total return from a combination of capital
appreciation and current income.
The Zenith Morgan Stanley International Magnum Equity Series. Its investment
objective is long-term capital appreciation through investment primarily in
international equity securities. In addition to the risks associated with equity
securities generally, foreign securities present additional risks.
The Zenith Davis Venture Value Series. Its investment objective is growth of
capital.
The Zenith Alger Equity Growth Series. Its investment objective is long-term
capital appreciation.
The Zenith MFS Investors Series. Its investment objective is reasonable
current income and long-term growth of capital and income.
The Zenith MFS Research Managers Series. Its investment objective is
long-term growth of capital.
The Metropolitan Putnam Large Cap Growth Portfolio.* Its investment
objective is capital appreciation.
The Metropolitan Janus Mid Cap Portfolio.* Its investment objective is
long-term growth of capital.
The Metropolitan Russell 2000 Index Portfolio.* Its investment objective is
to equal the return of the Russell 2000 Index.
The VIP Equity-Income Portfolio. It seeks reasonable income. The fund will
also consider the potential for capital appreciation. The fund seeks a yield
which exceeds the composite yield on the securities comprising the S&P 500.
The VIP Overseas Portfolio. It seeks long-term growth of capital. Foreign
markets, particularly emerging markets, can be more volatile than the U.S.
market due to increased risks of adverse issuer, political, regulatory, market
or economic developments and can perform differently than the U.S. market.
The VIP High Income Portfolio. It seeks a high level of current income while
also considering growth of capital. Lower-quality debt securities (those of less
than investment-grade quality) can be more volatile due to increased sensitivity
to adverse issuer, political, regulatory, market or economic developments.
The VIP II Asset Manager Portfolio. It seeks high total return with reduced
risk over the long-term by allocating its assets among stocks, bonds and
short-term instruments.
------------
* Availability of these Portfolios is subject to any necessary state insurance
department approvals.
WE INTEND TO SUBSTITUTE SHARES OF THE PUTNAM INTERNATIONAL STOCK PORTFOLIO
OF THE METROPOLITAN SERIES FUND, INC. FOR SHARES OF THE MORGAN STANLEY
INTERNATIONAL MAGNUM EQUITY SERIES OF THE NEW ENGLAND ZENITH FUND ONCE WE
RECEIVE NECESSARY REGULATORY APPROVAL (CURRENTLY ANTICIPATED DURING THE FOURTH
QUARTER OF 2000).
The Zenith Fund and the Metropolitan Series Fund, Inc. are open-end
management investment companies, more commonly known as mutual funds. These
funds are available as investment vehicles for separate investment accounts of
MetLife, NELICO, and other life insurance companies.
VIP and VIP II are mutual funds that serve as the investment vehicles for
variable life insurance and variable annuity separate accounts of various
insurance companies.
The Variable Account purchases and sells Eligible Fund shares at their net
asset value (without a deduction for sales load) determined as of the close of
regular trading on the New York Stock Exchange on each day when the exchange is
open for trading.
The Eligible Funds' investment objectives may not be met. More about the
Eligible Funds, including their investments, expenses, and risks, is in the
attached Eligible Fund prospectuses and the Eligible Funds' Statements of
Additional Information.
The investment objectives and policies of certain Eligible Funds are similar
to the investment objectives and policies of other funds that may be managed by
the same sub-adviser. The investment results of the Eligible Funds may be higher
or lower than the results of these funds. There is no assurance, and no
representation is made, that the investment results of any of the Eligible Funds
will be comparable to the investment results of any other fund.
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INVESTMENT MANAGEMENT
The chart below shows the adviser and sub-adviser for each series of the
Zenith Fund. New England Investment Management, which is an indirect,
wholly-owned subsidiary of NELICO, CGM, and each of the sub-advisers are
registered with the SEC as investment advisers under the Investment Advisers Act
of 1940.
<TABLE>
<CAPTION>
SERIES ADVISER SUB-ADVISER
------ ------- -----------
<S> <C> <C>
Capital Growth Capital Growth Management Limited
Partnership ("CGM")*
Back Bay Advisors Money Market New England Investment Management, Back Bay Advisors, L.P.*
Inc.
Back Bay Advisors Bond Income New England Investment Management, Back Bay Advisors, L.P.*
Inc.
Back Bay Advisors Managed New England Investment Management, Back Bay Advisors, L.P.*
Inc.
Westpeak Stock Index New England Investment Management, Westpeak Investment Advisors,
Inc. L.P.*
Westpeak Growth and Income New England Investment Management, Westpeak Investment Advisors,
Inc. L.P.*
Loomis Sayles Small Cap New England Investment Management, Loomis, Sayles & Company, L.P.*
Inc.
Balanced New England Investment Management, Wellington Management Company, LLP
Inc.
Morgan Stanley International New England Investment Management, Morgan Stanley Dean Witter
Magnum Equity Inc. Investment Management Inc.
Harris Oakmark Mid Cap Value New England Investment Management, Harris Associates L.P.*
Inc.
Davis Venture Value New England Investment Management, Davis Selected Advisers, L.P.**
Inc.
Alger Equity Growth New England Investment Management, Fred Alger Management, Inc.
Inc.
MFS Investors New England Investment Management, Massachusetts Financial Services
Inc. Company
MFS Research Managers New England Investment Management, Massachusetts Financial Services
Inc. Company
</TABLE>
------------
* An affiliate of NELICO
** Davis Selected may also delegate any of its responsibilities to Davis
Selected Advisers--NY, Inc., a wholly-owned subsidiary of Davis Selected.
In the case of the Back Bay Advisors Money Market Series, Back Bay Advisors
Bond Income Series, Back Bay Advisors Managed Series, Westpeak Stock Index
Series, Westpeak Growth and Income Series, Harris Oakmark Mid Cap Value Series
and Loomis Sayles Small Cap Series, New England Investment Management became the
adviser on May 1, 1995. The Morgan Stanley International Magnum Equity Series'
sub-adviser was Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley
Dean Witter Investment Management became the sub-adviser. The Harris Oakmark Mid
Cap Value Series' sub-adviser was Loomis, Sayles until May 1, 1998, when Goldman
Sachs Asset Management, a separate operating division of Goldman Sachs & Co.,
became the sub-adviser. Harris Associates became the sub-adviser on May 1, 2000.
The Balanced Series' sub-adviser was Loomis, Sayles until May 1, 2000, when
Wellington Management Company became the sub-adviser. For more information about
the Series' advisory agreements, see the Zenith Fund prospectus attached at the
end of this prospectus and the Zenith Fund's Statement of Additional
Information.
MetLife is the investment adviser for the Metropolitan Series Fund
Portfolios. Putnam Investment Management, Inc. is the sub-investment manager of
the Putnam Large Cap Growth Portfolio. Janus Capital Corporation is the
sub-investment manager of the Janus Mid Cap Portfolio. For more information
regarding the investment adviser and sub-investment managers of the Metropolitan
Series Fund Portfolios, see the Metropolitan Series Fund prospectus attached at
the end of this prospectus and its Statement of Additional Information.
Fidelity Management & Research Company ("FMR") is the investment adviser for
VIP and VIP II. For more information regarding the VIP Equity-Income, VIP
Overseas, VIP High Income and VIP II Asset Manager Portfolios and FMR, see the
VIP and VIP II prospectuses attached at the end of this prospectus and their
Statements of Additional Information.
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<PAGE> 35
THE FIXED ACCOUNT
THE POLICY HAS A FIXED ACCOUNT OPTION ONLY IN STATES THAT APPROVE IT. IT IS
NOT AVAILABLE UNDER POLICIES ISSUED IN NEW JERSEY.
You may allocate net premiums and transfer cash value to the Fixed Account,
which is part of NELICO's general account. Because of exemptive and exclusionary
provisions in the Federal securities laws, interests in the Fixed Account are
not registered under the Securities Act of 1933. Neither the Fixed Account nor
the general account is registered as an investment company under the Investment
Company Act of 1940. Therefore, neither the Fixed Account, the general account
nor any interests therein are generally subject to the provisions of these Acts,
and the SEC does not review Fixed Account disclosure. This disclosure may,
however, be subject to certain provisions of the Federal securities laws on the
accuracy and completeness of prospectuses.
GENERAL DESCRIPTION
Our general account includes all of our assets except assets in the Variable
Account or in our other separate accounts. We decide how to invest our general
account assets. Fixed Account allocations do not share in the actual investment
experience of the Fixed Account. Instead, we guarantee that the Fixed Account
will credit interest at an annual effective rate of at least 4%. We may or may
not credit interest at a higher rate. We declare the current interest rate for
the Fixed Account periodically. The Fixed Account earns interest daily.
We can change our Fixed Account interest crediting procedures. Currently,
all cash value in the Fixed Account on a Policy anniversary earns interest at
the declared annual rate in effect on the anniversary until the next Policy
anniversary, when it is credited with our current rate. (Although our current
practice is to credit your entire Fixed Account cash value on a Policy
anniversary with our current annual rate until the next anniversary, we can
select any portion, from 0% to 100%, of your Fixed Account cash value on a
Policy anniversary to earn interest at our current rate until the next Policy
anniversary.) Any net premiums allocated or cash value transferred to the Fixed
Account on a date other than a Policy anniversary earn interest at our current
rate until the next Policy anniversary. Any loan repayment allocated to the
Fixed Account is credited with the lesser of our current interest rate and the
effective interest rate for your Policy's cash value in the Fixed Account on the
date of the repayment. The Fixed Account effective interest rate is a weighted
average of all the Fixed Account rates for your Policy.
VALUES AND BENEFITS
Cash value in the Fixed Account increases from net premiums allocated and
transfers to the Fixed Account and Fixed Account interest, and decreases from
loans, partial surrenders made from the Fixed Account, charges and transfers
from the Fixed Account. We deduct charges from the Fixed Account and the
Policy's Sub-Accounts in proportion to the amount of cash value in each. (See
"Monthly Deduction from Cash Value".) A Policy's total cash value includes cash
value in the Variable Account, the Fixed Account, and any cash value held in our
general account (but outside of the Fixed Account) due to a Policy loan.
Cash value in the Fixed Account is included in the calculation of the
Policy's death benefit in the same manner as the cash value in the Variable
Account. (See "Death Benefit".)
POLICY TRANSACTIONS
We can restrict allocations and transfers to the Fixed Account if the
effective annual rate of interest on the amount would be 4%. Otherwise, the
requirements for Fixed Account and Variable Account allocations are the same.
(See "Allocation of Net Premiums".)
Except as described below, the Fixed Account has the same rights and
limitations about premium allocations, transfers, loans, surrenders and partial
surrenders as the Variable Account. (See "Other Policy Features".) The following
special rules apply to the Fixed Account.
TRANSFERS FROM THE FIXED ACCOUNT TO THE VARIABLE ACCOUNT ARE ALLOWED ONLY
ONCE IN EACH POLICY YEAR. WE PROCESS A TRANSFER FROM THE FIXED ACCOUNT ONLY IF
WE RECEIVE THE TRANSFER REQUEST WITHIN THE 30 DAY PERIOD AFTER THE POLICY
ANNIVERSARY. WE MAKE THE TRANSFER AS OF THE DATE WE RECEIVE THE TRANSFER REQUEST
AT OUR HOME OFFICE.
THE AMOUNT OF CASH VALUE YOU MAY TRANSFER FROM THE FIXED ACCOUNT IS LIMITED
TO THE GREATER OF 25% OF THE POLICY'S CASH VALUE IN THE FIXED ACCOUNT ON THE
TRANSFER DATE OR THE AMOUNT OF CASH VALUE TRANSFERRED FROM THE FIXED ACCOUNT IN
THE PRECEDING POLICY YEAR. Regardless of these limits, if a transfer of cash
value from the Fixed Account would reduce the remaining cash value in the Fixed
Account below $100, you may transfer the entire amount of Fixed Account cash
value. We may limit the total number of transfers among Sub-Accounts and from
the Sub-Accounts to the Fixed Account to four in one Policy year (twelve per
Policy year for Policies issued in New York). We currently do not limit the
number of these transfers in a Policy year.
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<PAGE> 36
Unless you request otherwise, a Policy loan reduces the Policy's cash value
in the Sub-Accounts and not the Fixed Account. If there is not enough cash value
in the Policy's Sub-Accounts for the loan, we take the balance from the Fixed
Account. We allocate all loan repayments first to the outstanding loan balance
attributable to the Fixed Account. The amount removed from the Policy's
Sub-Accounts and the Fixed Account as a result of a loan earns interest at an
effective rate of at least 4% per year, which we credit annually to the Policy's
cash value in the Sub-Accounts and the Fixed Account in proportion to the
Policy's cash value in each on the day it is credited.
Unless you request otherwise, we take partial surrenders only from the
Policy's Sub-Accounts and not the Fixed Account. If there is not enough cash
value in the Policy's sub-accounts for the partial surrender, we take the
balance from the Fixed Account.
We can delay transfers, surrenders, and Policy loans from the Fixed Account
for up to six months (to the extent allowed by state insurance law). We will not
delay loans to pay premiums on policies issued by us.
NELICO'S DISTRIBUTION AGREEMENT
We sell the Policies through licensed insurance agents. These agents are
also registered representatives of New England Securities Corporation ("New
England Securities"). New England Securities, a Massachusetts corporation
organized in 1968 and an indirect, wholly-owned subsidiary of NELICO, is
registered with the SEC as a broker-dealer under the Securities Exchange Act of
1934 and is a member of the National Association of Securities Dealers, Inc.
New England Securities, 399 Boylston Street, Boston, Massachusetts 02116,
also serves as the principal underwriter for the Policies under a Distribution
Agreement with NELICO. Under the Distribution Agreement, we pay the following
sales expenses: general agent and agency manager's compensation, agents'
training allowances, deferred compensation and insurance benefits of agents,
general agents and agency managers and advertising expenses and all other
expenses of distributing the Policies.
We pay the following commissions and/or service fees to the selling agent: a
maximum of 50% of the Commission Breakpoint Premium paid in the first Policy
year, a maximum of 5% in Policy years two through ten, and a maximum of 3%
thereafter. Agents receive a maximum commission of 3% of each payment in excess
of the Commission Breakpoint Premium in any year. For Policies sold in
connection with certain executive benefit plans the maximum commissions are: 20%
of the Commission Breakpoint Premium in the first Policy year, 10% in Policy
years two through ten, and 2% thereafter. For these Policies we will pay a
maximum commission of 3.5% of each payment in excess of the Commission
Breakpoint Premium in Policy years one through ten, and 2% of such excess
premiums thereafter. Agents who meet certain NELICO productivity and persistency
standards may be eligible for additional compensation. Agents may receive a
portion of the general agent's expense reimbursement allowance.
New England Securities may enter into selling agreements with other
broker-dealers registered under the Securities Exchange Act of 1934 whose
representatives are authorized by applicable law to sell variable life insurance
policies. Under the agreements with those broker-dealers, commissions paid to
the broker-dealer on behalf of the registered representative will not exceed
those described above. We may pay certain broker-dealers an additional bonus
after the first Policy year on behalf of certain registered representatives,
which may be up to the amount of the basic commission for the particular Policy
year. We pay commissions through the registered broker-dealer, and may pay
additional compensation to the broker-dealer and/or reimburse it for portions of
Policy sales expenses. The registered representative may receive a portion of
the expense reimbursement allowance paid to the broker-dealer.
LIMITS TO NELICO'S RIGHT TO CHALLENGE THE POLICY
Generally, we can challenge the validity of your Policy or a rider during
the insured's lifetime for two years (or less, if required by state law) from
the date of issue, based on misrepresentations made in the application. We can
challenge the portion of the death benefit resulting from an underwritten
premium payment for two years during the insured's lifetime from receipt of the
premium payment. However, if the insured dies within two years of the date of
issue, we can challenge all or part of the Policy at any time based on
misrepresentations in the application.
MISSTATEMENT OF AGE OR SEX
If the application misstates the insured's age or sex, the Policy's death
benefit is the amount that the most recent Monthly Deduction which was made
would provide, based on the insured's correct age and, if the Policy is
sex-based, correct sex.
SUICIDE
If the insured commits suicide within two years (or less, if required by
state law) from the date of issue, the death benefit is limited to premiums
paid, less any policy loan balance and partial surrenders. (Where required by
state law, we determine the death benefit under this provision by using the
greater of: the reserve of the insurance which is subject to the provision; and
the amounts used to purchase the insurance which is subject to the provision.)
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<PAGE> 37
TAX CONSIDERATIONS
INTRODUCTION
The following summary provides a general description of the Federal income
tax considerations associated with the Policy and does not purport to be
complete or to cover all tax situations. This discussion is not intended as tax
advice. Counsel or other competent tax advisors should be consulted for more
complete information. This discussion is based upon our understanding of the
present Federal income tax laws. No representation is made as to the likelihood
of continuation of the present Federal income tax laws or as to how they may be
interpreted by the Internal Revenue Service.
TAX STATUS OF THE POLICY
In order to qualify as a life insurance contract for Federal income tax
purposes and to receive the tax treatment normally accorded life insurance
contracts under Federal tax law, a Policy must satisfy certain requirements
which are set forth in the Internal Revenue Code. Guidance as to how these
requirements are to be applied is limited. Nevertheless, we believe that the
Policies should satisfy the applicable requirements. There is less guidance,
however, with respect to Policies issued on a substandard or automatic issue
basis and Policies with term riders added, and it is not clear whether such
Policies will in all cases satisfy the applicable requirements. If it is
subsequently determined that a Policy does not satisfy the applicable
requirements, we may take appropriate steps to bring the Policy into compliance
with such requirements, and we reserve the right to restrict Policy transactions
in order to do so.
In certain circumstances, owners of variable life insurance contracts have
been considered for Federal income tax purposes to be the owners of the assets
of the variable account supporting their contracts, due to their ability to
exercise investment control over those assets. Where this is the case, the
contract owners have been currently taxed on income and gains attributable to
variable account assets. There is little guidance in this area, and some
features of the Policies, such as the flexibility of a Policy Owner to allocate
premiums and cash values, have not been explicitly addressed in published
rulings. While we believe that the Policies do not give Policy Owners investment
control over Variable Account assets, we reserve the right to modify the
Policies as necessary to prevent a Policy Owner from being treated as the owner
of the Variable Account assets supporting the Policy.
In addition, the Code requires that the investments of the Variable Account
be "adequately diversified" in order for the Policies to be treated as life
insurance contracts for Federal income tax purposes. It is intended that the
Variable Account, through the Eligible Funds, will satisfy these diversification
requirements.
The following discussion assumes that the Policy will qualify as a life
insurance contract for Federal income tax purposes.
TAX TREATMENT OF POLICY BENEFITS
IN GENERAL. We believe that the death benefit under a Policy should be
excludible from the gross income of the beneficiary. Federal, state and local
transfer, and other tax consequences of ownership or receipt of Policy proceeds
depend on the circumstances of each Policy Owner or beneficiary. A tax advisor
should be consulted on these consequences.
Generally, the Policy Owner will not be deemed to be in constructive receipt
of the Policy cash value until there is a distribution. When distributions from
a Policy occur, or when loans are taken out from or secured by a Policy, the tax
consequences depend on whether the Policy is classified as a "Modified Endowment
Contract."
MODIFIED ENDOWMENT CONTRACTS. Under the Internal Revenue Code, certain life
insurance contracts are classified as "Modified Endowment Contracts," with less
favorable income tax treatment than other life insurance contracts. In general a
Policy will be classified as a Modified Endowment Contract if the amount of
premiums paid into the Policy causes the Policy to fail the "7-pay test." A
Policy will fail the 7-pay test if at any time in the first seven Policy years,
the amount paid into the Policy exceeds the sum of the level premiums that would
have been paid at that point under a Policy that provided for paid-up future
benefits after the payment of seven level annual payments.
If there is a reduction in the benefits under the Policy during the first
seven Policy years, for example, as a result of a partial surrender, the 7-pay
test will have to be reapplied as if the Policy had originally been issued at
the reduced face amount. If there is a "material change" in the Policy's
benefits or other terms, even after the first seven Policy years, the Policy may
have to be retested as if it were a newly issued Policy. A material change can
occur, for example, when there is an increase in the death benefit which is due
to the payment of an unnecessary premium. Unnecessary premiums are premiums paid
into the Policy which are not needed in order to provide a death benefit equal
to the lowest death benefit that was payable in the first seven Policy years. To
prevent your Policy from becoming a Modified Endowment Contract, it may be
necessary to limit premium payments or to limit reductions in benefits. A
current or prospective Policy Owner should consult a tax advisor to determine
whether a Policy transaction will cause the Policy to be classified as a
Modified Endowment Contract.
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<PAGE> 38
DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM MODIFIED ENDOWMENT
CONTRACTS. Policies classified as Modified Endowment Contracts are subject to
the following tax rules:
(1) All distributions other than death benefits, including distributions
upon surrender and withdrawals, from a Modified Endowment Contract will be
treated first as distributions of gain taxable as ordinary income and as
tax-free recovery of the Policy Owner's investment in the Policy only after
all gain has been distributed.
(2) Loans taken from or secured by a Policy classified as a Modified
Endowment Contract are treated as distributions and taxed accordingly.
(3) A 10 percent additional income tax is imposed on the amount subject
to tax except where the distribution or loan is made when the Policy Owner
has attained age 59 1/2 or is disabled, or where the distribution is part of
a series of substantially equal periodic payments for the life (or life
expectancy) of the Policy Owner or the joint lives (or joint life
expectancies) of the Policy Owner and the Policy Owner's beneficiary or
designated beneficiary.
If a Policy becomes a modified endowment contract, distributions that occur
during the contract year will be taxed as distributions from a modified
endowment contract. In addition, distributions from a Policy within two years
before it becomes a modified endowment contract will be taxed in this manner.
This means that a distribution made from a Policy that is not a modified
endowment contract could later become taxable as a distribution from a modified
endowment contract.
DISTRIBUTIONS OTHER THAN DEATH BENEFITS FROM POLICIES THAT ARE NOT MODIFIED
ENDOWMENT CONTRACTS. Distributions other than death benefits from a Policy that
is not classified as a Modified Endowment Contract are generally treated first
as a recovery of the Policy Owner's investment in the Policy and only after the
recovery of all investment in the Policy as taxable income. However, certain
distributions which must be made in order to enable the Policy to continue to
qualify as a life insurance contract for Federal income tax purposes if Policy
benefits are reduced during the first 15 Policy years may be treated in whole or
in part as ordinary income subject to tax.
Loans from or secured by a Policy that is not a Modified Endowment Contract
are generally not treated as distributions. However, the tax consequences
associated with Policy loans that are outstanding after the first 15 Policy
years are less clear and a tax adviser should be consulted about such loans.
Finally, neither distributions from nor loans from or secured by a Policy
that is not a Modified Endowment Contract are subject to the 10 percent
additional income tax.
INVESTMENT IN THE POLICY. Your investment in the Policy is generally your
aggregate premiums. When a distribution is taken from the Policy, your
investment in the Policy is reduced by the amount of the distribution that is
tax-free.
POLICY LOANS. In general, interest on a Policy loan will not be deductible.
If a Policy loan is outstanding when a Policy is canceled or lapses, the amount
of the outstanding indebtedness will be added to the amount distributed and will
be taxed accordingly. Before taking out a Policy loan, you should consult a tax
adviser as to the tax consequences.
MULTIPLE POLICIES. All Modified Endowment Contracts that are issued by
NELICO (or its affiliates) to the same Policy Owner during any calendar year are
treated as one Modified Endowment Contract for purposes of determining the
amount includible in the Policy Owner's income when a taxable distribution
occurs.
OTHER POLICY OWNER TAX MATTERS. Federal and state estate, inheritance,
transfer and other tax consequences depend on the individual circumstances of
each Policy Owner or beneficiary.
The tax consequences of continuing the Policy beyond the insured's 100th
year are unclear. You should consult a tax adviser if you intend to keep the
Policy in force beyond the insured's 100th year.
If a trustee under a pension or profit-sharing plan, or similar deferred
compensation arrangement, owns a Policy, the Federal, state and estate tax
consequences could differ. The amounts of life insurance that may be purchased
on behalf of a participant in a pension or profit-sharing plan are limited. The
current cost of insurance for the net amount at risk is treated as a "current
fringe benefit" and must be included annually in the plan participant's gross
income. We report this cost (generally referred to as the "P.S. 58" cost) to the
participant annually. If the plan participant dies while covered by the plan and
the Policy proceeds are paid to the participant's beneficiary, then the excess
of the death benefit over the cash value is not taxable. However, the cash value
will generally be taxable to the extent it exceeds the participant's cost basis
in the Policy. Policies owned under these types of plans may be subject to
restrictions under the Employee Retirement Income Security Act of 1974
("ERISA"). You should consult a qualified adviser regarding ERISA.
Department of Labor ("DOL") regulations impose requirements for participant
loans under retirement plans covered by ERISA. Plan loans must also satisfy tax
requirements to be treated as nontaxable. Plan loan requirements and provisions
may differ from the Policy loan provisions. Failure of plan loans to comply with
the requirements and provisions of the DOL regulations
A-33
<PAGE> 39
and of tax law may result in adverse tax consequences and/or adverse
consequences under ERISA. Plan fiduciaries and participants should consult a
qualified adviser before requesting a loan under a Policy held in connection
with a retirement plan.
Businesses can use the Policies in various arrangements, including
nonqualified deferred compensation or salary continuance plans, split dollar
insurance plans, executive bonus plans, tax exempt and nonexempt welfare benefit
plans, retiree medical benefit plans and others. The tax consequences of such
plans may vary depending on the particular facts and circumstances. If you are
purchasing the Policy for any arrangement the value of which depends in part on
its tax consequences, you should consult a qualified tax adviser. In recent
years, moreover, Congress has adopted new rules relating to life insurance owned
by businesses. Any business contemplating the purchase of a new Policy or a
change in an existing Policy should consult a tax adviser.
We believe that Policies subject to Puerto Rican tax law will generally
receive treatment similar, with certain modifications, to that described above.
Among other differences, Policies governed by Puerto Rican tax law are not
currently subject to the rules described above regarding Modified Endowment
Contracts. You should consult your tax adviser with respect to Puerto Rican tax
law governing the Policies.
POSSIBLE TAX LAW CHANGES. Although the likelihood of legislative changes is
uncertain, there is always the possibility that the tax treatment of the Policy
could change by legislation or otherwise. Consult a tax adviser with respect to
legislative developments and their effect on the Policy.
NELICO'S INCOME TAXES
Under current Federal income tax law, NELICO is not taxed on the Variable
Account's operations. Thus, currently we do not deduct a charge from the
Variable Account for Federal income taxes. We reserve the right to charge the
Variable Account for any future Federal income taxes we may incur.
Under current laws in several states, we may incur state and local taxes (in
addition to premium taxes). These taxes are not now significant and we are not
currently charging for them. If they increase, we may deduct charges for such
taxes.
MANAGEMENT
The directors and executive officers of NELICO and their principal business
experience during the past five years are:
DIRECTORS OF NELICO
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS DURING THE PAST FIVE YEARS
------------------ -----------------------------
<S> <C>
James M. Benson................... Chairman, President and Chief Executive Officer of NELICO
since 1998 and President, Individual Business of
Metropolitan Life Insurance Company since 1999; formerly,
Director, President and Chief Operating Officer 1997-1998
of NELICO; President and Chief Executive Officer 1996-1997
of Equitable Life Assurance Society; President and Chief
Operating Officer 1996-1997 of Equitable Companies, Inc.;
President and Chief Operating Officer 1994-1996 of
Equitable Life Assurance Society.
Susan C. Crampton................. Director of NELICO since 1996 and serves as Principal of The
6 Tarbox Road Vermont Partnership, a business consulting firm located in
Jericho, VT 05465 Jericho, Vermont since 1989; formerly, Director 1989-1996
of New England Mutual.
Edward A. Fox..................... Director of NELICO since 1996 and Chairman of the Board of
R.R. Box 67-15 SLM Holdings since 1997; formerly, Director 1994-1996 of New
Harborside, ME 04642 England Mutual.
George J. Goodman................. Director of NELICO since 1996 and author, television
Adam Smith's Global Television journalist, and editor.
50th Floor, Craig Drill Capital
General Motors Building
767 Fifth Street
New York, NY 10153
Dr. Evelyn E. Handler............. Director of NELICO since 1996 and President of Merrimack
Ten Sterling Place Higher Education Associates, Inc. since 1998; formerly,
Bow, NH 03304 Director 1987-1996 of New England Mutual and Executive
Director and Chief Executive Officer 1994-1997 of the
California Academy of Sciences.
</TABLE>
A-34
<PAGE> 40
<TABLE>
<CAPTION>
NAME AND PRINCIPAL PRINCIPAL BUSINESS EXPERIENCE
BUSINESS ADDRESS DURING THE PAST FIVE YEARS
------------------ -----------------------------
<S> <C>
Philip K. Howard, Esq............. Director of NELICO since 1996 and Partner of the law firm of
Covington & Burling Covington & Burling in New York City.
1330 Avenue of the Americas
New York, NY 10019
Bernard A. Leventhal.............. Director of NELICO since 1996; formerly, Vice Chairman of
Burlington Industries the Board of Directors 1995-1998 of Burlington Industries,
1345 Avenue of the Americas Inc.
17th Floor
New York, NY 10105
Thomas J. May..................... Director of NELICO since 1996 and Chairman and Chief
NSTAR Executive Officer of NSTAR since 2000; formerly, Chairman,
800 Boylston Street President and Chief Executive Officer of Boston Edison
Boston, MA 02199 Company 1994-2000 and, Director 1994-1996 of New England
Mutual.
Stewart G. Nagler................. Director of NELICO since 1996 and Vice Chairman and Chief
Metropolitan Life Insurance Co. Financial Officer of Metropolitan Life Insurance Company
One Madison Avenue since 1998; formerly, Senior Executive Vice President and
New York, NY 10010 Chief Financial Officer 1986-1998 of Metropolitan Life
Insurance Company.
Catherine A. Rein................. Director of NELICO since 1998 and President and Chief
Metropolitan Property and Executive Officer of Metropolitan Property and Casualty
Casualty Insurance Company since 1999; formerly, Senior Executive Vice President
700 Quaker Lane 1998-1999; Executive Vice President 1989-1998 of
Warwick, RI 02887 Metropolitan Life Insurance Company.
Rand N. Stowell................... Director of NELICO since 1996 and President of United Timber
P.O. Box 60 Corp. and President, Randwell Co. since 2000 of Weld, Maine;
Weld, ME 04285 formerly, Director 1990-1996 of New England Mutual.
Lisa M. Weber..................... Director of NELICO since 2000 and Executive Vice President
Metropolitan Life of Metropolitan Life Insurance Company since 1998; formerly,
Insurance Company Director of Diversity Strategies and Development and an
One Madison Avenue Associate Director of Human Resources of Paine Webber.
New York, New York 10010
</TABLE>
EXECUTIVE OFFICERS OF NELICO
OTHER THAN DIRECTORS
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE
NAME DURING THE PAST FIVE YEARS
---- -----------------------------
<S> <C>
James M. Benson................... See Directors above.
David W. Allen.................... Senior Vice President of NELICO since 1996; formerly, Senior
Vice President 1994-1996 and Vice President 1990-1994 of New
England Mutual.
Pauline V. Belisle................ Senior Vice President of NELICO since 1996; formerly, Senior
Vice President 1994-1996 of New England Mutual.
Mary Ann Brown.................... President, New England Products and Services (a business
unit of NELICO) since 1998; formerly, Director, Worldwide
Life Insurance 1997-1998 of Swiss Reinsurance New Markets;
President & Chief Executive Officer 1996-1998 of Atlantic
International Reinsurance Company; Executive Vice
President 1996-1997 of Swiss Re Atrium and Swiss Re
Services and Principal 1987-1996 of Tillinghast/ Towers
Perrin.
Anthony J. Candito................ President, NEF Information Services (a business unit of
NELICO) and Chief Information Officer since 1998; formerly,
Senior Vice President 1996-1998 of NELICO; Senior Vice
President 1995-1996 and Vice President 1994-1995 of New
England Mutual.
Thom A. Faria..................... President, Career Agency System (a business unit of NELICO)
since 1996; formerly, Executive Vice President in 1996;
Senior Vice President 1993-1996 of New England Mutual.
Anne M. Goggin.................... Senior Vice President and General Counsel of NELICO since
2000; formerly, Senior Vice President and Associate General
Counsel 1997-2000; Vice President and Counsel of NELICO in
1996; Vice President and Counsel 1994-1996 of New England
Mutual.
</TABLE>
A-35
<PAGE> 41
<TABLE>
<CAPTION>
PRINCIPAL BUSINESS EXPERIENCE
NAME DURING THE PAST FIVE YEARS
---- -----------------------------
<S> <C>
Daniel D. Jordan.................. Second Vice President, Counsel, Secretary and Clerk since
1996; formerly, Counsel and Assistant Secretary 1990-1996 of
New England Mutual.
Alan C. Leland, Jr. .............. Senior Vice President of NELICO since 1996; formerly, Vice
President 1984-1996 of New England Mutual.
George J. Maloof.................. Senior Vice President of NELICO since 1996; formerly, Vice
President 1991-1996 of New England Mutual.
Kenneth D. Martinelli............. Senior Vice President of NELICO since 1999; formerly, Vice
President 1997-1999 of NELICO and Vice President 1994-1997
of The Equitable Life Assurance Company.
Thomas W. McConnell............... Senior Vice President of NELICO since 1996 and Director,
Chief Executive Officer and President of New England
Securities Corporation since 1993.
Hugh C. McHaffie.................. Senior Vice President of NELICO since 1999; formerly, Vice
President 1994-1999 of Manufacturers Life Insurance Company
of North America.
Stephen J. McLaughlin............. Senior Vice President of NELICO since 1999; formerly, Vice
President 1996-1999 of NELICO and Vice President 1994-1996
of New England Mutual.
Thomas W. Moore................... Senior Vice President of NELICO since 1996; formerly, Vice
President 1990-1996 of New England Mutual.
David Y. Rogers................... Executive Vice President and Chief Financial Officer of
NELICO since 1999; formerly, Partner, Actuarial Consulting
1992-1999 of Price Waterhouse Coopers LLP.
John G. Small, Jr. ............... President, New England Services (a business unit of NELICO)
since 1997; formerly, Senior Vice President 1996-1997 of
NELICO and Senior Vice President 1990-1996 of New England
Mutual.
</TABLE>
The principal business address for each of the directors and executive
officers is the same as NELICO's except where indicated.
VOTING RIGHTS
We own Eligible Fund shares held in the Variable Account and vote those
shares at meetings of the Eligible Fund shareholders. Under Federal securities
law, you currently have the right to instruct us how to vote shares that are
attributable to your Policy.
Policy Owners who are entitled to give voting instructions and the number of
shares attributable to their Policies are determined as of the meeting record
date. If we do not receive timely instructions, we will vote shares in the same
proportion as (i) the aggregate cash value of policies giving instructions,
respectively, to vote for, against, or withhold votes on a proposition, bears to
(ii) the total cash value in that Sub-Account for all policies for which we
receive voting instructions. No voting privileges apply to the Fixed Account or
to cash value removed from the Variable Account due to a Policy loan.
We will vote Eligible Fund shares held by our general account (or any
unregistered separate account for which voting privileges were not extended) in
the same proportion as the total of (i) shares for which voting instructions
were received and (ii) shares that are voted in proportion to such voting
instructions.
The Eligible Funds' Boards of Trustees monitor events to identify conflicts
that may arise from the sale of Eligible Fund shares to variable life and
variable annuity separate accounts of affiliated and, if applicable,
unaffiliated insurance companies. Conflicts could result from changes in state
insurance law or Federal income tax law, changes in investment management of an
Eligible Fund, or differences in voting instructions given by variable life and
variable annuity contract owners. If there is a material conflict, the Board of
Trustees will determine what action should be taken, including the removal of
the affected Sub-Accounts from the Eligible Fund(s), if necessary. If we believe
any Eligible Fund action is insufficient, we will consider taking other action
to protect Policy Owners. There could, however, be unavoidable delays or
interruptions of operations of the Variable Account that we may be unable to
remedy.
We may disregard voting instructions for changes in the investment policy,
investment adviser or principal underwriter of an Eligible Fund portfolio if
required by state insurance law, or if we (i) reasonably disapprove of the
changes and (ii) in the case of a change in investment policy or investment
adviser, make a good faith determination that the proposed change is prohibited
by state authorities or inconsistent with a Sub-Account's investment objectives.
If we do disregard voting instructions, the next annual report to Policy Owners
will include a summary of that action and the reasons for it.
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<PAGE> 42
RIGHTS RESERVED BY NELICO
We and our affiliates may change the voting procedures described above, and
vote Eligible Fund shares without Policy Owner instructions, if the securities
laws change. We also reserve the right: (1) to add sub-accounts; (2) to combine
sub-accounts; (3) to substitute shares of a new fund for shares of an Eligible
Fund (the new fund may have different fees and expenses), to close a sub-account
to allocations of premium payments or cash value or both at any time in our sole
discretion, or to transfer assets to our general account as permitted by
applicable law; (4) to operate the Variable Account as a management investment
company under the Investment Company Act of 1940 or in any other form; and (5)
to deregister the Variable Account under the Investment Company Act of 1940. We
will exercise these rights in accordance with applicable law, including approval
of Policy Owners if required. We will notify you if exercise of any of these
rights would result in a material change in the Variable Account or its
investments.
TOLL-FREE NUMBERS
For information about historical values of the Variable Account
Sub-Accounts, call 1-800-333-2501.
For Sub-Account transfers, premium reallocations, or Statements of
Additional Information for the Eligible Funds, call 1-800-200-2214.
You may also call our Client TeleService Center at 1-800-388-4000 to request
current information about your Policy values, to change or update Policy
information such as your address, billing mode, beneficiary or ownership, or to
request Policy loans of less than $25,000. Requests must be in writing if the
Policy is owned by a corporation or a pension trust.
For all other Policy changes, please contact your registered representative.
REPORTS
We will send you an annual statement showing your Policy's death benefit,
cash value and any outstanding Policy loan principal. We will also confirm
Policy loans, subaccount transfers, lapses, surrenders and other Policy
transactions when they occur.
You will be sent semiannual reports containing the financial statements of
the Variable Account and the Eligible Funds.
ADVERTISING PRACTICES
Professional organizations may endorse the Policies. We may use such
endorsements in Policy sales material. We may pay the professional organization
for the use of its customer or mailing lists to distribute Policy promotional
materials. An endorsement by a third party does not predict the future
performance of the Policies.
Articles discussing the Variable Account's investment performance, rankings
and other characteristics may appear in publications. Some or all of these
publishers or ranking services (including, but not limited to, Lipper Analytical
Services, Inc. and Morningstar, Inc.) may publish their own rankings or
performance reviews of variable contract separate accounts, including the
Variable Account. We may use references to, or reprints of such articles or
rankings as sales material and may include rankings that indicate the names of
other variable contract separate accounts and their investment experience. We
may also use "unit values" to provide information about the Variable Account's
investment performance in this prospectus, marketing materials, and historical
illustrations.
Publications may use articles and releases, developed by NELICO, the
Eligible Funds and other parties, about the Variable Account or the Eligible
Funds. We may use references to or reprints of such articles in sales material
for the Policies or the Variable Account. Such literature may refer to personnel
of the advisers, who have portfolio management responsibility, and their
investment style, and include excerpts from media articles.
We are a member of the Insurance Marketplace Standards Association ("IMSA"),
and may include the IMSA logo and information about IMSA membership in our
advertisements. Companies that belong to IMSA subscribe to a set of ethical
standards covering the various aspects of sales and service for individually
sold life insurance and annuities.
Policy sales material may refer to historical, current and prospective
economic trends. In addition, sales material may discuss topics of general
investor interest for the benefit of registered representatives and prospective
Policy Owners. These materials may include, but are not limited to, discussions
of college planning, retirement planning, reasons for investing and historical
examples of the investment performance of various classes of securities,
securities markets and indices.
A-37
<PAGE> 43
LEGAL MATTERS
Legal matters in connection with the Policies described in this prospectus
have been passed on by Anne M. Goggin, General Counsel of NELICO. Sutherland
Asbill & Brennan LLP, of Washington, D.C., has provided advice on certain
matters relating to federal securities laws.
REGISTRATION STATEMENT
This prospectus omits certain information contained in the Registration
Statement which has been filed with the SEC. Copies of such additional
information may be obtained from the SEC upon payment of the prescribed fee.
EXPERTS
The financial statements of New England Variable Life Separate Account of
New England Life Insurance Company ("NELICO") as of December 31, 1999 and for
each of the three years in the period ended December 31, 1999 and the
consolidated financial statements of NELICO and subsidiaries as of December 31,
1999 and 1998 and for each of the three years in the period ended December 31,
1999 included in this Prospectus have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein, and are
included in reliance upon the reports of such firm given upon their authority as
experts in accounting and auditing.
Actuarial matters included in this prospectus have been examined by James J.
Reilly, F.S.A., M.A.A.A., Second Vice President and Actuary of NELICO, as stated
in his opinion filed as an exhibit to the Registration Statement.
A-38
<PAGE> 44
APPENDIX A
ILLUSTRATIONS OF DEATH BENEFITS, CASH VALUES,
NET CASH VALUES AND ACCUMULATED PREMIUMS
The tables in Appendix A illustrate the way the Policies work. They show how
the death benefit, net cash value and cash value could vary over an extended
period of time assuming hypothetical gross rates of return (i.e., investment
income and capital gains and losses, realized or unrealized) for the Variable
Account equal to constant after tax annual rates of 0%, 6% and 12%. The tables
are based on face amounts of $100,000 and $500,000 for a male aged 40. The
insured is assumed to be in the nonsmoker preferred class. The Tables assume no
rider benefits and assume that no allocations are made to the Fixed Account.
Values are first given based on current mortality and other Policy charges and
then based on guaranteed mortality and other Policy charges. The illustrations
for the $500,000 face amount reflect the lower sales charge and, in the
illustrations based on current charges, the lower mortality and expense risk
charge, and the lower cost of insurance charges that would apply to a Policy if
issued in the personal market or if issued in business situations which qualify
for those lower charges. (See "Charges and Expenses".) The illustrations do not
reflect the higher current charges that would apply for tax-qualified pension
plans. Illustrations show Option 1 and Option 2 death benefits.
The illustrated death benefits, net cash values and cash values for a Policy
would be different, either higher or lower, from the amounts shown if the actual
gross rates of return averaged 0%, 6% or 12%, but varied above and below that
average during the period, if premiums were paid in other amounts or at other
than annual intervals. They would also be different depending on the allocation
of cash value among the Variable Account's Sub-Accounts, if the actual gross
rate of return for all Sub-Accounts averaged 0%, 6% or 12%, but varied above or
below that average for individual Sub-Accounts. They would also differ if a
Policy loan or partial surrender were made during the period of time
illustrated, if the insured were female or in another risk classification, or if
the Policies were issued at unisex rates. For example, as a result of variations
in actual returns, additional premium payments beyond those illustrated may be
necessary to maintain the Policy in force for the periods shown or to realize
the Policy values shown on particular illustrations even if the average rate of
return is achieved.
The death benefits, net cash values and cash values shown in the tables
reflect: (i) deductions from premiums for the sales charge and state and federal
premium tax charge; and (ii) a Monthly Deduction (consisting of a Policy fee, an
administrative charge, and a charge for the cost of insurance) from the cash
value on the first day of each Policy month. The net cash values reflect a
Surrender Charge deducted from the cash value upon surrender, face reduction or
lapse during the first 11 Policy years. The death benefits, net cash values and
cash values also reflect a daily charge assessed against the Variable Account
for mortality and expense risks equivalent to an annual charge of .25% for the
tables based on a face amount of $100,000, and .20% for the tables based on a
face amount of $500,000 (on a current basis) and .50% (on a guaranteed basis) of
the average daily value of the assets in the Variable Account attributable to
the Policies. (See "Charges and Expenses".) The illustrations reflect an average
of the investment advisory fees and operating expenses of the Eligible Funds, at
an annual rate of .75% of the average daily net assets of the Eligible Funds.
This average reflects voluntary expense cap and expense deferral arrangements
between New England Investment Management and the Zenith Fund, that New England
Investment Management could terminate at any time, as well as expense subsidies
by MetLife of certain Portfolios of the Metropolitan Series Fund, Inc. that may
be voluntary and of limited duration.
Taking account of the mortality and expense risk charge and the average
investment advisory fee and operating expenses of the Eligible Funds, the gross
annual rates of return of 0%, 6% and 12% correspond to net investment experience
at constant annual rates of -1.00%, 4.95% and 10.89%, respectively, based on the
current charge for mortality and expense risks for the tables based on a face
amount of $100,000, and -.95%, 5.00% and 10.94%, respectively, based on the
current charge for mortality and expense risks for the tables based on a face
amount of $500,000, and -1.24%, 4.68% and 10.61%, respectively, based on the
guaranteed maximum charge for mortality and expense risks. (See "Net Investment
Experience".)
The second column of each table shows the amount which would accumulate if
an amount equal to the annual premium were invested to earn interest, after
taxes, of 5% per year, compounded annually.
The internal rate of return on net cash value is equivalent to an interest
rate (after taxes) at which an amount equal to the illustrated premiums could
have been invested outside the Policy to arrive at the net cash value of the
Policy. The internal rate of return on the death benefit is equivalent to an
interest rate (after taxes) at which an amount equal to the illustrated premiums
could have been invested outside the Policy to arrive at the death benefit of
the Policy. The internal rate of return is compounded annually, and the premiums
are assumed to be paid at the beginning of each Policy year.
If you request, we will furnish a personalized illustration reflecting the
proposed insured's age, sex, underwriting classification, and the face amount or
premium payment schedule requested. Where applicable, we will also furnish on
request an illustration for a Policy which is not affected by the sex of the
insured.
A-39
<PAGE> 45
MALE ISSUE AGE 40
$1,520 ANNUAL PREMIUM FOR
NONSMOKER PREFERRED UNDERWRITING RISK
$100,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST ------------------------------ ----------------------------- -----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1... $ 1,596 $100,000 $100,000 $100,000 $ 226 $ 294 $ 362 $ 893 $ 960 $ 1,028
2... 3,272 100,000 100,000 100,000 1,182 1,380 1,586 1,952 2,150 2,356
3... 5,031 100,000 100,000 100,000 2,241 2,639 3,068 2,986 3,384 3,813
4... 6,879 100,000 100,000 100,000 3,273 3,941 4,693 3,993 4,661 5,413
5... 8,819 100,000 100,000 100,000 4,277 5,291 6,476 4,973 5,986 7,171
6... 10,856 100,000 100,000 100,000 5,343 6,777 8,523 5,922 7,356 9,102
7... 12,995 100,000 100,000 100,000 6,376 8,311 10,762 6,840 8,774 11,226
8... 15,240 100,000 100,000 100,000 7,530 10,046 13,367 7,877 10,394 13,715
9... 17,598 100,000 100,000 100,000 8,779 11,969 16,352 9,011 12,201 16,584
10.. 20,074 100,000 100,000 100,000 10,005 13,972 19,640 10,121 14,088 19,756
15.. 34,439 100,000 100,000 100,000 15,308 24,833 41,488 15,308 24,833 41,488
20.. 52,773 100,000 100,000 101,316 19,837 38,203 77,935 19,837 38,203 77,935
25.. 76,172 100,000 100,000 166,773 23,443 54,879 138,977 23,443 54,879 138,977
30.. 106,036 100,000 100,000 276,568 25,795 76,026 240,494 25,795 76,026 240,494
35.. 144,151 100,000 108,753 430,086 26,229 103,574 409,606 26,229 103,574 409,606
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON NET CASH VALUE ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY --------------------------- ------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C>
1... -85.10% -80.65% -76.19% 6,478.95% 6,478.95% 6,478.95%
2... -48.62 -42.40 -36.28 662.65 662.65 662.65
3... -31.53 -24.96 -18.54 265.39 265.39 265.39
4... -23.29 -16.61 -10.09 152.66 152.66 152.66
5... -18.58 -11.84 -5.29 102.87 102.87 102.87
6... -15.12 -8.43 -1.93 75.61 75.61 75.61
7... -12.83 -6.18 0.29 58.68 58.68 58.68
8... -10.78 -4.26 2.10 47.26 47.26 47.26
9... -9.03 -2.68 3.55 39.10 39.10 39.10
10.. -7.77 -1.54 4.61 33.01 33.01 33.01
15.. -5.17 1.06 7.17 17.02 17.02 17.02
20.. -4.27 2.13 8.31 10.35 10.35 10.46
25.. -3.96 2.72 8.94 6.81 6.81 10.09
30.. -3.99 3.12 9.32 4.68 4.68 10.03
35.. -4.39 3.44 9.58 3.27 3.67 9.78
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE
FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT
EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH VALUE AND NET
CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN
BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-40
<PAGE> 46
MALE ISSUE AGE 40
$1,520 ANNUAL PREMIUM FOR
NONSMOKER PREFERRED UNDERWRITING RISK
$100,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST ------------------------------ ---------------------------- ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,596 100,000 100,000 100,000 224 291 359 890 957 1,025
2 3,272 100,000 100,000 100,000 1,127 1,322 1,525 1,897 2,092 2,295
3 5,031 100,000 100,000 100,000 2,131 2,519 2,940 2,876 3,264 3,685
4 6,879 100,000 100,000 100,000 3,106 3,754 4,486 3,826 4,474 5,206
5 8,819 100,000 100,000 100,000 4,052 5,029 6,177 4,747 5,724 6,872
6 10,856 100,000 100,000 100,000 5,056 6,433 8,117 5,636 7,012 8,696
7 12,995 100,000 100,000 100,000 6,028 7,877 10,232 6,491 8,340 10,695
8 15,240 100,000 100,000 100,000 6,965 9,361 12,540 7,313 9,709 12,887
9 17,598 100,000 100,000 100,000 7,867 10,886 15,062 8,099 11,118 15,293
10 20,074 100,000 100,000 100,000 8,731 12,453 17,819 8,847 12,568 17,935
15 34,439 100,000 100,000 100,000 11,893 20,399 35,659 11,893 20,399 35,659
20 52,773 100,000 100,000 100,000 13,285 28,999 64,690 13,285 28,999 64,690
25 76,172 100,000 100,000 136,073 12,028 38,051 113,394 12,028 38,051 113,394
30 106,036 100,000 100,000 220,898 5,921 46,865 192,085 5,921 46,865 192,085
35 144,151 100,000 335,508 54,382 319,531 54,382 319,531
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON NET CASH VALUE ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY --------------------------- ------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C>
1 -85.28 -80.86 -76.40 6,478.95 6,478.95 6,478.95
2 -50.44 -44.20 -38.04 662.65 662.65 662.65
3 -33.48 -26.87 -20.39 265.39 265.39 265.39
4 -25.13 -18.38 -11.80 152.66 152.66 152.66
5 -20.28 -13.46 -6.83 102.87 102.87 102.87
6 -16.66 -9.90 -3.32 75.61 75.61 75.61
7 -14.25 -7.52 -0.98 58.68 58.68 58.68
8 -12.56 -5.85 0.68 47.26 47.26 47.26
9 -11.32 -4.61 1.92 39.10 39.10 39.10
10 -10.39 -3.66 2.87 33.01 33.01 33.01
15 -8.68 -1.40 5.41 17.02 17.02 17.02
20 -8.77 -0.45 6.74 10.35 10.35 10.35
25 -10.61 0.01 7.63 6.81 6.81 8.80
30 -20.41 0.18 8.17 4.68 4.68 8.89
35 0.12 8.52 3.27 8.73
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE
FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT
EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH VALUE AND NET
CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN
BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-41
<PAGE> 47
MALE ISSUE AGE 40
$1,520 ANNUAL PREMIUM FOR
NONSMOKER PREFERRED UNDERWRITING RISK
$100,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST ------------------------------ ---------------------------- ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 1,596 $100,890 $100,958 $101,025 $ 224 $ 291 $ 359 $ 890 $ 958 $ 1,025
2 3,272 101,944 102,141 102,346 1,174 1,371 1,576 1,944 2,141 2,346
3 5,031 102,970 103,365 103,792 2,225 2,620 3,047 2,970 3,365 3,792
4 6,879 103,965 104,628 105,374 3,245 3,908 4,653 3,965 4,628 5,374
5 8,819 104,929 105,932 107,105 4,234 5,237 6,410 4,929 5,932 7,105
6 10,856 105,859 107,275 108,998 5,279 6,695 8,419 5,859 7,275 8,998
7 12,995 106,752 108,656 111,069 6,288 8,193 10,606 6,752 8,656 11,069
8 15,240 107,772 110,247 113,510 7,425 9,899 13,163 7,772 10,247 13,510
9 17,598 108,897 112,034 116,339 8,665 11,802 16,107 8,897 12,034 16,339
10 20,074 109,996 113,895 119,461 9,881 13,779 19,345 9,996 13,895 19,461
15 34,439 115,073 124,391 140,656 15,073 24,391 40,656 15,073 24,391 40,656
20 52,773 119,356 137,126 175,469 19,356 37,126 75,469 19,356 37,126 75,469
25.. 76,172 122,449 152,221 232,567 22,449 52,221 132,567 22,449 52,221 132,567
30.. 106,036 123,846 169,667 326,280 23,846 69,667 226,280 23,846 69,667 226,280
35.. 144,151 122,633 188,965 480,103 22,633 88,965 380,103 22,633 88,965 380,103
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON NET CASH VALUE ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY --------------------------- ------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C>
1 -85.28% -80.84% -76.38% 6,537.48% 6,541.96% 6,546.44%
2 -48.87 -42.66 -36.55 670.48 671.27 672.09
3 -31.81 -25.25 -18.84 269.39 269.92 270.49
4 -23.59 -16.92 -10.41 155.52 155.99 156.52
5 -18.90 -12.17 -5.63 105.21 105.68 106.22
6 -15.45 -8.77 -2.28 77.66 78.14 78.72
7 -13.18 -6.54 -0.08 60.54 61.05 61.68
8 -11.10 -4.59 1.76 49.02 49.56 50.25
9 -9.30 -2.97 3.25 40.81 41.38 42.15
10 -8.01 -1.79 4.34 34.68 35.29 36.13
15 -5.38 0.84 6.94 18.56 19.40 20.74
20 -4.53 1.87 8.04 11.78 12.89 14.84
25.. -4.34 2.36 8.64 8.13 9.51 12.15
30.. -4.60 2.61 9.01 5.85 7.52 10.86
35.. -5.46 2.69 9.26 4.25 6.23 10.24
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE
FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT
EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH VALUE AND NET
CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN
BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-42
<PAGE> 48
MALE ISSUE AGE 40
$1,520 ANNUAL PREMIUM FOR
NONSMOKER PREFERRED UNDERWRITING RISK
$100,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST ------------------------------ ---------------------------- ----------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1,596 100,887 100,955 101,022 221 288 356 887 955 1,022
2 3,272 101,889 102,083 102,286 1,119 1,313 1,516 1,889 2,083 2,286
3 5,031 102,860 103,246 103,665 2,115 2,501 2,920 2,860 3,246 3,665
4 6,879 103,799 104,442 105,168 3,079 3,722 4,447 3,799 4,442 5,168
5 8,819 104,705 105,672 106,808 4,010 4,977 6,113 4,705 5,672 6,808
6 10,856 105,575 106,934 108,596 4,995 6,355 8,016 5,575 6,934 8,596
7 12,995 106,407 108,227 110,545 5,944 7,764 10,081 6,407 8,227 10,545
8 15,240 107,200 109,552 112,670 6,853 9,204 12,322 7,200 9,552 12,670
9 17,598 107,953 110,906 114,988 7,721 10,675 14,756 7,953 10,906 14,988
10 20,074 108,661 112,288 117,515 8,545 12,173 17,399 8,661 12,288 17,515
15 34,439 111,393 119,477 133,951 11,393 19,477 33,951 11,393 19,477 33,951
20 52,773 112,184 126,475 158,830 12,184 26,475 58,830 12,184 26,475 58,830
25 76,172 109,952 131,865 196,131 9,952 31,865 96,131 9,952 31,865 96,131
30 106,036 102,689 132,712 251,119 2,689 32,712 151,119 2,689 32,712 151,119
35 144,151 123,837 330,880 23,837 230,880 23,837 230,880
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON NET CASH VALUE ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY --------------------------- ------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C>
1 -85.46 -81.04 -76.59 6,537.33 6,541.73 6,546.21
2 -50.69 -44.46 -38.32 670.26 671.04 671.85
3 -33.76 -27.16 -20.69 269.25 269.76 270.32
4 -25.43 -18.70 -12.12 155.40 155.86 156.37
5 -20.60 -13.79 -7.17 105.11 105.56 106.08
6 -17.00 -10.24 -3.67 77.56 78.03 78.58
7 -14.61 -7.89 -1.35 60.45 60.93 61.54
8 -12.94 -6.23 0.29 48.90 49.41 50.08
9 -11.72 -5.01 1.51 40.64 41.18 41.91
10 -10.81 -4.08 2.44 34.46 35.04 35.84
15 -9.30 -2.00 4.83 18.20 18.97 20.21
20 -9.83 -1.34 5.94 11.28 12.25 14.06
25 -12.88 -1.38 6.56 7.43 8.60 11.10
30 -36.11 -2.24 6.91 4.82 6.22 9.54
35 -5.08 7.12 4.29 8.67
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE
FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT
EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH VALUE AND NET
CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN
BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-43
<PAGE> 49
MALE ISSUE AGE 40
$7,600 ANNUAL PREMIUM FOR
NONSMOKER PREFERRED UNDERWRITING RISK
$500,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST -------------------------------- -------------------------------- --------------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 7,980 $500,000 $500,000 $ 500,000 $ 1,927 $ 2,293 $ 2,660 $ 5,259 $ 5,625 $ 5,992
2... 16,359 500,000 500,000 500,000 7,021 8,098 9,219 10,871 11,949 13,070
3... 25,157 500,000 500,000 500,000 12,632 14,790 17,125 16,357 18,516 20,850
4... 34,395 500,000 500,000 500,000 18,105 21,727 25,800 21,705 25,327 29,400
5... 44,095 500,000 500,000 500,000 23,444 28,923 35,334 26,919 32,398 38,809
6... 54,279 500,000 500,000 500,000 29,087 36,832 46,264 31,983 39,728 49,160
7... 64,973 500,000 500,000 500,000 34,575 45,007 58,239 36,892 47,324 60,556
8... 76,202 500,000 500,000 500,000 40,539 54,098 72,011 42,276 55,836 73,748
9... 87,992 500,000 500,000 500,000 47,097 64,268 87,882 48,255 65,426 89,040
10.. 100,372 500,000 500,000 500,000 53,543 74,867 105,385 54,122 75,446 105,964
15.. 172,197 500,000 500,000 500,000 81,636 132,690 222,173 81,636 132,690 222,173
20.. 263,866 500,000 500,000 542,972 105,897 204,301 417,671 105,897 204,301 417,671
25.. 380,862 500,000 500,000 894,328 125,614 294,239 745,273 125,614 294,239 745,273
30.. 530,182 500,000 500,000 1,485,024 139,203 409,237 1,291,325 139,203 409,237 1,291,325
35.. 720,756 500,000 586,594 2,313,173 143,511 558,661 2,203,022 143,511 558,661 2,203,022
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON NET CASH VALUE ON DEATH BENEFIT
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
GROSS ANNUAL GROSS ANNUAL
END OF RATE OF RETURN OF RATE OF RETURN OF
POLICY ------------------------ ------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C>
1 -74.64% -69.82% -65.00% 6,478.95% 6,478.95% 6,478.95%
2... -41.66 -35.30 -29.04 662.65 662.65 662.65
3... -26.75 -20.13 -13.64 265.39 265.39 265.39
4... -19.69 -12.99 -6.46 152.66 152.66 152.66
5... -15.69 -8.96 -2.41 102.87 102.87 102.87
6... -12.73 -6.07 0.41 75.61 75.61 75.61
7... -10.79 -4.18 2.26 58.68 58.68 58.68
8... -9.09 -2.60 3.75 47.26 47.26 47.26
9... -7.57 -1.25 4.98 39.10 39.10 39.10
10.. -6.48 -0.27 5.87 33.01 33.01 33.01
15.. -4.30 1.87 7.96 17.02 17.02 17.02
20.. -3.59 2.74 8.88 10.35 10.35 11.02
25.. -3.36 3.22 9.38 6.81 6.81 10.53
30.. -3.41 3.54 9.68 4.68 4.68 10.39
35.. -3.77 3.80 9.88 3.27 4.04 10.09
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE
FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT
EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH VALUE AND NET
CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN
BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-44
<PAGE> 50
MALE ISSUE AGE 40
$7,600 ANNUAL PREMIUM FOR
NONSMOKER PREFERRED UNDERWRITING RISK
$500,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST -------------------------------- ------------------------------- -------------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 7,980 500,000 500,000 500,000 1,910 2,274 2,639 5,241 5,605 5,971
2 16,359 500,000 500,000 500,000 6,826 7,891 9,004 10,677 11,742 12,854
3 25,157 500,000 500,000 500,000 12,246 14,367 16,669 15,971 18,092 20,394
4 34,395 500,000 500,000 500,000 17,514 21,055 25,052 21,114 24,655 28,652
5 44,095 500,000 500,000 500,000 22,634 27,968 34,234 26,109 31,444 37,709
6 54,279 500,000 500,000 500,000 28,045 35,557 44,742 30,941 38,453 47,638
7 64,973 500,000 500,000 500,000 33,288 43,373 56,214 35,605 45,690 58,531
8 76,202 500,000 500,000 500,000 38,358 51,421 68,752 40,095 53,159 70,489
9 87,992 500,000 500,000 500,000 43,248 59,710 82,472 44,407 60,868 83,631
10 100,372 500,000 500,000 500,000 47,946 68,238 97,498 48,526 68,817 98,077
15 172,197 500,000 500,000 500,000 65,649 112,103 195,387 65,649 112,103 195,387
20 263,866 500,000 500,000 500,000 74,567 160,716 355,935 74,567 160,716 355,935
25 380,862 500,000 500,000 748,065 70,500 214,075 623,388 70,500 214,075 623,388
30 530,182 500,000 500,000 1,212,540 42,863 271,009 1,054,383 42,863 271,009 1,054,383
35 720,756 500,000 1,840,033 332,099 1,752,413 332,099 1,752,413
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON NET CASH VALUE ON DEATH BENEFIT
ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
GROSS ANNUAL GROSS ANNUAL
END OF RATE OF RETURN OF RATE OF RETURN OF
POLICY --------------------------- ------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C>
1 -74.87 -70.08 -65.27 6,478.95 6,478.95 6,478.95
2 -42.85 -36.49 -30.22 662.65 662.65 662.65
3 -28.01 -21.38 -14.86 265.39 265.39 265.39
4 -20.88 -14.16 -7.59 152.66 152.66 152.66
5 -16.80 -10.05 -3.46 102.87 102.87 102.87
6 -13.75 -7.07 -0.54 75.61 75.61 75.61
7 -11.75 -5.11 1.38 58.68 58.68 58.68
8 -10.35 -3.74 2.73 47.26 47.26 47.26
9 -9.34 -2.73 3.72 39.10 39.10 39.10
10 -8.58 -1.97 4.48 33.01 33.01 33.01
15 -7.28 -0.21 6.48 17.02 17.02 17.02
20 -7.42 0.53 7.55 10.35 10.35 10.35
25 -8.86 0.91 8.25 6.81 6.81 9.41
30 -14.96 1.09 8.65 4.68 4.68 9.36
35 1.20 8.92 3.27 9.12
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE
FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT
EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH VALUE AND NET
CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN
BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-45
<PAGE> 51
MALE ISSUE AGE 40
$7,600 ANNUAL PREMIUM FOR
NONSMOKER PREFERRED UNDERWRITING RISK
$500,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON CURRENT POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST -------------------------------- -------------------------------- --------------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 $ 7,980 $505,245 $505,610 $ 505,976 $ 1,913 $ 2,278 $ 2,644 $ 5,245 $ 5,610 $ 5,976
2 16,359 510,829 511,902 513,018 6,978 8,051 9,168 10,829 11,902 13,018
3 25,157 516,269 518,415 520,736 12,544 14,690 17,010 16,269 18,415 20,736
4 34,395 521,554 525,147 529,186 17,954 21,547 25,586 21,554 25,147 29,186
5 44,095 526,685 532,107 538,451 23,209 28,632 34,976 26,685 32,107 38,451
6 54,279 531,642 539,287 548,597 28,746 36,391 45,701 31,642 39,287 48,597
7 64,973 536,418 546,688 559,710 34,101 44,371 57,393 36,418 46,688 59,710
8 76,202 541,700 555,028 572,625 39,963 53,291 70,888 41,700 55,028 72,625
9 87,992 547,633 564,508 587,699 46,475 63,350 86,541 47,633 64,508 87,699
10 100,372 553,440 574,391 604,348 52,861 73,812 103,769 53,440 74,391 104,348
15 172,197 580,367 630,295 717,649 80,367 130,295 217,649 80,367 130,295 217,649
20 263,866 603,313 698,495 904,424 103,313 198,495 404,424 103,313 198,495 404,424
25 380,862 620,280 779,934 1,211,929 120,280 279,934 711,929 120,280 279,934 711,929
30 530,182 628,729 874,999 1,718,567 128,729 374,999 1,218,567 128,729 374,999 1,218,567
35 720,756 624,061 981,734 2,553,434 124,061 481,734 2,053,434 124,061 481,734 2,053,434
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON NET CASH VALUE ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY --------------------------- ------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C>
1 -74.82% -70.02% -65.21% 6,547.96% 6,552.76% 6,557.58%
2 -41.92 -35.57 -29.32 671.37 672.23 673.12
3 -27.03 -20.42 -13.95 269.77 270.34 270.96
4 -19.99 -13.30 -6.78 155.77 156.28 156.85
5 -16.01 -9.29 -2.75 105.40 105.90 106.49
6 -13.06 -6.41 0.06 77.82 78.34 78.96
7 -11.14 -4.54 1.90 60.68 61.23 61.90
8 -9.42 -2.94 3.40 49.15 49.72 50.46
9 -7.85 -1.54 4.67 40.93 41.54 42.35
10 -6.73 -0.53 5.59 34.79 35.44 36.34
15 -4.51 1.65 7.73 18.65 19.55 20.96
20 -3.84 2.48 8.61 11.87 13.04 15.08
25 -3.73 2.86 9.09 8.21 9.67 12.40
30 -4.00 3.04 9.39 5.93 7.68 11.12
35 -4.78 3.09 9.59 4.33 6.40 10.50
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE
FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT
EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH VALUE AND NET
CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN
BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-46
<PAGE> 52
MALE ISSUE AGE 40
$7,600 ANNUAL PREMIUM FOR
NONSMOKER PREFERRED UNDERWRITING RISK
$500,000 FACE AMOUNT
OPTION 2 DEATH BENEFIT
THIS ILLUSTRATION IS BASED ON GUARANTEED POLICY CHARGES.
<TABLE>
<CAPTION>
DEATH BENEFIT NET CASH VALUE CASH VALUE
PREMIUMS ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL ASSUMING HYPOTHETICAL
ACCUMULATED GROSS ANNUAL GROSS ANNUAL GROSS ANNUAL
END OF AT 5% RATE OF RETURN OF RATE OF RETURN OF RATE OF RETURN OF
POLICY INTEREST -------------------------------- ------------------------------- -------------------------------
YEAR PER YEAR 0% 6% 12% 0% 6% 12% 0% 6% 12%
------ ----------- -- -- --- -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 7,980 505,227 505,591 505,955 1,896 2,259 2,624 5,227 5,591 5,955
2 16,359 510,634 511,695 512,803 6,784 7,845 8,952 10,634 11,695 12,803
3 25,157 515,885 517,993 520,281 12,160 14,268 16,556 15,885 17,993 20,281
4 34,395 520,966 524,478 528,443 17,366 20,878 24,843 20,966 24,478 28,443
5 44,095 525,881 531,160 537,359 22,405 27,684 33,884 25,881 31,160 37,359
6 54,279 530,610 538,025 547,090 27,714 35,129 44,194 30,610 38,025 47,090
7 64,973 535,146 545,074 557,711 32,829 42,757 55,394 35,146 45,074 57,711
8 76,202 539,482 552,304 569,305 37,744 50,567 67,567 39,482 52,304 69,305
9 87,992 543,610 559,714 581,966 42,452 58,555 80,807 43,610 59,714 81,966
10 100,372 547,513 567,291 595,785 46,934 66,711 95,206 47,513 67,291 95,785
15 172,197 562,913 607,065 686,065 62,913 107,065 186,065 62,913 107,065 186,065
20 263,866 568,504 646,876 823,876 68,504 146,876 323,876 68,504 146,876 323,876
25 380,862 558,882 679,882 1,032,593 58,882 179,882 532,593 58,882 179,882 532,593
30 530,182 524,011 691,738 1,344,338 24,011 191,738 844,338 24,011 191,738 844,338
35 720,756 656,959 1,804,151 156,959 1,304,151 156,959 1,304,151
<CAPTION>
INTERNAL RATE OF RETURN INTERNAL RATE OF RETURN
ON NET CASH VALUE ON DEATH BENEFIT
ASSUMING HYPOTHETICAL GROSS ASSUMING HYPOTHETICAL GROSS
END OF ANNUAL RATE OF RETURN OF ANNUAL RATE OF RETURN OF
POLICY --------------------------- -------------------------------
YEAR 0% 6% 12% 0% 6% 12%
------ -- -- --- -- -- ---
<S> <C> <C> <C> <C> <C> <C>
1 -75.06 -70.28 -65.48 6,547.73 6,552.51 6,557.31
2 -43.10 -36.76 -30.50 671.21 672.06 672.95
3 -28.29 -21.67 -15.17 269.67 270.23 270.84
4 -21.18 -14.48 -7.91 155.68 156.18 156.74
5 -17.12 -10.38 -3.80 105.33 105.82 106.39
6 -14.09 -7.41 -0.89 77.75 78.25 78.86
7 -12.10 -5.47 1.01 60.61 61.14 61.80
8 -10.72 -4.11 2.34 49.05 49.61 50.33
9 -9.73 -3.13 3.32 40.78 41.37 42.16
10 -8.99 -2.38 4.06 34.60 35.22 36.09
15 -7.88 -0.79 5.91 18.32 19.14 20.47
20 -8.41 -0.33 6.76 11.39 12.43 14.35
25 -10.86 -0.42 7.23 7.54 8.80 11.42
30 -24.04 -1.14 7.50 4.94 6.44 9.89
35 -3.17 7.65 4.57 9.04
</TABLE>
IT IS EMPHASIZED THAT THE HYPOTHETICAL GROSS ANNUAL RATES OF RETURN SHOWN ABOVE
AND ELSEWHERE IN THIS PROSPECTUS ARE ILLUSTRATIVE ONLY AND SHOULD NOT BE DEEMED
A REPRESENTATION OF PAST OR FUTURE GROSS ANNUAL RATES OF RETURN. ACTUAL GROSS
RATES OF RETURN MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY A POLICY OWNER, THE
FREQUENCY OF PREMIUM PAYMENTS CHOSEN BY A POLICY OWNER, AND THE INVESTMENT
EXPERIENCE OF THE POLICY'S SUB-ACCOUNTS. THE DEATH BENEFIT, CASH VALUE AND NET
CASH VALUE FOR A POLICY WOULD BE DIFFERENT FROM THOSE SHOWN IF THE ACTUAL GROSS
ANNUAL RATES OF RETURN AVERAGED 0%, 6%, AND 12% OVER A PERIOD OF YEARS, BUT
VARIED ABOVE OR BELOW THAT AVERAGE DURING THE PERIOD. THEY WOULD ALSO BE
DIFFERENT IF ANY POLICY LOAN WERE MADE DURING THE PERIOD. NO REPRESENTATIONS CAN
BE MADE BY NELICO OR THE ELIGIBLE FUNDS THAT THOSE HYPOTHETICAL RATES OF RETURN
CAN BE ACHIEVED FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.
A-47
<PAGE> 53
APPENDIX B
INVESTMENT EXPERIENCE INFORMATION
This Appendix gives hypothetical illustrations of the Variable Account's and
the Policy's investment experience based on the historical investment experience
of the Eligible Funds. It does not predict future performance.
The Policies became available in August, 1995. The Zenith Fund and the
Variable Account commenced operations on August 26, 1983. The Westpeak Stock
Index and Back Bay Advisors Managed Series of the Zenith Fund commenced
operations on May 1, 1987. The Westpeak Growth and Income Series and Harris
Oakmark Mid Cap Value Series of the Zenith Fund commenced operations on April
30, 1993. The Loomis Sayles Small Cap Series of the Zenith Fund commenced
operations on May 2, 1994 and was made available to the Variable Account on
December 19, 1994. The MFS Investors Series and MFS Research Managers Series of
the Zenith Fund commenced operations on April 30, 1999. The remaining Zenith
Fund Series commenced operations on October 31, 1994 and were made available to
the Variable Account on May 1, 1995. The commencement of operations for the
Metropolitan Series Fund, Inc. Portfolios was: March 3, 1997 for the Janus Mid
Cap Portfolio; and November 9, 1998 for the Russell 2000 Index Portfolio. Both
were made available to the Variable Account on May 1, 2000. The Putnam Large Cap
Growth Portfolio of the Metropolitan Series Fund, Inc. commenced operations on
May 1, 2000 and is not included in this Appendix. The VIP Equity-Income
Portfolio and VIP Overseas Portfolio commenced operations on October 9, 1986 and
January 28, 1987, respectively, and were added as investment options of the
Variable Account on April 30, 1993. The VIP High Income Portfolio and the VIP II
Asset Manager Portfolio commenced operations on September 19, 1985 and September
6, 1989, respectively, and were added as investment options of the Variable
Account on December 19, 1994.
We base the illustrations on the actual investment experience of the
relevant Eligible Funds for the periods shown (net of actual charges and
expenses incurred by the Eligible Funds), and reflect a charge for mortality and
expense risks against the Variable Account's assets at the currently applicable
annual rate of .25% for the $100,000 face amount and .20% for the $500,000 face
amount. The illustrations assume that premiums are paid at the beginning of each
year and that no loans, transfers or other Policy Owner transactions were made
during the periods shown.
Many factors other than investment experience affect Policy values and
benefits. These investment experience figures do not reflect the charges
deducted from Premiums and Monthly Deductions from the cash value. (See "Charges
and Expenses".)
NET RATES OF RETURN
The annual net rate is the effective earnings rate at which the investment
Sub-Accounts increased or decreased over a one-year period, based on the
investment experience of the relevant Eligible Funds. The rate is calculated by
taking the difference between the Sub-Accounts' ending values and beginning
values of the period and dividing it by the beginning values of the period.
The effective annual net rate of return since inception is the annualized
effective interest rate at which the Sub-Accounts increased or decreased since
the inception dates of the Sub-Accounts. For each Sub-Account, we calculate the
rate by taking the difference between the Sub-Account's ending value and the
value on the date of its inception and dividing it by the value on the date of
inception. This result is the total net rate of return since inception ("Total
Return"). The effective annual net rate of return is the rate which, if
compounded annually, would equal the total net rate of return since inception.
The net rates of return shown below reflect the current mortality and
expense risk charge of .25%.
SUB-ACCOUNTS INVESTING IN ZENITH FUND
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
SUB- -----------------------------------------------------------------------------------------------------------
ACCOUNT FOR ONE YEAR ENDING
------- 8/26/83- ------------------------------------------------------------------------------------------------
12/31/83 12/31/84 12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth*...... 8.77% -0.84% 67.68% 94.72% 52.32% -9.02% 30.43% -3.72% 53.60% -6.29%
Bond Income.......... 2.96% 12.32% 18.46% 14.55% 2.01% 8.10% 12.02% 7.82% 17.66% 7.91%
Money Market......... 3.21% 10.45% 7.99% 6.54% 6.26% 7.25% 8.98% 7.92% 5.95% 3.54%
<CAPTION>
ANNUAL NET RATE OF RETURN
SUB- -------------------------------------------------------------------------- 8/26/83- 8/26/83-
ACCOUNT FOR ONE YEAR ENDING 12/31/99 12/31/99
------- -------------------------------------------------------------------------- TOTAL EFFECTIVE
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Capital Growth*...... 14.68% -7.30% 37.68% 20.77% 23.17% 33.76% 15.41% 2872.30% 23.06%
Bond Income.......... 12.33% -3.60% 20.90% 4.35% 10.61% 8.77% -0.71% 333.62% 9.39%
Money Market......... 2.71% 3.71% 5.44% 4.87% 5.08% 5.00% 4.70% 162.13% 6.07%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
SUB-ACCOUNT FOR ONE YEAR ENDING
----------- 5/1/87- ------------------------------------------------------------------------------------------------
12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index.......... -9.84% 16.05% 29.83% -4.38% 30.11% 7.03% 9.45% 0.86% 36.58% 22.16%
Managed.............. 0.55% 9.21% 18.79% 2.95% 19.87% 6.43% 10.37% -1.36% 30.94% 14.74%
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------------ 5/1/87- 5/1/87-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/99 12/31/99
----------- ------------------------------ TOTAL EFFECTIVE
12/31/97 12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Stock Index.......... 32.16% 27.62% 20.08% 552.76% 15.96%
Managed.............. 26.25% 19.36% 9.69% 356.93% 12.74%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-------------------------------------------------------------------------- 4/30/93- 4/30/93-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/99 12/31/99
----------- 4/30/93 --------------------------------------------------------------- TOTAL EFFECTIVE
12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Growth and Income........... 13.49% -1.45% 36.13% 17.80% 33.14% 24.14% 9.08% 224.91% 19.33%
Mid Cap Value**............. 13.33% -0.52% 30.03% 17.31% 17.03% -5.70% 0.10% 92.03% 10.28%
</TABLE>
A-48
<PAGE> 54
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
--------------------------------------------------------------- 5/2/94 5/2/94
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/99 12/31/99
----------- 5/2/94- ---------------------------------------------------- TOTAL EFFECTIVE
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap.............................. -4.17% 28.52% 30.36% 24.54% -1.94% 31.42% 159.78% 18.36%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
--------------------------------------------------------------- 10/31/94- 10/31/94-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/99 12/31/99
----------- 10/31/94 ---------------------------------------------------- TOTAL EFFECTIVE
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- -------- -------- -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Equity Growth........................... -5.54% 48.33% 12.89% 25.32% 47.41% 33.80% 296.32% 30.54%
Balanced***............................. -0.24% 24.48% 16.62% 15.89% 8.84% -5.30% 73.16% 11.21%
Venture Value........................... -3.24% 38.94% 25.52% 33.16% 14.13% 17.22% 199.70% 23.67%
International Magnum Equity****......... 2.16% 5.97% 6.41% -1.55% 7.01% 24.30% 51.44% 8.36%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------- 4/30/99- 4/30/99-
12/31/99 12/31/99
4/30/99- TOTAL EFFECTIVE
SUB-ACCOUNT 12/31/99 RETURN ANNUAL
----------- -------- -------- ---------
<S> <C> <C> <C>
Investors................................................... 1.08% 2.68% N/A
Research Managers........................................... 17.90% 19.60% N/A
</TABLE>
------------
* Rates of return reflect the Capital Growth Series' former investment
advisory fee of .50% of average daily net assets for the period through
December 31, 1987 and its current advisory fee schedule thereafter.
** The Harris Oakmark Mid Cap Value Series' Sub-adviser was Loomis Sayles
until May 1, 1998, when Goldman Sachs Asset Management became the
sub-adviser. Harris Associates became the sub-adviser on May 1, 2000. Rates
of return reflect the Series' former investment advisory fee of .70% of
average daily net assets for the period through April 30, 1998, and .75%
thereafter.
*** The Balanced Series' sub-adviser was Loomis, Sayles until May 1, 2000, when
Wellington Management Company became the sub-adviser.
**** The Morgan Stanley International Magnum Equity Series' sub-adviser was
Draycott Partners until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management became sub-adviser.
SUB-ACCOUNTS INVESTING IN METROPOLITAN SERIES FUND, INC.
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-------------------------------- 3/3/97- 3/3/97-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/99 12/31/99
----------- 3/3/97- -------------------- TOTAL EFFECTIVE
12/31/97 12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Mid Cap..................................................... 26.64% 36.85% 122.37% 289.36% 61.71%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------------ 11/9/98- 11/9/98-
FOR ONE YEAR ENDING 12/31/99 12/31/99
11/9/98- ------------------- TOTAL EFFECTIVE
12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Russell 2000 Index.......................................... 5.44% 22.43% 29.09% 25.06%
</TABLE>
SUB-ACCOUNTS INVESTING IN VIP
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
SUB-ACCOUNT FOR ONE YEAR ENDING
----------- 10/9/86- ------------------------------------------------------------------------------------------------
12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Equity-Income........ 1.54% -1.38% 22.40% 17.05% -15.50% 31.11% 16.59% 18.00% 6.80% 34.76%
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------------------- 10/9/86- 10/9/86-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/99 12/31/99
----------- ----------------------------------------- TOTAL EFFECTIVE
12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Equity-Income........ 14.00% 27.79% 11.35% 6.06% 434.01% 13.50%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------------------------------------------------------------------------------
FOR ONE YEAR ENDING
1/28/87- -------------------------------------------------------------------------------------
12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
-------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Overseas............... -7.11% 7.86% 25.97% -1.91% 7.73% -10.94% 37.01% 1.47% 9.40%
<CAPTION>
ANNUAL NET RATE OF RETURN
----------------------------------------- 1/28/87- 1/28/87-
FOR ONE YEAR ENDING 12/31/99 12/31/99
----------------------------------------- TOTAL EFFECTIVE
12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Overseas............... 12.93% 11.28% 12.47% 42.27% 269.15% 10.63%
</TABLE>
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-----------------------------------------------------------------------------------------------------------
SUB-ACCOUNT FOR ONE YEAR ENDING
----------- 9/19/85- ------------------------------------------------------------------------------------------------
12/31/85 12/31/86 12/31/87 12/31/88 12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
High Income.......... 6.20% 17.39% 0.96% 11.36% -4.41% -2.48% 34.74% 22.86% 20.10% -1.79%
<CAPTION>
ANNUAL NET RATE OF RETURN
---------------------------------------------------- 9/19/85- 9/19/85-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/99 12/31/99
----------- ---------------------------------------------------- TOTAL EFFECTIVE
12/31/95 12/31/96 12/31/97 12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
High Income.......... 20.30% 13.75% 17.37% -4.57% 7.89% 322.28% 10.61%
</TABLE>
SUB-ACCOUNT INVESTING IN VIP II
<TABLE>
<CAPTION>
ANNUAL NET RATE OF RETURN
-------------------------------------------------------------------------------------
SUB-ACCOUNT FOR ONE YEAR ENDING
----------- 9/6/89- --------------------------------------------------------------------------
12/31/89 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96
-------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Asset Manager.......................... 1.23% 6.45% 22.25% 11.43% 20.93% -6.32% 16.66% 14.32%
<CAPTION>
ANNUAL NET RATE OF RETURN
------------------------------ 9/6/89- 9/6/89-
SUB-ACCOUNT FOR ONE YEAR ENDING 12/31/99 12/31/99
----------- ------------------------------ TOTAL EFFECTIVE
12/31/97 12/31/98 12/31/99 RETURN ANNUAL
-------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C>
Asset Manager.......................... 20.35% 14.76% 10.81% 237.79% 12.52%
</TABLE>
A-49
<PAGE> 55
POLICY PERFORMANCE
The material below assumes a Policy was issued with a $100,000 and $500,000
face amount, respectively, with annual premiums paid on August 26 of each year
(May 1 in the case of the Zenith Westpeak Stock Index and Zenith Back Bay
Managed Sub-Accounts; May 2 in the case of the Loomis Sayles Small Cap
Sub-Account; October 31 in the case of the Zenith Balanced, Zenith Morgan
Stanley International Magnum Equity, Zenith Davis Venture Value and Zenith Alger
Equity Growth Sub-Accounts; October 9 in the case of the VIP Equity-Income
Sub-Account; January 28 in the case of the VIP Overseas Sub-Account; April 30 in
the case of the Zenith Westpeak Growth and Income and Zenith Harris Oakmark Mid
Cap Value Sub-Accounts; September 19 in the case of the VIP High Income
Sub-Account; September 6 in the case of the VIP II Asset Manager Sub-Account;
March 3 in the case of the Metropolitan Janus Mid Cap Sub-Account; November 9 in
the case of the Metropolitan Russell 2000 Index Sub-Account), to a male age 40
in the nonsmoker preferred risk category. Values and benefits are shown first
for Policies with the Option 1 death benefit and then for the Policies with the
Option 2 death benefit. The death benefits, cash values and internal rates of
return assume in each instance that the entire policy value was invested in the
particular Sub-Account for the period shown. The illustrations of Policy
investment experience reflect all Policy charges based on NELICO's current
rates. The illustrations for the $500,000 face amount reflect the lower sales
charge, the lower mortality and expense risk charge, and the lower cost of
insurance charges that would apply to the Policy if issued in the personal
market or if issued in business situations which qualify for those lower
charges. The illustrations do not reflect the higher current charges that would
apply for tax-qualified pension plans. (See "Charges and Expenses".) (See
Appendix A for the definition of the internal rate of return.)
MALE NONSMOKER PREFERRED RISK, AGE 40
$100,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983................. $ 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1983............... 1,520 100,000 1,318 652 -91.23% --
December 31, 1984............... 3,040 100,000 2,260 1,475 -62.92 2,058.97%
December 31, 1985............... 4,560 100,000 5,083 4,324 -3.91 447.23
December 31, 1986............... 6,080 100,000 10,917 10,182 29.29 212.13
December 31, 1987............... 7,600 100,000 17,415 16,706 34.75 130.64
December 31, 1988............... 9,120 100,000 16,920 16,273 20.42 91.23
December 31, 1989............... 10,640 100,000 23,108 22,577 22.26 68.52
December 31, 1990............... 12,160 100,000 23,175 22,760 15.96 53.94
December 31, 1991............... 13,680 100,000 36,941 36,642 21.83 43.89
December 31, 1992............... 15,200 100,000 35,997 35,813 16.93 36.58
December 31, 1993............... 16,720 100,000 42,592 42,524 16.55 31.06
December 31, 1994............... 18,240 100,000 40,329 40,329 12.86 26.76
December 31, 1995............... 19,760 100,000 57,427 57,427 15.65 23.33
December 31, 1996............... 21,280 115,715 70,558 70,558 16.12 22.36
December 31, 1997............... 22,800 138,323 88,104 88,104 16.74 21.96
December 31, 1998............... 24,320 178,800 119,200 119,200 18.16 22.48
December 31, 1999............... 25,840 202,787 138,895 138,895 17.91 21.65
</TABLE>
A-50
<PAGE> 56
ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983................... 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1983................. 1,520 100,000 1,237 570 -94.03% --
December 31, 1984................. 3,040 100,000 2,448 1,663 -55.26 2,058.97%
December 31, 1985................. 4,560 100,000 4,033 3,274 -23.11 447.23
December 31, 1986................. 6,080 100,000 5,704 4,969 -10.73 212.13
December 31, 1987................. 7,600 100,000 6,881 6,171 -8.82 130.64
December 31, 1988................. 9,120 100,000 8,492 7,845 -5.29 91.23
December 31, 1989................. 10,640 100,000 10,554 10,023 -1.79 68.52
December 31, 1990................. 12,160 100,000 12,492 12,077 -0.18 53.94
December 31, 1991................. 13,680 100,000 15,972 15,673 3.10 43.89
December 31, 1992................. 15,200 100,000 18,474 18,290 3.77 36.58
December 31, 1993................. 16,720 100,000 21,974 21,907 4.95 31.06
December 31, 1994................. 18,240 100,000 22,334 22,334 3.41 26.76
December 31, 1995................. 19,760 100,000 28,331 28,331 5.51 23.33
December 31, 1996................. 21,280 100,000 30,821 30,821 5.23 20.53
December 31, 1997................. 22,800 100,000 35,333 35,333 5.73 18.22
December 31, 1998................. 24,320 100,000 39,666 39,666 5.95 16.27
December 31, 1999................. 25,840 100,000 40,569 40,569 5.17 14.62
</TABLE>
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983................... $ 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1983................. 1,520 100,000 1,239 572 -93.96% --
December 31, 1984................. 3,040 100,000 2,372 1,587 -58.37 2,058.97%
December 31, 1985................. 4,560 100,000 3,661 2,902 -30.83 447.23
December 31, 1986................. 6,080 100,000 4,978 4,244 -18.89 212.13
December 31, 1987................. 7,600 100,000 6,356 5,646 -12.56 130.64
December 31, 1988................. 9,120 100,000 7,874 7,227 -8.19 91.23
December 31, 1989................. 10,640 100,000 9,612 9,081 -4.76 68.52
December 31, 1990................. 12,160 100,000 11,444 11,028 -2.55 53.94
December 31, 1991................. 13,680 100,000 13,312 13,012 -1.15 43.89
December 31, 1992................. 15,200 100,000 15,020 14,836 -0.50 36.58
December 31, 1993................. 16,720 100,000 16,653 16,586 -0.15 31.06
December 31, 1994................. 18,240 100,000 18,502 18,502 0.24 26.76
December 31, 1995................. 19,760 100,000 20,717 20,717 0.74 23.33
December 31, 1996................. 21,280 100,000 22,919 22,919 1.08 20.53
December 31, 1997................. 22,600 100,000 25,271 25,271 1.39 18.22
December 31, 1998................. 24,320 100,000 27,711 27,711 1.64 16.27
December 31, 1999................. 25,840 100,000 30,181 30,181 1.83 14.62
</TABLE>
ZENITH WESTPEAK STOCK INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987....................... $ 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1987................. 1,520 100,000 942 276 -92.21% --
December 31, 1988................. 3,040 100,000 2,189 1,411 -50.82 1,070.47%
December 31, 1989................. 4,560 100,000 4,202 3,448 -15.92 337.59
December 31, 1990................. 6,080 100,000 5,020 4,292 -15.53 178.58
December 31, 1991................. 7,600 100,000 7,690 6,987 -3.14 115.51
December 31, 1992................. 9,120 100,000 9,335 8,717 -1.43 82.89
December 31, 1993................. 10,640 100,000 11,308 10,806 0.42 63.34
December 31, 1994................. 12,160 100,000 12,527 12,141 -0.04 50.46
December 31, 1995................. 13,680 100,000 18,718 18,448 6.33 41.41
December 31, 1996................. 15,200 100,000 24,104 23,950 8.61 34.74
December 31, 1997................. 16,720 100,000 33,375 33,336 11.74 29.65
December 31, 1998................. 18,240 100,000 43,941 43,941 13.56 25.65
December 31, 1999................. 19,760 100,000 54,106 54,106 14.22 22.43
</TABLE>
A-51
<PAGE> 57
ZENITH BACK BAY MANAGED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987....................... $ 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1987................. 1,520 100,000 1,071 405 -86.18% --
December 31, 1988................. 3,040 100,000 2,254 1,476 -48.57 1,070.47%
December 31, 1989................. 4,560 100,000 3,937 3,184 -20.18 337.59
December 31, 1990................. 6,080 100,000 5,162 4,433 -14.13 178.58
December 31, 1991................. 7,600 100,000 7,348 6,644 -5.01 115.51
December 31, 1992................. 9,120 100,000 8,943 8,325 -2.88 82.89
December 31, 1993................. 10,640 100,000 10,941 10,439 -0.52 63.34
December 31, 1994................. 12,160 100,000 11,904 11,517 -1.30 50.46
December 31, 1995................. 13,680 100,000 17,110 16,840 4.41 41.41
December 31, 1996................. 15,200 100,000 20,904 20,750 5.93 34.74
December 31, 1997................. 16,720 100,000 27,859 27,820 8.73 29.65
December 31, 1998................. 18,240 100,000 34,545 34,545 9.96 25.65
December 31, 1999................. 19,760 100,000 39,125 39,125 9.79 22.43
</TABLE>
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.................... $ 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1993................. 1,520 100,000 1,205 539 -78.65% --
December 31, 1994................. 3,040 100,000 2,238 1,462 -48.96 1,065.53%
December 31, 1995................. 4,560 100,000 4,399 3,648 -12.83 336.86
December 31, 1996................. 6,080 100,000 6,363 5,637 -3.46 178.34
December 31, 1997................. 7,600 100,000 9,817 9,115 6.87 115.39
December 31, 1998................. 9,120 100,000 13,291 12,683 10.46 82.83
December 31, 1999................. 10,640 100,000 15,528 15,036 9.40 63.30
</TABLE>
ZENITH HARRIS OAKMARK MID CAP VALUE SUB-ACCOUNT**
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.................... $ 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1993................. 1,520 100,000 1,212 546 -78.26% --
December 31, 1994................. 3,040 100,000 2,264 1,487 -48.07 1,065.53%
December 31, 1995................. 4,560 100,000 4,292 3,541 -14.46 336.86
December 31, 1996................. 6,080 100,000 6,165 5,438 -5.08 178.34
December 31, 1997................. 7,600 100,000 8,484 7,783 0.89 115.39
December 31, 1998................. 9,120 100,000 8,797 8,189 -3.39 82.83
December 31, 1999................. 10,640 100,000 9,733 9,241 -3.85 63.30
</TABLE>
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 2, 1994....................... $1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1994................. 1,520 100,000 1,022 356 -88.71% --
December 31, 1995................. 3,040 100,000 2,569 1,791 -38.02 1,075.45%
December 31, 1996................. 4,560 100,000 4,579 3,825 -10.22 338.33
December 31, 1997................. 6,080 100,000 7,067 6,339 1.93 178.83
December 31, 1998................. 7,600 100,000 7,816 7,112 -2.48 115.62
December 31, 1999................. 9,120 100,000 11,693 11,075 6.15 82.96
</TABLE>
A-52
<PAGE> 58
ZENITH BALANCED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1994................. 1,520 100,000 1,277 611 -100.00% --
December 31, 1995................. 3,040 100,000 2,565 1,776 -62.40 3,427.00%
December 31, 1996................. 4,560 100,000 4,092 3,328 -25.51 539.22
December 31, 1997................. 6,080 100,000 5,821 5,082 -10.61 236.33
December 31, 1998................. 7,600 100,000 7,444 6,730 -5.60 140.81
December 31, 1999................. 9,120 100,000 8,079 7,413 -7.81 96.62
</TABLE>
ZENITH MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1994................. 1,520 100,000 1,309 643 -100.00% --
December 31, 1995................. 3,040 100,000 2,409 1,620 -69.82 3,427.00%
December 31, 1996................. 4,560 100,000 3,655 2,891 -36.00 539.22
December 31, 1997................. 6,080 100,000 4,643 3,904 -25.82 236.33
December 31, 1998................. 7,600 100,000 6,059 5,345 -16.20 140.81
December 31, 1999................. 9,120 100,000 8,655 7,989 -4.98 96.62
</TABLE>
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1994................. 1,520 100,000 1,236 570 -100.00% --
December 31, 1995................. 3,040 100,000 2,673 1,884 -57.18 3,427.00%
December 31, 1996................. 4,560 100,000 4,467 3,704 -17.17 539.22
December 31, 1997................. 6,080 100,000 7,024 6,285 1.99 236.33
December 31, 1998................. 7,600 100,000 9,155 8,441 4.85 140.81
December 31, 1999................. 9,120 100,000 11,838 11,172 7.59 96.62
</TABLE>
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1994................. 1,520 100,000 1,205 539 -100.00% --
December 31, 1995................. 3,040 100,000 2,668 1,879 -57.41 3,427.00%
December 31, 1996................. 4,560 100,000 4,111 3,347 -25.06 539.22
December 31, 1997................. 6,080 100,000 6,213 5,474 -6.25 236.33
December 31, 1998................. 7,600 100,000 10,402 9,688 11.27 140.81
December 31, 1999................. 9,120 100,000 15,111 14,445 17.20 96.62
</TABLE>
ZENITH MFS INVESTORS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.................... $1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1999................. 1,520 100,000 1,051 384 -87.10% --
</TABLE>
ZENITH MFS RESEARCH MANAGERS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.................... $1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1999................. 1,520 100,000 1,247 581 -76.13% --
</TABLE>
A-53
<PAGE> 59
METROPOLITAN JANUS MID CAP SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
March 3, 1997....................... $1,520 $100,000 $1,364 $ 698 -- --
December 31, 1997................... 1,520 100,000 1,320 653 -63.85% --
December 31, 1998................... 3,040 100,000 3,142 2,368 -17.42 831.66%
December 31, 1999................... 4,560 100,000 9,421 8,671 39.29 298.61
</TABLE>
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 9, 1998.................... $1,520 $100,000 $1,364 $ 698 -- --
December 31, 1998................... 1,520 100,000 1,395 728 -100.00% --
December 31, 1999................... 3,040 100,000 2,740 1,950 -55.88 3,715.89%
</TABLE>
VIP EQUITY-INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 9, 1986................... $ 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1986................. 1,520 100,000 1,285 618 -98.08% --
December 31, 1987................. 3,040 100,000 2,030 1,241 -80.94 2,847.87%
December 31, 1988................. 4,560 100,000 3,518 2,755 -37.46 505.26
December 31, 1989................. 6,080 100,000 5,180 4,442 -17.76 227.75
December 31, 1990................. 7,600 100,000 5,493 4,779 -20.72 137.27
December 31, 1991................. 9,120 100,000 8,292 7,626 -6.58 94.76
December 31, 1992................. 10,640 100,000 10,794 10,244 -1.18 70.66
December 31, 1993................. 12,160 100,000 13,756 13,322 2.44 55.37
December 31, 1994................. 13,680 100,000 15,813 15,494 2.92 44.89
December 31, 1995................. 15,200 100,000 22,749 22,546 8.12 37.32
December 31, 1996................. 16,720 100,000 27,103 27,016 8.87 31.62
December 31, 1997................. 18,240 100,000 35,848 35,848 11.22 27.20
December 31, 1998................. 19,760 100,000 41,386 41,386 11.21 23.68
December 31, 1999................. 21,280 100,000 45,139 45,139 10.51 20.82
</TABLE>
VIP OVERSEAS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 28, 1987.................. $ 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1987................. 1,520 100,000 862 196 -89.15% 9,215.82%
December 31, 1988................. 3,040 100,000 2,181 1,411 -43.29 731.16
December 31, 1989................. 4,560 100,000 4,001 3,256 -16.54 279.55
December 31, 1990................. 6,080 100,000 4,998 4,278 -14.01 158.04
December 31, 1991................. 7,600 100,000 6,521 5,826 -8.97 105.56
December 31, 1992................. 9,120 100,000 6,684 6,105 -11.64 77.19
December 31, 1993................. 10,640 100,000 10,554 10,090 -1.35 59.70
December 31, 1994................. 12,160 100,000 11,756 11,408 -1.44 47.97
December 31, 1995................. 13,680 100,000 14,435 14,203 0.76 39.61
December 31, 1996................. 15,200 100,000 17,569 17,453 2.53 33.39
December 31, 1997................. 16,720 100,000 20,935 20,935 3.75 28.61
December 31, 1998................. 18,240 100,000 24,869 24,869 4.74 24.82
December 31, 1999................. 19,760 100,000 37,094 37,094 8.75 21.77
</TABLE>
A-54
<PAGE> 60
VIP HIGH INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 19, 1985................ $ 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1985................. 1,520 100,000 1,320 653 -94.98% --
December 31, 1986................. 3,040 100,000 2,549 1,762 -54.87 2,440.56%
December 31, 1987................. 4,560 100,000 3,635 2,873 -33.09 477.39
December 31, 1988................. 6,080 100,000 5,118 4,382 -17.91 220.41
December 31, 1989................. 7,600 100,000 5,889 5,177 -16.70 134.18
December 31, 1990................. 9,120 100,000 6,756 6,100 -14.57 93.12
December 31, 1991................. 10,640 100,000 10,136 9,595 -3.16 69.67
December 31, 1992................. 12,160 100,000 13,487 13,062 1.89 54.71
December 31, 1993................. 13,680 100,000 17,416 17,107 5.15 44.43
December 31, 1994................. 15,200 100,000 18,334 18,141 3.65 36.98
December 31, 1995................. 16,720 100,000 23,345 23,268 6.10 31.37
December 31, 1996................. 18,240 100,000 27,738 27,738 7.01 27.00
December 31, 1997................. 19,760 100,000 33,782 33,782 8.17 23.52
December 31, 1998................. 21,280 100,000 33,523 33,523 6.44 20.69
December 31, 1999................. 22,800 100,000 37,394 37,394 6.49 18.34
</TABLE>
VIP II ASSET MANAGER SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 6, 1989................. $ 1,520 $100,000 $ 1,364 $ 698 -- --
December 31, 1989................. 1,520 100,000 1,255 588 -94.95% --
December 31, 1990................. 3,040 100,000 2,355 1,568 -60.93 2,221.59%
December 31, 1991................. 4,560 100,000 3,987 3,225 -24.64 460.64
December 31, 1992................. 6,080 100,000 5,539 4,803 -12.72 215.86
December 31, 1993................. 7,600 100,000 7,807 7,096 -2.96 132.24
December 31, 1994................. 9,120 100,000 8,272 7,616 -6.41 92.09
December 31, 1995................. 10,640 100,000 10,747 10,206 -1.26 69.04
December 31, 1996................. 12,160 100,000 13,398 12,974 1.69 54.29
December 31, 1997................. 13,680 100,000 17,308 16,999 4.97 44.14
December 31, 1998................. 15,200 100,000 21,268 21,074 6.64 36.77
December 31, 1999................. 16,720 100,000 24,864 24,787 7.20 31.20
</TABLE>
OPTION 2 DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983................. $ 1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1983............... 1,520 101,317 1,317 650 -91.29% --
December 31, 1984............... 3,040 102,255 2,255 1,470 -63.13 2,096.20%
December 31, 1985............... 4,560 105,063 5,063 4,304 -4.24 459.97
December 31, 1986............... 6,080 110,850 10,850 10,116 28.90 223.31
December 31, 1987............... 7,600 117,264 17,264 16,554 34.33 140.84
December 31, 1988............... 9,120 116,730 16,730 16,084 20.00 98.06
December 31, 1989............... 10,640 122,782 22,782 22,251 21.83 75.41
December 31, 1990............... 12,160 122,796 22,796 22,381 15.54 59.48
December 31, 1991............... 13,680 136,296 36,296 35,997 21.44 50.89
December 31, 1992............... 15,200 135,353 35,353 35,169 16.58 42.46
December 31, 1993............... 16,720 141,800 41,800 41,732 16.23 37.01
December 31, 1994............... 18,240 139,544 39,544 39,544 12.56 31.82
December 31, 1995............... 19,760 156,242 56,242 56,242 15.36 29.45
December 31, 1996............... 21,280 169,017 69,017 69,017 15.84 27.11
December 31, 1997............... 22,800 186,100 86,100 86,100 16.47 25.37
December 31, 1998............... 24,320 216,409 116,409 116,409 17.91 24.50
December 31, 1999............... 25,840 235,559 135,559 135,559 17.67 23.12
</TABLE>
A-55
<PAGE> 61
ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983................... $ 1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1983................. 1,520 101,235 1,235 569 -94.06% --
December 31, 1984................. 3,040 102,442 2,442 1,657 -55.49 2,099.30%
December 31, 1985................. 4,560 104,018 4,018 3,258 -23.42 457.37
December 31, 1986................. 6,080 105,673 5,673 4,938 -11.06 218.08
December 31, 1987................. 7,600 106,830 6,830 6,121 -9.16 134.83
December 31, 1988................. 9,120 108,413 8,413 7,766 -5.65 94.78
December 31, 1989................. 10,640 110,431 10,431 9,900 -2.16 71.83
December 31, 1990................. 12,160 112,324 12,324 11,909 -0.54 57.07
December 31, 1991................. 13,680 115,748 15,748 15,449 2.78 47.18
December 31, 1992................. 15,200 118,213 18,213 18,029 3.48 39.82
December 31, 1993................. 16,720 121,654 21,654 21,586 4.69 34.40
December 31, 1994................. 18,240 121,995 21,995 21,995 3.15 29.78
December 31, 1995................. 19,760 127,876 27,876 27,876 5.27 26.70
December 31, 1996................. 21,280 130,292 30,292 30,292 5.00 23.85
December 31, 1997................. 22,800 134,677 34,677 34,677 5.49 21.66
December 31, 1998................. 24,320 138,867 38,867 38,867 5.72 19.79
December 31, 1999................. 25,840 139,677 39,677 39,677 4.92 17.96
</TABLE>
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983................... $ 1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1983................. 1,520 101,237 1,237 571 -94.00% --
December 31, 1984................. 3,040 102,366 2,366 1,581 -58.60 2,098.04%
December 31, 1985................. 4,560 103,648 3,648 2,888 -31.12 456.44
December 31, 1986................. 6,080 104,952 4,952 4,217 -19.21 217.34
December 31, 1987................. 7,600 106,311 6,311 5,601 -12.89 134.52
December 31, 1988................. 9,120 107,803 7,803 7,156 -8.54 94.53
December 31, 1989................. 10,640 109,504 9,504 8,973 -5.12 71.55
December 31, 1990................. 12,160 111,294 11,294 10,879 -2.91 56.82
December 31, 1991................. 13,680 113,132 13,132 12,833 -1.48 46.66
December 31, 1992................. 15,200 114,818 14,818 14,634 -0.78 39.26
December 31, 1993................. 16,720 116,426 16,426 16,358 -0.41 33.65
December 31, 1994................. 18,240 118,240 18,240 18,240 -- 29.30
December 31, 1995................. 19,760 120,409 20,409 20,409 0.51 25.88
December 31, 1996................. 21,280 122,556 22,556 22,556 0.85 23.08
December 31, 1997................. 22,800 124,840 24,840 24,840 1.16 20.78
December 31, 1998................. 24,320 127,198 27,198 27,198 1.41 18.85
December 31, 1999................. 25,840 129,571 29,571 29,571 1.59 17.22
</TABLE>
ZENITH WESTPEAK STOCK INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987....................... $ 1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1987................. 1,520 100,941 941 274 -92.28% --
December 31, 1988................. 3,040 102,183 2,183 1,405 -51.04 1,086.47%
December 31, 1989................. 4,560 104,183 4,183 3,430 -16.22 345.10
December 31, 1990................. 6,080 104,990 4,990 4,261 -15.84 182.88
December 31, 1991................. 7,600 107,628 7,628 6,925 -3.47 119.58
December 31, 1992................. 9,120 109,239 9,239 8,621 -1.77 86.41
December 31, 1993................. 10,640 111,165 11,165 10,663 0.06 66.60
December 31, 1994................. 12,160 112,350 12,350 11,964 -0.39 53.39
December 31, 1995................. 13,680 118,449 18,449 18,179 6.02 45.02
December 31, 1996................. 15,200 123,750 23,750 23,596 8.33 38.68
December 31, 1997................. 16,720 132,864 32,864 32,825 11.48 34.29
December 31, 1998................. 18,240 143,225 43,225 43,225 13.32 30.91
December 31, 1999................. 19,760 153,157 53,157 53,157 13.98 28.09
</TABLE>
A-56
<PAGE> 62
ZENITH BACK BAY MANAGED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987....................... $ 1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1987................. 1,520 101,069 1,069 403 -86.27% --
December 31, 1988................. 3,040 102,247 2,247 1,469 -48.81 1,086.95%
December 31, 1989................. 4,560 103,920 3,920 3,167 -20.47 344.63
December 31, 1990................. 6,080 105,130 5,130 4,402 -14.44 183.00
December 31, 1991................. 7,600 107,289 7,289 6,586 -5.33 119.41
December 31, 1992................. 9,120 108,852 8,852 8,234 -3.22 86.26
December 31, 1993................. 10,640 110,803 10,803 10,301 -0.88 66.50
December 31, 1994................. 12,160 111,738 11,738 11,352 -1.65 53.25
December 31, 1995................. 13,680 116,868 16,868 16,598 4.11 44.73
December 31, 1996................. 15,200 120,604 20,604 20,449 5.65 38.20
December 31, 1997................. 16,720 127,444 27,444 27,405 8.48 33.61
December 31, 1998................. 18,240 133,999 33,999 33,999 9.72 29.93
December 31, 1999................. 19,760 138,463 38,463 38,463 9.55 26.75
</TABLE>
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.................... $1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1993................. 1,520 101,203 1,203 537 -78.79% --
December 31, 1994................. 3,040 102,231 2,231 1,455 -49.21 1,081.78%
December 31, 1995................. 4,560 104,378 4,378 3,627 -13.15 344.69
December 31, 1996................. 6,080 106,321 6,321 5,595 -3.80 183.75
December 31, 1997................. 7,600 109,732 9,732 9,030 6.51 120.54
December 31, 1998................. 9,120 113,143 13,143 12,535 10.08 87.75
December 31, 1999................. 10,640 115,312 15,312 14,820 9.00 67.70
</TABLE>
ZENITH HARRIS OAKMARK MID CAP VALUE SUB-ACCOUNT**
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993...................... $1,520 $101,364 $1,364 $ 698 -- --
December 31, 1993................... 1,520 101,210 1,210 543 -78.40% --
December 31, 1994................... 3,040 102,256 2,256 1,480 -48.33 1,081.97%
December 31, 1995................... 4,560 104,272 4,272 3,521 -14.78 344.50
December 31, 1996................... 6,080 106,124 6,124 5,398 -5.42 183.58
December 31, 1997................... 7,600 108,412 8,412 7,711 0.54 119.87
December 31, 1998................... 9,120 108,701 8,701 8,092 -3.76 86.14
December 31, 1999................... 10,640 109,602 9,602 9,110 -4.24 66.12
</TABLE>
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 2, 1994....................... $1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1994................. 1,520 101,020 1,020 354 -88.80% --
December 31, 1995................. 3,040 102,561 2,561 1,783 -38.27 1,094.32%
December 31, 1996................. 4,560 104,558 4,558 3,804 -10.53 346.52
December 31, 1997................. 6,080 107,022 7,022 6,294 1.60 184.84
December 31, 1998................. 7,600 107,749 7,749 7,045 -2.83 119.77
December 31, 1999................. 9,120 111,569 11,569 10,951 5.79 87.32
</TABLE>
ZENITH BALANCED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................... $1,520 $101,364 $1,364 $ 698 -- --
December 31, 1994................... 1,520 101,276 1,276 610 -100.00% --
December 31, 1995................... 3,040 102,560 2,560 1,771 -62.64 3,506.11%
December 31, 1996................... 4,560 104,078 4,078 3,314 -25.83 552.15
December 31, 1997................... 6,080 105,792 5,792 5,053 -10.95 243.21
December 31, 1998................... 7,600 107,393 7,393 6,679 -5.95 145.73
December 31, 1999................... 9,120 108,008 8,008 7,342 -8.17 100.21
</TABLE>
A-57
<PAGE> 63
ZENITH MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1994................. 1,520 101,309 1,309 642 -100.00% --
December 31, 1995................. 3,040 102,404 2,404 1,615 -70.02 3,501.28%
December 31, 1996................. 4,560 103,644 3,644 2,880 -36.29 550.79
December 31, 1997................. 6,080 104,622 4,622 3,883 -26.14 241.84
December 31, 1998................. 7,600 106,020 6,020 5,307 -16.53 144.84
December 31, 1999................. 9,120 108,583 8,583 7,917 -5.32 100.46
</TABLE>
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1994................. 1,520 101,235 1,235 569 -100.00% --
December 31, 1995................. 3,040 102,668 2,668 1,879 -57.43 3,509.41%
December 31, 1996................. 4,560 104,452 4,452 3,688 -17.50 553.32
December 31, 1997................. 6,080 106,987 6,987 6,248 1.64 244.59
December 31, 1998................. 7,600 109,088 9,088 8,375 4.49 146.82
December 31, 1999................. 9,120 111,726 11,726 11,060 7.21 101.81
</TABLE>
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1994................. 1,520 101,205 1,205 538 -100.00% --
December 31, 1995................. 3,040 102,663 2,663 1,874 -57.67 3,509.26%
December 31, 1996................. 4,560 104,097 4,097 3,333 -25.38 552.21
December 31, 1997................. 6,080 106,181 6,181 5,442 -6.60 243.66
December 31, 1998................. 7,600 110,327 10,327 9,613 10.90 147.61
December 31, 1999................. 9,120 114,966 14,966 14,300 16.83 103.16
</TABLE>
ZENITH MFS INVESTORS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.................... $1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1999................. 1,520 101,049 1,049 382 -87.21% --
</TABLE>
ZENITH MFS RESEARCH MANAGERS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.................... $1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1999................. 1,520 101,245 1,245 579 -76.28% --
</TABLE>
METROPOLITAN JANUS MID CAP SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
March 3, 1997..................... $1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1997................. 1,520 101,317 1,317 650 -64.04% --
December 31, 1998................. 3,040 103,130 3,130 2,356 -17.73 848.37%
December 31, 1999................. 4,560 109,371 9,371 8,622 38.90 312.87
</TABLE>
A-58
<PAGE> 64
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 9, 1998.................... $1,520 $101,364 $1,364 $ 698 -- --
December 31, 1998................... 1,520 101,394 1,394 728 -100.00% --
December 31, 1999................... 3,040 102,736 2,736 1,945 -56.11 3,809.22%
</TABLE>
VIP EQUITY-INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 9, 1986................... $1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1986................. 1,520 101,284 1,284 618 -98.10% --
December 31, 1987................. 3,040 102,026 2,026 1,237 -81.10 2,897.76%
December 31, 1988................. 4,560 103,507 3,507 2,743 -37.75 515.55
December 31, 1989................. 6,080 105,155 5,155 4,416 -18.08 233.63
December 31, 1990................. 7,600 105,458 5,458 4,744 -21.05 140.83
December 31, 1991................. 9,120 108,224 8,224 7,558 -6.91 98.37
December 31, 1992................. 10,640 110,681 10,681 10,131 -1.52 74.16
December 31, 1993................. 12,160 113,581 13,581 13,147 2.09 58.88
December 31, 1994................. 13,680 115,598 15,598 15,279 2.60 48.22
December 31, 1995................. 15,200 122,433 22,433 22,230 7.84 41.32
December 31, 1996................. 16,720 126,713 26,713 26,626 8.60 35.72
December 31, 1997................. 18,240 135,300 35,300 35,300 10.98 31.86
December 31, 1998................. 19,760 140,712 40,712 40,712 10.97 28.43
December 31, 1999................. 21,280 144,346 44,346 44,346 10.27 25.47
</TABLE>
VIP OVERSEAS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 28, 1987.................. $ 1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1987................. 1,520 100,859 859 193 -89.30% 9,302.52%
December 31, 1988................. 3,040 102,172 2,172 1,402 -43.56 741.05
December 31, 1989................. 4,560 103,980 3,980 3,234 -16.84 285.23
December 31, 1990................. 6,080 104,962 4,962 4,242 -14.33 161.75
December 31, 1991................. 7,600 106,461 6,461 5,766 -9.31 108.71
December 31, 1992................. 9,120 106,608 6,608 6,029 -12.00 79.55
December 31, 1993................. 10,640 110,411 10,411 9,948 -1.71 62.58
December 31, 1994................. 12,160 111,585 11,585 11,238 -1.79 50.59
December 31, 1995................. 13,680 114,231 14,231 13,999 0.47 42.32
December 31, 1996................. 15,200 117,319 17,319 17,203 2.27 36.23
December 31, 1997................. 16,720 120,628 20,628 20,628 3.51 31.57
December 31, 1998................. 18,240 124,486 24,486 24,486 4.50 27.93
December 31, 1999................. 19,760 136,485 36,485 36,485 8.53 25.79
</TABLE>
VIP HIGH INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 19, 1985................ $ 1,520 $101,364 $ 1,364 $ 698 -- --
December 31, 1985................. 1,520 101,319 1,319 652 -95.01% --
December 31, 1986................. 3,040 102,544 2,544 1,757 -55.10 2,492.35%
December 31, 1987................. 4,560 103,622 3,622 2,860 -33.38 487.30
December 31, 1988................. 6,080 105,092 5,092 4,356 -18.23 226.00
December 31, 1989................. 7,600 105,849 5,849 5,137 -17.04 137.89
December 31, 1990................. 9,120 106,698 6,698 6,042 -14.92 96.03
December 31, 1991................. 10,640 110,025 10,025 9,485 -3.52 72.92
December 31, 1992................. 12,160 113,312 13,312 12,887 1.53 58.12
December 31, 1993................. 13,680 117,176 17,176 16,867 4.83 48.04
December 31, 1994................. 15,200 118,078 18,078 17,885 3.36 40.23
December 31, 1995................. 16,720 123,008 23,008 22,931 5.84 34.92
December 31, 1996................. 18,240 127,318 27,318 27,318 6.77 30.70
December 31, 1997................. 19,760 133,237 33,237 33,237 7.93 27.49
December 31, 1998................. 21,280 132,944 32,944 32,944 6.20 24.28
December 31, 1999................. 22,800 136,696 36,696 36,696 6.25 21.98
</TABLE>
A-59
<PAGE> 65
VIP II ASSET MANAGER SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 6, 1989................. $ 1,520 $101,354 $ 1,364 $ 698 -- --
December 31, 1989................. 1,520 101,254 1,254 587 -94.98% --
December 31, 1990................. 3,040 102,350 2,350 1,563 -61.13 2,264.20%
December 31, 1991................. 4,560 103,973 3,973 3,211 -24.93 471.04
December 31, 1992................. 6,080 105,511 5,511 4,774 -13.04 221.76
December 31, 1993................. 7,600 107,752 7,752 7,041 -3.29 137.05
December 31, 1994................. 9,120 108,197 8,197 7,541 -6.76 95.58
December 31, 1995................. 10,640 110,624 10,624 10,084 -1.62 72.44
December 31, 1996................. 12,160 113,220 13,220 12,795 1.33 57.65
December 31, 1997................. 13,680 117,063 17,063 16,755 4.64 47.70
December 31, 1998................. 15,200 120,964 20,964 20,771 6.35 40.47
December 31, 1999................. 16,720 124,498 24,498 24,421 6.93 34.94
</TABLE>
------------
* Rates of return and Policy values and benefits shown reflect the Capital
Growth Series' investment advisory fee of .50% of average daily net assets
for the period through December 31, 1987 and its current advisory fee
schedule thereafter.
** Rates of return and Policy values and benefits shown reflect the Harris
Oakmark Mid Cap Value Series' investment advisory fee of .70% of average
daily net assets for the period through April 30, 1998 and .75% thereafter.
MALE NON-SMOKER PREFERRED RISK AGE 40
$500,000 FACE AMOUNT
OPTION 1 DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983............... $ 7,600 $ 500,000 $ 6,957 $ 3,625 -- --
December 31, 1983............. 7,600 500,000 6,978 3,646 -87.89% --
December 31, 1984............. 15,200 500,000 12,342 8,419 -54.41 2,058.98%
December 31, 1985............. 22,800 500,000 27,581 23,783 3.16 447.23
December 31, 1986............. 30,400 500,000 59,214 55,541 34.54 212.13
December 31, 1987............. 38,000 500,000 94,497 90,949 38.70 130.64
December 31, 1988............. 45,600 500,000 91,733 88,499 23.42 91.23
December 31, 1989............. 53,200 500,000 125,326 122,671 24.73 68.52
December 31, 1990............. 60,800 500,000 125,595 123,520 18.03 53.94
December 31, 1991............. 68,400 500,000 200,070 198,574 23.58 43.89
December 31, 1992............. 76,000 500,000 194,827 193,910 18.46 36.58
December 31, 1993............. 83,600 500,000 230,451 230,113 17.90 31.06
December 31, 1994............. 91,200 500,000 218,173 218,173 14.09 26.76
December 31, 1995............. 98,800 531,259 310,678 310,678 16.75 24.16
December 31, 1996............. 106,400 625,866 381,626 381,626 17.12 23.35
December 31, 1997............. 114,000 748,199 476,560 476,560 17.66 22.87
December 31, 1998............. 121,600 967,245 644,830 644,830 19.00 23.31
December 31, 1999............. 129,200 1,097,183 751,495 751,495 18.69 22.42
</TABLE>
A-60
<PAGE> 66
ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983..................... $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1983................... 7,600 500,000 6,566 3,234 -91.42% --
December 31, 1984................... 15,200 500,000 13,329 9,406 -46.32 2,058.98%
December 31, 1985................... 22,800 500,000 21,815 18,017 -16.72 447.23
December 31, 1986................... 30,400 500,000 30,759 27,086 -6.19 212.13
December 31, 1987................... 38,000 500,000 37,032 33,484 -5.37 130.64
December 31, 1988................... 45,600 500,000 45,655 42,421 -2.54 91.23
December 31, 1989................... 53,200 500,000 56,718 54,063 0.48 68.52
December 31, 1990................... 60,800 500,000 67,051 64,975 1.72 53.94
December 31, 1991................... 68,400 500,000 85,584 84,088 4.69 43.89
December 31, 1992................... 76,000 500,000 98,929 98,012 5.16 36.58
December 31, 1993................... 83,600 500,000 117,632 117,294 6.18 31.06
December 31, 1994................... 91,200 500,000 119,516 119,516 4.52 26.76
December 31, 1995................... 98,800 500,000 151,593 151,593 6.51 23.33
December 31, 1996................... 106,400 500,000 164,906 164,906 6.16 20.53
December 31, 1997................... 114,000 500,000 189,059 189,059 6.58 18.22
December 31, 1998................... 121,600 500,000 212,278 212,278 6.75 16.27
December 31, 1999................... 129,200 500,000 217,152 217,152 5.92 14.62
</TABLE>
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983..................... $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1983................... 7,600 500,000 6,579 3,247 -91.32% --
December 31, 1984................... 15,200 500,000 12,920 8,996 -49.68 2,058.98%
December 31, 1985................... 22,800 500,000 19,791 15,993 -24.63 447.23
December 31, 1986................... 30,400 500,000 26,813 23,140 -14.43 212.13
December 31, 1987................... 38,000 500,000 34,168 30,620 -9.14 130.64
December 31, 1988................... 45,600 500,000 42,290 39,056 -5.45 91.23
December 31, 1989................... 53,200 500,000 51,606 48,951 -2.49 68.52
December 31, 1990................... 60,800 500,000 61,360 59,285 -0.66 53.94
December 31, 1991................... 68,400 500,000 71,244 69,747 0.45 43.89
December 31, 1992................... 76,000 500,000 80,314 79,397 0.90 36.58
December 31, 1993................... 83,600 500,000 88,993 88,655 1.09 31.06
December 31, 1994................... 91,200 500,000 98,827 98,827 1.36 26.76
December 31, 1995................... 98,800 500,000 110,636 110,636 1.76 23.33
December 31, 1996................... 106,400 500,000 122,381 122,381 2.02 20.53
December 31, 1997................... 114,000 500,000 134,940 134,940 2.26 18.22
December 31, 1998................... 121,600 500,000 147,986 147,986 2.45 16.27
December 31, 1999................... 129,200 500,000 161,203 161,203 2.59 14.62
</TABLE>
ZENITH WESTPEAK STOCK INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987.......................... $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1987.................... 7,600 500,000 5,197 1,865 -87.77% --
December 31, 1988.................... 15,200 500,000 12,024 8,132 -43.42 1,070.47%
December 31, 1989.................... 22,800 500,000 22,822 19,055 -10.41 337.59
December 31, 1990.................... 30,400 500,000 27,139 23,497 -11.59 178.58
December 31, 1991.................... 38,000 500,000 41,486 37,969 -0.03 115.51
December 31, 1992.................... 45,600 500,000 50,296 47,206 1.09 82.89
December 31, 1993.................... 53,200 500,000 60,881 58,371 2.53 63.34
December 31, 1994.................... 60,800 500,000 67,301 65,370 1.73 50.46
December 31, 1995.................... 68,400 500,000 100,402 99,051 7.82 41.41
December 31, 1996.................... 76,000 500,000 129,208 128,436 9.91 34.74
December 31, 1997.................... 83,600 500,000 178,823 178,630 12.88 29.65
December 31, 1998.................... 91,200 500,000 235,456 235,456 14.59 25.65
December 31, 1999.................... 98,800 500,000 289,971 289,971 15.16 22.43
</TABLE>
A-61
<PAGE> 67
ZENITH BACK BAY MANAGED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987..................... $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1987............... 7,600 500,000 5,898 2,566 -80.29% --
December 31, 1988............... 15,200 500,000 12,367 8,475 -41.12 1,070.47%
December 31, 1989............... 22,800 500,000 21,368 17,602 -14.80 337.59
December 31, 1990............... 30,400 500,000 27,875 24,233 -10.23 178.58
December 31, 1991............... 38,000 500,000 39,593 36,076 -1.94 115.51
December 31, 1992............... 45,600 500,000 48,120 45,031 -0.40 82.89
December 31, 1993............... 53,200 500,000 58,836 56,326 1.56 63.34
December 31, 1994............... 60,800 500,000 63,878 61,947 0.45 50.46
December 31, 1995............... 68,400 500,000 91,669 90,318 5.89 41.41
December 31, 1996............... 76,000 500,000 111,912 111,140 7.22 34.74
December 31, 1997............... 83,600 500,000 149,072 148,879 9.86 29.65
December 31, 1998............... 91,200 500,000 184,850 184,850 10.98 25.65
December 31, 1999............... 98,800 500,000 209,384 209,384 10.73 22.43
</TABLE>
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.................... $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1993................. 7,600 500,000 6,689 3,357 -70.40% --
December 31, 1994................. 15,200 500,000 12,286 8,404 -41.51 1,065.53%
December 31, 1995................. 22,800 500,000 23,877 20,120 -7.32 336.86
December 31, 1996................. 30,400 500,000 34,401 30,770 0.56 178.34
December 31, 1997................. 38,000 500,000 52,927 49,421 9.97 115.39
December 31, 1998................. 45,600 500,000 71,630 68,589 12.97 82.83
December 31, 1999................. 53,200 500,000 83,672 81,211 11.49 63.30
</TABLE>
ZENITH HARRIS OAKMARK MID CAP VALUE SUB-ACCOUNT**
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.................... $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1993................. 7,600 500,000 6,723 3,391 -69.95% --
December 31, 1994................. 15,200 500,000 12,416 8,535 -40.64 1,065.53%
December 31, 1995................. 22,800 500,000 23,279 19,522 -9.03 336.86
December 31, 1996................. 30,400 500,000 33,310 29,679 -1.10 178.34
December 31, 1997................. 38,000 500,000 45,710 42,204 3.95 115.39
December 31, 1998................. 45,600 500,000 47,415 44,374 -0.86 82.83
December 31, 1999................. 53,200 500,000 52,441 49,979 -1.70 63.30
</TABLE>
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 2, 1994....................... $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1994................. 7,600 500,000 5,653 2,321 -83.17% --
December 31, 1995................. 15,200 500,000 14,127 10,235 -29.71 1,075.45%
December 31, 1996................. 22,800 500,000 24,946 21,179 -4.37 338.33
December 31, 1997................. 30,400 500,000 38,283 34,641 6.11 178.83
December 31, 1998................. 38,000 500,000 42,308 38,792 0.77 115.62
December 31, 1999................. 45,600 500,000 63,178 60,089 8.75 82.96
</TABLE>
A-62
<PAGE> 68
ZENITH BALANCED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1994................. 7,600 500,000 6,642 3,310 -100.00% --
December 31, 1995................. 15,200 500,000 13,899 9,955 -51.94 3,427.01%
December 31, 1996................. 22,800 500,000 22,061 18,242 -18.36 539.22
December 31, 1997................. 30,400 500,000 31,318 27,624 -5.70 236.33
December 31, 1998................. 38,000 500,000 39,983 36,414 -1.97 140.81
December 31, 1999................. 45,600 500,000 43,348 40,018 -4.91 96.62
</TABLE>
ZENITH MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1994................. 7,600 500,000 6,807 3,476 -100.00% --
December 31, 1995................. 15,200 500,000 13,041 9,097 -60.31 3,427.01%
December 31, 1996................. 22,800 500,000 19,667 15,848 -29.20 539.22
December 31, 1997................. 30,400 500,000 24,908 21,214 -21.07 236.33
December 31, 1998................. 38,000 500,000 32,436 28,867 -12.65 140.81
December 31, 1999................. 45,600 500,000 46,332 43,001 -2.20 96.62
</TABLE>
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1994................. 7,600 500,000 6,433 3,101 -100.00% --
December 31, 1995................. 15,200 500,000 14,503 10,559 -46.00 3,427.01%
December 31, 1996................. 22,800 500,000 24,125 20,306 -9.72 539.22
December 31, 1997................. 30,400 500,000 37,871 34,177 7.09 236.33
December 31, 1998................. 38,000 500,000 49,290 45,721 8.57 140.81
December 31, 1999................. 45,600 500,000 63,696 60,366 10.49 96.62
</TABLE>
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1994................. 7,600 500,000 6,276 2,944 -100.00% --
December 31, 1995................. 15,200 500,000 14,501 10,558 -46.01 3,427.01%
December 31, 1996................. 22,800 500,000 22,209 18,390 -17.71 539.22
December 31, 1997................. 30,400 500,000 33,493 29,799 -1.20 236.33
December 31, 1998................. 38,000 500,000 56,012 52,443 14.99 140.81
December 31, 1999................. 45,600 500,000 81,338 78,007 20.10 96.62
</TABLE>
ZENITH MFS INVESTORS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.................... $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1999................. 7,600 500,000 5,899 2,567 -80.15% --
</TABLE>
ZENITH MFS RESEARCH MANAGERS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------ -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.................... $7,600 $500,000 $6,957 $3,625 -- --
December 31, 1999................. 7,600 500,000 6,955 3,623 -66.84% --
</TABLE>
A-63
<PAGE> 69
METROPOLITAN JANUS MID CAP SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
March 3, 1997..................... $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1997................. 7,600 500,000 7,388 4,056 -53.07% --
December 31, 1998................. 15,200 500,000 17,317 13,446 -8.88 831.66%
December 31, 1999................. 22,800 500,000 51,301 47,555 45.67 298.61
</TABLE>
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 9, 1998.................. $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1998................. 7,600 500,000 7,180 3,849 -100.00 --
December 31, 1999................. 15,200 500,000 14,813 10,858 -44.59 3,715.91%
</TABLE>
VIP EQUITY-INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 9, 1986................ $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1986.............. 7,600 500,000 6,678 3,346 -97.29% --
December 31, 1987.............. 15,200 500,000 10,985 7,041 -74.07 2,847.86%
December 31, 1988.............. 22,800 500,000 18,946 15,127 -31.02 505.26
December 31, 1989.............. 30,400 500,000 27,854 24,160 -13.07 227.75
December 31, 1990.............. 38,000 500,000 29,418 25,849 -17.21 137.27
December 31, 1991.............. 45,600 500,000 44,400 41,070 -3.84 94.76
December 31, 1992.............. 53,200 500,000 57,786 55,034 1.05 70.66
December 31, 1993.............. 60,800 500,000 73,637 71,465 4.30 55.37
December 31, 1994.............. 68,400 500,000 84,529 82,937 4.50 44.89
December 31, 1995.............. 76,000 500,000 121,579 120,565 9.47 37.32
December 31, 1996.............. 83,600 500,000 144,827 144,393 10.06 31.62
December 31, 1997.............. 91,200 500,000 191,593 191,593 12.28 27.20
December 31, 1998.............. 98,800 500,000 221,160 221,160 12.17 23.68
December 31, 1999.............. 106,400 500,000 241,251 241,251 11.39 20.82
</TABLE>
VIP OVERSEAS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 28, 1987................ $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1987............... 7,600 500,000 5,053 1,721 -79.99% 9,215.79%
December 31, 1988............... 15,200 500,000 12,069 8,219 -36.21 731.16
December 31, 1989............... 22,800 500,000 21,827 18,102 -11.54 279.55
December 31, 1990............... 30,400 500,000 27,113 23,512 -10.33 158.04
December 31, 1991............... 38,000 500,000 35,248 31,773 -6.06 105.56
December 31, 1992............... 45,600 500,000 36,089 33,193 -9.22 77.19
December 31, 1993............... 53,200 500,000 56,842 54,525 0.63 59.70
December 31, 1994............... 60,800 500,000 63,129 61,392 0.22 47.97
December 31, 1995............... 68,400 500,000 77,380 76,222 2.19 39.61
December 31, 1996............... 76,000 500,000 94,078 93,498 3.79 33.39
December 31, 1997............... 83,600 500,000 112,003 112,003 4.86 28.61
December 31, 1998............... 91,200 500,000 132,998 132,998 5.74 24.82
December 31, 1999............... 98,800 500,000 198,318 198,318 9.65 21.77
</TABLE>
A-64
<PAGE> 70
VIP HIGH INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 19, 1985............. $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1985.............. 7,600 500,000 6,931 3,600 -92.92% --
December 31, 1986.............. 15,200 500,000 13,831 9,898 -45.46 2,440.56%
December 31, 1987.............. 22,800 500,000 19,592 15,783 -26.80 477.39
December 31, 1988.............. 30,400 500,000 27,514 23,831 -13.40 220.41
December 31, 1989.............. 38,000 500,000 31,606 28,048 -13.22 134.18
December 31, 1990.............. 45,600 500,000 36,229 32,947 -11.75 93.12
December 31, 1991.............. 53,200 500,000 54,365 51,663 -0.89 69.67
December 31, 1992.............. 60,800 500,000 72,307 70,184 3.77 54.71
December 31, 1993.............. 68,400 500,000 93,246 91,701 6.73 44.43
December 31, 1994.............. 76,000 500,000 98,098 97,133 5.05 36.98
December 31, 1995.............. 83,600 500,000 124,876 124,490 7.32 31.37
December 31, 1996.............. 91,200 500,000 148,356 148,356 8.11 27.00
December 31, 1997.............. 98,800 500,000 180,702 180,702 9.16 23.52
December 31, 1998.............. 106,400 500,000 179,286 179,286 7.35 20.69
December 31, 1999.............. 114,000 500,000 200,006 200,006 7.34 18.34
</TABLE>
VIP II ASSET MANAGER SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 6, 1989............... $ 7,600 $500,000 $ 6,957 $ 3,625 -- --
December 31, 1989............... 7,600 500,000 6,594 3,262 -93.01% --
December 31, 1990............... 15,200 500,000 12,791 8,858 -52.42 2,221.58%
December 31, 1991............... 22,800 500,000 21,530 17,722 -18.24 460.64
December 31, 1992............... 30,400 500,000 29,825 26,141 -8.20 215.86
December 31, 1993............... 38,000 500,000 41,987 38,428 0.48 132.24
December 31, 1994............... 45,600 500,000 44,448 41,165 -3.63 92.09
December 31, 1995............... 53,200 500,000 57,738 55,035 1.02 69.04
December 31, 1996............... 60,800 500,000 71,912 69,788 3.59 54.29
December 31, 1997............... 68,400 500,000 92,775 91,230 6.57 44.14
December 31, 1998............... 76,000 500,000 113,901 112,936 8.02 36.77
December 31, 1999............... 83,600 500,000 133,116 132,730 8.42 31.20
</TABLE>
OPTION 2 DEATH BENEFIT
ZENITH CAPITAL GROWTH SUB-ACCOUNT*
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- ---------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983............... $ 7,600 $ 506,956 $ 6,956 $ 3,624 -- --
December 31, 1983............. 7,600 506,971 6,971 3,639 -87.96% --
December 31, 1984............. 15,200 512,314 12,314 8,391 -54.64 2,099.63%
December 31, 1985............. 22,800 527,473 27,473 23,675 2.81 461.04
December 31, 1986............. 30,400 558,851 58,851 55,178 34.14 224.22
December 31, 1987............. 38,000 593,673 93,673 90,125 38.27 141.65
December 31, 1988............. 45,600 590,704 90,704 87,470 23.00 98.60
December 31, 1989............. 53,200 623,554 123,554 120,899 24.29 75.94
December 31, 1990............. 60,800 623,519 123,519 121,443 17.60 59.90
December 31, 1991............. 68,400 696,511 196,511 195,015 23.19 51.39
December 31, 1992............. 76,000 691,276 191,276 190,359 18.10 42.87
December 31, 1993............. 83,600 726,088 226,088 225,751 17.57 37.42
December 31, 1994............. 91,200 713,850 213,850 213,850 13.78 32.17
December 31, 1995............. 98,800 804,178 304,178 304,178 16.46 29.85
December 31, 1996............. 106,400 873,253 373,253 373,253 16.84 27.52
December 31, 1997............. 114,000 965,756 465,756 465,756 17.39 25.80
December 31, 1998............. 121,600 1,129,873 629,873 629,873 18.75 24.96
December 31, 1999............. 129,200 1,233,718 733,718 733,718 18.45 23.58
</TABLE>
A-65
<PAGE> 71
ZENITH BACK BAY BOND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983................ $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1983.............. 7,600 506,559 6,559 3,227 -91.47% --
December 31, 1984.............. 15,200 513,298 13,298 9,375 -46.57 2,102.87%
December 31, 1985.............. 22,800 521,732 21,732 17,934 -17.03 458.19
December 31, 1986.............. 30,400 530,589 30,589 26,916 -6.52 218.54
December 31, 1987.............. 38,000 536,759 36,759 33,211 -5.71 135.14
December 31, 1988.............. 45,600 545,226 45,226 41,992 -2.90 95.03
December 31, 1989.............. 53,200 556,053 56,053 53,399 0.11 72.07
December 31, 1990.............. 60,800 566,137 66,137 64,062 1.35 57.28
December 31, 1991.............. 68,400 584,357 84,357 82,861 4.36 47.40
December 31, 1992.............. 76,000 597,497 97,497 96,580 4.87 40.03
December 31, 1993.............. 83,600 615,878 115,878 115,540 5.91 34.61
December 31, 1994.............. 91,200 617,662 117,662 117,662 4.27 29.97
December 31, 1995.............. 98,800 649,108 149,108 149,108 6.27 26.91
December 31, 1996.............. 106,400 662,022 162,022 162,022 5.92 24.05
December 31, 1997.............. 114,000 685,494 185,494 185,494 6.34 21.86
December 31, 1998.............. 121,600 707,933 207,933 207,933 6.51 20.00
December 31, 1999.............. 129,200 712,311 212,311 212,311 5.67 18.16
</TABLE>
ZENITH BACK BAY MONEY MARKET SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
August 26, 1983................... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1983................. 7,600 506,572 6,572 3,240 -91.37% --
December 31, 1984................. 15,200 512,890 12,890 8,967 -49.92 2,101.53%
December 31, 1985................. 22,800 519,717 19,717 15,919 -24.93 457.18
December 31, 1986................. 30,400 526,670 26,670 22,997 -14.75 217.73
December 31, 1987................. 38,000 533,925 33,925 30,377 -9.48 134.80
December 31, 1988................. 45,600 541,905 41,905 38,671 -5.79 94.76
December 31, 1989................. 53,200 551,021 51,021 48,366 -2.85 71.76
December 31, 1990................. 60,800 560,549 60,549 58,474 -1.02 57.02
December 31, 1991................. 68,400 570,259 70,259 68,762 0.12 46.85
December 31, 1992................. 76,000 579,207 79,207 78,290 0.61 39.43
December 31, 1993................. 83,600 587,747 87,747 87,409 0.83 33.81
December 31, 1994................. 91,200 597,398 97,398 97,398 1.12 29.46
December 31, 1995................. 98,800 608,958 108,958 108,958 1.53 26.03
December 31, 1996................. 106,400 620,406 120,406 120,406 1.78 23.24
December 31, 1997................. 114,000 632,599 132,599 132,599 2.03 20.94
December 31, 1998................. 121,600 645,205 145,205 145,205 2.22 19.01
December 31, 1999................. 129,200 657,902 157,902 157,902 2.35 17.37
</TABLE>
ZENITH WESTPEAK STOCK INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987....................... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1987................. 7,600 505,188 5,188 1,857 -87.86% --
December 31, 1988................. 15,200 511,989 11,989 8,097 -43.66 1,088.04%
December 31, 1989................. 22,800 522,721 22,721 18,955 -10.71 345.73
December 31, 1990................. 30,400 526,973 26,973 23,331 -11.90 183.22
December 31, 1991................. 38,000 541,150 41,150 37,633 -0.36 119.89
December 31, 1992................. 45,600 549,778 49,778 46,689 0.75 86.67
December 31, 1993................. 53,200 560,106 60,106 57,597 2.16 66.84
December 31, 1994................. 60,800 566,335 66,335 64,404 1.38 53.60
December 31, 1995................. 68,400 598,924 98,924 97,572 7.50 45.26
December 31, 1996................. 76,000 627,267 127,267 126,495 9.62 38.93
December 31, 1997................. 83,600 676,026 176,026 175,833 12.62 34.57
December 31, 1998................. 91,200 731,542 231,542 231,542 14.34 31.22
December 31, 1999................. 98,800 784,793 284,793 284,793 14.91 28.42
</TABLE>
A-66
<PAGE> 72
ZENITH BACK BAY MANAGED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 1, 1987..................... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1987............... 7,600 505,888 5,888 2,556 -80.40% --
December 31, 1988............... 15,200 512,330 12,330 8,438 -41.36 1,088.54%
December 31, 1989............... 22,800 521,274 21,274 17,507 -15.10 345.22
December 31, 1990............... 30,400 527,705 27,705 24,063 -10.54 183.35
December 31, 1991............... 38,000 539,275 39,275 35,758 -2.27 119.70
December 31, 1992............... 45,600 547,631 47,631 44,542 -0.74 86.51
December 31, 1993............... 53,200 558,096 58,096 55,586 1.20 66.73
December 31, 1994............... 60,800 562,972 62,972 61,042 0.10 53.45
December 31, 1995............... 68,400 590,341 90,341 88,990 5.58 44.95
December 31, 1996............... 76,000 610,268 110,268 109,496 6.94 38.42
December 31, 1997............... 83,600 646,804 146,804 146,611 9.61 33.85
December 31, 1998............... 91,200 681,872 181,872 181,872 10.74 30.19
December 31, 1999............... 98,800 705,773 205,773 205,773 10.49 27.01
</TABLE>
ZENITH WESTPEAK GROWTH AND INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.................... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1993................. 7,600 506,676 6,676 3,344 -70.56% --
December 31, 1994................. 15,200 512,246 12,246 8,364 -41.77 1,083.37%
December 31, 1995................. 22,800 523,763 23,763 20,007 -7.64 345.35
December 31, 1996................. 30,400 534,174 34,174 30,543 0.22 184.18
December 31, 1997................. 38,000 552,469 52,469 48,963 9.61 120.93
December 31, 1998................. 45,600 570,831 70,831 67,790 12.59 88.11
December 31, 1999................. 53,200 582,509 82,509 80,047 11.10 68.02
</TABLE>
ZENITH HARRIS OAKMARK MID CAP VALUE SUB-ACCOUNT**
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1993.................... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1993................. 7,600 506,710 6,710 3,378 -70.12% --
December 31, 1994................. 15,200 512,376 12,376 8,494 -40.90 1,083.56%
December 31, 1995................. 22,800 523,168 23,168 19,412 -9.35 345.14
December 31, 1996................. 30,400 533,091 33,091 29,459 -1.44 184.00
December 31, 1997................. 38,000 545,318 45,318 41,812 3.60 120.20
December 31, 1998................. 45,600 546,893 46,893 43,852 -1.23 86.39
December 31, 1999................. 53,200 551,736 51,736 49,274 -2.09 66.33
</TABLE>
ZENITH LOOMIS SAYLES SMALL CAP SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
May 2, 1994....................... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1994................. 7,600 505,643 5,643 2,311 -83.27% --
December 31, 1995................. 15,200 514,085 14,085 10,193 -29.97 1,096.20%
December 31, 1996................. 22,800 524,831 24,831 21,065 -4.69 347.24
December 31, 1997................. 30,400 538,039 38,039 34,397 5.77 185.33
December 31, 1998................. 38,000 541,946 41,946 38,429 0.42 120.10
December 31, 1999................. 45,600 562,504 62,504 59,415 8.39 87.65
</TABLE>
A-67
<PAGE> 73
ZENITH BALANCED SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1994................. 7,600 506,638 6,638 3,306 -100.00% --
December 31, 1995................. 15,200 513,873 13,873 9,929 -52.21 3,512.71%
December 31, 1996................. 22,800 521,987 21,987 18,168 -18.68 553.15
December 31, 1997................. 30,400 531,159 31,159 27,465 -6.05 243.72
December 31, 1998................. 38,000 539,708 39,708 36,139 -2.32 146.09
December 31, 1999................. 45,600 542,965 42,965 39,635 -5.27 100.47
</TABLE>
ZENITH MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1994................. 7,600 506,803 6,803 3,472 -100.00% --
December 31, 1995................. 15,200 513,017 13,017 9,073 -60.54 3,507.44%
December 31, 1996................. 22,800 519,604 19,604 15,785 -29.50 551.66
December 31, 1997................. 30,400 524,790 24,790 21,096 -21.39 242.23
December 31, 1998................. 38,000 532,229 32,229 28,660 -12.98 145.12
December 31, 1999................. 45,600 545,945 45,945 42,614 -2.54 100.72
</TABLE>
ZENITH DAVIS VENTURE VALUE SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1994................. 7,600 506,429 6,429 3,098 -100.00% --
December 31, 1995................. 15,200 514,474 14,474 10,530 -46.28 3,516.42%
December 31, 1996................. 22,800 524,041 24,041 20,222 -10.06 554.44
December 31, 1997................. 30,400 537,669 37,669 33,975 6.73 245.22
December 31, 1998................. 38,000 548,930 48,930 45,361 8.20 147.27
December 31, 1999................. 45,600 563,090 63,090 59,759 10.11 102.18
</TABLE>
ZENITH ALGER EQUITY GROWTH SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 31, 1994.................. $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1994................. 7,600 506,272 6,272 2,940 -100.00% --
December 31, 1995................. 15,200 514,472 14,472 10,528 -46.30 3,516.41%
December 31, 1996................. 22,800 522,132 22,132 18,313 -18.05 553.24
December 31, 1997................. 30,400 533,318 33,318 29,624 -1.55 244.22
December 31, 1998................. 38,000 555,606 55,606 52,037 14.63 148.11
December 31, 1999................. 45,600 580,556 80,556 77,226 19.72 103.63
</TABLE>
ZENITH MFS INVESTORS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.................... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1999................. 7,600 505,887 5,887 2,556 -80.28% --
</TABLE>
ZENITH MFS RESEARCH MANAGERS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- ------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
April 30, 1999.................... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1999................. 7,600 506,941 6,941 3,610 -67.02% --
</TABLE>
A-68
<PAGE> 74
METROPOLITAN JANUS MID CAP SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
March 3, 1997.................. $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1997.............. 7,600 507,372 7,372 4,040 -53.29% --
December 31, 1998.............. 15,200 517,255 17,255 13,384 -9.20 850.07%
December 31, 1999.............. 22,800 551,031 51,031 47,285 45.27 314.10
</TABLE>
METROPOLITAN RUSSELL 2000 INDEX SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
November 9, 1998............... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1998.............. 7,600 507,178 7,178 3,846 -100.00% --
December 31, 1999.............. 15,200 514,788 14,788 10,833 -44.84 3,816.77%
</TABLE>
VIP EQUITY-INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
October 9, 1986................ $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1986.............. 7,600 506,674 6,674 3,342 -97.30% --
December 31, 1987.............. 15,200 510,964 10,964 7,020 -74.25 2,901.86%
December 31, 1988.............. 22,800 518,884 18,884 15,065 -31.30 516.33
December 31, 1989.............. 30,400 527,716 27,716 24,022 -13.39 234.06
December 31, 1990.............. 38,000 529,231 29,231 25,662 -17.54 141.07
December 31, 1991.............. 45,600 544,031 44,031 40,701 -4.18 98.62
December 31, 1992.............. 53,200 557,176 57,176 54,425 0.70 74.40
December 31, 1993.............. 60,800 572,689 72,689 70,517 3.95 59.11
December 31, 1994.............. 68,400 583,351 83,351 81,758 4.17 48.44
December 31, 1995.............. 76,000 619,852 119,852 118,838 9.18 41.56
December 31, 1996.............. 83,600 642,693 142,693 142,258 9.79 35.97
December 31, 1997.............. 91,200 688,603 188,603 188,603 12.03 32.14
December 31, 1998.............. 98,800 717,491 217,491 217,491 11.93 28.70
December 31, 1999.............. 106,400 736,939 236,939 236,939 11.15 25.74
</TABLE>
VIP OVERSEAS SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
January 28, 1987............... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1987.............. 7,600 505,039 5,039 1,707 -80.16% 9,317.53%
December 31, 1988.............. 15,200 512,023 12,023 8,172 -36.49 742.10
December 31, 1989.............. 22,800 521,710 21,710 17,984 -11.85 285.75
December 31, 1990.............. 30,400 526,917 26,917 23,317 -10.66 162.06
December 31, 1991.............. 38,000 534,927 34,927 31,452 -6.41 108.96
December 31, 1992.............. 45,600 535,680 35,680 32,784 -9.58 79.73
December 31, 1993.............. 53,200 556,074 56,074 53,757 0.27 62.79
December 31, 1994.............. 60,800 562,196 62,196 60,458 -0.13 50.78
December 31, 1995.............. 68,400 576,263 76,263 75,104 1.89 42.51
December 31, 1996.............. 76,000 592,710 92,710 92,131 3.52 36.42
December 31, 1997.............. 83,600 610,328 110,328 110,328 4.62 31.75
December 31, 1998.............. 91,200 630,910 130,910 130,910 5.51 28.13
December 31, 1999.............. 98,800 695,004 195,004 195,004 9.43 26.02
</TABLE>
A-69
<PAGE> 75
VIP HIGH INCOME SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 19, 1985............. $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1985.............. 7,600 506,926 6,926 3,594 -92.96% --
December 31, 1986.............. 15,200 513,802 13,802 9,868 -45.72 2,496.75%
December 31, 1987.............. 22,800 519,522 19,522 15,713 -27.10 488.07
December 31, 1988.............. 30,400 527,373 27,373 23,689 -13.72 226.41
December 31, 1989.............. 38,000 531,389 31,389 27,830 -13.56 138.16
December 31, 1990.............. 45,600 535,915 35,915 32,632 -12.10 96.24
December 31, 1991.............. 53,200 553,769 53,769 51,067 -1.25 73.14
December 31, 1992.............. 60,800 571,356 71,356 69,233 3.41 58.35
December 31, 1993.............. 68,400 591,927 91,927 90,383 6.41 48.28
December 31, 1994.............. 76,000 596,697 96,697 95,732 4.75 40.44
December 31, 1995.............. 83,600 623,035 123,035 122,649 7.06 35.14
December 31, 1996.............. 91,200 646,063 146,063 146,063 7.85 30.92
December 31, 1997.............. 98,800 677,729 177,729 177,729 8.92 27.72
December 31, 1998.............. 106,400 676,134 176,134 176,134 7.11 24.50
December 31, 1999.............. 114,000 696,213 196,213 196,213 7.10 22.19
</TABLE>
VIP II ASSET MANAGER SUB-ACCOUNT
<TABLE>
<CAPTION>
TOTAL INTERNAL RATE INTERNAL RATE
PREMIUMS DEATH CASH NET CASH OF RETURN ON OF RETURN ON
DATE PAID BENEFIT VALUE VALUE NET CASH VALUE DEATH BENEFIT
---- -------- -------- -------- -------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
September 6, 1989............... $ 7,600 $506,956 $ 6,956 $ 3,624 -- --
December 31, 1989............... 7,600 506,589 6,589 3,257 -93.05% --
December 31, 1990............... 15,200 512,765 12,765 8,832 -52.64 2,267.87%
December 31, 1991............... 22,800 521,454 21,454 17,646 -18.54 471.86
December 31, 1992............... 30,400 529,670 29,670 25,987 -8.52 222.20
December 31, 1993............... 38,000 541,688 41,688 38,130 0.15 137.40
December 31, 1994............... 45,600 544,040 44,040 40,758 -3.99 95.84
December 31, 1995............... 53,200 557,077 57,077 54,374 0.66 72.68
December 31, 1996............... 60,800 570,941 70,941 68,817 3.23 57.88
December 31, 1997............... 68,400 591,431 91,431 89,886 6.23 47.94
December 31, 1998............... 76,000 612,237 112,237 111,271 7.73 40.71
December 31, 1999............... 83,600 631,109 131,109 130,723 8.15 35.18
</TABLE>
------------
* Rates of return and Policy values and benefits shown reflect the Capital
Growth Series' investment advisory fee of .50% of average daily net assets
for the period through December 31, 1987 and its current advisory fee
schedule thereafter.
** Rates of return and Policy values and benefits shown reflect the Harris
Oakmark Mid Cap Value Series' investment advisory fee of .70% of average
daily net assets for the period through April 30, 1998 and .75% thereafter.
A-70
<PAGE> 76
APPENDIX C
LONG TERM MARKET TRENDS
The information below compares the average annual returns of common stock,
high grade corporate bonds and 30-day U.S. Treasury bills over 20-year and
30-year holding periods.* The average annual returns assume the reinvestment of
dividends, capital gains and interest. This is an historical record and does not
predict future performance. The information does not reflect Policy charges.
The data indicates that, historically, the investment performance of common
stocks over long periods has been positive and generally superior to that of
long-term, high grade debt securities. Common stocks have, however, been subject
to more dramatic market adjustments over short periods.
Over the 55 20-year time periods beginning in 1926 and ending in 1999 (i.e.,
1926-1945, 1927-1946, and so on through 1980-1999):
-- The average annual return of common stocks was superior to that of high
grade, long-term corporate bonds in 52 of the 55 periods.
-- The average annual return of common stocks surpassed that of U.S.
Treasury bills in each of the 55 periods.
-- Common stock average annual returns exceeded the average annual rate of
inflation in each of the 55 periods.
Over the 45 30-year periods beginning in 1926 and ending in 1999, the
average annual return of common stocks was superior to that of high grade,
long-term corporate bonds, U.S. Treasury bills and inflation in all 45 periods.
From 1926 through 1999 the average annual return for common stocks was
11.3%, compared to 5.6% for high grade, long-term corporate bonds, 3.8% for U.S.
Treasury bills and 3.1% for the Consumer Price Index.
------------
* Used with permission. (C)2000 Ibbotson Associates, Inc. All rights reserved.
[Certain portions of this work were derived from copyrighted works of Roger G.
Ibbotson and Rex Sinquefield.]
------------------------
SUMMARY: HISTORIC S&P STOCK INDEX RESULTS FOR
SPECIFIC HOLDING PERIODS
The following chart categorizes the historical results of the Standard &
Poor's 500 Stock Index with dividends reinvested, over one-year, five-year and
twenty-year periods beginning in 1926 and ending 1999.
The chart does not predict future stock market results. It shows the
historic performance of a broad index of stocks, and not the performance of any
fund or investment.
------------------------
PERCENT OF HOLDING PERIODS WITH THE FOLLOWING RETURNS:
<TABLE>
<CAPTION>
GREATER
0- 5.01- 10.01- 15.01- THAN
HOLDING NEGATIVE 5.00% 10.00% 15.00% 20.00% 20.00%
PERIOD RETURN RETURN RETURN RETURN RETURN RETURN
------- -------- ------ ------ ------ ------ -------
<S> <C> <C> <C> <C> <C> <C>
1 year.................................. 27% 4% 11% 7% 11% 40%
5 years................................. 10% 14% 14% 30% 19% 13%
10 years................................ 3% 10% 33% 24% 28% 2%
20 years................................ 0% 6% 31% 53% 10% 0%
</TABLE>
------------
Used with permission. (C)2000 Ibbotson Associates, Inc. All rights reserved.
[Certain portions of this work were derived from copyrighted works of Roger G.
Ibbotson and Rex Sinquefield.]
A-71
<PAGE> 77
APPENDIX D
USES OF LIFE INSURANCE
These are examples of ways the Policy can be used to address certain
financial objectives.
FAMILY INCOME PROTECTION
You may purchase life insurance on the lives of family income earners to
provide a death benefit to cover final expenses, and continue current family
income. The amount of insurance you purchase should be an amount which will
provide a death benefit that, when invested outside the policy at a reasonable
interest rate, will generate enough money to replace the individual's income.
ESTATE PROTECTION
A trust may purchase life insurance on the life of the person whose estate
will incur federal estate taxes upon the person's death. The amount of insurance
purchased should equal the amount of the estimated estate tax liability. On the
insured's death, the trustee makes the death proceeds available to the estate
for the payment of estate tax costs.
EDUCATION FUNDING
You may purchase life insurance on the life of the parent(s) or primary
person funding an education. The amount of insurance you purchase should equal
the total education cost projected at a reasonable inflation rate.
In the event of death, the guaranteed death benefit is available to help pay
the education costs. If the insured lives through the education years, cash
value may be accessed to meet education costs. Loans or surrenders reduce the
Policy's death benefit.
MORTGAGE PROTECTION
You may purchase life insurance on the life of the person responsible for
making mortgage payments. The amount of insurance you purchase should equal the
mortgage amount. In the event of the insured's death, the guaranteed death
benefit can be used to pay the mortgage balance.
During the insured's lifetime, cash value may be accessed late in the
mortgage term to help make the remaining mortgage payments. Loans or surrenders
reduce the Policy's death benefit.
KEY PERSON PROTECTION
A business may purchase life insurance on the life of a key person in an
amount equal to the key person's value, considering salary, benefits, and
contribution to the business. On the key person's death, the business uses the
death benefit to ease the interruption of business operations and/or to provide
a replacement fund for hiring a new executive.
BUSINESS CONTINUATION PROTECTION
You can insure each business owner in an amount equal to the value of each
owner's business interest. In the event of death, the guaranteed death benefit
provides funds for the purchase of the deceased's business interest by the
business, or surviving owners, from the deceased owner's heirs.
RETIREMENT INCOME
You may purchase life insurance on the life of a family income earner during
his or her working life. If the insured lives to retirement, cash value may be
accessed to provide retirement payments. In the event of the insured's death,
the proceeds may be used to provide retirement income to his or her spouse.
Loans or surrenders reduce the Policy's death benefit.
Because the Policy provides a death benefit and cash value accumulation, you
can use the Policy for various individual and business planning purposes. If you
purchase the Policy for such purposes, you assume certain risks, particularly if
the Policy's cash value, as opposed to its death benefit, will be the principal
Policy feature used for such planning purposes. If the investment performance of
the Sub-Accounts to which cash value is allocated is poorer than expected, or if
you don't pay sufficient premiums or maintain cash values, the Policy may lapse
or may not accumulate sufficient cash value or net cash value to fund the
purpose for which you purchased the Policy. Because the Policy is designed to
provide benefits on a long-term basis, before purchasing a Policy for a
specialized purpose, you should consider whether the long-term nature of the
Policy is consistent with your goals. If you wish to access your Policy's cash
value, through loans, surrenders or withdrawals, you should consult your tax
advisor about possible tax consequences. (See "Tax Considerations".)
A-72
<PAGE> 78
APPENDIX E
TAX INFORMATION
The Office of Tax Analysis of the U.S. Department of the Treasury published
a "Report to the Congress on the Taxation of Life Insurance Company Products" in
March 1990. Page 4 of this report is Table 1.1, a "Comparison of Tax Treatment
of Life Insurance Products and Other Retirement Savings Plans". Because it is a
convenient summary of the relevant tax characteristics of these products and
plans, we have reprinted it here, and added footnotes to reflect exceptions to
the general rules.
------------------------
TABLE 1.1
COMPARISON OF TAX TREATMENT OF LIFE INSURANCE PRODUCTS AND OTHER RETIREMENT
SAVINGS PLANS
<TABLE>
<CAPTION>
CASH-VALUE
LIFE NON-QUALIFIED QUALIFIED
INSURANCE ANNUITIES IRA'S PENSION
---------- ------------- ----- ---------
<S> <C> <C> <C> <C>
Annual Contribution Limits No No Yes Yes
Income Eligibility Limits No No Yes** No
Borrowing Treated as
Distributions No* Yes Loans not allowed Yes, beyond $50,000
Income Ordering Rules (Income
included in First
Distribution) No* Yes Yes Yes
Early Withdrawal Penalties No* Yes*** Yes*** Yes***
Minimum Distribution Rules by
Age 70 1/2 No No Yes Yes
Maximum Annual Distribution
Rules No No Yes Yes
Anti-discrimination Rules No No No Yes
</TABLE>
------------
Department of the Treasury March 1990
Office of Tax Analysis
* If the Policy is not a modified endowment contract.
** If amounts paid in to fund the IRA are deductible; once over the income
eligibility limits amounts paid into an IRA are permitted but not
deductible.
*** There are several exceptions to the application of the early withdrawal
penalties for annuities, IRAs and qualified pensions.
This appendix is not tax advice. You should consult with your own tax advisor
for more complete information.
A-73
<PAGE> 79
APPENDIX F
TAX LAW AND THE DEATH BENEFIT
In order to meet the Internal Revenue Code's definition of life insurance,
the Policies provide that the death benefit will not be less than a percentage
of the Policy's cash value. These percentages are set forth below.
<TABLE>
<CAPTION>
AGE OF INSURED AGE OF INSURED AT
AT START OF THE PERCENTAGE OF START OF THE PERCENTAGE OF
POLICY YEAR CASH VALUE* POLICY YEAR CASH VALUE*
--------------- ------------- ----------------- -------------
<S> <C> <C> <C>
0 through 40 250 61 128
41 243 62 126
42 236 63 124
43 229 64 122
44 222 65 120
45 215 66 119
46 209 67 118
47 203 68 117
48 197 69 116
49 191 70 115
50 185 71 113
51 178 72 111
52 171 73 109
53 164 74 107
54 157 75 through 90 105
55 150 91 104
56 146 92 103
57 142 93 102
58 138 94 through 99 101
59 134 100 100
60 130
</TABLE>
------------
* including the pro rata portion of any Monthly Deduction made for a period
beyond the date of death.
A-74
<PAGE> 80
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
REPORT OF INDEPENDENT AUDITORS
To the Policy Owners and Board of Directors of New England Life Insurance
Company:
We have audited the accompanying statement of assets and liabilities of the New
England Variable Life Separate Account (comprised of the following Sub-Accounts:
Capital Growth, Bond Income, Money Market, Stock Index, Managed, Midcap Value
(formerly Avanti Growth), Growth and Income (formerly Value Growth), Small Cap,
U.S. Government, Balanced, Equity Growth, International Magnum Equity (formerly
International Equity), Venture Value, Bond Opportunities, Investors, Research
Managers, Equity-Income, Overseas, High Income and Asset Manager) of New England
Life Insurance Company (the "Company") as of December 31, 1999, and the related
statements of operations and changes in net assets for each of the three years
in the period then ended for all Sub-Accounts. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the respective aforementioned
Sub-Accounts comprising the New England Variable Life Separate Account of New
England Life Insurance Company as of December 31, 1999, and the results of their
operations and the changes in their net assets for each of the three years in
the period then ended, in conformity with generally accepted accounting
principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 4, 2000
AA-1
<PAGE> 81
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 1999
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK
GROWTH INCOME MARKET INDEX MANAGED
SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-------------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in New England Zenith Fund,
Variable Insurance Products Fund, and
Variable Insurance Products Fund II at
value (Note 2)............................ $1,230,974,235 $74,838,213 $148,173,522 $183,798,637 $70,090,490
<CAPTION>
NEW ENGLAND ZENITH FUND
---------------------------------------
GROWTH
MIDCAP AND SMALL
VALUE INCOME CAP
SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
ASSETS
Investments in New England Zenith Fund,
Variable Insurance Products Fund, and
Variable Insurance Products Fund II at
value (Note 2)............................ $36,996,243 $94,643,283 $99,681,359
</TABLE>
<TABLE>
<CAPTION>
SHARES COST
--------- --------------
<S> <C> <C>
Capital Growth
Series................ 2,831,583 $1,086,202,933
Back Bay Advisors Bond
Income Series......... 738,049 79,337,797
Back Bay Advisors Money
Market Series......... 1,481,735 148,173,522
Westpeak Stock Index
Series................ 796,217 120,113,367
Back Bay Advisors
Managed Series........ 356,133 60,490,121
Goldman Sachs Midcap
Value Series.......... 303,945 41,326,387
Westpeak Growth and
Income Series......... 476,840 86,077,139
Loomis Sayles Small Cap
Series................ 494,133 72,214,392
Salomon Brothers U.S.
Government Series..... 72,858 844,414
Loomis Sayles Balanced
Series................ 1,214,912 18,213,928
Alger Equity Growth
Series................ 7,670,932 172,788,088
Morgan Stanley
International Magnum
Equity Series......... 1,284,810 14,534,170
Davis Venture Value
Series................ 6,183,625 126,513,387
Salomon Brothers Bond
Opportunities
Series................ 104,337 1,267,848
MFS Investors Series... 77,411 773,570
MFS Research Managers
Series................ 78,902 806,954
VIP Equity-Income
Portfolio............. 6,551,702 126,034,149
VIP Overseas
Portfolio............. 5,064,896 87,116,523
VIP High Income
Portfolio............. 1,322,300 15,875,113
VIP II Asset Manager
Portfolio............. 707,988 11,460,518
--------------
Total $2,270,164,320
==============
</TABLE>
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK
GROWTH INCOME MARKET INDEX MANAGED
SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-------------- ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Amount due and accrued (payable) from
policy-related transactions, net.......... (136,071) 21,370 560,723 49,113 (11,519)
Dividends receivable........................ -- -- -- -- --
-------------- ----------- ------------ ------------ -----------
Total Assets............................. 1,230,838,164 74,859,583 148,734,245 183,847,750 70,078,971
LIABILITIES
Due to New England Life Insurance Company... 84,134,782 6,819,176 11,964,362 19,325,681 5,908,740
-------------- ----------- ------------ ------------ -----------
NET ASSETS FOR VARIABLE LIFE INSURANCE
POLICIES.................................... $1,146,703,382 $68,040,407 $136,769,883 $164,522,069 $64,170,231
============== =========== ============ ============ ===========
<CAPTION>
NEW ENGLAND ZENITH FUND
---------------------------------------
GROWTH
MIDCAP AND SMALL
VALUE INCOME CAP
SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT
----------- ----------- -----------
<S> <C> <C> <C>
Amount due and accrued (payable) from
policy-related transactions, net.......... 39,928 7,685 84,454
Dividends receivable........................ -- -- --
----------- ----------- -----------
Total Assets............................. 37,036,171 94,650,968 99,765,813
LIABILITIES
Due to New England Life Insurance Company... 3,542,818 9,540,656 10,713,149
----------- ----------- -----------
NET ASSETS FOR VARIABLE LIFE INSURANCE
POLICIES.................................... $33,493,353 $85,110,312 $89,052,664
=========== =========== ===========
</TABLE>
See Notes to Financial Statements
AA-2
<PAGE> 82
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------------------------------------------------------------------------------------------
INTERNATIONAL
U.S. EQUITY MAGNUM VENTURE BOND RESEARCH
GOVERNMENT BALANCED GROWTH EQUITY VALUE OPPORTUNITIES INVESTORS MANAGERS
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
---------- ----------- ------------ ------------- ------------ ------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$787,592 $16,826,533 $225,065,146 $18,180,067 $164,917,275 $1,113,279 $794,240 $945,245
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
----------------------------------------- ----------- --------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------ ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$168,444,262 $138,980,751 $14,955,213 $13,218,146 $2,703,423,731
</TABLE>
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------------------------------------------------------------------------------------------
INTERNATIONAL
U.S. EQUITY MAGNUM VENTURE BOND RESEARCH
GOVERNMENT BALANCED GROWTH EQUITY VALUE OPPORTUNITIES INVESTORS MANAGERS
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
---------- ----------- ------------ ------------- ------------ ------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
10,965 157,461 236,677 96,973 124,826 5,544 (2,239) (2,139)
-- -- -- -- -- -- -- --
-------- ----------- ------------ ----------- ------------ ---------- -------- --------
798,557 16,983,994 225,301,823 18,277,040 165,042,101 1,118,823 792,001 943,106
41,247 1,694,626 26,656,245 2,058,494 18,572,069 57,789 99,163 154,903
-------- ----------- ------------ ----------- ------------ ---------- -------- --------
$757,310 $15,289,368 $198,645,578 $16,218,546 $146,470,032 $1,061,034 $692,838 $788,203
======== =========== ============ =========== ============ ========== ======== ========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
----------------------------------------- ----------- --------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------ ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
(5,066) 101,197 2,344 592 1,342,818
-- -- -- -- --
------------ ------------ ----------- ----------- --------------
168,439,196 139,081,948 14,957,557 13,218,738 2,704,766,549
16,380,286 12,743,559 1,476,634 1,448,557 233,332,936
------------ ------------ ----------- ----------- --------------
$152,058,910 $126,338,389 $13,480,923 $11,770,181 $2,471,433,613
============ ============ =========== =========== ==============
</TABLE>
See Notes to Financial Statements
AA-3
<PAGE> 83
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF ASSETS AND LIABILITIES
JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK MIDCAP
GROWTH INCOME MARKET INDEX MANAGED VALUE
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-------------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in New England Zenith
Fund, Metropolitan Series Fund,
Variable Insurance Products Fund,
and Variable Insurance Products
Fund II at value (Note 2).......... $1,123,384,081 $74,610,091 $73,395,395 $200,882,751 $70,800,260 $36,076,125
<CAPTION>
NEW ENGLAND ZENITH FUND
--------------------------------------------------------------------
GROWTH
AND SMALL U.S. EQUITY
INCOME CAP GOVERNMENT BALANCED GROWTH
SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
----------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS
Investments in New England Zenith
Fund, Metropolitan Series Fund,
Variable Insurance Products Fund,
and Variable Insurance Products
Fund II at value (Note 2).......... $96,058,930 $135,082,006 $785,442 $16,227,155 $320,845,558
</TABLE>
<TABLE>
<CAPTION>
SHARES COST
---------- --------------
<S> <C> <C>
Capital Growth
Series............. 2,743,173 $1,047,956,367
Back Bay Advisors
Bond Income
Series............. 715,547 77,338,222
Back Bay Advisors
Money Market
Series............. 733,954 73,395,395
Westpeak Stock Index
Series............. 873,935 137,693,376
Back Bay Advisors
Managed Series..... 357,523 60,807,147
Harris Oakmark
Midcap Value
Series............. 299,710 40,811,303
Westpeak Growth and
Income Series...... 500,594 90,685,788
Loomis Sayles Small
Cap Series......... 620,382 99,469,012
Salomon Brothers
U.S. Government
Series............. 70,254 816,865
Balanced Series..... 1,164,907 18,322,043
Alger Equity Growth
Series............. 10,471,461 257,311,005
Morgan Stanley
International
Magnum Equity
Series............. 1,568,585 18,397,616
Davis Venture Value
Series............. 7,362,267 159,472,052
Salomon Brothers
Bond Opportunities
Series............. 94,658 1,171,580
MFS Investors
Series............. 172,654 6,221,497
MFS Research
Managers Series.... 421,074 9,401,922
Janus Mid Cap
Portfolio.......... 199,317 6,600,080
Putnam Large Cap
Growth Portfolio... 92,490 889,473
Russell 2000 Index
Portfolio.......... 74,007 921,558
Putnam International
Stock Portfolio.... 3,059 41,958
VIP Equity-Income
Portfolio.......... 6,885,378 133,482,013
VIP Overseas
Portfolio.......... 8,331,215 168,389,257
VIP High Income
Portfolio.......... 1,510,606 17,847,780
VIP II Asset Manager
Portfolio.......... 869,225 14,189,153
--------------
Total $2,441,632,462
==============
</TABLE>
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK MIDCAP
GROWTH INCOME MARKET INDEX MANAGED VALUE
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-------------- ----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Amount due and accrued from
policy-related transactions, net... (22,204) 12,833 39,134 188,376 23,936 (2,848)
Dividends receivable................ -- -- 354,822 -- -- --
-------------- ----------- ----------- ------------ ----------- -----------
Total Assets...................... 1,123,361,877 74,622,924 73,789,348 201,071,127 70,824,196 36,073,277
LIABILITIES
Due to New England Life Insurance
Company............................ 77,966,684 6,783,829 9,227,629 22,037,878 6,382,142 3,434,066
-------------- ----------- ----------- ------------ ----------- -----------
Total Liabilities................. 77,966,684 6,783,829 9,227,629 22,037,878 6,382,142 3,434,066
-------------- ----------- ----------- ------------ ----------- -----------
NET ASSETS FOR VARIABLE LIFE
INSURANCE POLICIES.................. $1,045,395,191 $67,839,095 $64,561,719 $179,033,249 $64,442,054 $32,639,211
============== =========== =========== ============ =========== ===========
<CAPTION>
NEW ENGLAND ZENITH FUND
--------------------------------------------------------------------
GROWTH
AND SMALL U.S. EQUITY
INCOME CAP GOVERNMENT BALANCED GROWTH
SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
----------- ------------ ---------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Amount due and accrued from
policy-related transactions, net... 37,758 184,977 (29,778) (5,710) 413,587
Dividends receivable................ -- -- -- -- --
----------- ------------ -------- ----------- ------------
Total Assets...................... 96,096,688 135,266,983 755,664 16,221,445 321,259,145
LIABILITIES
Due to New England Life Insurance
Company............................ 5,771,112 14,734,748 36,752 1,699,345 39,688,298
----------- ------------ -------- ----------- ------------
Total Liabilities................. 5,771,112 14,734,748 36,752 1,699,345 39,688,298
----------- ------------ -------- ----------- ------------
NET ASSETS FOR VARIABLE LIFE
INSURANCE POLICIES.................. $90,325,576 $120,532,235 $718,912 $14,522,100 $281,570,847
=========== ============ ======== =========== ============
</TABLE>
See Notes to Financial Statements
AA-4
<PAGE> 84
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND METROPOLITAN SERIES FUND
---------------------------------------------------------------------- ---------------------------------------------------
INTERNATIONAL
MAGNUM VENTURE BOND RESEARCH LARGE CAP RUSSELL INTERNATIONAL
EQUITY VALUE OPPORTUNITIES INVESTORS MANAGERS MID CAP GROWTH 2000 INDEX STOCK
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------- ------------ ------------- ---------- ---------- ---------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$21,740,593 $210,266,359 $1,029,873 $1,781,792 $5,381,326 $7,113,618 $923,975 $948,772 $42,251
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
----------------------------------------- ----------- --------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------ ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$157,744,016 $195,450,310 $15,166,488 $14,376,986 $2,780,114,150
</TABLE>
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND METROPOLITAN SERIES FUND
---------------------------------------------------------------------- ---------------------------------------------------
INTERNATIONAL
MAGNUM VENTURE BOND RESEARCH LARGE CAP RUSSELL INTERNATIONAL
EQUITY VALUE OPPORTUNITIES INVESTORS MANAGERS MID CAP GROWTH 2000 INDEX STOCK
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------- ------------ ------------- ---------- ---------- ---------- --------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8,879 413,278 (10,239) 120,898 13,874 288,055 1,532 8,986 0
-- -- -- -- -- -- -- -- --
----------- ------------ ---------- ---------- ---------- ---------- -------- -------- -------
21,749,472 210,679,637 1,019,634 1,902,690 5,395,200 7,401,673 925,507 957,758 42,251
2,401,477 28,048,578 49,600 241,549 497,603 789,385 130,622 65,397 0
----------- ------------ ---------- ---------- ---------- ---------- -------- -------- -------
2,401,477 28,048,578 49,600 241,549 497,603 789,385 130,622 65,397 0
----------- ------------ ---------- ---------- ---------- ---------- -------- -------- -------
$19,347,995 $182,631,059 $ 970,034 $1,661,141 $4,897,597 $6,612,288 $794,885 $892,361 $42,251
=========== ============ ========== ========== ========== ========== ======== ======== =======
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
----------------------------------------- ----------- --------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------ ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
58,702 225,113 18,291 24,425 2,011,855
-- -- -- -- 354,822
------------ ------------ ----------- ----------- --------------
157,802,718 195,675,423 15,184,779 14,401,411 2,782,480,827
15,604,061 15,642,072 1,574,328 1,575,691 254,382,846
------------ ------------ ----------- ----------- --------------
15,604,061 15,642,072 1,574,328 1,575,691 254,382,846
------------ ------------ ----------- ----------- --------------
$142,198,657 $180,033,351 $13,610,451 $12,825,720 $2,528,097,981
============ ============ =========== =========== ==============
</TABLE>
See Notes to Financial Statements
AA-5
<PAGE> 85
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
---------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK MIDCAP
GROWTH INCOME MARKET INDEX MANAGED VALUE
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME
Dividends................................ $239,049,928 $ 5,475,221 $5,083,165 $ 4,154,533 $ 9,783,326 $ 459,624
EXPENSE
Mortality and expense risk charge (Note
3)..................................... 6,723,595 471,818 638,578 1,013,735 421,255 330,436
------------ ----------- ---------- ----------- ----------- -----------
Net investment income (loss)............. 232,326,333 5,003,403 4,444,587 3,140,798 9,362,071 129,188
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period.................... 215,969,495 1,209,273 -- 39,965,167 13,285,666 (3,807,527)
End of period.......................... 144,771,302 (4,499,584) -- 63,685,270 9,600,369 (4,330,144)
------------ ----------- ---------- ----------- ----------- -----------
Net change in unrealized appreciation
(depreciation)......................... (71,198,193) (5,708,857) -- 23,720,103 (3,685,297) (522,617)
Net realized gain (loss) on
investments............................ (572,298) 1,487 -- (52,322) (65,614) (9,202)
------------ ----------- ---------- ----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments......................... (71,770,491) (5,707,370) -- 23,667,781 (3,750,911) (531,819)
------------ ----------- ---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ $160,555,842 $ (703,967) $4,444,587 $26,808,579 $ 5,611,160 $ (402,631)
============ =========== ========== =========== =========== ===========
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------
GROWTH
AND SMALL
INCOME CAP
SUB- SUB-
ACCOUNT ACCOUNT
----------- -----------
<S> <C> <C>
INCOME
Dividends................................ $12,174,462 $ 260,319
EXPENSE
Mortality and expense risk charge (Note
3)..................................... 578,297 538,571
----------- -----------
Net investment income (loss)............. 11,596,165 (278,252)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period.................... 13,616,695 3,516,783
End of period.......................... 8,566,144 27,466,967
----------- -----------
Net change in unrealized appreciation
(depreciation)......................... (5,050,551) 23,950,184
Net realized gain (loss) on
investments............................ (33,403) 2,146
----------- -----------
Net realized and unrealized gain (loss)
on investments......................... (5,083,954) 23,952,330
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ $ 6,512,211 $23,674,078
=========== ===========
</TABLE>
* For the period April 30, 1999 (Commencement of Operations) through December
31, 1999.
See Notes to Financial Statements
AA-6
<PAGE> 86
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-----------------------------------------------------------------------------------------------------------------
INTERNATIONAL
U.S. EQUITY MAGNUM VENTURE BOND RESEARCH
GOVERNMENT BALANCED GROWTH EQUITY VALUE OPPORTUNITIES INVESTORS* MANAGERS*
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
---------- ----------- ----------- ------------- ----------- ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ 46,383 $ 998,875 $26,651,028 $ 60,426 $ 3,101,039 $ 90,809 $ 1,921 $ --
10,668 126,629 1,069,420 119,372 961,922 24,177 533 1,540
-------- ----------- ----------- ---------- ----------- --------- ------- --------
35,715 872,246 25,581,608 (58,946) 2,139,117 66,632 1,388 (1,540)
15,209 1,036,991 30,707,168 194,954 20,008,648 (46,594) -- --
(56,822) (1,387,395) 52,277,058 3,645,897 38,403,888 (154,569) 20,670 138,291
-------- ----------- ----------- ---------- ----------- --------- ------- --------
(72,031) (2,424,386) 21,569,890 3,450,943 18,395,240 (107,975) 20,670 138,291
(1,634) (14,874) (116,438) (4,634) (47,139) 1,097 8,670 (34,566)
-------- ----------- ----------- ---------- ----------- --------- ------- --------
(73,665) (2,439,260) 21,453,452 3,446,309 18,348,101 (106,878) 29,340 103,725
-------- ----------- ----------- ---------- ----------- --------- ------- --------
$(37,950) $(1,567,014) $47,035,060 $3,387,363 $20,487,218 $ (40,246) $30,728 $102,185
======== =========== =========== ========== =========== ========= ======= ========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
-------------------------------------- ---------- ------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
----------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
$ 7,478,140 $ 3,746,050 $1,147,254 $ 713,060 $320,475,563
1,005,310 681,381 87,077 74,260 14,878,574
----------- ----------- ---------- ---------- ------------
6,472,830 3,064,669 1,060,177 638,800 305,596,989
39,593,709 14,768,529 (611,552) 1,247,559 390,670,173
42,410,113 51,864,228 (919,900) 1,757,628 433,259,411
----------- ----------- ---------- ---------- ------------
2,816,404 37,095,699 (308,348) 510,069 42,589,238
(592,373) (370,244) 48,706 (3,669) (1,856,304)
----------- ----------- ---------- ---------- ------------
2,224,031 36,725,455 (259,642) 506,400 40,732,934
----------- ----------- ---------- ---------- ------------
$ 8,696,861 $39,790,124 $ 800,535 $1,145,200 $346,329,923
=========== =========== ========== ========== ============
</TABLE>
See Notes to Financial Statements
AA-7
<PAGE> 87
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
------------------------------------------------------------------
CAPITAL BOND MONEY STOCK
GROWTH INCOME MARKET INDEX MANAGED
SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ ---------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME
Dividends...................................... $136,031,595 $4,500,888 $2,243,738 $ 1,665,717 $ 4,920,327
EXPENSE
Mortality and expense risk charge (Note 3)..... 5,675,180 329,452 281,233 574,859 295,717
------------ ---------- ---------- ----------- -----------
Net investment income (loss)................... 130,356,415 4,171,436 1,962,505 1,090,858 4,624,610
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation (depreciation) on
investments:
Beginning of period.......................... 91,366,363 892,059 -- 19,889,059 9,447,437
End of period................................ 215,969,495 1,209,273 -- 39,965,167 13,285,666
------------ ---------- ---------- ----------- -----------
Net change in unrealized appreciation
(depreciation)............................... 124,603,132 317,214 -- 20,076,109 3,838,229
Net realized gain on investments............... 5,610,899 1,800 -- 190,803 163,910
------------ ---------- ---------- ----------- -----------
Net realized and unrealized gain (loss) on
investments.................................. 130,214,031 319,014 20,266,912 4,002,139
------------ ---------- ---------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ $260,570,446 $4,490,449 $1,962,505 $21,357,770 $ 8,626,750
============ ========== ========== =========== ===========
<CAPTION>
NEW ENGLAND ZENITH FUND
--------------------------
GROWTH
MIDCAP AND
VALUE INCOME
SUB- SUB-
ACCOUNT ACCOUNT
------------ -----------
<S> <C> <C>
INCOME
Dividends...................................... $ 8,522,091 $ 4,438,526
EXPENSE
Mortality and expense risk charge (Note 3)..... 213,136 321,673
------------ -----------
Net investment income (loss)................... 8,308,955 4,116,853
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation (depreciation) on
investments:
Beginning of period.......................... 6,964,381 6,858,665
End of period................................ (3,807,527) 13,616,695
------------ -----------
Net change in unrealized appreciation
(depreciation)............................... (10,771,908) 6,758,031
Net realized gain on investments............... 236,891 14,655
------------ -----------
Net realized and unrealized gain (loss) on
investments.................................. (10,535,017) 6,772,686
------------ -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ $ (2,226,063) $10,889,538
============ ===========
</TABLE>
See Notes to Financial Statements
AA-8
<PAGE> 88
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------------------------------------------------------------------------------
INTERNATIONAL
SMALL U.S. EQUITY MAGNUM VENTURE BOND
CAP GOVERNMENT BALANCED GROWTH EQUITY VALUE OPPORTUNITIES
SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
----------- ---------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,148,975 $32,331 $ 607,129 $ 3,598,904 $ 251,292 $ 2,912,129 $ 81,480
380,727 (2,318) 52,939 452,661 48,632 512,333 (9,440)
----------- ------- ---------- ----------- --------- ----------- --------
768,248 34,649 554,190 3,146,243 202,660 2,399,796 90,920
5,422,058 (1,916) 642,612 5,391,267 (155,005) 10,716,783 (2,256)
3,516,783 15,209 1,036,991 30,707,168 194,954 20,008,648 (46,594)
----------- ------- ---------- ----------- --------- ----------- --------
(1,905,274) 17,125 394,379 25,315,901 349,959 9,291,865 (44,337)
20,862 11 6,840 56,142 5,897 22,521 493
----------- ------- ---------- ----------- --------- ----------- --------
(1,884,412) 17,136 401,219 25,372,043 355,856 9,314,386 (43,844)
----------- ------- ---------- ----------- --------- ----------- --------
$(1,116,164) $51,785 $ 955,409 $28,518,286 $ 558,517 $11,714,181 $ 47,076
=========== ======= ========== =========== ========= =========== ========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
----------------------------------------- ---------- ------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
----------- ------------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C>
$ 8,088,940 $ 6,093,523 $ 1,064,286 $ 835,511 $187,037,382
902,569 550,070 67,547 50,140 10,697,110
----------- ----------- ----------- ---------- ------------
7,186,371 5,543,453 996,739 785,371 176,340,272
32,699,163 11,137,299 964,520 971,097 203,203,584
39,593,709 14,768,529 (611,552) 1,247,559 390,670,172
----------- ----------- ----------- ---------- ------------
6,894,545 3,631,231 (1,576,072) 276,461 187,466,588
561,003 333,272 20,913 4,137 7,251,049
----------- ----------- ----------- ---------- ------------
7,455,548 3,964,503 (1,555,159) 280,598 194,717,637
----------- ----------- ----------- ---------- ------------
$14,641,919 $ 9,507,956 $ (558,420) $1,065,969 $371,057,909
=========== =========== =========== ========== ============
</TABLE>
See Notes to Financial Statements
AA-9
<PAGE> 89
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
----------------------------------------------------
CAPITAL BOND MONEY STOCK
GROWTH INCOME MARKET INDEX
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ ---------- ---------- -----------
<S> <C> <C> <C> <C>
INCOME
Dividends...................................... $184,229,729 $3,419,409 $1,852,865 $ 1,082,727
EXPENSE
Mortality and expense risk charge (Note 3)..... 4,170,905 253,374 241,048 333,771
------------ ---------- ---------- -----------
Net investment income (loss)................... 180,058,824 3,166,035 1,611,817 748,956
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation (depreciation) on
investments:
Beginning of year............................ 138,009,405 40,519 -- 7,633,013
End of year.................................. 91,366,363 892,059 -- 19,889,059
------------ ---------- ---------- -----------
Net change in unrealized appreciation
(depreciation)............................... (46,643,042) 851,540 12,256,046
Net realized gain on investments............... 1,699,829 15,488 -- 35,165
------------ ---------- ---------- -----------
Net realized and unrealized gain (loss) on
investments.................................. (44,943,213) 867,028 12,291,211
------------ ---------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ $135,115,611 $4,033,063 $1,611,817 $13,040,167
============ ========== ========== ===========
<CAPTION>
NEW ENGLAND ZENITH FUND
------------------------------------
GROWTH
MIDCAP AND
MANAGED VALUE INCOME
SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT
---------- ---------- ----------
<S> <C> <C> <C>
INCOME
Dividends...................................... $5,025,764 $2,781,138 $3,928,553
EXPENSE
Mortality and expense risk charge (Note 3)..... 229,423 207,451 190,264
---------- ---------- ----------
Net investment income (loss)................... 4,796,341 2,573,687 3,738,289
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation (depreciation) on
investments:
Beginning of year............................ 6,137,629 4,823,316 3,107,090
End of year.................................. 9,447,437 6,964,381 6,858,664
---------- ---------- ----------
Net change in unrealized appreciation
(depreciation)............................... 3,309,808 2,141,065 3,751,574
Net realized gain on investments............... 242,079 87,159 17,721
---------- ---------- ----------
Net realized and unrealized gain (loss) on
investments.................................. 3,551,887 2,228,224 3,769,295
---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS................................ $8,348,228 $4,801,911 $7,507,584
========== ========== ==========
</TABLE>
See Notes to Financial Statements
AA-10
<PAGE> 90
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------------------------------------------------------------------------------
INTERNATIONAL
SMALL U.S. EQUITY MAGNUM VENTURE BOND
CAP GOVERNMENT BALANCED GROWTH EQUITY VALUE OPPORTUNITIES
SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
---------- ---------- -------- ---------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
$6,279,206 $ 9,089 $438,430 $4,721,050 $ 209,389 $ 1,822,395 $43,914
275,141 2,290 50,941 265,599 51,702 276,055 9,400
---------- ------- -------- ---------- --------- ----------- -------
6,004,065 6,799 387,489 4,455,451 157,687 1,546,340 34,514
3,059,565 (819) 236,625 2,084,389 136,191 2,398,023 (1,153)
5,422,058 (1,916) 642,612 5,391,267 (155,006) 10,716,783 (2,256)
---------- ------- -------- ---------- --------- ----------- -------
2,362,493 (1,097) 405,987 3,306,878 (291,197) 8,318,760 (1,103)
20,956 1 55,231 75,802 8,303 21,718 201
---------- ------- -------- ---------- --------- ----------- -------
2,383,449 (1,096) 461,218 3,382,680 (282,894) 8,340,478 (902)
---------- ------- -------- ---------- --------- ----------- -------
$8,387,514 $ 5,703 $848,707 $7,838,131 $(125,207) $ 9,886,818 $33,612
========== ======= ======== ========== ========= =========== =======
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
-------------------------------------- --------- ------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------- ----------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
$ 8,872,794 $ 5,434,055 $393,295 $528,401 $231,072,203
676,059 447,597 41,502 33,135 7,755,657
----------- ----------- -------- -------- ------------
8,196,735 4,986,458 351,793 495,266 223,316,546
16,409,989 9,502,216 362,600 547,647 194,486,245
32,699,163 11,137,299 964,520 971,097 203,203,584
----------- ----------- -------- -------- ------------
16,289,174 1,635,083 601,920 423,450 8,717,339
126,489 67,905 12,234 5,368 2,491,649
----------- ----------- -------- -------- ------------
16,415,663 1,702,988 614,154 428,818 11,208,988
----------- ----------- -------- -------- ------------
$24,612,398 $ 6,689,446 $965,947 $924,084 $234,525,534
=========== =========== ======== ======== ============
</TABLE>
See Notes to Financial Statements
AA-11
<PAGE> 91
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
--------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK MIDCAP
GROWTH INCOME MARKET INDEX MANAGED VALUE
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ ----------- ---------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME
Dividends................................ $ -- $ -- $2,310,839 $ -- $ -- $ --
EXPENSE
Mortality and expense risk charge (Note
3)...................................... 3,553,802 246,580 293,885 653,613 221,836 118,952
------------ ----------- ---------- ----------- ---------- -----------
Net investment income (loss)............. (3,553,802) (246,580) 2,016,954 (653,613) (221,836) (118,952)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period..................... 145,014,283 (4,499,584) -- 63,685,270 9,600,369 (4,330,144)
End of period........................... 75,427,714 (2,728,130) -- 63,189,376 9,993,112 (4,735,178)
------------ ----------- ---------- ----------- ---------- -----------
Net change in unrealized appreciation
(depreciation).......................... (69,586,571) 1,771,453 -- (495,894) 392,743 (405,034)
Net realized gain (loss) on
investments............................. 45,495 10,789 -- (121,519) (18,862) (22,691)
------------ ----------- ---------- ----------- ---------- -----------
Net realized and unrealized gain (loss)
on investments.......................... (69,541,076) 1,782,242 -- (617,413) 373,881 (427,725)
------------ ----------- ---------- ----------- ---------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ $(73,094,878) $ 1,535,662 $2,016,954 $(1,271,026) $ 152,045 $ (546,677)
============ =========== ========== =========== ========== ===========
<CAPTION>
NEW ENGLAND ZENITH FUND
----------------------------------------------------------------------------------
GROWTH INTERNATIONAL
AND SMALL U.S. EQUITY MAGNUM
INCOME CAP GOVERNMENT BALANCED GROWTH EQUITY
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
----------- ----------- ---------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
INCOME
Dividends................................ $ -- $ -- $ -- $ -- $ -- $ --
EXPENSE
Mortality and expense risk charge (Note
3)...................................... 321,503 425,715 3,810 57,847 948,531 71,123
----------- ----------- -------- ----------- ----------- ----------
Net investment income (loss)............. (321,503) (425,715) (3,810) (57,847) (948,531) (71,123)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period..................... 8,566,144 27,466,967 (56,822) (1,387,395) 52,277,058 3,645,897
End of period........................... 5,373,141 35,612,993 (31,423) (2,094,887) 63,534,553 3,342,978
----------- ----------- -------- ----------- ----------- ----------
Net change in unrealized appreciation
(depreciation).......................... (3,193,002) 8,146,026 25,399 (707,492) 11,257,494 (302,919)
Net realized gain (loss) on
investments............................. 1,897 (14,811) 32 77,593 (25,425) (4,300)
----------- ----------- -------- ----------- ----------- ----------
Net realized and unrealized gain (loss)
on investments.......................... (3,191,105) 8,131,215 25,431 (629,899) 11,232,069 (307,219)
----------- ----------- -------- ----------- ----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ $(3,512,608) $ 7,705,500 $ 21,621 $ (687,746) $10,283,538 $ (378,342)
=========== =========== ======== =========== =========== ==========
<CAPTION>
NEW ENGLAND ZENITH FUND
-----------
VENTURE
VALUE
SUB-
ACCOUNT
-----------
<S> <C>
INCOME
Dividends................................ $ --
EXPENSE
Mortality and expense risk charge (Note
3)...................................... 656,729
-----------
Net investment income (loss)............. (656,729)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period..................... 38,403,888
End of period........................... 50,794,304
-----------
Net change in unrealized appreciation
(depreciation).......................... 12,390,417
Net realized gain (loss) on
investments............................. (11,798)
-----------
Net realized and unrealized gain (loss)
on investments.......................... 12,378,619
-----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ $11,721,890
===========
</TABLE>
* For the period May 1, 2000 (Commencement of Operations) through June 30, 2000.
See Notes to Financial Statements
AA-12
<PAGE> 92
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND METROPOLITAN SERIES FUND
---------------------------------------------------- ----------------------------------------
LARGE
BOND RESEARCH CAP* RUSSELL* 2000 INTERNATIONAL*
OPPORTUNITIES INVESTORS MANAGERS MID-CAP* GROWTH INDEX STOCK
SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------- ----------- ----------- -------- ------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ -- $ -- $ -- $ -- $ -- $ -- $ --
5,031 4,419 9,722 3,770 424 466 --
--------- ----------- ----------- -------- ------- ------- ----
(5,031) (4,419) (9,722) (3,770) (424) (466) --
(154,569) 20,670 138,291 -- -- -- --
(141,707) (4,439,706) (4,020,596) 513,538 34,500 27,211 292
--------- ----------- ----------- -------- ------- ------- ----
12,864 (4,460,376) (4,158,887) 513,539 34,501 27,212 293
6,214 (662) (2,365) (399) (21) -- (28)
--------- ----------- ----------- -------- ------- ------- ----
19,078 (4,461,038) (4,161,252) 513,140 34,480 27,212 265
--------- ----------- ----------- -------- ------- ------- ----
$ 14,047 $(4,465,457) $(4,170,974) $509,370 $34,056 $26,746 $265
========= =========== =========== ======== ======= ======= ====
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
----------------------------------------- ----------- ------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------ ------------ ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
$ 13,394,550 $ 16,105,748 $ 1,006,372 $ 1,452,323 $ 34,269,832
505,228 517,312 52,081 45,999 8,718,378
------------ ------------ ----------- ----------- ------------
12,889,322 15,588,436 954,291 1,406,324 25,551,454
42,410,113 51,864,228 (919,900) 1,757,628 433,502,392
24,262,004 27,061,054 (2,681,292) 187,832 338,481,686
------------ ------------ ----------- ----------- ------------
(18,148,109) (24,803,173) (1,761,392) (1,569,795) (95,020,702)
(144,700) (11,100) 21,015 21,546 (194,100)
------------ ------------ ----------- ----------- ------------
(18,292,809) (24,814,273) (1,740,377) (1,548,249) (95,214,809)
------------ ------------ ----------- ----------- ------------
$ (5,403,487) $ (9,225,837) $ (786,086) $ (141,925) $(69,663,355)
============ ============ =========== =========== ============
</TABLE>
See Notes to Financial Statements
AA-13
<PAGE> 93
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
---------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK MIDCAP
GROWTH INCOME MARKET INDEX MANAGED VALUE
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ ----------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INCOME
Dividends................................ $ -- $ -- $2,302,260 $ -- $ -- $ --
EXPENSE
Mortality and expense risk charge (Note
3)..................................... 3,311,082 214,540 279,886 432,182 191,101 192,741
------------ ----------- ---------- ----------- ----------- -----------
Net investment income (loss)............. (3,311,082) (214,540) 2,022,374 (432,182) (191,101) (192,741)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period.................... 215,969,495 1,209,273 -- 39,965,167 13,285,666 (3,807,527)
End of period.......................... 275,479,001 (34,566) -- 54,991,573 17,764,355 1,604,301
------------ ----------- ---------- ----------- ----------- -----------
Net change in unrealized appreciation
(depreciation)......................... 59,509,506 (1,243,839) 15,026,406 4,478,689 5,411,828
Net realized gain (loss) on
investments............................ (22,921) 992 -- 33,125 244,711 (13,860)
------------ ----------- ---------- ----------- ----------- -----------
Net realized and unrealized gain (loss)
on investments......................... 59,486,585 (1,242,847) -- 15,059,531 4,723,400 5,397,968
------------ ----------- ---------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ $ 56,175,503 ($1,457,387) $2,022,374 $14,627,349 $ 4,532,299 $ 5,205,227
============ =========== ========== =========== =========== ===========
<CAPTION>
NEW ENGLAND ZENITH FUND
------------------------
GROWTH
AND SMALL
INCOME CAP
SUB- SUB-
ACCOUNT ACCOUNT
----------- ----------
<S> <C> <C>
INCOME
Dividends................................ $ -- $ --
EXPENSE
Mortality and expense risk charge (Note
3)..................................... 246,030 227,844
----------- ----------
Net investment income (loss)............. (246,030) (227,844)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS
Net unrealized appreciation
(depreciation) on investments:
Beginning of period.................... 13,616,695 3,516,783
End of period.......................... 21,369,327 6,250,210
----------- ----------
Net change in unrealized appreciation
(depreciation)......................... 7,752,632 2,733,427
Net realized gain (loss) on
investments............................ 17,588 1,971
----------- ----------
Net realized and unrealized gain (loss)
on investments......................... 7,770,220 2,735,398
----------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS................ $ 7,524,190 $2,507,554
=========== ==========
</TABLE>
* For the period April 30, 1999 (Commencement of Operations) through June 30,
1999.
See Notes to Financial Statements
AA-14
<PAGE> 94
<TABLE>
<CAPTION>
VARIABLE INSURANCE
PRODUCTS FUND
--------------------------------------------------------------------------------------------------------------
INTERNATIONAL MFS*
U.S. EQUITY MAGNUM VENTURE BOND MFS* RESEARCH
GOVERNMENT BALANCED GROWTH EQUITY VALUE OPPORTUNITIES INVESTORS MANAGERS
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
---------- ---------- ----------- ------------- ----------- ------------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ -- $ -- $ -- $ -- $ -- $ -- $ -- $ --
-- 46,863 408,608 38,884 398,526 -- -- --
-------- ---------- ----------- ---------- ----------- -------- -------- --------
-- (46,863) (408,608) (38,884) (398,526) -- -- --
15,209 1,036,991 30,707,168 194,954 20,008,648 (46,594) -- --
(20,556) 1,563,048 49,749,552 1,041,829 38,023,955 (68,398) 115,757 270,617
-------- ---------- ----------- ---------- ----------- -------- -------- --------
(35,765) 526,057 19,042,384 846,875 18,015,307 (21,804) 115,757 270,617
(929) 14,252 78,411 1,858 213,315 (927) (789) 250
-------- ---------- ----------- ---------- ----------- -------- -------- --------
(36,694) 540,309 19,120,795 848,733 18,228,622 (22,731) 114,968 270,867
-------- ---------- ----------- ---------- ----------- -------- -------- --------
$(36,694) $ 493,446 $18,712,187 $ 809,849 $17,830,096 $(22,731) $114,968 $270,867
======== ========== =========== ========== =========== ======== ======== ========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
-------------------------------------- ---------- ------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
----------- ----------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
$ 7,478,140 $ 4,624,752 $1,147,254 $ 713,060 $ 16,265,466
458,897 306,394 37,927 33,938 6,825,443
----------- ----------- ---------- ---------- ------------
7,019,243 4,318,358 1,109,327 679,122 9,440,023
39,593,709 14,768,529 (611,552) 1,247,559 390,670,172
53,369,139 18,618,610 (976,653) 1,073,258 540,184,358
----------- ----------- ---------- ---------- ------------
13,775,430 3,850,081 (365,101) (174,301) 149,514,186
1,611,931 936,416 (46,738) 1,319 3,069,975
----------- ----------- ---------- ---------- ------------
15,387,361 4,786,497 (411,839) (172,982) 152,584,161
----------- ----------- ---------- ---------- ------------
$22,406,604 $ 9,104,855 $ 697,488 $ 506,140 $162,024,184
=========== =========== ========== ========== ============
</TABLE>
See Notes to Financial Statements
AA-15
<PAGE> 95
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1999
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
---------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK MIDCAP
GROWTH INCOME MARKET INDEX MANAGED VALUE
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-------------- ----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATING ACTIVITIES
Net investment income
(loss)...................... $ 232,326,333 $ 5,003,403 $ 4,444,587 $ 3,140,798 $ 9,362,071 $ 129,188
Net realized and unrealized
gain (loss) on
investments................. (71,770,491) (5,707,370) -- 23,667,781 (3,750,911) (531,819)
-------------- ----------- ------------- ------------ ----------- -----------
Net Increase (decrease) in
net assets resulting from
operations................. 160,555,842 (703,967) 4,444,587 26,808,579 5,611,160 (402,631)
FROM POLICY-RELATED
TRANSACTIONS
Net premiums transferred from
New England Life Insurance
Company (Note 4)............ 142,211,177 13,805,688 214,469,972 29,988,746 10,115,433 7,098,841
Net transfers (to) from other
sub-accounts................ (3,426,057) 5,993,183 (132,180,032) 28,975,401 3,130,211 (1,928,318)
Net transfers (to) from New
England Life Insurance
Company..................... (127,342,172) (8,870,541) (35,295,568) (21,960,448) (7,936,560) (3,985,601)
-------------- ----------- ------------- ------------ ----------- -----------
Net Increase in net assets
resulting from policy
related transactions....... 11,442,948 10,928,330 46,994,372 37,003,699 5,309,084 1,184,922
-------------- ----------- ------------- ------------ ----------- -----------
Net increase (decrease) in net
assets...................... 171,998,790 10,224,363 51,438,959 63,812,278 10,920,244 782,291
NET ASSETS, AT BEGINNING OF THE
PERIOD........................ 974,704,592 57,816,044 85,330,924 100,709,791 53,249,987 32,711,062
-------------- ----------- ------------- ------------ ----------- -----------
NET ASSETS, AT END OF THE
PERIOD........................ $1,146,703,382 $68,040,407 $ 136,769,883 $164,522,069 $64,170,231 $33,493,353
============== =========== ============= ============ =========== ===========
<CAPTION>
NEW ENGLAND ZENITH FUND
----------------------------------------
GROWTH
AND SMALL U.S.
INCOME CAP GOVERNMENT
SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT
------------ ------------ ----------
<S> <C> <C> <C>
FROM OPERATING ACTIVITIES
Net investment income
(loss)...................... $ 11,596,165 $ (278,252) $ 35,715
Net realized and unrealized
gain (loss) on
investments................. (5,083,954) 23,952,330 (73,665)
------------ ------------ --------
Net Increase (decrease) in
net assets resulting from
operations................. 6,512,211 23,674,078 (37,950)
FROM POLICY-RELATED
TRANSACTIONS
Net premiums transferred from
New England Life Insurance
Company (Note 4)............ 15,769,644 16,994,060 --
Net transfers (to) from other
sub-accounts................ 14,513,514 (3,433,209) 79,255
Net transfers (to) from New
England Life Insurance
Company..................... (10,636,850) (11,981,152) 24,393
------------ ------------ --------
Net Increase in net assets
resulting from policy
related transactions....... 19,646,308 1,579,699 103,648
------------ ------------ --------
Net increase (decrease) in net
assets...................... 26,158,519 25,253,777 65,698
NET ASSETS, AT BEGINNING OF THE
PERIOD........................ 58,951,793 63,798,887 691,612
------------ ------------ --------
NET ASSETS, AT END OF THE
PERIOD........................ $ 85,110,312 $ 89,052,664 $757,310
============ ============ ========
</TABLE>
* For the period April 30, 1999 (Commencement of Operations) through December
31, 1999.
See Notes to Financial Statements
AA-16
<PAGE> 96
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
------------------------------------------------------------------------------------------------------
INTERNATIONAL
EQUITY MAGNUM VENTURE BOND RESEARCH
BALANCED GROWTH EQUITY VALUE OPPORTUNITIES INVESTORS* MANAGERS*
SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
----------- ------------ ------------- ------------ ------------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 872,246 $ 25,581,608 $ (58,946) $ 2,139,117 $ 66,632 $ 1,388 $ (1,540)
(2,439,260) 21,453,452 3,446,309 18,348,101 (106,878) 29,340 103,725
----------- ------------ ----------- ------------ ---------- -------- ---------
(1,567,014) 47,035,060 3,387,363 20,487,218 (40,246) 30,728 102,185
4,093,455 31,646,457 3,430,299 32,031,496 -- 75,935 86,667
1,865,860 59,949,102 1,463,742 22,546,367 1,100 684,756 763,549
(1,579,581) (30,858,890) (2,381,414) (23,867,517) 9,526 (98,581) (164,198)
----------- ------------ ----------- ------------ ---------- -------- ---------
4,379,734 60,736,669 2,512,627 30,710,346 10,626 662,110 686,018
----------- ------------ ----------- ------------ ---------- -------- ---------
2,812,720 107,771,729 5,899,990 51,197,564 (29,620) 692,838 788,203
12,476,648 90,873,849 10,318,556 95,272,468 1,090,654 -- --
----------- ------------ ----------- ------------ ---------- -------- ---------
$15,289,368 $198,645,578 $16,218,546 $146,470,032 $1,061,034 $692,838 $ 788,203
=========== ============ =========== ============ ========== ======== =========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
----------------------------------------- ----------- --------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------ ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 6,472,830 $ 3,064,669 $ 1,060,177 $ 638,800 $ 305,596,989
2,224,031 36,725,455 (259,642) 506,400 40,732,934
------------ ------------ ----------- ----------- --------------
8,696,861 39,790,124 800,535 1,145,200 346,329,923
26,649,674 17,254,614 3,727,099 2,393,210 571,842,467
(2,823,843) 1,086,949 1,354,057 1,384,413 --
(19,017,183) (16,067,097) (2,389,723) (1,339,833) (325,738,990)
------------ ------------ ----------- ----------- --------------
4,808,648 2,274,466 2,691,433 2,437,790 246,103,477
------------ ------------ ----------- ----------- --------------
13,505,509 42,064,590 3,491,968 3,582,990 592,433,400
138,553,401 84,273,799 9,988,955 8,187,191 1,879,000,213
------------ ------------ ----------- ----------- --------------
$152,058,910 $126,338,389 $13,480,923 $11,770,181 $2,471,433,613
============ ============ =========== =========== ==============
</TABLE>
See Notes to Financial Statements
AA-17
<PAGE> 97
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
--------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK MIDCAP
GROWTH INCOME MARKET INDEX MANAGED VALUE
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ ----------- ------------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATING ACTIVITIES
Net investment income (loss)..... $130,356,415 $ 4,171,436 $ 1,962,505 $ 1,090,858 $ 4,624,610 $ 8,308,955
Net realized and unrealized gain
(loss) on investments.......... 130,214,031 319,014 20,266,912 4,002,139 (10,535,017)
------------ ----------- ------------- ------------ ----------- ------------
Net Increase (decrease) in net
assets resulting from
operations.................... 260,570,446 4,490,449 1,962,505 21,357,770 8,626,750 (2,226,063)
FROM POLICY-RELATED TRANSACTIONS
Net premiums transferred from New
England Life Insurance Company
(Note 4)....................... 130,346,621 10,522,040 221,378,611 15,997,005 6,508,238 8,067,127
Net transfers (to) from other
sub-accounts................... 28,412,166 9,220,311 (149,270,654) 22,094,429 6,317,021 (102,089)
Net transfers to New England Life
Insurance Company.............. (136,266,249) (7,932,456) (21,844,962) (16,290,249) (6,742,406) (4,094,516)
------------ ----------- ------------- ------------ ----------- ------------
Net Increase in net assets
resulting from policy related
transactions.................. 22,492,538 11,809,895 50,262,995 21,801,185 6,082,853 3,870,522
------------ ----------- ------------- ------------ ----------- ------------
Net increase in net assets....... 283,062,984 16,300,344 52,225,500 43,158,955 14,709,603 1,644,459
NET ASSETS, AT BEGINNING OF THE
PERIOD........................... 691,641,608 41,515,700 33,105,424 57,550,836 38,540,384 31,066,603
------------ ----------- ------------- ------------ ----------- ------------
NET ASSETS, AT END OF THE
PERIOD........................... $974,704,592 $57,816,044 $ 85,330,924 $100,709,791 $53,249,987 $ 32,711,062
============ =========== ============= ============ =========== ============
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------
GROWTH
AND SMALL
INCOME CAP
SUB- SUB-
ACCOUNT ACCOUNT
----------- -----------
<S> <C> <C>
FROM OPERATING ACTIVITIES
Net investment income (loss)..... $ 4,116,853 $ 768,248
Net realized and unrealized gain
(loss) on investments.......... 6,772,686 (1,884,412)
----------- -----------
Net Increase (decrease) in net
assets resulting from
operations.................... 10,889,538 (1,116,164)
FROM POLICY-RELATED TRANSACTIONS
Net premiums transferred from New
England Life Insurance Company
(Note 4)....................... 10,034,046 16,979,803
Net transfers (to) from other
sub-accounts................... 15,004,643 9,499,585
Net transfers to New England Life
Insurance Company.............. (8,744,105) (9,074,771)
----------- -----------
Net Increase in net assets
resulting from policy related
transactions.................. 16,294,584 17,404,617
----------- -----------
Net increase in net assets....... 27,184,123 16,288,452
NET ASSETS, AT BEGINNING OF THE
PERIOD........................... 31,767,670 47,510,435
----------- -----------
NET ASSETS, AT END OF THE
PERIOD........................... $58,951,793 $63,798,887
=========== ===========
</TABLE>
See Notes to Financial Statements
AA-18
<PAGE> 98
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
--------------------------------------------------------------------------------------
INTERNATIONAL
U.S. EQUITY MAGNUM VENTURE BOND
GOVERNMENT BALANCED GROWTH EQUITY VALUE OPPORTUNITIES
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
---------- ----------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
$ 34,649 $ 554,190 $ 3,146,243 $ 202,660 $ 2,399,796 $ 90,920
17,136 401,219 25,372,043 355,856 9,314,386 (43,844)
--------- ----------- ------------ ----------- ------------ ----------
51,785 955,409 28,518,286 558,517 11,714,181 47,076
-- 3,185,034 18,566,913 3,131,225 24,165,947 --
590,096 3,794,185 16,305,214 999,735 23,584,994 612,788
(111,452) (2,333,228) (14,453,624) (1,503,958) (15,609,387) (156,947)
--------- ----------- ------------ ----------- ------------ ----------
478,644 4,645,991 20,418,503 2,627,002 32,141,554 455,841
--------- ----------- ------------ ----------- ------------ ----------
530,429 5,601,400 48,936,789 3,185,519 43,855,735 502,917
161,183 6,875,248 41,937,060 7,133,037 51,416,733 587,737
--------- ----------- ------------ ----------- ------------ ----------
$ 691,612 $12,476,648 $ 90,873,849 $10,318,556 $ 95,272,468 $1,090,654
========= =========== ============ =========== ============ ==========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
----------------------------------------- ----------- --------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------ ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 7,186,371 $ 5,543,453 $ 996,739 $ 785,371 $ 176,340,272
7,455,548 3,964,503 (1,555,159) 280,598 194,717,637
------------ ------------ ----------- ----------- --------------
14,641,919 9,507,956 (558,420) 1,065,969 371,057,909
26,170,240 17,386,996 2,434,923 1,626,307 516,501,076
8,474,098 342,473 2,823,884 1,297,121 --
(18,064,178) (10,788,946) (1,891,706) (1,251,084) (277,154,223)
------------ ------------ ----------- ----------- --------------
16,580,160 6,940,523 3,367,101 1,672,344 239,346,853
------------ ------------ ----------- ----------- --------------
31,222,080 16,448,479 2,808,682 2,738,313 610,404,762
107,331,321 67,825,320 7,180,273 5,448,878 1,268,595,450
------------ ------------ ----------- ----------- --------------
$138,553,401 $ 84,273,799 $ 9,988,955 $ 8,187,191 $1,879,000,212
============ ============ =========== =========== ==============
</TABLE>
See Notes to Financial Statements
AA-19
<PAGE> 99
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
--------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK MIDCAP
GROWTH INCOME MARKET INDEX MANAGED VALUE
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------- ----------- ------------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATING ACTIVITIES
Net investment income (loss)..... $ 180,058,824 $ 3,166,035 $ 1,611,817 $ 748,956 $ 4,796,341 $ 2,573,687
Net realized and unrealized gain
(loss) on investments.......... (44,943,213) 867,028 -- 12,291,211 3,551,887 2,228,224
------------- ----------- ------------- ------------ ----------- -----------
Net increase (decrease) in net
assets resulting from
operations.................... 135,115,611 4,033,063 1,611,817 13,040,167 8,348,228 4,801,911
FROM POLICY-RELATED TRANSACTIONS
Net premiums transferred from New
England Life Insurance Company
(Note 4)....................... 115,563,292 9,916,442 112,790,933 11,030,326 6,066,893 8,052,822
Net transfers (to) from other
sub-accounts................... 19,184,703 2,250,884 (100,492,346) 13,670,086 2,168,458 728,467
Net transfers to New England Life
Insurance Company.............. (103,221,618) (7,435,545) (10,617,259) (11,516,905) (6,628,199) (5,007,957)
------------- ----------- ------------- ------------ ----------- -----------
Net increase in net assets
resulting from policy related
transactions.................. 31,526,377 4,731,781 1,681,328 13,183,507 1,607,152 3,773,332
------------- ----------- ------------- ------------ ----------- -----------
Net increase in net assets....... 166,641,988 8,764,844 3,293,145 26,223,674 9,955,380 8,575,243
NET ASSETS, AT BEGINNING OF THE
YEAR............................. 524,999,620 32,750,856 29,812,279 31,327,162 28,585,004 22,491,360
------------- ----------- ------------- ------------ ----------- -----------
NET ASSETS, AT END OF THE YEAR.... $ 691,641,608 $41,515,700 $ 33,105,424 $ 57,550,836 $38,540,384 $31,066,603
============= =========== ============= ============ =========== ===========
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------
GROWTH
AND SMALL
INCOME CAP
SUB- SUB-
ACCOUNT ACCOUNT
----------- -----------
<S> <C> <C>
FROM OPERATING ACTIVITIES
Net investment income (loss)..... $ 3,738,289 $ 6,004,065
Net realized and unrealized gain
(loss) on investments.......... 3,769,295 2,383,449
----------- -----------
Net increase (decrease) in net
assets resulting from
operations.................... 7,507,584 8,387,514
FROM POLICY-RELATED TRANSACTIONS
Net premiums transferred from New
England Life Insurance Company
(Note 4)....................... 6,483,236 12,931,007
Net transfers (to) from other
sub-accounts................... 6,112,407 13,551,252
Net transfers to New England Life
Insurance Company.............. (5,507,253) (8,882,069)
----------- -----------
Net increase in net assets
resulting from policy related
transactions.................. 7,088,390 17,600,190
----------- -----------
Net increase in net assets....... 14,595,974 25,987,704
NET ASSETS, AT BEGINNING OF THE
YEAR............................. 17,171,696 21,522,731
----------- -----------
NET ASSETS, AT END OF THE YEAR.... $31,767,670 $47,510,435
=========== ===========
</TABLE>
See Notes to Financial Statements
AA-20
<PAGE> 100
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------------------------------------------------------------------
INTERNATIONAL
U.S. EQUITY MAGNUM VENTURE BOND
GOVERNMENT BALANCED GROWTH EQUITY VALUE OPPORTUNITIES
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
---------- ----------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
$6,799 $ 387,489 $ 4,455,451 $ 157,687 $ 1,546,340 $ 34,514
(1,096) 461,218 3,382,680 (282,894) 8,340,478 (902)
-------- ----------- ----------- ------------- ------------ --------
5,703 848,707 7,838,131 (125,207) 9,886,818 33,612
-- 2,146,406 14,606,449 3,056,999 13,157,429 --
118,925 2,461,028 6,194,266 1,537,466 22,596,463 563,357
(9,482) (1,814,302) (8,772,068) (1,574,196) (10,885,947) (36,000)
-------- ----------- ----------- ------------- ------------ --------
109,443 2,793,132 12,028,647 3,020,269 24,867,945 527,357
-------- ----------- ----------- ------------- ------------ --------
115,146 3,641,839 19,866,778 2,895,062 34,754,763 560,969
46,037 3,233,409 22,070,282 4,237,975 16,661,970 26,768
-------- ----------- ----------- ------------- ------------ --------
$161,183 $ 6,875,248 $41,937,060 $ 7,133,037 $ 51,416,733 $587,737
======== =========== =========== ============= ============ ========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
---------------------------------------- ---------- --------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------ ----------- ----------- ---------- --------------
<S> <C> <C> <C> <C> <C>
$ 8,196,735 $ 4,986,458 $ 351,793 $ 495,266 $ 223,316,546
16,415,663 1,702,988 614,154 428,818 11,208,988
------------ ----------- ----------- ---------- --------------
24,612,398 6,689,446 965,947 924,084 234,525,534
23,866,781 17,551,475 2,042,291 1,403,144 360,665,925
5,377,892 1,724,137 1,829,771 422,784 --
(18,885,322) (9,549,079) (1,756,377) (881,229) (212,980,807)
------------ ----------- ----------- ---------- --------------
10,359,351 9,726,533 2,115,685 944,699 147,685,118
------------ ----------- ----------- ---------- --------------
34,971,749 16,415,979 3,081,632 1,868,783 382,210,652
72,359,572 51,409,341 4,098,641 3,580,095 886,384,798
------------ ----------- ----------- ---------- --------------
$107,331,321 $67,825,320 $ 7,180,273 $5,448,878 $1,268,595,450
============ =========== =========== ========== ==============
</TABLE>
See Notes to Financial Statements
AA-21
<PAGE> 101
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-----------------------------------------------------------------------------------------------------
GROWTH
CAPITAL BOND MONEY STOCK MIDCAP AND
GROWTH INCOME MARKET INDEX MANAGED VALUE INCOME
SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-------------- ----------- ------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
FROM OPERATING
ACTIVITIES
Net investment income
(loss)................ $ (3,553,802) $ (246,580) $ 2,016,954 $ (653,613) $ (221,836) $ (118,952) $ (321,503)
Net realized and
unrealized gain (loss)
on investments........ (69,541,076) 1,782,242 -- (617,413) 373,881 (427,725) (3,191,105)
-------------- ----------- ------------ ------------ ------------ ----------- -----------
Net increase
(decrease) in net
assets resulting from
operations........... (73,094,878) 1,535,662 2,016,954 (1,271,026) 152,045 (546,677) (3,512,608)
FROM POLICY-RELATED
TRANSACTIONS
Net premiums
transferred from New
England Life Insurance
Company (Note 4)...... 67,876,159 6,212,323 109,814,307 18,950,701 6,010,682 3,410,544 9,269,201
Net transfers (to) from
other sub-accounts.... (29,500,799) (3,196,017) (111,430,393) 12,490,740 (1,109,345) (1,944,157) 508,020
Net transfers (to) from
New England Life
Insurance Company..... (66,588,669) (4,753,280) (72,609,032) (15,659,235) (4,781,559) (1,773,852) (1,049,349)
-------------- ----------- ------------ ------------ ------------ ----------- -----------
Net Increase in net
assets resulting from
policy related
transactions......... (28,213,310) (1,736,974) (74,225,118) 15,782,206 119,778 (307,464) 8,727,872
-------------- ----------- ------------ ------------ ------------ ----------- -----------
Net increase (decrease)
in net assets......... (101,308,187) (201,312) (72,208,164) 14,511,180 271,823 (854,141) 5,215,264
NET ASSETS, AT BEGINNING
OF THE PERIOD.......... 1,146,703,380 68,040,407 136,769,883 164,522,069 64,170,231 33,493,352 85,110,312
-------------- ----------- ------------ ------------ ------------ ----------- -----------
NET ASSETS, AT END OF
THE PERIOD............. $1,045,395,191 $67,839,095 $ 64,561,719 $179,033,249 $ 64,442,054 $32,639,211 $90,325,576
============== =========== ============ ============ ============ =========== ===========
<CAPTION>
NEW ENGLAND ZENITH FUND
----------------------------------------------------------------------
INTERNATIONAL
SMALL U.S. EQUITY MAGNUM
CAP GOVERNMENT BALANCED GROWTH EQUITY
SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ ---------- ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>
FROM OPERATING
ACTIVITIES
Net investment income
(loss)................ $ (425,715) $ (3,810) $ (57,847) $ (948,531) $ (71,123)
Net realized and
unrealized gain (loss)
on investments........ 8,131,215 25,431 (629,899) 11,232,069 (307,219)
------------ -------- ----------- ------------ -----------
Net increase
(decrease) in net
assets resulting from
operations........... 7,705,500 21,621 (687,746) 10,283,538 (378,342)
FROM POLICY-RELATED
TRANSACTIONS
Net premiums
transferred from New
England Life Insurance
Company (Note 4)...... 10,020,412 -- 1,974,382 25,358,073 2,009,583
Net transfers (to) from
other sub-accounts.... 25,867,621 (59,424) (1,274,489) 58,640,768 2,681,369
Net transfers (to) from
New England Life
Insurance Company..... (12,113,962) (595) (779,415) (11,357,110) (1,183,161)
------------ -------- ----------- ------------ -----------
Net Increase in net
assets resulting from
policy related
transactions......... 23,774,071 (60,019) (79,522) 72,641,731 3,507,791
------------ -------- ----------- ------------ -----------
Net increase (decrease)
in net assets......... 31,479,571 (38,398) (767,268) 82,925,269 3,129,449
NET ASSETS, AT BEGINNING
OF THE PERIOD.......... 89,052,664 757,310 15,289,368 198,645,578 16,218,546
------------ -------- ----------- ------------ -----------
NET ASSETS, AT END OF
THE PERIOD............. $120,532,235 $718,912 $14,522,100 $281,570,847 $19,347,995
============ ======== =========== ============ ===========
</TABLE>
* For the period May 1, 2000 (Commencement of Operations) through June 30, 2000.
See Notes to Financial Statements
AA-22
<PAGE> 102
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND METROPOLITAN SERIES FUND
-------------------------------------------------------- --------------------------------------------------
LARGE* RUSSELL*
VENTURE BOND RESEARCH CAP 2000 INTERNATIONAL*
VALUE OPPORTUNITIES INVESTORS MANAGERS MID-CAP* GROWTH INDEX STOCK
SUB- SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
------------ ------------- ----------- ----------- ---------- --------- -------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$ (656,729) $ (5,031) $ (4,419) $ (9,722) $ (3,770) $ (424) $ (466) $ --
12,378,619 19,078 (4,461,038) (4,161,252) 513,140 34,480 27,212 265
------------ ---------- ----------- ----------- ---------- --------- -------- -------
11,721,890 14,047 (4,465,457) (4,170,974) 509,370 34,056 26,746 265
20,269,524 -- 188,497 367,898 143,213 17,315 9,906 --
24,986,853 (106,374) 786,881 4,024,385 6,560,309 873,288 548,968 41,986
(20,817,240) 1,327 4,458,382 3,888,085 (600,604) (129,774) 306,741 --
------------ ---------- ----------- ----------- ---------- --------- -------- -------
24,439,137 (105,047) 5,433,759 8,280,368 6,102,918 760,829 865,615 41,986
------------ ---------- ----------- ----------- ---------- --------- -------- -------
36,161,027 (91,000) 968,303 4,109,394 6,612,288 794,885 892,361 42,251
146,470,032 1,061,034 692,838 788,203 -- -- -- --
------------ ---------- ----------- ----------- ---------- --------- -------- -------
$182,631,059 $ 970,034 $ 1,661,141 $ 4,897,597 $6,612,288 $ 794,885 $892,361 $42,251
============ ========== =========== =========== ========== ========= ======== =======
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
----------------------------------------- ----------- --------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------ ------------ ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 12,889,322 $ 15,588,436 $ 954,291 $ 1,406,324 $ 25,551,454
(18,292,809) (24,814,273) (1,740,377) (1,548,249) (95,214,809)
------------ ------------ ----------- ----------- --------------
(5,403,487) (9,225,837) (786,086) (141,925) (69,663,355)
13,004,707 10,296,804 1,443,406 1,127,732 307,775,369
(9,279,231) 17,928,797 262,945 1,697,298 --
(8,182,242) 34,695,196 (790,737) (1,627,566) (181,447,654)
------------ ------------ ----------- ----------- --------------
(4,456,766) 62,920,797 915,614 1,197,464 126,327,715
------------ ------------ ----------- ----------- --------------
(9,860,253) 53,694,959 129,528 1,055,539 56,664,367
152,058,910 126,338,392 13,480,923 11,770,181 2,471,433,614
------------ ------------ ----------- ----------- --------------
$142,198,657 $180,033,351 $13,610,451 $12,825,720 $2,528,097,981
============ ============ =========== =========== ==============
</TABLE>
See Notes to Financial Statements
AA-23
<PAGE> 103
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED JUNE 30, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
--------------------------------------------------------------------------------------
CAPITAL BOND MONEY STOCK MIDCAP
GROWTH INCOME MARKET INDEX MANAGED VALUE
SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
-------------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
FROM OPERATING ACTIVITIES
Net investment income
(loss)...................... $ (3,311,082) $ (214,540) $ 2,022,374 $ (432,182) $ (191,101) $ (192,741)
Net realized and unrealized
gain (loss) on
investments................. 59,486,585 (1,242,847) -- 15,059,531 4,723,400 5,397,968
-------------- ----------- ------------ ------------ ----------- -----------
Net increase (decrease) in
net assets resulting from
operations................. 56,175,503 (1,457,387) 2,022,374 14,627,349 4,532,299 5,205,227
FROM POLICY-RELATED
TRANSACTIONS
Net premiums transferred from
New England Life Insurance
Company (Note 4)............ 69,661,120 6,207,119 89,198,640 13,620,891 5,649,915 3,388,153
Net transfers (to) from other
sub-accounts................ 9,776,517 7,007,489 (76,169,924) 17,687,461 3,296,437 (1,782,040)
Net transfers to (from) New
England Life Insurance
Company..................... (77,330,034) (8,066,179) (5,681,230) (15,448,448) (6,012,588) (2,902,937)
-------------- ----------- ------------ ------------ ----------- -----------
Net Increase (decrease) in
net assets resulting from
policy related
transactions............... 2,107,603 5,148,429 7,347,486 15,859,904 2,933,764 (1,296,824)
-------------- ----------- ------------ ------------ ----------- -----------
Net increase in net assets.... 58,283,106 3,691,042 9,369,860 30,487,253 7,466,063 3,908,403
NET ASSETS, AT BEGINNING OF THE
PERIOD........................ 974,704,592 57,816,044 85,330,924 100,709,791 53,249,987 32,711,062
-------------- ----------- ------------ ------------ ----------- -----------
NET ASSETS, AT END OF THE
PERIOD........................ $1,032,987,698 $61,507,086 $ 94,700,784 $131,197,044 $60,716,050 $36,619,465
============== =========== ============ ============ =========== ===========
<CAPTION>
--------------------------------------
GROWTH
AND SMALL U.S.
INCOME CAP GOVERNMENT
SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT
----------- ----------- ----------
<S> <C> <C> <C>
FROM OPERATING ACTIVITIES
Net investment income
(loss)...................... $ (246,030) $ (227,844) $ --
Net realized and unrealized
gain (loss) on
investments................. 7,770,220 2,735,398 (36,694)
----------- ----------- ----------
Net increase (decrease) in
net assets resulting from
operations................. 7,524,190 2,507,554 (36,694)
FROM POLICY-RELATED
TRANSACTIONS
Net premiums transferred from
New England Life Insurance
Company (Note 4)............ 7,516,046 9,037,307 --
Net transfers (to) from other
sub-accounts................ 9,658,225 (4,211,738) (86,921)
Net transfers to (from) New
England Life Insurance
Company..................... (7,520,124) (5,601,369) 587,885
----------- ----------- ----------
Net Increase (decrease) in
net assets resulting from
policy related
transactions............... 9,654,147 (775,800) 500,964
----------- ----------- ----------
Net increase in net assets.... 17,178,337 1,731,754 464,270
NET ASSETS, AT BEGINNING OF THE
PERIOD........................ 58,951,793 63,798,887 691,612
----------- ----------- ----------
NET ASSETS, AT END OF THE
PERIOD........................ $76,130,130 $65,530,641 $1,155,882
=========== =========== ==========
</TABLE>
* For the period April 30, 1999 (Commencement of Operations) through June 30,
1999.
See Notes to Financial Statements
AA-24
<PAGE> 104
<TABLE>
<CAPTION>
NEW ENGLAND ZENITH FUND
-------------------------------------------------------------------------------------------------------
INTERNATIONAL MFS*
EQUITY MAGNUM VENTURE BOND MFS* RESEARCH
BALANCED GROWTH EQUITY VALUE OPPORTUNITIES INVESTORS MANAGERS
SUB- SUB- SUB- SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT ACCOUNT
----------- ------------ ------------- ------------ ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ (46,863) $ (408,608) $ (38,884) $ (398,526) $ -- $ -- $ --
540,309 19,120,795 848,733 18,228,622 (22,731) 114,968 270,867
----------- ------------ ----------- ------------ ---------- ---------- ----------
493,446 18,712,187 809,849 17,830,096 (22,731) 114,968 270,867
2,061,308 13,616,451 1,674,473 15,078,216 -- 5,000,867 5,005,249
1,294,388 27,827,472 556,511 8,503,261 20,487 104,592 88,526
(1,820,247) (15,796,107) 16,527,006 (18,742,427) 4,535,893 (115,124) (107,811)
----------- ------------ ----------- ------------ ---------- ---------- ----------
1,535,449 25,647,816 18,757,990 4,839,050 4,556,380 4,990,335 4,985,964
----------- ------------ ----------- ------------ ---------- ---------- ----------
2,028,895 44,360,003 19,567,839 22,669,146 4,533,649 5,105,303 5,256,831
12,476,648 90,873,849 10,318,556 95,272,468 1,090,654 -- --
----------- ------------ ----------- ------------ ---------- ---------- ----------
$14,505,543 $135,233,852 $29,886,395 $117,941,614 $5,624,303 $5,105,303 $5,256,831
=========== ============ =========== ============ ========== ========== ==========
<CAPTION>
VARIABLE
INSURANCE
VARIABLE INSURANCE PRODUCTS
PRODUCTS FUND FUND II
---------------------------------------- ----------- --------------
EQUITY- HIGH ASSET
INCOME OVERSEAS INCOME MANAGER
SUB- SUB- SUB- SUB-
ACCOUNT ACCOUNT ACCOUNT ACCOUNT TOTAL
------------ ----------- ----------- ----------- --------------
<S> <C> <C> <C> <C> <C>
$ 7,019,243 $ 4,318,358 $ 1,109,327 $ 679,122 $ 9,440,023
15,387,361 4,786,497 (411,839) (172,982) 152,584,161
------------ ----------- ----------- ----------- --------------
22,406,604 9,104,855 697,488 506,140 162,024,184
13,735,230 8,419,606 1,730,200 1,038,381 271,639,172
(2,922,186) (2,711,707) 775,727 1,287,423 --
(16,968,471) (9,693,102) (1,693,729) (1,498,149) (173,347,291)
------------ ----------- ----------- ----------- --------------
(6,155,427) (3,985,203) 812,198 827,655 98,291,881
------------ ----------- ----------- ----------- --------------
16,251,177 5,119,652 1,509,686 1,333,795 260,316,065
138,553,401 84,273,799 9,988,955 8,187,191 1,879,000,212
------------ ----------- ----------- ----------- --------------
$154,804,578 $89,393,451 $11,498,641 $ 9,520,986 $2,139,316,277
============ =========== =========== =========== ==============
</TABLE>
See Notes to Financial Statements
AA-25
<PAGE> 105
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
(INFORMATION WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
IS UNAUDITED)
NOTES TO FINANCIAL STATEMENTS
1. NATURE OF BUSINESS. New England Variable Life Separate Account (the
"Account") of New England Life Insurance Company ("NELICO") was established by
NELICO's Board of Directors on January 31, 1983 in accordance with the
regulations of the Delaware Insurance Department and is now operating in
accordance with the regulations of the Commonwealth of Massachusetts Division of
Insurance. The Account is registered as a unit investment trust under the
Investment Company Act of 1940. The assets of the Account are owned by NELICO.
The net assets of the Account are restricted from use in the ordinary business
of NELICO. NELICO is an indirect wholly-owned subsidiary of Metropolitan Life
Insurance Company.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
2. SUB-ACCOUNTS. The Account has twenty investment sub-accounts each of which
invest in the shares of one portfolio of the New England Zenith Fund ("Zenith
Fund"), the Variable Insurance Products Fund or the Variable Insurance Products
Fund II. The portfolios of the Zenith Fund, the Variable Insurance Products Fund
and the Variable Insurance Products Fund II in which the sub-accounts invest are
referred to herein as the "Eligible Funds". The Zenith Fund, the Variable
Insurance Products Fund and the Variable Insurance Products Fund II are
diversified, open-end management investment companies. The Account purchases or
redeems shares of the twenty Eligible Funds based on the amount of net premiums
invested in the Account, transfers among the sub-accounts, policy loans,
surrender payments, and death benefit payments. The values of the shares of the
Eligible Funds are determined as of the close of the New York Stock Exchange
(the "Exchange") (normally 4:00 p.m. EST) on each day the Exchange is open for
trading. Realized gains and losses on the sale of Eligible Funds' shares are
computed on the basis of identified cost on the trade date. Income from
dividends is recorded on the ex-dividend date. Charges for investment advisory
fees and other expenses are reflected in the carrying value of the assets of the
Eligible Funds.
3. MORTALITY AND EXPENSE RISK CHARGES. NELICO charges the Account for the
mortality and expense risk NELICO assumes. The mortality risk assumed by NELICO
is the risk that insureds may live for shorter periods of time than NELICO
estimated when setting its cost of insurance charges. The expense risk assumed
by NELICO is the risk that the deductions for sales and administrative charges
may prove insufficient to cover actual cost. If these deductions are
insufficient to cover the cost of the mortality and expense risk assumed by
NELICO, NELICO absorbs the resulting losses and makes sufficient transfers to
the Fund from its general assets. Conversely, if those deductions are more than
sufficient after the establishment of any contingency reserves deemed prudent or
required by law, the excess is retained by NELICO. Currently, the charges are
made daily at an annual rate of .35% of the Account assets attributable to fixed
premium ("Zenith Life") variable policies, .45% of the Account assets
attributable to single premium ("Zenith Life One") variable life policies, .60%
of the Account assets attributable to variable ordinary ("Zenith Life Plus",
"Zenith Life Plus II" and "Zenith Variable Whole Life") life policies and
limited payment ("Zenith Life Executive 65") variable life policies, .90% and
.75% of the Account assets attributable to variable survivorship ("Zenith
Survivorship Life") life policies, and .75% and .60% of the Account assets
attributable to flexible premium ("Zenith Flexible Life") variable life
policies. For the modified single premium ("American Gateway") and flexible
premium ("Zenith Executive Advantage Plus") variable life policies mortality and
expense risk charges are not charged daily against the sub-account assets but
are deducted from the policy cash values monthly at an annual rate of .90% and a
maximum annual rate of .75%, respectively
4. NET PREMIUM TRANSFERS AND DEDUCTIONS FROM CASH VALUE. Certain deductions are
made from each premium payment paid to NELICO to arrive at a net premium that is
transferred to the Account. Certain deductions are made from cash value in the
sub-accounts. These deductions, depending on the policy, could include sales
load, administrative charges, premium tax charges, risk charges, cost of
insurance charges, and charges for rider benefits and special risk charges.
AA-26
<PAGE> 106
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
5. FEDERAL INCOME TAXES. For federal income tax purposes the Account's
operations are included with those of NELICO. NELICO intends to make appropriate
charges against the Account in the future if and when tax liabilities arise.
6. INVESTMENT ADVISERS. The adviser and sub-adviser for each series of the
Zenith Fund are listed in the chart below. New England Investment Management,
Inc. (formerly, TNE Advisers, Inc.), which is an indirect subsidiary of NELICO,
Capital Growth Management Limited Partnership ("CGM"), and each of the
sub-advisers are registered with the Securities and Exchange Commission as
investment advisers under the Investment Advisers Act of 1940.
<TABLE>
<CAPTION>
SERIES ADVISER SUB-ADVISER
------ --------------------------------------- ------------------------------
<S> <C> <C>
Capital Growth CGM* --
Back Bay Advisors Money Market New England Investment Management, Inc. Back Bay Advisors, L.P.*
Back Bay Advisors Bond Income New England Investment Management, Inc. Back Bay Advisors, L.P.*
Back Bay Advisors Managed New England Investment Management, Inc. Back Bay Advisors, L.P.*
Westpeak Stock Index New England Investment Management, Inc. Westpeak Investment Advisors,
L.P.*
Westpeak Growth and Income New England Investment Management, Inc. Westpeak Investment Advisors,
L.P.*
Goldman Sachs Midcap Value New England Investment Management, Inc. Goldman Sachs Asset Management
Loomis Sayles Small Cap New England Investment Management, Inc. Loomis, Sayles & Company,
L.P.*
Loomis Sayles Balanced New England Investment Management, Inc. Loomis, Sayles & Company,
L.P.*
Morgan Stanley International Magnum New England Investment Management, Inc. Morgan Stanley Dean Witter
Equity Investment Management Inc.
Davis Venture Value New England Investment Management, Inc. Davis Selected Advisers, L.P.
Alger Equity Growth New England Investment Management, Inc. Fred Alger Management, Inc.
Salomon Brothers U.S. Government New England Investment Management, Inc. Salomon Brothers Asset
Management Inc
Salomon Brothers Strategic Bond New England Investment Management, Inc. Salomon Brothers Asset
Opportunities Management Inc
MFS Investors New England Investment Management, Inc. Massachusetts Financial
Services Company
MFS Research Managers New England Investment Management, Inc. Massachusetts Financial
Services Company
</TABLE>
* An affiliate of NELICO
Effective May 1, 1997 the Draycott International Equity Series was renamed the
Morgan Stanley International Magnum Equity Series and Morgan Stanley Dean Witter
Investment Management Inc. became the sub-adviser of the Series, succeeding
Draycott Partners, Ltd.
Effective May 1, 1998 Goldman Sachs Asset Management ("Goldman Sachs") became
the sub-adviser of the Loomis Sayles Avanti Growth Series, succeeding Loomis
Sayles & Company, L.P., and the name of the Series was changed to the "Goldman
Sachs Midcap Value Series". Goldman Sachs is a separate operating division of
Goldman, Sachs & Co., a privately-owned global financial services company.
AA-27
<PAGE> 107
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
7. INVESTMENT PURCHASES AND SALES. The following table shows the aggregate cost
of Eligible Fund shares purchased and proceeds from the sales of Eligible Fund
shares for each sub-account for the year ended December 31, 1999:
<TABLE>
<CAPTION>
PURCHASES SALES
------------ ------------
<S> <C> <C>
Capital Growth Series $242,198,370 $241,707,039
Back Bay Advisors Money Market Series 327,644,952 277,923,925
Back Bay Advisors Bond Income Series 36,178,905 24,991,981
Back Bay Advisors Managed Series 24,394,855 18,680,924
Westpeak Stock Index Series 81,767,015 38,818,677
Westpeak Growth and Income Series 43,834,304 22,733,178
Goldman Sachs Midcap Value Series 14,632,125 14,003,124
Loomis Sayles Small Cap Series 32,520,472 28,114,874
Loomis Sayles Balanced Series 11,121,785 7,665,490
Morgan Stanley International Magnum Equity Series 8,500,269 5,336,590
Davis Venture Value Series 74,752,030 39,161,371
Alger Equity Growth Series 112,530,144 37,977,904
Salomon Bothers U.S. Government Series 728,153 711,346
Salomon Bothers Strategic Bond Opportunities Series 504,155 619,331
MFS Investors Series* 853,017 92,276
MFS Research Managers Series* 869,163 29,781
VIP Equity-Income Portfolio 48,322,887 44,032,962
VIP Overseas Portfolio 36,474,794 30,947,930
VIP High Income Portfolio 10,500,033 7,853,618
VIP II Asset Manager Portfolio 6,412,123 3,587,782
</TABLE>
* For the period April 30, 1999 (Commencement of Operations) to December 31,
1999.
8. NET INVESTMENT RETURNS. The following table shows the net investment return
of the Sub-Account for each type of variable life insurance policy investing in
the Account. The net investment return reflects the appropriate mortality and
expense risk charge against sub-account assets, where applicable, for each type
of variable life insurance policy shown (in the case of American Gateway Series,
and Zenith Executive Advantage Plus, the mortality and expense risk charge is
deducted monthly from the cash values rather than daily from sub-account assets
and, therefore, does not impact sub-account net investment returns). These
figures do not reflect charges deducted from premiums and the cash values of the
policies. Such charges will affect the actual cash values and benefits of the
policies. Certain amounts have been restated to conform with the current
calculation of net investment return to provide greater comparability with
industry convention.
AA-28
<PAGE> 108
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FIXED PREMIUM ("ZENITH LIFE") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS
--------------------------------------------------------------------------------------------------------
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital Growth........... (3.82)% 53.45% (6.38)% 14.57% (7.39)% 37.55%
Bond Income.............. 7.71% 17.55% 7.80% 12.22% (3.70)% 20.78%
Money Market............. 7.81% 5.84% 3.43% 2.61% 3.61% 5.33%
1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Capital Growth........... 20.65% 23.05% 33.63% 15.30%
Bond Income.............. 4.24% 10.50% 8.66% (0.81)%
Money Market............. 4.76% 4.97% 4.90% 4.60%
</TABLE>
<TABLE>
<CAPTION>
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index.............. (4.48)% 29.98% 6.92% 9.34% 0.76% 36.44% 22.04% 32.03% 27.49%
Managed.................. 2.85% 19.75% 6.33% 10.26% (1.46)% 30.81% 14.62% 26.12% 19.24%
<CAPTION>
1/1/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Stock Index.............. 19.96%
Managed.................. 9.59%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Midcap Value................................... 14.47% (0.62)% 29.90% 17.20% 16.91% (5.79)% 0.00%
Growth and Income.............................. 13.97% (1.55)% 35.99% 17.68% 33.01% 24.02% 8.97%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity-Income.................................. 9.29% 6.69% 34.62% 13.88% 27.66% 11.24% 5.96%
Overseas....................................... 14.57% 1.37% 9.30% 12.82% 11.17% 12.36% 42.13%
</TABLE>
<TABLE>
<CAPTION>
5/2/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Small Cap.................................................. (3.45)% 28.40% 30.22% 24.42% (2.04)% 31.29%
</TABLE>
<TABLE>
<CAPTION>
8/31/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
High Income................................................ (0.58)% 20.18% 13.63% 17.26% (4.66)% 7.78%
Asset Manager.............................................. (4.41)% 16.55% 14.20% 20.23% 14.65% 10.70%
</TABLE>
<TABLE>
<CAPTION>
5/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Equity Growth............................................... 24.84% 12.78% 25.19% 47.27% 33.66%
Balanced.................................................... 13.75% 16.50% 15.77% 8.73% (5.39)%
International Magnum Equity................................. 3.85% 6.30% (1.64)% 6.90% 24.18%
Venture Value............................................... 21.64% 25.40% 33.03% 14.02% 17.11%
</TABLE>
<TABLE>
<CAPTION>
4/30/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Investors................................................... 2.61%
Research Managers........................................... 19.52%
</TABLE>
AA-29
<PAGE> 109
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
SINGLE PREMIUM ("ZENITH LIFE ONE") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS
--------------------------------------------------------------------------------------------------------
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital Growth........... (3.91)% 53.29% (6.47)% 14.46% (7.38)% 37.41%
Bond Income.............. 7.60% 17.43% 7.69% 12.10% (3.80)% 20.66%
Money Market............. 7.71% 5.74% 3.33% 2.51% 3.35% 5.23%
1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Capital Growth........... 20.53% 22.92% 33.49% 15.18%
Bond Income.............. 4.14% 10.39% 8.55% (0.91)%
Money Market............. 4.65% 4.87% 4.79% 4.49%
</TABLE>
<TABLE>
<CAPTION>
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index.............. (4.58)% 29.85% 6.81% 9.23% 0.66% 36.30% 21.91% 31.90% 27.36%
Managed.................. 2.75% 19.63% 6.22% 10.15% (1.56)% 30.67% 14.51% 25.99% 19.12%
<CAPTION>
1/1/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Stock Index.............. 19.84%
Managed.................. 9.48%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Midcap Value................................... 14.39% (0.72)% 29.77% 17.08% 16.80% (5.88)% (0.10)%
Growth and Income.............................. 13.90% (1.65)% 38.85% 17.56% 32.87% 23.89% 8.86%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity Income.................................. 9.22% 6.59% 34.49% 13.77% 27.53% 11.13% 5.85%
Overseas....................................... 14.49% 1.27% 9.19% 12.70% 11.05% 12.24% 41.99%
</TABLE>
<TABLE>
<CAPTION>
5/2/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Small Cap.................................................. (3.52)% 28.27% 30.09% 24.29% (2.14)% 31.16%
</TABLE>
<TABLE>
<CAPTION>
8/31/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
High Income................................................ (0.61)% 20.06% 13.52% 17.14% (4.76)% 7.67%
Asset Manager.............................................. (4.45)% 16.43% 14.09% 20.11% 14.53% 10.59%
</TABLE>
<TABLE>
<CAPTION>
5/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Equity Growth............................................... 24.76% 12.66% 25.06% 47.12% 33.53%
Balanced.................................................... 13.67% 16.39% 15.66% 8.62% (5.49)%
International Magnum Equity................................. 3.79% 6.19% (1.74)% 6.79% 24.05%
Venture Value............................................... 21.56% 25.27% 32.90% 13.90% 16.99%
</TABLE>
<TABLE>
<CAPTION>
4/30/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Investors................................................... 2.54%
Research Managers........................................... 19.44%
</TABLE>
AA-30
<PAGE> 110
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
VARIABLE ORDINARY ("ZENITH LIFE PLUS", "ZENITH LIFE PLUS II" AND "ZENITH
VARIABLE WHOLE LIFE") AND LIMITED PAYMENT ("ZENITH LIFE EXECUTIVE 65") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS
--------------------------------------------------------------------------------------------------------
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital Growth........... (4.06)% 53.06% (6.61)% 14.28% (7.62)% 37.21%
Bond Income.............. 7.44% 17.25% 7.53% 11.94% (3.94)% 20.47%
Money Market............. 7.54% 5.58% 3.18% 2.36% 3.35% 5.07%
1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Capital Growth........... 20.34% 22.74% 33.29% 15.01%
Bond Income.............. 3.98% 10.23% 8.39% (1.06)%
Money Market............. 4.50% 4.71% 4.63% 4.34%
</TABLE>
<TABLE>
<CAPTION>
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index.............. (4.72)% 29.65% 6.65% 9.07% 0.51% 36.10% 21.73% 31.70% 27.17%
Managed.................. 2.59% 19.45% 6.06% 9.99% (1.70)% 30.48% 14.34% 25.81% 18.94%
<CAPTION>
1/1/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Stock Index.............. 19.66%
Managed.................. 9.31%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Midcap Value................................... 14.28% (0.87)% 29.57% 16.90% 16.62% (6.03)% (0.25)%
Growth and Income.............................. 13.78% (1.80)% 35.65% 17.38% 32.67% 23.71% 8.70%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity-Income.................................. 9.11% 6.43% 34.29% 13.59% 27.34% 10.96% 5.69%
Overseas....................................... 14.38% 1.12% 9.02% 12.53% 10.89% 12.08% 41.77%
</TABLE>
<TABLE>
<CAPTION>
5/2/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Small Cap.................................................. (3.61)% 28.08% 29.90% 24.11% (2.28)% 30.96%
</TABLE>
<TABLE>
<CAPTION>
8/31/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
High Income................................................ (0.66)% 19.88% 13.35% 16.96% (4.90)% 7.51%
Asset Manager.............................................. (4.49)% 16.26% 13.91% 19.93% 14.36% 10.43%
</TABLE>
<TABLE>
<CAPTION>
5/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Equity Growth............................................... 24.64% 12.49% 24.88% 46.90% 33.33%
Balanced.................................................... 13.56% 16.21% 15.48% 8.46% (5.63)%
International Magnum Equity................................. 3.68% 6.03% (1.89)% 6.63% 23.87%
Venture Value............................................... 21.44% 25.08% 32.70% 13.73% 16.81%
</TABLE>
<TABLE>
<CAPTION>
4/30/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Investors................................................... 2.44%
Research Managers........................................... 19.32%
</TABLE>
AA-31
<PAGE> 111
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
VARIABLE SURVIVORSHIP ("ZENITH SURVIVORSHIP LIFE") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS*
---------------------------------------------------------------------------------------------------------
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital Growth........... (4.35)% 52.61% (6.90)% 13.94% (7.90)% 36.80%
Bond Income.............. 7.11% 16.90% 7.21% 11.60% (4.23)% 20.12%
Money Market............. 7.22% 5.26% 2.87% 2.05% 3.04% 4.75%
<CAPTION>
1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Capital Growth........... 19.98% 22.37% 32.89% 14.67%
Bond Income.............. 3.67% 9.90% 8.07% (1.36)%
Money Market............. 4.18% 4.39% 4.32% 4.03%
</TABLE>
<TABLE>
<CAPTION>
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index.............. (5.01)% 29.27% 6.33% 8.74% 0.21% 35.69% 21.36% 31.31% 26.79%
Managed.................. 2.28% 19.10% 5.74% 9.69% (2.00)% 30.09% 13.99% 25.43% 18.58%
<CAPTION>
1/1/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Stock Index.............. 19.30%
Managed.................. 8.98%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Midcap Value................................... 14.05% (1.16)% 29.19% 16.55% 16.27% (6.31)% (0.55)%
Growth and Income.............................. 13.55% (2.09)% 35.25% 17.03% 32.28% 23.34% 8.37%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity-Income.................................. 8.89% 6.11% 33.89% 13.25% 26.96% 10.63% 5.38%
Overseas....................................... 14.15% 0.82% 8.70% 12.19% 10.56% 11.74% 41.35%
</TABLE>
<TABLE>
<CAPTION>
5/2/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Small Cap.................................................. (3.80)% 27.69% 29.50% 23.73% (2.58)% 30.57%
</TABLE>
<TABLE>
<CAPTION>
8/31/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
High Income................................................ (0.76)% 19.53% 13.00% 16.61% (5.19)% 7.19%
Asset Manager.............................................. (4.59)% 15.91% 13.57% 19.57% 14.02% 10.10%
</TABLE>
<TABLE>
<CAPTION>
5/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Equity Growth............................................... 24.39% 12.15% 24.50% 46.46% 32.93%
Balanced.................................................... 13.33% 15.86% 15.14% 8.13% (5.91)%
International Magnum Equity................................. 3.48% 5.71% (2.18)% 6.31% 23.50%
Venture Value............................................... 21.20% 24.71% 32.30% 13.39% 16.47%
</TABLE>
<TABLE>
<CAPTION>
4/30/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Investors................................................... 2.23%
Research Managers........................................... 19.08%
</TABLE>
* Based on a mortality and expense risk charge at an annual rate of .90%.
Certain Zenith Survivorship Life Policies currently have a mortality and
expense risk charge at an annual rate of .75%.
AA-32
<PAGE> 112
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FLEXIBLE PREMIUM ("ZENITH FLEXIBLE LIFE") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS*
---------------------------------------------------------------------------------------------------------
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital Growth........... (5.73)% 52.83% (6.75)% 14.11% (7.76)% 37.00%
Bond Income.............. 7.28% 17.08% 7.37% 11.77% (4.08)% 20.29%
Money Market............. 7.38% 5.42% 3.02% 2.20% 3.20% 4.91%
<CAPTION>
1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Capital Growth........... 20.16% 22.56% 33.09% 14.84%
Bond Income.............. 3.82% 10.06% 8.23% (1.21)%
Money Market............. 4.34% 4.55% 4.48% 4.18%
</TABLE>
<TABLE>
<CAPTION>
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index.............. (4.86)% 29.46% 6.49% 8.90% 0.36% 35.90% 21.55% 31.51% 26.98%
Managed.................. 2.44% 19.28% 5.90% 9.82% (1.85)% 30.28% 14.16% 25.62% 18.76%
<CAPTION>
1/1/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Stock Index.............. 19.48%
Managed.................. 9.15%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Midcap Value................................... 14.16% (1.01)% 29.38% 16.72% 16.45% (6.17)% (0.40)%
Growth and Income.............................. 13.67% (1.94)% 35.45% 17.21% 32.47% 23.52% 8.53%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity-Income.................................. 9.00% 6.27% 34.09% 13.42% 27.15% 10.79% 5.54%
Overseas....................................... 14.26% 0.97% 8.86% 12.36% 10.72% 11.91% 41.56%
</TABLE>
<TABLE>
<CAPTION>
5/2/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Small Cap.................................................. (3.71)% 27.88% 29.70% 23.92% (2.43)% 30.77%
</TABLE>
<TABLE>
<CAPTION>
8/31/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
High Income................................................ (0.71)% 19.71% 13.17% 16.79% (5.04)% 7.35%
Asset Manager.............................................. (4.54)% 16.08% 13.74% 19.75% 14.19% 10.26%
</TABLE>
<TABLE>
<CAPTION>
5/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Equity Growth............................................... 24.51% 12.32% 24.69% 46.68% 33.13%
Balanced.................................................... 13.44% 16.03% 15.31% 8.29% (5.77)%
International Magnum Equity................................. 3.58% 5.87% (2.04)% 6.47% 23.68%
Venture Value............................................... 21.32% 24.89% 32.50% 13.56% 16.64%
</TABLE>
<TABLE>
<CAPTION>
4/30/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Investors................................................... 2.34%
Research Managers........................................... 19.20%
</TABLE>
* Based on a mortality and expense risk charge at an annual rate of .75%.
Certain Zenith Flexible Life Policies currently have a mortality and expense
risk charge at an annual rate of .60%.
AA-33
<PAGE> 113
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
FLEXIBLE PREMIUM ("ZENITH EXECUTIVE ADVANTAGE PLUS") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS
-------------------------------------------------------------------------------------------------------
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Capital Growth........... (3.48)% 53.98% (6.05)% 14.97% (7.07)% 38.03%
Bond Income.............. 8.09% 17.96% 8.18% 12.61% (3.36)% 21.20%
Money Market............. 8.19% 6.21% 3.80% 2.97% 3.97% 5.70%
<CAPTION>
1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Capital Growth........... 21.07% 23.48% 34.09% 15.70%
Bond Income.............. 4.61% 10.89% 9.04% (0.47)%
Money Market............. 5.13% 5.34% 5.26% 4.97%
</TABLE>
<TABLE>
<CAPTION>
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index.............. (4.14)% 30.43% 7.30% 9.72% 1.12% 36.92% 22.47% 32.50% 27.93%
Managed.................. 3.21% 20.17% 6.70% 10.65% (1.11)% 31.26% 15.03% 26.56% 19.65%
<CAPTION>
1/1/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Stock Index.............. 20.38%
Managed.................. 9.97%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Midcap Value................................... 14.74% (0.27)% 30.35% 17.61% 17.32% (5.46)% 0.35%
Growth and Income.............................. 14.24% (1.21)% 36.47% 18.10% 33.47% 24.45% 9.35%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Equity-Income.................................. 9.55% 6.93% 35.90% 13.75% 28.11% 11.63% 6.33%
Overseas....................................... 14.84% 1.21% 11.02% 12.43% 11.56% 12.75% 42.63%
</TABLE>
<TABLE>
<CAPTION>
5/2/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Small Cap.................................................. (3.23)% 28.84% 30.68% 24.85% (1.69)% 31.75%
</TABLE>
<TABLE>
<CAPTION>
8/31/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
High Income................................................ (.37)% 20.79% 13.75% 17.67% (4.33)% 8.15%
Asset Manager.............................................. (4.65)% 17.68% 14.31% 20.65% 15.05% 11.09%
</TABLE>
<TABLE>
<CAPTION>
5/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Equity Growth............................................... 25.13% 13.17% 25.63% 47.78% 34.13%
Balanced.................................................... 14.01% 16.91% 16.18% 9.11% (5.06)%
International Magnum Equity................................. 4.01% 6.67% (1.30)% 7.27% 24.61%
Venture Value............................................... 21.92% 25.84% 33.50% 14.41% 17.52%
</TABLE>
<TABLE>
<CAPTION>
4/30/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Investors................................................... 2.85%
Research Managers........................................... 19.80%
</TABLE>
AA-34
<PAGE> 114
NEW ENGLAND VARIABLE LIFE SEPARATE ACCOUNT OF
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
MODIFIED SINGLE PREMIUM ("AMERICAN GATEWAY") POLICIES
<TABLE>
<CAPTION>
NET INVESTMENT RETURN OF THE SUB-ACCOUNTS
-------------------------------------------------------------------------------------------------------
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Bond Income.............. 8.09% 17.96% 8.18% 12.61% (3.36)% 21.20%
Money Market............. 8.19% 6.21% 3.80% 2.97% 3.97% 5.70%
<CAPTION>
1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
Bond Income.............. 4.61% 10.89% 9.04% (0.47)%
Money Market............. 5.13% 5.34% 5.26% 4.97%
</TABLE>
<TABLE>
<CAPTION>
1/1/90- 1/1/91- 1/1/92- 1/1/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98-
SUB-ACCOUNT 12/31/90 12/31/91 12/31/92 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
----------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stock Index.............. (4.14)% 30.43% 7.30% 9.72% 1.12% 36.92% 22.47% 32.50% 27.93%
Managed.................. 3.21% 20.17% 6.70% 10.65% (1.11)% 31.26% 15.03% 26.56% 19.65%
<CAPTION>
1/1/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Stock Index.............. 20.38%
Managed.................. 9.97%
</TABLE>
<TABLE>
<CAPTION>
4/30/93- 1/1/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/93 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Midcap Value................................... 14.74% (0.27)% 30.35% 17.61% 17.32% (5.46)% 0.35%
Growth and Income.............................. 14.24% (1.21)% 36.47% 18.10% 33.47% 24.45% 9.35%
</TABLE>
<TABLE>
<CAPTION>
5/2/94- 1/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Small Cap.................................................. (3.23)% 28.84% 30.68% 24.85% (1.69)% 31.75%
</TABLE>
<TABLE>
<CAPTION>
5/1/95- 1/1/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Equity Growth............................................... 25.13% 13.17% 25.63% 47.78% 34.13%
Balanced.................................................... 14.01% 16.91% 16.18% 9.11% (5.06)%
International Magnum Equity................................. 4.01% 6.67% (1.30)% 7.27% 24.61%
Venture Value............................................... 21.92% 25.84% 33.50% 14.41% 17.52%
</TABLE>
<TABLE>
<CAPTION>
6/28/96- 1/1/97- 1/1/98- 1/1/99-
SUB-ACCOUNT 12/31/96 12/31/97 12/31/98 12/31/99
----------- -------- -------- -------- --------
<S> <C> <C> <C> <C>
U.S. Government............................................. 4.55% 8.47% 7.61% 0.17%
Strategic Bond Opportunities................................ 8.46% 11.07% 2.04% 1.44%
</TABLE>
<TABLE>
<CAPTION>
4/30/99-
SUB-ACCOUNT 12/31/99
----------- --------
<S> <C>
Investors................................................... 2.85%
Research Managers........................................... 19.80%
</TABLE>
The net investment return of a sub-account is calculated by taking the
difference between the sub-account's ending value and the beginning value for
the period and dividing it by the beginning value for the period.
AA-35
<PAGE> 115
NEW ENGLAND LIFE INSURANCE COMPANY
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Policyholders of New England Life Insurance Company:
We have audited the accompanying consolidated balance sheets of New England Life
Insurance Company and subsidiaries (the "Company") as of December 31, 1999 and
1998, and the related consolidated statements of income and comprehensive
income, equity and cash flows for each of the three years in the period ended
December 31, 1999. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements 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 financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of New England 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.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 4, 2000
AA-36
<PAGE> 116
NEW ENGLAND LIFE INSURANCE COMPANY
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1999 AND 1998, JUNE 30, 2000 AND JUNE 30, 1999 (IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1999 1998 2000 1999
---------- ---------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Investments:
Fixed Maturities, Available for Sale, at
Estimated Fair Value.......................... $ 735,697 $ 769,364 $ 739,741 $ 741,990
Equity Securities, at Fair Value................ 22,685 13,240 25,013 19,578
Policy Loans.................................... 181,995 135,800 211,871 161,329
Short-Term Investments.......................... 62,619 52,285 7,455 89,932
Other Invested Assets........................... 16,798 16,372 52,868 15,322
---------- ---------- ---------- ----------
Total Investments......................... 1,019,794 987,061 1,036,948 1,028,151
Cash and Cash Equivalents......................... 84,371 43,598 112,798 80,650
Deferred Policy Acquisition Costs................. 930,703 710,961 985,600 811,622
Accrued Investment Income......................... 29,940 21,802 28,537 24,543
Premiums and Other Receivables.................... 119,750 145,117 154,801 150,937
Other Assets...................................... 105,982 111,067 112,766 143,027
Separate Account Assets........................... 4,840,029 3,258,383 5,374,793 4,017,207
---------- ---------- ---------- ----------
TOTAL ASSETS.............................. $7,130,569 $5,277,989 $7,806,243 $6,256,137
========== ========== ========== ==========
LIABILITIES AND EQUITY
LIABILITIES
Future Policy Benefits............................ $ 614,927 $ 561,746 $ 641,760 $ 586,576
Policyholder Account Balances..................... 325,385 210,242 363,731 247,978
Other Policyholder Funds.......................... 245,339 186,255 279,489 229,100
Policyholder Dividends Payable.................... 977 609 1,325 797
Short and Long-Term Debt.......................... 75,053 82,855 85,793 72,509
Income Taxes Payable:
Current......................................... (77) 10,984 (2,719) 17,258
Deferred........................................ 38,669 42,334 19,743 28,646
Due to Parent..................................... 72,247 789
Other Liabilities................................. 64,717 78,721 210,660 225,512
Separate Account Liabilities...................... 4,840,029 3,258,383 5,374,793 4,017,207
---------- ---------- ---------- ----------
TOTAL LIABILITIES......................... 6,277,266 4,432,918 6,974,575 5,425,583
---------- ---------- ---------- ----------
Commitments and Contingencies (Notes 4, 8 and 9)
EQUITY
Common Stock, $125.00 par value; 50,000 shares
authorized, 20,000 shares issued and
outstanding..................................... 2,500 2,500 2,500 2,500
Preferred Stock, $0.00 par value; 1,000,000 shares
authorized, 200,000 shares issued and
outstanding..................................... 0 0 0 0
Contributed Capital............................... 647,273 647,273 647,273 647,273
Retained Earnings................................. 214,528 177,859 222,296 184,088
Accumulated Other Comprehensive Income............ (10,998) 17,439 (40,401) (3,307)
---------- ---------- ---------- ----------
TOTAL EQUITY.............................. 853,303 845,071 831,668 830,554
---------- ---------- ---------- ----------
TOTAL LIABILITIES AND EQUITY...................... $7,130,569 $5,277,989 $7,806,243 $6,256,137
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
AA-37
<PAGE> 117
NEW ENGLAND LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND SIX MONTHS ENDED
JUNE 30, 2000 AND JUNE 30, 1999 (IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
1999 1998 1997 2000 1999
-------- -------- -------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
REVENUES
Premiums.................................... $123,638 $100,689 $ 63,616 $ 64,966 $ 58,507
Universal Life and Investment-Type Product
Policy Fees............................... 220,841 173,766 145,157 107,728 96,032
Net Investment Income....................... 68,498 49,077 61,059 31,690 34,846
Investment Gains (Losses), Net.............. 2,922 5,610 890 (4,332) 2,807
Commissions, Fees and Other Income.......... 265,891 192,411 28,302 186,309 119,831
-------- -------- -------- -------- --------
TOTAL REVENUES...................... 681,790 521,553 299,024 386,361 312,023
-------- -------- -------- -------- --------
BENEFITS AND OTHER DEDUCTIONS
Policyholder Benefits....................... 193,293 149,687 100,180 64,600 89,848
Interest Credited to Policyholder Account
Balances.................................. 10,721 7,735 6,220 8,307 5,684
Policyholder Dividends...................... 20,827 22,989 21,325 11,400 10,969
Other Operating Costs and Expenses.......... 381,881 316,659 144,342 278,783 186,860
-------- -------- -------- -------- --------
TOTAL BENEFITS AND OTHER
DEDUCTIONS........................ 606,722 497,070 272,067 363,090 293,361
-------- -------- -------- -------- --------
Income From Operations Before Income
Taxes..................................... 75,068 24,483 26,957 23,271 18,662
Income Taxes................................ 29,344 13,046 4,988 10,473 8,050
-------- -------- -------- -------- --------
NET INCOME.................................. $ 45,724 $ 11,437 $ 21,969 $ 12,798 $ 10,612
-------- -------- -------- -------- --------
Other Comprehensive Income (Loss), Net of
Tax:
Unrealized Investment Gains (Losses) (Net
of Related Offsets, Reclassification
Adjustments and Income Taxes, of
$45,376, $(299) and $(16,588),
Respectively)........................... (28,437) 92 13,620 (29,403) (20,746)
-------- -------- -------- -------- --------
COMPREHENSIVE INCOME........................ $ 17,287 $ 11,529 $ 35,589 $(16,605) $(10,134)
======== ======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
AA-38
<PAGE> 118
NEW ENGLAND LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND SIX MONTHS ENDED JUNE
30, 2000 AND JUNE 30, 1999 (IN THOUSANDS)
<TABLE>
<CAPTION>
CAPITAL ACCUMULATED
STOCK & OTHER
CONTRIBUTED RETAINED COMPREHENSIVE
CAPITAL EARNINGS INCOME TOTAL
----------- -------- ------------- --------
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1996................... $402,242 $144,453 $ 3,727 $550,422
Net Income...................................... 21,969 21,969
Change in Net Unrealized Investment Gains
(Losses)...................................... 13,620 13,620
Contributed Capital............................. 47,531 47,531
-------- -------- -------- --------
BALANCES AT DECEMBER 31, 1997................... 449,773 166,422 17,347 633,542
Net Income...................................... 11,437 11,437
Change in Net Unrealized Investment Gains
(Losses)...................................... 92 92
Contributed Capital............................. 200,000 200,000
-------- -------- -------- --------
BALANCES AT DECEMBER 31, 1998................... 649,773 177,859 17,439 845,071
Net Income...................................... 45,724 45,724
Preferred Stock Dividends....................... (9,055) (9,055)
Change in Net Unrealized Investment Gains
(Losses)...................................... (28,437) (28,437)
-------- -------- -------- --------
BALANCES AT DECEMBER 31, 1999................... $649,773 $214,528 $(10,998) $853,303
======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
CAPITAL ACCUMULATED
STOCK & OTHER
CONTRIBUTED RETAINED COMPREHENSIVE
CAPITAL EARNINGS INCOME TOTAL
----------- -------- ------------- --------
(UNAUDITED)
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1998................... $649,773 $177,859 $ 17,439 $845,071
Net Income...................................... 10,612 10,612
Preferred Stock Dividends....................... (4,383) (4,383)
Change in Net Unrealized Investment Gains
(Losses)...................................... (20,746) (20,746)
-------- -------- -------- --------
BALANCES AT JUNE 30, 1999....................... 649,773 184,088 (3,307) 830,554
======== ======== ======== ========
Net Income...................................... 35,112 35,112
Preferred Stock Dividends....................... (4,672) (4,672)
Change in Net Unrealized Investment Gains
(Losses)...................................... (7,691) (7,691)
-------- -------- -------- --------
BALANCES AT DECEMBER 31, 1999................... 649,773 214,528 (10,998) 853,303
======== ======== ======== ========
Net Income...................................... 12,798 12,798
Preferred Stock Dividends....................... (5,030) (5,030)
Change in Net Unrealized Investment Gains
(Losses)...................................... (29,403) (29,403)
-------- -------- -------- --------
BALANCES AT JUNE 30, 2000....................... $649,773 $222,296 $(40,401) $831,668
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
AA-39
<PAGE> 119
NEW ENGLAND LIFE INSURANCE COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997, AND SIX MONTHS ENDED JUNE
30, 2000 AND JUNE 30, 1999 (IN THOUSANDS)
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
----------- -----------
1999 1998 1997 2000 1999
--------- --------- --------- ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES.................. $(159,314) $(311,296) $(121,838) $ (78,827) $ (29,165)
--------- --------- --------- --------- ---------
Cash Flows from Investing Activities:
Sales, Maturities and Repayments of:
Available for Sale Fixed Maturities................ 114,478 164,566 145,197 16,272 50,738
Equity Securities.................................. 2,491 39,333 32,806 1,351 2,561
Other, Net......................................... (1) 721 128 102,236 45,296
Purchases of:
Available for Sale Fixed Maturities................ (157,761) (184,810) (326,059) (36,780) (74,128)
Equity Securities.................................. (9,590) (80,066) 0 (14,481) (6,862)
Real Estate........................................ (3,251) (3,644) 0 (95) (2,230)
Fixed Asset Property and Equipment................. 0 (1,459) (101) 0 0
Other Assets....................................... (302) (89) 0 (129,456) (14)
Net Change in Short-Term Investments................. (10,334) (24,341) 128,616 55,348 (38,174)
Net Change in Policy Loans........................... (46,195) (31,017) (28,520) (29,876) (25,530)
Other, Net........................................... 23,443 1,631 177 0 0
--------- --------- --------- --------- ---------
NET CASH USED IN INVESTING ACTIVITIES.................. (87,022) (119,175) (47,756) (35,481) (48,343)
--------- --------- --------- --------- ---------
Cash Flows from Financing Activities:
Capital Contributions................................ 0 200,000 46,681 0 (157)
Dividends Paid....................................... (9,055) 0 0 (5,030) (158)
Additions to Debt.................................... 10,000 0
Repayment of Debt.................................... (13,232) (8,670) (3,181) 0 (13,232)
Policyholder Account Balances:
Deposits........................................... 517,551 358,090 244,338 611,860 541,498
Withdrawals........................................ (242,388) (149,499) (95,066) (474,095) (413,392)
Financial Reinsurance Receivables.................... 34,233 0 1,823 0 0
--------- --------- --------- --------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES.............. 287,109 399,921 194,595 142,735 114,559
--------- --------- --------- --------- ---------
Change in Cash and Cash Equivalents.................... 40,773 (30,550) 25,001 28,427 37,051
Cash and Cash Equivalents, Beginning of Year........... 43,598 74,148 49,147 84,371 43,599
--------- --------- --------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR................. $ 84,371 $ 43,598 $ 74,148 $ 112,798 $ 80,650
========= ========= ========= ========= =========
Supplemental Cash Flow Information:
Interest Paid........................................ $ 87 $ 3,830 $ 1,495 $ 193 $ 87
========= ========= ========= ========= =========
Income Taxes Paid.................................... $ 30,045 $ 14,118 $ 5,470 $ 20,100 $ 762
========= ========= ========= ========= =========
NET INCOME............................................. $ 45,724 $ 11,437 $ 21,969 12,798 10,612
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used in) Operating Activities:
Change in Deferred Policy Acquisition Costs, Net..... (186,467) (145,787) (140,578) (69,113) 19,670
Change in Accrued Investment Income.................. (8,138) (3,090) (4,999) 1,403 (3,741)
Change in Premiums and Other Receivables............. 25,367 (82,081) (57,095) (35,051) (5,820)
Gains from Sales of Investments, Net................. (2,922) (5,610) (890) 4,332 (2,807)
Depreciation and Amortization Expenses............... 11,350 13,137 10,085 5,675 5,675
Interest Credited to Policyholder Account Balances... 10,721 7,735 6,220 8,307 5,684
Universal Life and Investment-Type Product Policy Fee
Income............................................. (220,841) (173,766) (145,157) (107,728) (96,032)
Change in Future Policy Benefits..................... 53,181 61,317 35,540 26,833 24,830
Change in Other Policyholder Funds................... 59,084 73,814 6,309 34,150 42,845
Change in Policyholder Dividends Payable............. 368 188 5,701 348 188
Change in Income Taxes Payable....................... (26,871) 2,358 1,674 (16,379) (14,194)
Other, Net........................................... 80,130 (70,948) 139,383 55,598 (16,075)
--------- --------- --------- --------- ---------
NET CASH USED IN OPERATING ACTIVITIES.................. $(159,314) $(311,296) $(121,838) $ (78,827) $ (29,165)
========= ========= ========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
AA-40
<PAGE> 120
NEW ENGLAND LIFE INSURANCE COMPANY
(INFORMATION WITH RESPECT TO THE SIX MONTH PERIODS ENDED JUNE 30, 2000 AND 1999
IS UNAUDITED)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
New England Life Insurance Company and its subsidiaries (the Company or NELICO)
is a wholly-owned stock life insurance subsidiary of Metropolitan Life Insurance
Company (MetLife). The Company is headquartered in Boston, Massachusetts as a
Massachusetts chartered company. The Company principally provides variable life
insurance and variable annuity contracts through a network of general agencies
and independent brokers located throughout the United States. The Company also
provides participating and non-participating traditional life insurance, fixed
annuity contracts, pension products, as well as, group life, medical, and
disability coverage.
Prior to the merger of New England Mutual Life Insurance Company (NEMLICO) with
MetLife on August 30, 1996, New England Life Insurance Company (NELICO),
formerly known as New England Variable Life Insurance Company (NEVLICO) was a
subsidiary of NEMLICO. As a result of the merger, NEMLICO ceased to exist as a
separate mutual life insurance company, and NELICO became a subsidiary of
MetLife. NELICO has continued after the merger to conduct its existing business
as well as administer the business activities of the former parent NEMLICO.
(Note 13)
Certain companies that were subsidiaries of NEMLICO became subsidiaries of
NELICO as of the merger. The principal subsidiaries of which NELICO owns 100% of
the outstanding common stock are: Exeter Reassurance Company, Ltd., New England
Pension and Annuity Company, and Newbury Insurance Company, Limited, for
insurance operations and New England Securities Corporation and New England
Investment Management, Inc. for other operations. On February 28, 1997, NELICO
created and became the sole owner of New England Life Holdings, Inc. which was
established as a holding company for the non-insurance operations of the
Company, principally, New England Securities and New England Investment
Management, Inc. On April 30, 1998, the Company acquired all of the outstanding
stock of NL Holding Corporation and its wholly owned subsidiaries, Nathan and
Lewis Securities, Inc., and Nathan and Lewis Associates, Inc. Subsequent to the
acquisition, NL Holding Corporation was transferred to New England Life
Holdings, Inc. The principal business activities of the subsidiaries are
disclosed below.
Exeter Reassurance Company, Ltd., (Exeter) was incorporated in Bermuda on
November 15, 1994, and registered as an insurer under The Insurance Act 1978
(Bermuda). Exeter engages in financial reinsurance of life insurance and annuity
policies.
New England Pension and Annuity Company (NEPA) was incorporated under the laws
of the State of Delaware on September 12, 1980. NEPA holds licenses to sell
annuity contracts in 22 states, but is currently not actively engaged in the
sale or distribution of insurance products.
Newbury Insurance Company, Limited (Newbury) was incorporated in Bermuda on May
1, 1987, and is registered as a Class 2 insurer under The Insurance Act 1978
(Bermuda). Newbury provides professional liability and personal injury coverage
to the agents of NELICO through a facultative reinsurance agreement with
Lexington Insurance Company. Effective September 1, 1999, Newbury began
providing errors and omissions coverage to certain of the life insurance agents
of MetLife through a facultative reinsurance agreement with Fireman's Fund
Insurance Company.
New England Securities Corporation (NES), a National Association of Securities
Dealers (NASD) registered broker/dealer, conducts business as a wholesale
distributor of investment products through the sales force of NELICO.
Established in 1968, NES offers a range of investment products including mutual
funds, investment partnerships, and individual securities. In 1994, NES became a
Registered Investment Advisor with the Securities and Exchange Commission (SEC)
and now offers individually managed portfolios. NES is the national distributor
for variable annuity and variable life products issued by NELICO.
New England Investment Management, Inc. (NEIM), which changed its name from TNE
Advisers, Inc. in March 1999, was incorporated on August 26, 1994, and is
registered as an investment adviser with the SEC, under the Investment Advisers
Act of 1940. NEIM was organized to serve as an investment adviser to certain
series of the New England Zenith Fund.
AA-41
<PAGE> 121
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
NL Holding Corporation and subsidiaries (NL Holding) engages in securities
brokerage, dealer trading in fixed income securities, over the counter stock,
unit investment trusts, and the sale of insurance related products and
annuities, sold through licensed brokers and independent agents. Nathan and
Lewis Securities, Inc., a wholly owned subsidiary of NL Holding, is a National
Association of Securities Dealers (NASD) registered broker/dealer. N&L
Associates, a wholly owned subsidiary of NL Holding, is a general insurance
agent which sells insurance policies and other insurance related products
through its licensed brokers and independent agents.
BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles (GAAP). The
Commonwealth of Massachusetts Division of Insurance (the "Division") recognizes
only statutory accounting practices for determining and reporting the financial
condition and results of operations of an insurance company for determining
solvency under the Massachusetts Insurance Law. No consideration is given by the
Division to financial statements prepared in accordance with GAAP in making such
determination.
The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The most significant estimates include those used in
determining deferred policy acquisition costs, investment allowances and the
liability for future policyholder benefits. Actual results could differ from
those estimates.
Effective July 1, 1997, management realigned its fixed maturity investment
classifications and transferred all securities classified as held to maturity to
available for sale. As a result, consolidated equity at July 1, 1997 increased
by $798, excluding the effects of deferred income taxes, amounts attributable to
participating pension contractholders and adjustments of deferred policy
acquisition costs and future policy benefits.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of New
England Life Insurance and its subsidiaries, partnerships and joint ventures in
which NELICO has a controlling interest. All material intercompany accounts and
transactions have been eliminated.
The Company accounts for its investments in real estate joint ventures and other
limited partnership interests in which it does not have a controlling interest,
but more than a minimal interest, under the equity method of accounting.
Certain amounts in the prior years' consolidated financial statements have been
reclassified to conform with the 1999 presentation.
INVESTMENTS
The Company's fixed maturity and equity securities are classified as
available-for-sale and are reported at their estimated fair value. Unrealized
investment gains and losses on securities are recorded as a separate component
of accumulated other comprehensive income, net of policyholder related amounts
and deferred income taxes. The cost of fixed maturity and equity securities is
adjusted for impairments in value deemed to be other than temporary. These
adjustments are recorded as realized losses on investments. Realized gains and
losses on sales of securities are determined on a specific identification basis.
All security transactions are recorded on a trade date basis.
Policy loans are stated at unpaid principal balances, which approximates fair
value.
Short-term investments are stated at amortized cost, which approximates fair
value.
Other invested assets are reported at their estimated fair value.
AA-42
<PAGE> 122
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
CASH AND CASH EQUIVALENTS
Cash and cash equivalents include cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less.
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Property, equipment and leasehold improvements, which are included in other
assets, are stated at cost, less accumulated depreciation and amortization.
Depreciation is determined using the straight line method over the estimated
useful lives of the assets which generally range from 4 to 15 years or the term
of the lease, if shorter. Amortization of leasehold improvements is provided
using the straight-line method over the lesser of the term of the leases or the
estimated useful life of the improvements.
Accumulated depreciation on property and equipment and amortization of leasehold
improvements was $36,122, and $24,772 at December 31, 1999 and 1998,
respectively. Related depreciation and amortization expense was $11,350, $13,137
and $10,085 for the years ended December 31, 1999, 1998 and 1997, respectively.
DEFERRED POLICY ACQUISITION COSTS
The costs of acquiring new business that vary with, and are primarily related
to, the production of new business are deferred. Such costs, which consist
principally of commissions, agency and policy issue expenses, are amortized over
the expected life of the contract for participating traditional life, variable
life, universal life, investment-type products, and variable annuities.
Generally, deferred policy acquisition costs are amortized in proportion to the
present value of estimated gross margins or profits from investments, mortality,
expense margins and surrender charges. Actual gross profits can vary from
management's estimates resulting in increases and decreases in the rate of
amortization. Management periodically updates these estimates and evaluates the
recoverability of deferred policy acquisition costs. When appropriate,
management revises its assumptions of the estimated gross margins or profits of
these contracts, and the cumulative amortization is reestimated and adjusted by
a cumulative charge or credit to current operations.
Deferred policy acquisition costs for nonmedical health policies are amortized
in proportion to anticipated premiums. Assumptions as to anticipated premiums
are made at the date of policy issuance and are consistently applied during the
life of the contracts. Deviations from estimated experience are reflected in
operations when they occur. For these contracts, the amortization period is
typically the estimated life of the policy.
Information regarding deferred policy acquisition costs is as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Balance at January 1........................................ $710,961 $565,769 $434,636
Capitalized during the year................................. 216,913 182,943 157,670
-------- -------- --------
Total................................................... 927,874 748,712 592,306
Amortization allocated to:
Net realized investment gains............................. (616) (5,282) 0
Unrealized investment gains (losses)...................... 33,276 (595) (9,446)
Other Expenses............................................ (29,831) (31,874) (17,091)
-------- -------- --------
Total amortization...................................... 2,829 (37,751) (26,537)
Balance at December 31...................................... $930,703 $710,961 $565,769
======== ======== ========
</TABLE>
Amortization of deferred policy acquisition costs is allocated to (1) realized
investment gains and losses to provide consolidated statement of income
information regarding the impact of such gains and losses on the amount of the
amortization, (2) unrealized investment gains and losses to provide information
regarding the amount of deferred
AA-43
<PAGE> 123
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
policy acquisition costs that would have been amortized if such gains and losses
had been realized and (3) other expenses to provide amounts related to the gross
margins or profits originating from transactions other than investment gains and
losses.
Realized investment gains and losses related to certain products have a direct
impact on the amortization of deferred policy acquisition costs. Presenting
realized investment gains and losses net of related amortization of deferred
policy acquisition costs provides information useful in evaluating the operating
performance of the Company. This presentation may not be comparable to
presentations made by other insurers.
ACQUISITIONS
The Company acquired certain assets and assumed certain liabilities of NL
Holding Corporation effective April 30, 1998. The acquisition was accounted for
under the purchase method of accounting and is included in the financial
statements as of the effective date of the transaction. The cost of the
acquisition was $35,082, which represents an initial cash settlement and payment
of direct acquisition costs of $27,873, as well as, accrued contingent payment
arrangements of $7,209 anticipated to be paid to the sellers over a three year
period ending December 31, 2000. Goodwill of $23,498 was recorded, to be
amortized on a straight-line basis over a ten year period.
The 1998 and 1997 pro forma, unaudited financial data shown as follows presents
the effect of the acquisition as if it had occurred at the beginning of the
respective reporting periods. The pro forma financial data does not necessarily
reflect the results of operations that would have been obtained had the
acquisition occurred on the assumed date, nor is the financial data necessarily
indicative of the results of the combined entities that may be achieved for any
future period.
Pro forma Impact of Acquisition
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1998 1997
---------- ----------
<S> <C> <C>
Revenue..................................................... $557,229 $381,691
======== ========
Net Income.................................................. $ 10,311 $ 25,049
======== ========
</TABLE>
OTHER INTANGIBLE ASSETS
The excess of cost over the fair value of net assets acquired, which represents
goodwill, and the value of business acquired are included in other assets.
Goodwill is amortized on a straight-line basis over 10 years. The Company
reviews goodwill to assess recoverability from future operations using
undiscounted cash flows. Impairments would be recognized in operating results if
a permanent diminution in value is deemed to have occurred.
Excess of Purchase Price Over Fair Value of Net Assets Acquired
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Net Balance, January 1...................................... $21,931 $ 0 $ 0
Acquisitions.............................................. 0 23,498 0
Amortization.............................................. (2,350) (1,567) 0
------- ------- -------
Net Balance, December 31.................................... $19,581 $21,931 $ 0
======= ======= =======
December 31
Accumulated Amortization.................................. $(3,917) $(1,567) $ 0
======= ======= =======
</TABLE>
AA-44
<PAGE> 124
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
FUTURE POLICY BENEFITS AND POLICYHOLDER ACCOUNT BALANCES
Future policy benefit liabilities for participating traditional life insurance
policies are equal to the aggregate of (a) net level premium reserves for death
and endowment policy benefits (calculated based upon the nonforfeiture interest
rate, ranging from 4% to 4.5%, and mortality rates guaranteed in calculating the
cash surrender values described in such contracts), (b) the liability for
terminal dividends and (c) premium deficiency reserves, which are established
when the liabilities for future policy benefits plus the present value of
expected future gross premiums are insufficient to provide for expected future
policy benefits and expenses after deferred policy acquisition costs are written
off.
Future policy benefit liabilities for traditional annuities are equal to
accumulated contractholder fund balances during the accumulation period and the
present value of expected future payments after annuitization. Interest rates
used in establishing such liabilities range from 5.5% to 6%.
Future policy benefit liabilities for non-medical health insurance are
calculated using the net level premium method and assumptions as to future
morbidity, withdrawals and interest, which provide a margin for adverse
deviation. Future policy benefit liabilities for disabled lives are estimated
using the present value of benefits method and experience assumptions as to
claim terminations, expenses and interest. The interest rates used in
establishing such liabilities range from 3% to 6.5%.
Policyholder account balances for variable life, universal life and
investment-type contracts are equal to the policy account values, which consist
of an accumulation of gross premium payments plus credited interest ranging from
3.8% to 7.25%, less expense and mortality charges and withdrawals.
The liability for unpaid claims represents the amount estimated for claims that
have been reported but not settled and claims incurred but not reported.
Liabilities for unpaid claims are estimated based upon the Company's historical
experience and other actuarial assumptions that consider the effects of current
developments, anticipated trends and risk management programs. Revisions of
these estimates are included in operations in the year such refinements are
made.
RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS
Premiums related to traditional life and annuity policies with life
contingencies are recognized as revenues when due. Benefits and expenses are
provided against such revenues to recognize profits over the estimated life of
the policies.
Premiums related to non-medical health contracts are recognized as income when
due.
Premiums related to variable life and universal life contracts are credited to
policyholder account balances. Revenues from such contracts consist of amounts
assessed against policyholder account balances for mortality recognized ratably
over the policy period, policy administration charges recognized as services are
provided and surrender charges recognized as earned. Amounts that are charged to
operations include interest credited to policyholders and benefit claims
incurred in excess of related policyholder account balances.
Premiums related to investment-type contracts are credited to policyholder
account balances. Revenues from such contracts consist of amounts assessed
against policyholder account balances for contract administration charges
recognized ratably over the policy period. Amounts that are charged to
operations include interest credited to policyholders.
DIVIDENDS TO POLICYHOLDERS
Dividends to policyholders are determined annually by the board of directors.
The aggregate amount of policyholders' dividends is related to actual interest,
mortality, morbidity and expense experience for the year, as well as
management's judgment as to the appropriate level of statutory surplus to be
retained by the Company.
AA-45
<PAGE> 125
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
PARTICIPATING BUSINESS
Participating business represented approximately 3.49% and 3.52% of the
Company's life insurance in force, and 8.30% and 7.96% of the number of life
insurance policies in force at December 31, 1999 and 1998, respectively.
Participating policies represented approximately 56.77%, 95.78% and 68.24% of
gross life insurance premiums, for the years ended December 31, 1999, 1998 and
1997, respectively.
INCOME TAXES
NELICO and its eligible life insurance subsidiary, Exeter Reassurance Company,
Ltd., file a consolidated federal income tax return. Separate income tax returns
as required are filed for the other life insurance and non-life insurance direct
subsidiaries. Income tax expense has been calculated in accordance with the
provisions of the Internal Revenue Code, as amended. The Company uses the
liability method of accounting for income taxes. Income tax provisions are based
on income reported for financial statement purposes. The future tax consequences
of temporary differences between financial reporting and tax basis of assets and
liabilities are measured as of the balance sheet dates and are recorded as
deferred income tax assets or liabilities.
REINSURANCE
The Company has reinsured certain of its life insurance contracts with other
insurance companies under various agreements. Amounts due from reinsurers are
estimated based upon assumptions consistent with those used in establishing the
liabilities related to the underlying reinsured contracts. Policy and contract
liabilities are reported gross of reinsurance credits.
SEPARATE ACCOUNTS
Separate Accounts are established in conformity with the state insurance laws
and are generally not chargeable with liabilities that arise from any other
business of the Company. Separate Account assets are subject to general account
claims only to the extent the value of such assets exceed the Separate Account
liabilities. Investments held in the Separate Accounts (stated at estimated fair
market value) and liabilities of the Separate Accounts (including participants'
corresponding equity in the Separate Accounts) are reported separately as assets
and liabilities. Deposits to Separate Accounts, investment income, and realized
and unrealized gains and losses on the investments of the Separate Account
accrue directly to contractholders and, accordingly, are not reflected in the
Company's financial statements. Mortality, policy administration and surrender
charges to all Separate Accounts are included in revenues. See Note 14.
APPLICATION OF ACCOUNTING PRONOUNCEMENTS
Effective January 1, 1999, the Company adopted Statement of Position ("SOP")
98-5, Reporting on the Costs of Start-Up Activities ("SOP 98-5"). SOP 98-5
broadly defines start-up activities. SOP 98-5 requires costs of start-up
activities and organization costs to be expensed as incurred. Adoption of SOP
98-5 did not have a material effect on the Company's consolidated financial
statements.
Effective January 1, 1999, the Company adopted SOP 98-1, Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use ("SOP 98-1").
SOP 98-1 provides guidance for determining when an entity should capitalize or
expense external and internal costs of computer software developed or obtained
for internal use. The adoption of SOP 98-1 resulted in the capitalization of $6
million of software costs which would have otherwise been expensed in 1999.
Effective January 1, 1999, the Company adopted SOP 97-3, Accounting for
Insurance and Other Enterprises for Insurance Related Assessments ("SOP 97-3").
SOP 97-3 provides guidance on accounting by insurance and other enterprises for
assessments related to insurance activities including recognition, measurement
and disclosure of guaranty fund and other insurance related assessments.
Adoption of SOP 97-3 did not have a material effect on the Company's
consolidated financial statements.
AA-46
<PAGE> 126
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
In June 1999, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 137, Accounting for Derivative Instruments
and Hedging Activities -- Deferral of the Effective Date of FASB Statement No.
133 ("SFAS 137"). SFAS 137 defers the provisions of SFAS 133 until January 1,
2001. The provisions of SFAS 133 require, among other things, that all
derivatives be recognized in the consolidated balance sheets as either assets or
liabilities and measured at fair value. The corresponding derivative gains and
losses should be reported based upon the hedge relationship, if such a
relationship exists. Changes in the fair value of derivatives that are not
designated as hedges or that do not meet the hedge accounting criteria in SFAS
133 are required to be reported in income. The Company is in the process of
quantifying the impact of SFAS 133 on its consolidated financial statements.
In October 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-7, Accounting for Insurance
and Reinsurance Contracts That Do Not Transfer Insurance Risk ("SOP 98-7"). SOP
98-7 provides guidance on the method of accounting for insurance and reinsurance
contracts that do not transfer insurance risk, defined in the SOP as the deposit
method. SOP 98-7 classifies insurance and reinsurance contracts for which the
deposit method is appropriate into those that 1) transfer only significant
timing risk, 2) transfer only significant underwriting risk, 3) transfer neither
significant timing or underwriting risk and 4) have an indeterminate risk. The
Company is required to adopt SOP 98-7 as of January 1, 2000. Adoption of SOP
98-7 is not expected to have a material effect on the Company's consolidated
financial statements.
2. NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The components of net investment income are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Fixed maturities............................................ $54,490 $53,467 $50,348
Equity securities........................................... 13,896 (9,118) 4,915
Real estate................................................. 831 4,149 815
Policy loans................................................ 9,157 6,855 5,081
Cash, cash equivalents and short-term investments........... 3,494 861 4,160
Other investment income..................................... (7,529) 76 591
------- ------- -------
Gross investment income..................................... 74,339 56,290 65,910
Investment expenses......................................... (5,841) (7,213) (4,851)
------- ------- -------
Net Investment income....................................... $68,498 $49,077 $61,059
======= ======= =======
</TABLE>
Realized investment gains (losses), net, including changes in valuation
allowances, are summarized as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Fixed maturities............................................ $ 850 $10,899 $ (774)
Equity securities........................................... 0 0 1,040
Other invested assets....................................... 2,688 (7) (8)
------- ------- -------
Subtotal................................................ 3,538 10,892 258
Less: Amounts allocable to amortization of deferred policy
acquisition costs......................................... 616 5,282 (632)
------- ------- -------
Investment gains (losses), net.............................. $ 2,922 $ 5,610 $ 890
======= ======= =======
</TABLE>
Realized investment gains have been reduced by (1) deferred policy acquisition
amortization to the extent that such amortization results from realized
investment gains and losses, (2) additions to future policy benefits resulting
from the
AA-47
<PAGE> 127
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
need to establish additional liabilities due to the recognition of investment
gains, and (3) additions to participating contractholder accounts when amounts
equal to such investment gains and losses are credited to the contractholders'
accounts. This presentation may not be comparable to presentations made by other
insurers.
The changes in unrealized investment gains (losses), net, included in
accumulated other comprehensive income, are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Balance at January 1........................................ $ 17,439 $17,347 $ 3,727
Change in unrealized investment gains (losses)............ (73,813) 391 30,207
Change in unrealized investment gains (losses)
attributable to:
Deferred policy acquisition costs....................... 33,276 (595) (9,446)
Deferred income tax (expense) benefit................... 12,100 296 (7,141)
-------- ------- -------
Balance at December 31...................................... $(10,998) $17,439 $17,347
======== ======= =======
</TABLE>
The components of unrealized investment gains (losses), net, included in
accumulated other comprehensive income, are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Balance, end of year, comprised of:
Unrealized investment gains (losses) on:
Fixed maturities........................................ $(35,205) $40,928 $41,706
Equity securities....................................... 3,511 1,191 0
Other................................................... 0 0 22
-------- ------- -------
(31,694) 42,119 41,728
Amounts of unrealized investment gains (losses)
Attributable to:
Deferred policy acquisition costs....................... 17,478 (15,798) (15,202)
Deferred income tax (expense) benefit................... 3,218 (8,882) (9,179)
-------- ------- -------
Balance, end of year........................................ $(10,998) $17,439 $17,347
======== ======= =======
</TABLE>
AA-48
<PAGE> 128
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
3. INVESTMENTS
FIXED MATURITIES AND EQUITY SECURITIES
The amortized cost, gross unrealized gain (loss) and estimated fair value of
fixed maturities and equity securities, by category, are shown below.
AVAILABLE FOR SALE SECURITIES
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ----------------- ESTIMATED
COST GAIN LOSS FAIR VALUE
--------- ------ ------- ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1999
Fixed Maturities:
U.S. Treasury Securities and obligations of U.S.
Government corporations and agencies.................... $ 33,909 $ 20 $ 439 $ 33,490
Foreign governments....................................... 20,748 201 581 20,368
Corporate................................................. 670,602 5,074 40,237 635,439
Mortgage-backed securities................................ 44,470 934 203 45,201
Other..................................................... 1,199 0 0 1,199
-------- ------ ------- --------
Total Fixed Maturities.................................. $770,928 $6,229 $41,460 $735,697
======== ====== ======= ========
Equity Securities:
Common stocks............................................. 19,174 4,191 680 22,685
-------- ------ ------- --------
Total Equity Securities................................. $ 19,174 $4,191 $ 680 $ 22,685
======== ====== ======= ========
</TABLE>
AVAILABLE FOR SALE SECURITIES
<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED ----------------- ESTIMATED
COST GAIN LOSS FAIR VALUE
--------- ------- ------ ----------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
Fixed Maturities:
U.S. Treasury Securities and obligations of U.S.
government corporations and agencies.................... $ 27,260 $ 91 $ 47 $ 27,304
Foreign governments....................................... 1,679 0 0 1,679
Corporate................................................. 644,636 43,036 5,139 682,533
Mortgage-backed securities................................ 55,027 2,821 0 57,848
-------- ------- ------ --------
Total Fixed Maturities.................................. $728,602 $45,948 $5,186 $769,364
======== ======= ====== ========
Equity Securities:
Common stocks............................................. 12,075 1,645 480 13,240
-------- ------- ------ --------
Total Equity Securities................................. $ 12,075 $ 1,645 $ 480 $ 13,240
======== ======= ====== ========
</TABLE>
AA-49
<PAGE> 129
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
The amortized cost and estimated fair value of fixed maturities classified as
available for sale, by contractual maturity, at December 31, 1999 are shown
below.
<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ----------
<S> <C> <C>
Due in one year or less..................................... $ 15,910 $ 15,857
Due after one year through five years....................... 92,303 90,635
Due after five years through ten years...................... 131,438 130,492
Due after ten years......................................... 486,807 453,512
-------- --------
Subtotal................................................ 726,458 690,496
Mortgage-backed securities.................................. 44,470 45,201
-------- --------
Total................................................... $770,928 $735,697
======== ========
</TABLE>
Fixed maturities not due at a single maturity date have been included in the
above tables in the year of final maturity. Actual maturities may differ from
contractual maturities due to the exercise of prepayment options.
Sales of fixed maturities and equity securities are as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------- -------- --------
<S> <C> <C> <C>
Fixed Maturities
Proceeds.................................................. $64,925 $120,416 $110,301
Gross realized gains...................................... $ 1,897 $ 10,901 $ 1,036
Gross realized losses..................................... $ 1,047 $ 2 $ 1,810
Equity Securities
Proceeds.................................................. $ 2,491 $ 39,333 $ 32,806
Gross realized gains...................................... $ 0 $ 0 $ 1,344
Gross realized losses..................................... $ 0 $ 0 $ 304
</TABLE>
Excluding investments in U.S. governments and agencies, the Company is not
exposed to any significant concentration of credit risk in its fixed maturities
portfolio.
ASSETS HELD IN TRUST FOR THE BENEFIT OF OTHER PARTIES
Exeter has deposited in a trust for the benefit of MetLife certain assets for
the purpose of allowing MetLife to record a reserve credit as permitted by
regulations of the State of New York. Under the terms of the Trust Agreement
MetLife enjoys broad powers to withdraw funds from the trust for the payment of
policyholder claims incurred by Exeter under its reinsurance treaty and to
direct the investment of funds held in the trust. The Trust Agreement limits the
types of investments that may be held in trust to cash and certificates of
deposit, U.S. Government bonds and notes and publicly traded securities of U.S.
companies having a National Association of Insurance Commissioners (NAIC) rating
of 1. The bonds and short-term investments at fair market value held by the
trust were $518,436 and $526,723, at December 31, 1999 and 1998, respectively.
STATUTORY DEPOSITS
The Company had assets on deposit with regulatory agencies of $6,245 and $6,245
at December 31, 1999 and 1998, respectively.
4. REINSURANCE AND OTHER INSURANCE TRANSACTIONS
The Company assumes and cedes reinsurance with other insurance companies. The
company continually evaluates the financial condition of its reinsurers and
monitors concentration of credit risk in an effort to minimize its exposure to
AA-50
<PAGE> 130
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
significant losses from reinsurer insolvencies. The Company is contingently
liable with respect to ceded reinsurance should any reinsurer be unable to meet
its obligations under these agreements. The consolidated statements of income
are presented net of reinsurance ceded.
Effective July 1, 1999, the Company reinsured the general account liability for
certain group pension variable contracts assumed from Sun Life Assurance Company
of Canada (U.S.). The initial liability assumed included in Policyholder Account
Balances was $53,675 at July 1, 1999, and was $44,431 at December 31, 1999.
The effect of reinsurance on premiums earned is as follows:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- -------
<S> <C> <C> <C>
Direct premiums............................................. $163,159 $110,768 $30,975
Reinsurance assumed......................................... 57,479 58,329 62,315
Reinsurance ceded........................................... (97,000) (68,408) (29,674)
-------- -------- -------
Net premiums earned......................................... $123,638 $100,689 $63,616
======== ======== =======
</TABLE>
Reinsurance recoverables, included in other receivables, were $83,091 and
$103,677 at December 31, 1999 and 1998, respectively.
Reinsurance and ceded commissions payables, included in other liabilities, were
$23,400 and $21,152 at December 31, 1999 and 1998, respectively.
The following provides an analysis of the activity in the liability for benefits
relating to group accident and nonmedical health policies and contracts:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------
1999 1998 1997
------ ------ ----
<S> <C> <C> <C>
Balance at January 1........................................ $1,953 $ 809 $ 0
Less: Reinsurance recoverables............................ 1,565 647 0
------ ------ ----
Net balance at January 1.................................... 388 162 0
------ ------ ----
Incurred related to:
Current year.............................................. 472 303 173
Prior years............................................... (33) (57) (11)
------ ------ ----
439 246 162
------ ------ ----
Paid related to:
Current year.............................................. 23 2 0
Prior years............................................... 19 18 0
------ ------ ----
42 20 0
------ ------ ----
Balance at December 31...................................... 785 388 162
Add: Reinsurance recoverables............................. 3,147 1,565 647
------ ------ ----
Balance at December 31...................................... $3,932 $1,953 $809
====== ====== ====
</TABLE>
AA-51
<PAGE> 131
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
5. INCOME TAXES
The provision for income tax expense (benefit) in the consolidated statements of
income is shown below:
<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -------
<S> <C> <C> <C>
1999
Federal..................................................... $20,910 $ 8,134 $29,044
State and Local............................................. 0 300 300
------- ------- -------
Total................................................... $20,910 $ 8,434 $29,344
======= ======= =======
1998
Federal..................................................... $13,734 $ (788) $12,946
State and Local............................................. 0 100 100
------- ------- -------
Total................................................... $13,734 $ (688) $13,046
======= ======= =======
1997
Federal..................................................... $ 8,473 $(3,772) $ 4,701
State and Local............................................. 316 (29) 287
------- ------- -------
Total................................................... $ 8,789 $(3,801) $ 4,988
======= ======= =======
</TABLE>
Reconciliations of the income tax provision at the U.S. statutory rate to the
provision for income taxes are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------
1999 1998 1997
------- ------- -------
<S> <C> <C> <C>
Income before taxes......................................... $75,068 $24,483 $26,957
Income tax rate............................................. 35% 35% 35%
------- ------- -------
Expected income tax expense at federal statutory income tax
rate...................................................... 26,274 8,569 9,435
Tax effect of:
Tax exempt investment income.............................. 0 (100) 0
State and local income taxes.............................. 300 100 (1,013)
Tax credits............................................... 0 (100) 0
Prior year taxes.......................................... 684 0 0
Other, net................................................ 2,086 4,577 (3,434)
------- ------- -------
Income Tax Expense.......................................... $29,344 $13,046 $ 4,988
======= ======= =======
</TABLE>
AA-52
<PAGE> 132
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
Deferred income taxes represent the tax effect of the differences between the
book and tax basis of assets and liabilities. Net deferred income tax
liabilities consisted of the following:
<TABLE>
<CAPTION>
1999 1998
--------- ---------
<S> <C> <C>
Deferred tax assets:
Policyholder liabilities.................................. $ 233,504 $ 177,017
Unrealized investment losses, net......................... 3,218 0
Other, net................................................ 15,035 15,453
--------- ---------
Total gross assets...................................... 251,757 192,470
--------- ---------
Deferred tax liabilities:
Investments............................................... (216) (1,068)
Deferred policy acquisition costs......................... (267,249) (208,881)
Unrealized investment gains, net.......................... 0 (8,882)
Other, net................................................ (22,961) (15,973)
--------- ---------
Total gross liabilities................................. (290,426) (234,804)
--------- ---------
Net deferred tax liability................................ $ (38,669) $ (42,334)
========= =========
</TABLE>
6. EMPLOYEE BENEFIT PLANS
Prior to the merger, substantially all employees were employed by NEMLICO and
were covered under the Home Office Retirement Plan and related Select Employees'
Supplemental Retirement Plan (collectively referred to as the Plans). Subsequent
to the merger substantially all of the employees became employees of the Company
and continued to be covered by the Plans, which became the Plans of the Company.
Under the Plans retirement benefits are based primarily on years of service and
the employee's average salary. The Company's funding policy is to contribute
annually an amount that can be deducted for federal income tax purposes using a
different actuarial cost method and different assumptions from those used for
financial reporting purposes.
AA-53
<PAGE> 133
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
-------------------- --------------------
DECEMBER 31,
--------------------------------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation at beginning of
year............................................ $252,487 $210,590 $ 48,987 $ 46,591
Service cost...................................... 8,172 6,927 973 942
Interest cost..................................... 18,488 15,878 3,351 3,267
Actuarial gain.................................... (15,914) 14,831 (3,214) 1,256
Divestitures...................................... 0 0 0 0
Curtailments...................................... 0 0 0 0
Terminations...................................... 0 0 0 0
Change in benefits................................ 0 11,935 0 (10)
Benefits paid..................................... (8,444) (7,674) (3,475) (3,059)
-------- -------- -------- --------
Projected benefit obligation at end of year....... $254,789 $252,487 $ 46,622 $ 48,987
-------- -------- -------- --------
CHANGE IN PLAN ASSETS
Contract value of plan assets at beginning of
year............................................ $184,803 $150,820 $ 0 $ 0
Actual return on plan assets...................... 25,300 28,309 0 0
Employer contribution............................. 7,620 12,997 0 0
Benefits paid..................................... (7,500) (7,323) 0 0
-------- -------- -------- --------
Contract value of plan assets at end of year...... $210,223 $184,803 $ 0 $ 0
-------- -------- -------- --------
Over/(Under) funded............................... $(44,566) $(67,684) $(46,622) $(48,987)
Unrecognized net asset at transition.............. (503) (1,674) 0 0
Unrecognized net actuarial gains.................. 7,681 34,350 (20,068) (17,787)
Unrecognized prior service cost................... 15,942 16,854 (8) (9)
-------- -------- -------- --------
Prepaid (accrued) benefit cost.................... $(21,446) $(18,154) $(66,698) $(66,783)
======== ======== ======== ========
Qualified plan prepaid (accrued) pension cost..... $ (2,675) $ (2,164) $ 0 $ 0
Non-qualified plan prepaid (accrued) pension
cost............................................ (18,771) (15,990) 0 0
-------- -------- -------- --------
Prepaid (accrued) benefit cost.................... $(21,446) $(18,154) $ 0 $ 0
======== ======== ======== ========
</TABLE>
The aggregate projected benefit obligation and aggregate contract value of plan
assets for the pension plans were as follows:
<TABLE>
<CAPTION>
QUALIFIED PLAN NON-QUALIFIED PLAN TOTAL
-------------------- -------------------- --------------------
1999 1998 1999 1998 1999 1998
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Aggregate projected
benefit obligation.... $224,653 $226,717 $ 30,136 $ 25,770 $254,789 $252,487
Aggregate contract value
of plan assets
(principally Company
contracts)............ 210,223 184,803 0 0 210,223 184,803
-------- -------- -------- -------- -------- --------
Over/(Under) funded..... $(14,430) $(41,914) $(30,136) $(25,770) $(44,566) $(67,684)
======== ======== ======== ======== ======== ========
</TABLE>
AA-54
<PAGE> 134
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
The assumptions used in determining the aggregate projected benefit obligation
and aggregate contract value for the pension and other benefits were as follows:
<TABLE>
<CAPTION>
PENSION OTHER
BENEFITS BENEFITS
------------ ------------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average assumptions as of December 31, Discount
rate...................................................... 7.00% 7.25% 7.75% 7.00%
Expected return on plan assets.............................. 8.50% 8.50% -- --
Rate of compensation increase............................... 5.50% 4.50% -- --
</TABLE>
The assumed health care cost trend rate used in measuring the accumulated
nonpension postretirement benefit obligation was generally 7.00% in 1999,
gradually decreasing to 5.00% over five years and generally 7.40% in 1998,
gradually decreasing to 5.00% over five years.
Assumed health care cost trend rates have a significant effect on the amounts
reported for health care plans. A one-percentage point change in assumed health
care cost trend rates would have the following effects:
<TABLE>
<CAPTION>
ONE % ONE %
INCREASE DECREASE
-------- --------
<S> <C> <C>
Effect on total of service and interest cost components..... 13% (10%)
Effect on accumulated postretirement benefit obligation..... 11% (10%)
</TABLE>
The components of periodic benefit costs were as follows:
<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
-------------------------------- --------------------------------
1999 1998 1997 1999 1998 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Service cost.............. $ 8,172 $ 6,927 $ 5,310 $ 973 $ 942 $ 885
Interest cost............. 18,488 15,878 13,958 3,351 3,267 3,707
Expected return on plan
assets.................. (15,698) (12,866) (22,250) 0 0 0
Net amortization and
deferrals............... 1,322 669 11,092 (934) 167 (871)
-------- -------- -------- -------- -------- --------
Net periodic benefit
cost.................... $ 12,284 $ 10,608 $ 8,110 $ 3,390 $ 4,376 $ 3,721
======== ======== ======== ======== ======== ========
</TABLE>
SAVINGS AND INVESTMENT PLANS
The Company sponsors savings and investment plans for substantially all
employees under which the Company matches a portion of employee contributions.
The Company contributed $2,187, $2,252 and $1,588 for the years ended December
31, 1999, 1998 and 1997, respectively.
7. LEASES
In accordance with industry practice, certain of the Company's income from lease
agreements with retail tenants is contingent upon the level of the tenants'
sales revenue. Additionally, the Company, as lessee, has entered into various
AA-55
<PAGE> 135
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
lease and sublease agreements for office space, data processing and other
equipment. Future minimum rental and sub-rental income, and minimum gross rental
payments relating to these lease agreements were as follows:
<TABLE>
<CAPTION>
GROSS
RENTAL SUB-RENTAL RENTAL
INCOME INCOME EXPENSE
-------- ---------- --------
<S> <C> <C> <C>
2000........................................................ $ 31 $ 7,845 $ 14,738
2001........................................................ 0 7,854 14,042
2002........................................................ 0 7,864 13,413
2003........................................................ 0 8,026 13,822
2004........................................................ 0 8,206 12,836
Thereafter.................................................. 0 26,319 117,722
-------- -------- --------
Total................................................... $ 31 $ 66,114 $186,573
======== ======== ========
</TABLE>
8. DEBT
In 1995, the Company borrowed $25,000 from a bank, bearing interest, payable
monthly, at a variable rate equal to the greater of the bank's base rate or
money market rates plus 0.6% per annum. The loan was collateralized by sales
loads and surrender charges collected on a defined block of variable life
insurance policies issued by the Company. Repayment was structured in a manner
to result in repayment over a term of five years or less. The Company repaid the
entire outstanding balance of the loan in January 1999. Repayments of principal
and interest of $13,310, $8,612 and $3,155 were made during 1999, 1998 and 1997,
respectively. The interest rate applied was 6.4%, 6.4% and 5.8% at January 31,
1999 and December 31, 1998 and 1997, respectively.
Exeter privately placed $75,118 aggregate principal amount, subordinated notes
payable (the Notes), on December 30, 1994 which are due December 30, 2004, with
no interest payments for the first five years and semiannual interest payments
thereafter. The Notes have been discounted to yield 8.45% for the first five
years and pay interest at 8.845% thereafter. The Notes are expressly
subordinated in right of payment to the insurance liabilities of Exeter. The
Notes are not subject to redemption by Exeter or through the operation of a
sinking fund prior to maturity. Proceeds of the issuance of the Notes, net of
discount, amounted to $50,000. The issue costs of the Notes of $130 were
deducted from Notes, net of discount, to arrive at the subordinated notes
payable of $49,870. The issue cost will be amortized over the life of the Notes.
The Notes are held by MetLife, and the carrying value of the loan approximates
its fair value of $75,053. No repayments were made during 1999, 1998 and 1997,
respectively.
9. COMMITMENTS AND CONTINGENCIES
Under insurance guaranty fund laws in each state, the District of Columbia and
Puerto Rico, insurers licensed to do business can be assessed by state insurance
guaranty associations for certain obligations of insolvent insurance companies
to policyholders and claimants. Recent regulatory actions against certain large
life insurers encountering financial difficulty have prompted various state
insurance guaranty associations to begin assessing life insurance companies for
the deemed losses. Most of these laws do provide, however, that an assessment
may be excused or deferred if it would threaten an insurer's solvency and
further provide annual limits on such assessments. A large part of the
assessments paid by the Company's insurance subsidiaries pursuant to these laws
may be used as credits for a portion of the Company's premium taxes. The Company
paid guaranty fund assessments of approximately, $197, $204, and $43 in 1999,
1998, and 1997, respectively, of which $197, $203, and $33 were to be credited
against premium taxes.
Various litigation, claims and assessments against the Company, in addition to
those otherwise provided for in the Company's consolidated financial statements,
have arisen in the course of the Company's business, including, but not limited
to, in connection with its activities as an insurer, employer, investor,
investment advisor and taxpayer. Further,
AA-56
<PAGE> 136
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
state insurance regulatory authorities and other Federal and state authorities
regularly make inquiries and conduct investigations concerning the Company's
compliance with applicable insurance and other laws and regulations.
In some of the matters referred to above, large and/or indeterminate amounts,
including punitive damages and treble damages, are sought. While it is not
feasible to predict or determine the ultimate outcome of all pending
investigations and legal proceedings or provide reasonable ranges of potential
losses, it is the opinion of the Company's management that their outcomes, after
consideration of available insurance and reinsurance and the provisions made in
the Company's consolidated financial statements, are not likely to have a
material adverse effect on the Company's consolidated financial position.
However, given the large and/or indeterminate amounts sought in certain of these
matters and the inherent unpredictability of litigation, it is possible that an
adverse outcome in certain matters could, from time to time, have a material
adverse effect on the Company's operating results or cash flows in particular
annual periods.
10. OTHER EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Compensation................................................ $ 96,887 $ 86,822 $ 58,754
Commissions................................................. 205,463 166,218 77,351
Interest and debt expense................................... 5,493 9,374 6,750
Amortization of policy acquisition costs.................... 29,831 31,874 17,091
Capitalization of policy acquisition costs.................. (216,913) (182,943) (157,670)
Rent expense, net of sub-lease income....................... 5,550 4,252 4,473
Insurance taxes, licenses, and fees......................... 21,253 21,802 15,002
Other....................................................... 234,317 179,260 122,591
--------- --------- ---------
Total................................................... $ 381,881 $ 316,659 $ 144,342
========= ========= =========
</TABLE>
11. FAIR VALUE INFORMATION
The estimated fair value amounts of financial instruments have been determined
by using available market information and the valuation methodologies described
below. Considerable judgment is often required in interpreting market data to
develop estimates of fair value. Accordingly, the estimates presented herein may
not necessarily be indicative of amounts that could be realized in a current
market exchange. The use of different assumptions or valuation methodologies may
have a material effect on the estimated fair value amounts.
AA-57
<PAGE> 137
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
Amounts related to the Company's financial instruments are as follows:
<TABLE>
<CAPTION>
CARRYING ESTIMATED
VALUE FAIR VALUE
-------- ----------
<S> <C> <C>
DECEMBER 31, 1999:
ASSETS
Fixed maturities............................................ $735,697 $735,697
Equity securities........................................... 22,685 22,685
Policy loans................................................ 181,995 181,995
Short-term investments...................................... 62,619 62,619
Cash and cash equivalents................................... 84,371 84,371
LIABILITIES
Policyholder account balances............................... 84,037 82,765
Other policyholder funds.................................... 525 525
Short and long-term debt.................................... 75,053 75,053
</TABLE>
<TABLE>
<CAPTION>
CARRYING ESTIMATED
VALUE FAIR VALUE
-------- ----------
<S> <C> <C>
DECEMBER 31, 1998:
ASSETS
Fixed maturities............................................ $769,364 $769,364
Equity securities........................................... 13,240 13,240
Policy loans................................................ 135,800 135,800
Short-term investments...................................... 52,285 52,285
Cash and cash equivalents................................... 43,598 43,598
LIABILITIES
Policyholder account balances............................... 23,365 22,524
Other policyholder funds.................................... 646 646
Short and long-term debt.................................... 82,855 82,855
</TABLE>
The methods and assumptions used to estimate the fair values of financial
instruments are summarized as follows:
FIXED MATURITIES AND EQUITY SECURITIES
The fair value of fixed maturities and equity securities that are publicly
traded are based upon quotations obtained from an independent market pricing
service or published by applicable stock exchanges. For securities for which the
market values were not readily available, fair values were estimated by
management, based primarily on interest rates, maturity, credit quality and
average life.
POLICY LOANS
Policy loans are stated at unpaid principal balances, which approximates fair
value.
CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS
The carrying values for cash and cash equivalents and short-term investments
approximated fair market values due to the short-term maturities of these
instruments.
POLICYHOLDER ACCOUNT BALANCES
The fair value of policyholder account balances are estimated by discounting
expected future cash flows, based on interest rates currently being offered for
similar contracts with maturities consistent with those remaining for the
AA-58
<PAGE> 138
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
contracts being valued. Other policyholder funds include liabilities without
defined durations such as policy proceeds and dividends left with the Company.
The estimated fair value of such liabilities, which generally are of short
duration or have periodic adjustments of interest rates, approximates their
carrying value.
SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt are stated at unpaid principal balances, which
approximates fair value.
12. STATUTORY FINANCIAL INFORMATION
The reconciliation of statutory surplus and statutory net income, determined in
accordance with accounting practices prescribed or permitted by insurance
regulatory authorities with such amounts determined in conformity with generally
accepted accounting principles were as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
Statutory surplus........................................... $399,864 $456,525 $307,290
Adjustments to GAAP for:
Future policy benefits and policyholders account
balances................................................ (435,980) (336,821) (279,510)
Deferred policy acquisition costs......................... 930,703 710,961 565,769
Deferred federal income taxes............................. (38,669) (42,334) (42,066)
Valuation of investments.................................. (46,890) 53,514 56,873
Statutory asset valuation reserves........................ 13,514 10,636 8,388
Statutory interest maintenance reserve.................... 462 816 571
Surplus notes............................................. (75,053) (69,560) (64,016)
Receivables from reinsurance transactions................. 5,049 26,004 27,519
Other, net................................................ 100,303 35,330 52,724
-------- -------- --------
GAAP equity................................................. $853,303 $845,071 $633,542
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
Statutory net income (loss)................................. $ (40,928) $ (28,043) $ (37,358)
Adjustments to GAAP for:
Future policy benefits and policyholders account
balances................................................ (295,868) (196,754) (311,588)
Deferred policy acquisition costs......................... 186,497 135,788 139,947
Deferred federal income taxes............................. (580) 688 3,801
Valuation of investments.................................. 13,681 (13,490) 0
Statutory interest maintenance reserve.................... (354) 245 342
Other, net................................................ 183,276 113,003 226,825
--------- --------- ---------
GAAP net income............................................. $ 45,724 $ 11,437 $ 21,969
========= ========= =========
</TABLE>
13. RELATED PARTY TRANSACTIONS
MetLife and the Company have entered into an Administrative Services Agreement
to provide all administrative, accounting, legal and similar services to MetLife
for certain administered contracts, which are life insurance and annuity
contracts issued by NEMLICO prior to the merger, and those policies and
contracts defined in the Administrative Services Agreement as Transition
Policies which were sold by the Company's field force post-merger.
The Company charged MetLife $160,792, $193,641 and $186,757 including accruals
for administrative services on NEMLICO administered contracts for 1999, 1998,
and 1997, respectively. In addition, $9,442, $14,123 and
AA-59
<PAGE> 139
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
$600 for 1999, 1998 and 1997, respectively, was paid or payable by MetLife to
the Company for varied and miscellaneous other services. These services were
charged based upon direct costs incurred. Service fees are recorded by NELICO as
a reduction in operating expenses.
On December 30, 1998 the Company sold to MetLife Credit Corporation shares of
preferred stock for $200,000. In 1997, MetLife made a capital contribution to
the Company of $50,000 in cash.
During 1999, the Company paid $9,055 of preferred stock dividends to MetLife
Credit Corporation.
On April 30, 1998 the Company acquired all the outstanding stock of N.L. Holding
Corporation and its subsidiaries, and concurrently contributed such stock to the
Company's downstream holding company, New England Life Holding Inc. In
conjunction with the acquisition, the Company entered into employment agreements
with key individuals of N.L. Holding Corporation. The Company paid $2,730 and
$6,166 in 1999 and 1998, respectively under these agreements.
The Company entered into a lease agreement with MetLife on August 30, 1996 for
the home-office building that it occupies on 501 Boylston Street in Boston,
Massachusetts. The Company paid lease payments to MetLife of $4,219, $2,340 and
$2,340 in 1999, 1998 and 1997, respectively.
Commissions earned by NES from sales of New England Funds (NEF) and State Street
Research (SSR) shares, subsidiaries of MetLife, for 1999 were $12,736 and $751,
respectively. Included in accrued income at December 31, 1999, were amounts
receivable for sales-based commissions from NEF and SSR totaling $312 and $4,
respectively. In 1999, NES earned asset-based income of $11,184 and $183 on
average assets of approximately $4,500,000 and $101,000 under management with
NEF and SSR, respectively. Included in accrued income at December 31, 1999 were
amounts receivable for asset-based commissions from NEF and SSR totaling $307
and $0, respectively.
Commissions earned by NES from sales of New England Funds (NEF) and State Street
Research (SSR) shares, subsidiaries of MetLife, for 1998 were $15,204 and
$1,159, respectively. Included in accrued income at December 31, 1998, were
amounts receivable for sales-based commissions from NEF and SSR totaling $385
and $14, respectively. In 1998, NES earned asset-based income of $9,193 and $139
on average assets of approximately $4,300,000 and $77,000 under management with
NEF and SSR, respectively. Included in accrued income at December 31, 1998 were
amounts receivable for asset-based commissions from NEF and SSR totaling $593
and $13, respectively.
Commissions earned by NES from sales of New England Funds (NEF) and State Street
Research (SSR) shares, subsidiaries of MetLife, for 1997 were $16,799 and
$1,127, respectively. Included in accrued income at December 31, 1997, were
amounts receivable for sales-based commissions from NEF and SSR totaling $233
and $13, respectively. In 1997, NES earned asset-based income of $8,777 and $61
on average assets of approximately $3,900,000 and $33,000 under management with
NEF and SSR, respectively.
Exeter has a privately-placed subordinated notes payable to MetLife for $75,053
and $69,560 at December 31, 1999 and 1998, respectively.
Stockholder dividends or other distributions proposed to be paid by NELICO must
be approved by the Massachusetts Commissioner of Insurance if such dividends or
distributions, together with other dividends or distributions made within the
preceding 12 months, exceeds the greater of (1) 10% of NELICO's statutory
surplus as regards policyholders as of the previous December 31, or (2) NELICO's
statutory net gain from operations for the 12 month period ending the previous
December 31.
Of the statutory profits earned by NELICO on participating policies and
contracts, the portion which shall inure to the benefit of NELICO's stockholder
shall not exceed the larger of (1) 10% of such statutory profits, or (2) fifty
cents per year per thousand dollars of participating life insurance other than
group term insurance in force at the end of the year.
AA-60
<PAGE> 140
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
14. SEPARATE ACCOUNTS
Separate accounts reflect non-guaranteed separate accounts totaling $4,840,029
and $3,258,383 at December 31, 1999 and 1998, respectively, wherein the
policyholder assumes the investment risk.
Fees charged to the separate accounts by the Company (including mortality
charges, policy administration fees and surrender charges) are reflected in the
Company's revenues as universal life and investment-type product policy fees
totaling $36,934, $30,714 and $12,642 in 1999, 1998 and 1997, respectively.
15. YEAR 2000
The Year 2000 issue was the result of the widespread use of computer programs
written using two digits (rather than four) to define the applicable year. Such
programming was a common industry practice designed to avoid the significant
costs associated with additional mainframe capacity necessary to accommodate a
four-digit field. As a result, any of the Company's computer systems that have
time-sensitive software may recognize a date using "00" as the year 1900 rather
than the year 2000. This could result in major system failures or
miscalculations. The Company has conducted a comprehensive review of its
computer systems to identify the systems that could be affected by the Year 2000
issue and has implemented a plan to resolve the issue. There can be no
assurances that the Year 2000 plan of the Company or that of its vendors or
third parties have resolved all Year 2000 issues. Further, there can be no
assurance that there will not be any future system failure or that such failure,
if any, will not have a material impact on the operations of the Company.
16. BUSINESS SEGMENT INFORMATION
The Company provides insurance and financial services to customers primarily in
the United States. The Company's core businesses are divided into five segments:
Individual Life, Individual Annuity, Group Pension, Group Accident and Health,
and Corporate. These segments are managed separately because they either provide
different products and services, require different strategies, or have different
technology requirements.
Individual Life sells primarily variable life as well as traditional life
policies. Individual Annuity sells a variety of fixed annuity and variable
annuity contracts. Group Pension sells a variety of group annuity and pension
contracts to corporations and other institutions. Group Accident and Health
provides group life, medical, and disability contracts to corporations and small
businesses. Through its Corporate segment, the Company reports the operating
results of subsidiaries as well as items that are not allocated to any of the
business segments.
Set forth in the following tables is certain financial information with respect
to the Company's operating segments for the years ended December 31, 1999, 1998
and 1997. The accounting policies of the segments are the same as those
described in the summary of significant accounting policies. The Company
evaluates the performance of each operating segment based on profit or loss from
operations after income taxes. The Company does not allocate non-recurring items
to the segments.
Allocation of net investment income and investment gains (losses), net were
based on the amount of assets allocated to each segment. Other costs and
operating costs were allocated to each of the segments based on: (i) a review of
the nature of such costs, (ii) time studies analyzing the amount of employee
compensation costs incurred by each segment, and (iii) cost estimates included
in the Company's product pricing.
AA-61
<PAGE> 141
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------------------------------------------------------
CORPORATE
INDIVIDUAL INDIVIDUAL GROUP GROUP AND
LIFE ANNUITY PENSION LIFE A&H SUBSIDIARIES TOTAL
---------- ---------- -------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums........................... $ 63,358 $ 0 $ 15 $ 28,652 $ 31,613 $ 123,638
Universal Life and Investment-Type
Product Policy Fees.............. 199,701 16,771 4,369 0 0 220,841
Net Investment Income.............. (31,181) (108) (13) 167 99,633 68,498
Investment Gains (Losses), Net..... 402 1 0 (1) 2,520 2,922
Commissions, Fees and Other
Revenues......................... 25,376 6,708 3,005 34,610 196,192 265,891
---------- ---------- -------- -------- -------- ----------
Total Revenues................. 257,656 23,372 7,376 63,428 329,958 681,790
BENEFITS AND OTHER DEDUCTIONS
Policyholder Benefits.............. 124,727 4,624 113 23,814 40,015 193,293
Interest Credited to Policyholder
Account Balances................. 8,811 1,623 1,220 30 (963) 10,721
Policyholder Dividends............. 1,739 0 0 (32) 19,120 20,827
Other Operating Costs and
Expenses......................... 128,466 21,826 6,196 36,326 189,067 381,881
---------- ---------- -------- -------- -------- ----------
Total Benefits and Other
Deductions................... 263,743 28,073 7,529 60,138 247,239 606,722
Income from Operations Before
Income Taxes..................... (6,087) (4,701) (153) 3,290 82,719 75,068
Income Taxes....................... 1,357 (1,563) (26) 1,244 28,332 29,344
---------- ---------- -------- -------- -------- ----------
Net Income..................... $ (7,444) $ (3,138) $ (127) $ 2,046 $ 54,387 $ 45,724
========== ========== ======== ======== ======== ==========
Assets
Deferred Policy Acquisition
Costs............................ $ 771,879 $ 63,123 $ 10,499 $ 8,539 $ 76,663 $ 930,703
Separate Account Assets............ 2,704,767 1,398,993 517,920 218,349 0 4,840,029
Liabilities
Policyholder Liabilities........... 535,662 43,674 45,407 43,936 517,949 1,186,628
Separate Account Liabilities....... 2,704,767 1,398,993 517,920 218,349 0 4,840,029
</TABLE>
AA-62
<PAGE> 142
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
<TABLE>
<CAPTION>
DECEMBER 31, 1998
-------------------------------------------------------------------------
CORPORATE
INDIVIDUAL INDIVIDUAL GROUP GROUP AND
LIFE ANNUITY PENSION LIFE A&H SUBSIDIARIES TOTAL
---------- ---------- -------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums........................... $ 48,733 $ 31 $ 417 $ 21,394 $ 30,114 $ 100,689
Universal Life and Investment-Type
Product Policy Fees.............. 161,936 9,332 2,788 (290) 0 173,766
Net Investment Income.............. (22,496) (1,752) (405) 651 73,079 49,077
Investment Gains (Losses), Net..... (182) (7) (4) 17 5,786 5,610
Commissions, Fees and Other
Revenues......................... 9,408 6,042 1,118 20,430 155,413 192,411
---------- -------- -------- -------- -------- ----------
Total Revenues................. 197,399 13,646 3,914 42,202 264,392 521,553
BENEFITS AND OTHER DEDUCTIONS
Policyholder Benefits.............. 84,709 3,943 874 13,561 46,600 149,687
Interest Credited to Policyholder
Account Balances................. 6,337 1,264 83 0 51 7,735
Policyholder Dividends............. 1,135 4 0 3 21,847 22,989
Other Operating Costs and
Expenses......................... 103,284 14,324 3,617 15,731 179,703 316,659
---------- -------- -------- -------- -------- ----------
Total Benefits and Other
Deductions................... 195,465 19,535 4,574 29,295 248,201 497,070
Income from Operations Before
Income Taxes..................... 1,934 (5,889) (660) 12,907 16,191 24,483
Income Taxes....................... 9,968 (402) (423) 3,986 (83) 13,046
---------- -------- -------- -------- -------- ----------
Net Income..................... $ (8,034) $ (5,487) $ (237) $ 8,921 $ 16,274 $ 11,437
========== ======== ======== ======== ======== ==========
Assets
Deferred Policy Acquisition
Costs............................ $ 616,959 $ 42,524 $ 2,359 $ 2,511 $ 46,608 $ 710,961
Separate Account Assets............ 2,073,552 835,648 235,467 113,716 0 3,258,383
Liabilities
Policyholder Liabilities........... 380,586 38,912 768 19,233 519,353 958,852
Separate Account Liabilities....... 2,073,552 835,648 235,467 113,716 0 3,258,383
</TABLE>
AA-63
<PAGE> 143
NEW ENGLAND LIFE INSURANCE COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(DOLLAR AMOUNTS ARE IN THOUSANDS UNLESS OTHERWISE STATED.)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------------------------------------------------
CORPORATE
INDIVIDUAL INDIVIDUAL GROUP GROUP AND
LIFE ANNUITY PENSION LIFE A&H SUBSIDIARIES TOTAL
---------- ---------- -------- -------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums.............................. $ 27,200 $ 31 $ 0 $ 3,743 $ 32,642 $ 63,616
Universal Life and Investment-Type
Product Policy Fees................. 139,235 4,732 486 704 0 145,157
Net Investment Income................. 31,905 (270) (20) (118) 29,562 61,059
Investment Gains (Losses), Net........ 523 0 0 0 367 890
Commissions, Fees and Other
Revenues............................ 9,542 3,253 266 4,383 10,858 28,302
---------- -------- -------- ------- -------- ----------
Total Revenues.................... 208,405 7,746 732 8,712 73,429 299,024
BENEFITS AND OTHER DEDUCTIONS
Policyholder Benefits................. 71,010 3,431 0 3,827 21,912 100,180
Interest Credited to Policyholder
Account Balances.................... 5,371 664 149 0 36 6,220
Policyholder Dividends................ 507 1 0 0 20,817 21,325
Other Operating Costs and Expenses.... 98,664 10,777 2,092 6,745 26,064 144,342
---------- -------- -------- ------- -------- ----------
Total Benefits and Other
Deductions...................... 175,552 14,873 2,241 10,572 68,829 272,067
Income from Operations Before Income
Taxes............................... 32,853 (7,127) (1,509) (1,860) 4,600 26,957
Income Taxes.......................... 2,701 (1,203) (504) (447) 4,441 4,988
---------- -------- -------- ------- -------- ----------
Net Income........................ $ 30,152 $ (5,924) $ (1,005) $(1,413) $ 159 $ 21,969
========== ======== ======== ======= ======== ==========
Assets
Deferred Policy Acquisition Costs..... $ 498,208 $ 24,226 $ 1,347 $ 877 $ 41,111 $ 565,769
Separate Account Assets............... 1,426,347 450,441 111,437 0 0 1,988,225
Liabilities
Policyholder Liabilities.............. 258,880 20,476 197 6,398 463,269 749,220
Separate Account Liabilities.......... 1,426,347 450,441 111,437 0 0 1,988,225
</TABLE>
Revenues derived from any single customer do not exceed 10% of the total
consolidated revenues for the years presented. Revenues were predominantly
generated from United States activity. Activity from other geographic locations
did not exceed 10% for any geographic location.
AA-64
<PAGE> 144
NEW ENGLAND LIFE INSURANCE COMPANY
501 BOYLSTON STREET
BOSTON, MA 02116
RECEIPT
This is to acknowledge receipt of a Zenith Flexible Life I Prospectus dated
November 13, 2000. This Variable Life Policy is offered by New England Life
Insurance Company.
<TABLE>
<S> <C>
----------------------------------------------------- -----------------------------------------------------
(Date) (Client's Signature)
</TABLE>
<PAGE> 145
Part II
UNDERTAKING TO FILE REPORTS
Subject to the terms and conditions of Section 15(d) of the Securities
Exchange Act of 1934, the undersigned Registrant hereby undertakes to file with
the Securities and Exchange Commission such supplementary and periodic
information, documents, and reports as may be prescribed by any rule or
regulation of the Commission heretofore or hereafter duly adopted pursuant to
authority conferred in that section.
RULE 484 UNDERTAKING
Section 9 of NELICO's By-Laws provides that NELICO shall, to the extent
legally permissible, indemnify its directors and officers against liabilities
and expenses relating to lawsuits and proceedings based on such persons' roles
as directors or officers. However, Section 9 further provides that no such
indemnification shall be made with respect to any matter as to which a director
or officer is adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the corporation. Section 9
also provides that in the event a matter is disposed of by a settlement payment
by a director or officer, indemnification will be provided only if the
settlement is approved as in the best interest of the corporation by (a) a
disinterested majority of the directors then in office, (b) a majority of the
disinterested directors then in office, or (c) the holders of a majority of
outstanding voting stock (exclusive of any stock owned by any interested
director or officer).
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
NELICO pursuant to the foregoing provisions, or otherwise, NELICO has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification may be against public policy as expressed in the Act and may be,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than payment by NELICO of expenses incurred or paid by a
director, officer, or controlling person of NELICO 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, NELICO
will, unless in the opinion of its 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.
II - 1
<PAGE> 146
REPRESENTATIONS
New England Life Insurance Company hereby represents that the fees and
charges deducted under the flexible premium adjustable variable life insurance
policies 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 New England Life Insurance Company.
CONTENTS OF REGISTRATION STATEMENT
This Registration Statement comprises the following papers and
documents:
The facing sheet.
A reconciliation and tie-in of the information shown in the prospectus
with the items of Form N-8B-2.
The prospectuses and supplements consisting of 343 pages.
The undertaking to file reports.
The undertaking pursuant to Rule 484(b) under the Securities Act of
1933.
Representations.
The signatures.
Written consents of the following persons:
Anne M. Goggin, Esq. (see Exhibit 3(iii) below)
James J. Reilly, Jr., F.S.A., M.A.A.A.
(see Exhibit 3(ii) below)
Sutherland Asbill & Brennan LLP (see Exhibit 6 below)
Independent Auditor (see Exhibit 11 below)
The following exhibits:
1.A.(1) January 31, 1983 resolution of the Board of Directors
of NEVLICO**
(2) None
(3)(a) Distribution Agreement between NEVLICO and NELESCO***
(b)(i) Form of Contract between NELICO and its General Agents**
II - 2
<PAGE> 147
(ii) Form of contract between NELICO and its Agents***
(c) Commission Schedule for Policies@@@@@
(d) Form of contract among NES, NELICO and other broker
dealers*
(4) None
(5)(a) Specimen of Policy+
(b) Additional Specimen of Policy@@@@@
(c) Riders and Endorsements+
(d) Temporary Term Rider+++
(e) Exclusion from Benefits Riders@
(f) Endorsement- Unisex rates**
(g) Extended Maturity Rider@@
(h) Additional Extended Maturity Endorsement, Level Term
Rider and Change Endorsement@@@@@
(6)(a) Amended and restated Articles of Organization of
NELICO##
(b) Amended and restated By-Laws of NELICO*
(c) Amendments to Amended and restated Articles of
Organization++++
(7) None
(8) None
(9) None
(10)(a) Specimens of Application for Policy+
(b) Additional Application for Policy+++
2. See Exhibit 3(i)
3.(i) Opinion and Consent of H. James Wilson, Esquire#
(ii) Opinion and Consent of James J. Reilly, Jr., F.S.A.,
M.A.A.A.
(iii) Opinion and Consent of Anne M. Goggin, Esquire
4. None
5. Inapplicable
6. Consent of Sutherland Asbill & Brennan LLP
7.(i) Powers of Attorney##
(ii) Powers of Attorney of James M. Benson, Robert H.
Benmosche and Catherine A. Rein++
(iii) Power of Attorney for David Rogers@@@
8. Notice of Withdrawal Right for Policies#
9. Inapplicable
10. Inapplicable
11. Consent of Independent Auditors
12. Schedule for computation of performance quotations***
13.(i) Consolidated memorandum describing certain procedures,
filed pursuant to Rule 6e-2(b)(12)(ii)and Rule
6e-3(T)(b)(12)(iii)***
II - 3
<PAGE> 148
(ii) Second Addendum to Consolidated Memorandum+++++
14.(i) Participation Agreement among Variable Insurance
Products Fund, Fidelity Distributors Corporation and
New England Variable Life Insurance Company***
(ii) Amendment No. 1 to Participation Agreement among
Variable Insurance Products Fund, Fidelity Distributors
Corporation and New England Variable Life Insurance
Company#
(iii) Participation Agreement among Variable Insurance
Products Fund II, Fidelity Distributors Corporation and
New England Variable Life Insurance Company#
(iv) Form of Participation Agreement among Metropolitan
Series Fund, Inc., Metropolitan Life Insurance Company
and New England Life Insurance Company@@@@
(v) Participation Agreement among Metropolitan Series Fund,
Inc., Metropolitan Life Insurance Company and New
England Life Insurance Company
(vi) Participation Agreement among New England Zenith Fund,
New England Investment Management, Inc., New England
Securities Corporation and New England Life Insurance
Company
# Incorporated herein by reference to Pre-Effective Amendment No. 1 to
the Variable Account's Form S-6 Registration Statement, File No.
33-88082, filed June 22, 1995.
## Incorporated herein by reference to the Variable Account's Form S-6
Registration Statement, File No. 333-21767, filed February 13, 1997.
* Incorporated herein by reference to the Pre-effective Amendment No.
1 to the Variable Account's Form S-6 Registration Statement, File
No. 333-21767, filed July 16, 1997.
** Incorporated herein by reference to Post-Effective Amendment No. 9
to the Variable Account's Form S-6 Registration Statement, File No.
33-66864, filed February 25, 1998.
*** Incorporated herein by reference to Post-Effective Amendment No. 9
to the Variable Account's Form S-6 Registration Statement, File No.
33-52050, filed April 24, 1998.
II - 4
<PAGE> 149
+ Incorporated herein by reference to Post-Effective Amendment No. 3
to the Variable Account's Form S-6 Registration Statement, File No.
33-88082, filed April 24, 1998.
++ Incorporated herein by reference to Pre-Effective Amendment No. 1 to
the Variable Account's Form S-6 Registration Statement, File No.
333-46401, filed July 9, 1998.
+++ Incorporated herein by reference to Post-Effective Amendment No. 4
to the Variable Account's Form S-6 Registration Statement, File No.
33-88082, filed January 20, 1999.
++++ Incorporated herein by reference to the Post-Effective Amendment
No.4 to the Variable Account's Form S-6 Registration Statement, File
No. 33-65263, filed February 24, 1999.
+++++ Incorporated herein by reference to the Post-Effective Amendment
No.10 to the Variable Account's Form S-6 Registration Statement,
File No. 33-52050, filed April 26, 1999.
@ Incorporated herein by reference to the Post-Effective Amendment
No.6 to the Variable Account's Form S-6 Registration Statement, File
No. 33-88082, filed April 27, 1999.
@@ Incorporated herein by reference to the Post-Effective Amendment
No.7 to the Variable Account's Form S-6 Registration Statement, File
No. 33-88082, filed February 29, 2000.
@@@ Incorporated herein by reference to Post-Effective Amendment No. 11
to the Variable Account's Form S-6 Registration Statement, File No.
33-52050, filed April 26, 2000.
@@@@ Incorporated herein by reference to Post-Effective Amendment No. 26
to the Metropolitan Series Fund, Inc. Registration Statement on Form
N-1A (File No. 2-80751) filed April 6, 2000.
@@@@@ Incorporated herein by reference to the Post-Effective Amendment
No.9 to the Variable Account's Form S-6 Registration Statement, File
No. 33-88082, filed August 18, 2000.
II - 5
<PAGE> 150
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant, New England Variable Life Separate Account, certifies that it meets
all of the requirements for effectiveness of this amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has duly
caused this amendment to the Registration Statement to be signed on its behalf
by the undersigned thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in the city of Boston, and the Commonwealth of
Massachusetts, on the 9th day of November, 2000.
New England Variable Life Separate Account
(Registrant)
By: New England Life Insurance Company
(Depositor)
By: /s/ Anne M. Goggin
-----------------------------------
Anne M. Goggin
Senior Vice President and
General Counsel
Attest:
/s/ Michele H. Abate
------------------------------------
Michele H. Abate
<PAGE> 151
Pursuant to the requirements of the Securities Act of 1933, New England
Life Insurance Company certifies that it meets all of the requirements for
effectiveness of this amendment to the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this amendment to
the Registration Statement to be signed on its behalf by the undersigned
thereunto duly authorized, and its seal to be hereunto affixed and attested, all
in the city of Boston, and the Commonwealth of Massachusetts, on the 9th day of
November, 2000.
New England Life Insurance Company
(Seal)
Attest: /s/Michele H. Abate By: /s/ Anne M. Goggin
------------------- ---------------------------
Michele H. Abate Anne M. Goggin
Senior Vice President
And General Counsel
Pursuant to the requirements of the Securities Act of 1933, this
Amendment to the Registration Statement has been signed below by the following
persons in the capacities indicated on November 9, 2000.
<TABLE>
<S> <C>
* Chairman, President and
---------------------- Chief Executive Officer
James M. Benson
* Director
----------------------
Susan C. Crampton
* Director
----------------------
Edward A. Fox
* Director
----------------------
George J. Goodman
* Director
----------------------
Evelyn E. Handler
* Director
----------------------
Philip K. Howard, Esq.
* Director
----------------------
Bernard A. Leventhal
* Director
----------------------
Thomas J. May
* Director
----------------------
Stewart G. Nagler
</TABLE>
<PAGE> 152
<TABLE>
<S> <C>
* Director
----------------------
Catherine A. Rein
* Executive Vice President,
---------------------- Chief Financial Officer and
David Y. Rogers Chief Accounting Officer
* Director
----------------------
Rand N. Stowell
Director
----------------------
Lisa M. Weber
By: /s/ Marie C. Swift
-----------------------
Marie C. Swift, Esq.
Attorney-in-fact
</TABLE>
* Executed by Marie C. Swift, Esquire on behalf of those indicated
pursuant to powers of attorney filed with the Variable Account's Form
S-6 Registration Statement, File No. 333-21767, on February 13, 1997,
Pre-Effective Amendment No. 1 to the Variable Account's Form S-6
Registration Statement, File No. 333-46401, on July 9, 1998,
Post-Effective Amendment No. 4 to the Variable Account's Form S-6
Registration Statement, File No. 33-88082, on January 20, 1999 and
Post-Effective Amendment No. 11 to the Variable Account's Form S-6
Registration Statement, File No. 33-52050, on April 26, 2000.
<PAGE> 153
EXHIBIT LIST
<TABLE>
<CAPTION>
Sequentially
Exhibit Number Title Numbered Page*
-------------- ----- --------------
<S> <C> <C>
3. (ii) Opinion and Consent of James J. Reilly, Jr.,
F.S.A., M.A.A.A.
3. (iii) Opinion and Consent of Anne M. Goggin,
Esquire
6. Consent of Sutherland Asbill & Brennan LLP
11. Consent of the Independent Auditors
14. (v) Participation Agreement among Metropolitan
Series Fund, Inc., Metropolitan Life
Insurance Company and New England Life
Insurance Company
14. (vi) Participation Agreement among New England
Zenith Fund, New England Investment
Management, Inc., New England Securities
Corporation and New England Life Insurance
Company
</TABLE>
---------
* Page numbers inserted on manually-signed copy only.
