<PAGE> 1
Registration No. 333-72913
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933 / /
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 2 /X/
---
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940 / /
Amendment No. / /
---
(Check appropriate box or boxes.)
NML VARIABLE ANNUITY ACCOUNT A
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(Exact Name of Registrant)
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
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(Name of Depositor)
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
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(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, including Area Code 414-271-1444
---------------
JOHN M. BREMER, Executive Vice President, General Counsel and Secretary
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective (check appropriate space)
immediately upon filing pursuant to paragraph (b) of Rule 485
---
X on March 31, 2000 pursuant to paragraph (b) of Rule 485
---
60 days after filing pursuant to paragraph (a)(1) of Rule 485
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on (DATE) pursuant to paragraph (a)(1) of Rule 485
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this post-effective amendment designates a new effective date
--- for a previously filed post-effective amendment.
<PAGE> 2
NML VARIABLE ANNUITY ACCOUNT A
CROSS-REFERENCE SHEET
<TABLE>
<CAPTION>
N-4, Part A Heading in
Item Prospectus
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<S> <C>
1 .................................................. Cover Page
2 .................................................. Index of Special Terms
3 .................................................. Expense Table
4 .................................................. Accumulation Unit Values, Financial Statements
5 .................................................. The Company, NML Variable Annuity Account A, The Funds
6 .................................................. Deductions, Distribution of the Contracts
7 .................................................. The Contracts, Owners of the Contracts, Application of Purchase
Payments, Transfers Between Divisions and Payment Plans, Substitution
and Change
8 .................................................. Variable Payment Plans, Description of Payment Plans, Amount of
Annuity Payments, Maturity Benefit, Assumed Investment Rate,
Transfers Between Divisions and Payment Plans
9 .................................................. Death Benefit
10 .................................................. Amount and Frequency, Application of Purchase Payments, Net
Investment Factor, Distribution of the Contracts
11 .................................................. Withdrawal Amount, Deferment of Benefit Payments, Right to Examine
Contract
12 .................................................. Federal Income Taxes
13 .................................................. Not Applicable
14 .................................................. Table of Contents for Statement of Additional Information
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<CAPTION>
N-4, Part B Heading in Statement
Item of Additional Information
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<S> <C>
15 .................................................. Cover Page
16 .................................................. Table of Contents
17 .................................................. Not Applicable
18 .................................................. Experts
19 .................................................. Not Applicable
20 .................................................. Distribution of the Contracts
21 .................................................. Not Applicable
22 .................................................. Determination of Annuity Payments
23 .................................................. Financial Statements
</TABLE>
<PAGE> 3
PROSPECTUSES
March 31, 2000
[NORTHWESTERN MUTUAL LIFE(R) LOGO]
The Quiet Company(R)
NML VARIABLE ANNUITY ACCOUNT A
Individual Variable Annuity Contracts for Retirement
Plans of Self-Employed Persons and Their Employees
[PHOTO]
Northwestern Mutual Series Fund, Inc. and
Russell Insurance Funds
The Northwestern Mutual
Life Insurance Company
720 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
(414) 271-1444
<PAGE> 4
[NORTHWESTERN MUTUAL LIFE(R) LOGO]
March 31, 2000
PROFILE OF THE VARIABLE ANNUITY CONTRACT
This Profile is a summary of some of the more important points that you should
consider and know before purchasing the Contract. We describe the Contract more
fully in the prospectus which accompanies this Profile. Please read the
prospectus carefully.
1. THE ANNUITY CONTRACT The Contract provides retirement annuity benefits for
self-employed individuals (and their eligible employees). The Contract will
invest on a tax-deferred basis in your choice of sixteen investment portfolios.
The Contract also allows investment on a fixed basis in a guaranteed account.
The Contract is intended for retirement savings or other long-term investment
purposes. The Contract provides for a death benefit during the years when funds
are being accumulated and for a variety of income options following retirement.
The sixteen investment portfolios are listed in Section 4 below. These
portfolios bear varying amounts of investment risk. Those with more risk are
designed to produce a better long-term return than those with less risk. But
this is not guaranteed. You can also lose your money.
The amounts you invest on a fixed basis earn interest at a rate we declare from
time to time. We guarantee principal and we guarantee the interest rate for each
amount for at least one year.
You may invest in any or all of the sixteen investment portfolios. You may
move money among these portfolios without charge up to 12 times per year. After
that, a charge of $25 may apply. Transfers of amounts invested on a fixed basis
are subject to restrictions.
During the years when funds are being paid into your Contract, known as the
accumulation phase, the earnings accumulate on a tax-deferred basis. The
earnings are taxed as income if you make a withdrawal. The income phase begins
when you start receiving annuity payments from your Contract, usually at
retirement. Monthly annuity payments begin on the date you select.
The amount you accumulate in your Contract, including the results of
investment performance, will determine the amount of your monthly annuity
payments.
2. ANNUITY PAYMENTS If you decide to begin receiving monthly annuity payments
from your Contract, you may choose one of three payment plans: (1) monthly
payments for a specified period of five to thirty years, as you select, (2)
monthly payments for your life (assuming you are the annuitant), and you may
choose to have payments continue to your beneficiary for the balance of ten or
twenty years if you die sooner; or (3) monthly payments for your life and for
the life of another person (usually your spouse) selected by you. After you
begin receiving monthly annuity payments you cannot change your selection if the
payments depend on your life or the life of another.
These payment plans are available to you on a variable or fixed basis. Variable
means that the amount accumulated in your Contract will continue to be invested
in one or more of the sixteen investment portfolios as you choose. Your monthly
annuity payments will vary up or down to reflect continuing investment
performance. Or you may choose a fixed annuity payment plan which guarantees the
amount you will receive each month.
3. PURCHASE We offer Front Load and Back Load Contracts, as briefly described in
Section 5. You may make purchase payments of $25 or more as you accumulate funds
in your Contract. For the Front Load Contract the minimum initial purchase
payment is $10,000. Your Northwestern Mutual agent will help you complete a
Contract application form.
4. INVESTMENT CHOICES You may invest in any or all of the following investment
portfolios. All of these are described in the attached prospectuses for
Northwestern Mutual Series Fund, Inc. and the Russell Insurance Funds:
Northwestern Mutual Series Fund, Inc.
1. Small Cap Growth Stock Portfolio
2. Aggressive Growth Stock Portfolio
3. International Equity Portfolio
4. Index 400 Stock Portfolio
5. Growth Stock Portfolio
6. Growth and Income Stock Portfolio
7. Index 500 Stock Portfolio
8. Balanced Portfolio
9. High Yield Bond Portfolio
10. Select Bond Portfolio
11. Money Market Portfolio
Russell Insurance Funds
1. Multi-Style Equity Fund
2. Aggressive Equity Fund
3. Non-U.S. Fund
4. Real Estate Securities Fund
5. Core Bond Fund
You may also invest all or part of your funds on a fixed basis (the Guaranteed
Interest Fund).
PROFILE-i
<PAGE> 5
5. EXPENSES The Contract has insurance and investment features, and there are
costs related to them. For the Front Load Contract we deduct a sales load of
4.5% from your purchase payments. The percentage is lower when cumulative
purchase payments exceed $100,000. For the Back Load Contract there is no sales
load deducted from purchase payments but a withdrawal charge of 0% to 6%
applies, depending on the length of time the money you withdraw has been in the
Contract and the size of your Contract.
Each year we deduct a $30 Contract fee. Currently this fee is waived if the
value of your Contract is $25,000 or more.
We also deduct mortality and expense risk charges for the guarantees associated
with your Contract. These charges are at the annual rate of 0.50% for the Front
Load Contract. They begin at 1.25% for the Back Load Contract and are reduced to
0.50% for purchase payments that are no longer subject to withdrawal charges in
Contracts with a value of $25,000 or more. We may increase the charges to a
maximum rate of 0.75% for the Front Load Contract and 1.50% for the Back Load
Contract. We will not increase the charges for at least five years from the date
of the prospectus.
The portfolios also bear investment charges that range from an annual rate of
0.20% to 1.30% of the average daily value of the portfolio, depending on the
investment portfolio you select. The following charts are designed to help you
understand the charges for the Front Load and Back Load Contracts. The first
three columns show the annual expenses as a percentage of assets including the
insurance charges, the portfolio charges and the total charges. Portfolio
expenses are based on 1999 expenses for the portfolios. Expenses for the
portfolios reflect fee waivers and expense reimbursements. The last two columns
show you examples of the charges, in dollars, you would pay. The examples
reflect the impact of the asset based charges, any sales loads or withdrawals
that would apply, and the $30 Contract fee calculated by dividing the annual
Contract fees collected by the average assets of the sub-account. The examples
assume that you invested $1,000 in a Contract which earns 5% annually and that
you withdraw your money at the end of year one, and at the end of year ten. Both
of these examples, for both Contracts, reflect aggregate charges on a cumulative
basis to the end of the 1 or 10-year period.
For more detailed information, see the Expense Table which begins on page 3 of
the attached prospectus for the Contracts.
<TABLE>
<CAPTION>
EXPENSES
============================================================================================================================
FRONT LOAD CONTRACT ANNUAL EXPENSES AS A PERCENTAGE OF ASSETS
EXAMPLES: *
Total Annual Total Annual Total Total Annual Charges At End of
Insurance Charges Portfolio Annual
Portfolio Charges Expenses 1 Year 10 Years
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
Small Cap Growth Stock 0.52% (0.50% + 0.02%) 1.00% 1.52% $60 $236
Aggressive Growth Stock 0.52% (0.50% + 0.02%) 0.51% 1.03% $55 $181
International Equity 0.52% (0.50% + 0.02%) 0.74% 1.26% $57 $206
Index 400 Stock 0.52% (0.50% + 0.02%) 0.35% 0.87% $53 $174
Growth Stock 0.52% (0.50% + 0.02%) 0.43% 0.95% $54 $172
Growth and Income Stock 0.52% (0.50% + 0.02%) 0.57% 1.09% $56 $187
Index 500 Stock 0.52% (0.50% + 0.02%) 0.20% 0.72% $52 $146
Balanced 0.52% (0.50% + 0.02%) 0.30% 0.82% $53 $158
High Yield Bond 0.52% (0.50% + 0.02%) 0.50% 1.02% $55 $180
Select Bond 0.52% (0.50% + 0.02%) 0.30% 0.82% $53 $158
Money Market 0.52% (0.50% + 0.02%) 0.30% 0.82% $53 $158
Russell Insurance Funds
Multi-Style Equity 0.52% (0.50% + 0.02%) 0.92% 1.44% $59 $228
Aggressive Equity 0.52% (0.50% + 0.02%) 1.25% 1.77% $62 $267
Non-U.S. 0.52% (0.50% + 0.02%) 1.30% 1.82% $63 $282
Real Estate Securities 0.52% (0.50% + 0.02%) 1.15% 1.67% $61 $248
Core Bond 0.52% (0.50% + 0.02%) 0.80% 1.32% $58 $218
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
*TOTAL ANNUAL INSURANCE CHARGES INCLUDE THE INSURANCE CHARGES OF 0.50% PLUS
0.02% OF THE ASSETS TO REFLECT THE $30 CONTRACT FEE, BASED ON ACTUAL CONTRACT
FEES COLLECTED DIVIDED BY AVERAGE ASSETS OF THE SUB-ACCOUNT. THE ACTUAL IMPACT
OF THE CONTRACT FEE MAY BE GREATER OR LESS THAN 0.02%, DEPENDING UPON THE VALUE
OF YOUR CONTRACT. WE MAY INCREASE THE INSURANCE CHARGES TO A MAXIMUM RATE OF
0.75%. WE WILL NOT INCREASE THE CHARGES FOR AT LEAST FIVE YEARS FROM THE DATE OF
THE PROSPECTUS.
NOTE: THE MINIMUM INITIAL PURCHASE PAYMENT FOR A FRONT LOAD CONTRACT IS $10,000.
THE NUMBERS ABOVE MUST BE MULTIPLIED BY 10 TO FIND THE EXPENSES FOR A FRONT LOAD
CONTRACT OF MINIMUM SIZE.
PROFILE-ii
<PAGE> 6
[NORTHWESTERN MUTUAL LIFE(R) LOGO]
<TABLE>
<CAPTION>
============================================================================================================================
BACK LOAD CONTRACT ANNUAL EXPENSES AS A PERCENTAGE OF ASSETS
Total EXAMPLES: **
Total Annual Total Annual Charges At End
Annual Total of
Insurance Charges Portfolio Annual
Portfolio Charges Expenses 1 Year 10 Years
============================================================================================================================
<S> <C> <C> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
Small Cap Growth Stock 1.46% (1.25% + 0.21%) 1.00% 2.46% $ 85 $297
Aggressive Growth Stock 1.46% (1.25% + 0.21%) 0.51% 1.97% $ 80 $245
International Equity 1.46% (1.25% + 0.21%) 0.74% 2.20% $ 82 $268
Index 400 Stock 1.46% (1.25% + 0.21%) 0.35% 1.81% $ 76 $237
Growth Stock 1.46% (1.25% + 0.21%) 0.43% 1.89% $ 79 $237
Growth and Income Stock 1.46% (1.25% + 0.21%) 0.57% 2.03% $ 81 $251
Index 500 Stock 1.46% (1.25% + 0.21%) 0.20% 1.66% $ 77 $212
Balanced 1.46% (1.25% + 0.21%) 0.30% 1.76% $ 78 $223
High Yield Bond 1.46% (1.25% + 0.21%) 0.50% 1.96% $ 80 $244
Select Bond 1.46% (1.25% + 0.21%) 0.30% 1.76% $ 78 $223
Money Market 1.46% (1.25% + 0.21%) 0.30% 1.76% $ 78 $223
Russell Insurance Funds
Multi-Style Equity 1.46% (1.25% + 0.21%) 0.92% 2.38% $ 84 $290
Aggressive Equity 1.46% (1.25% + 0.21%) 1.25% 2.71% $ 87 $326
Non-U.S. 1.46% (1.25% + 0.21%) 1.30% 2.76% $ 88 $341
Real Estate Securities 1.46% (1.25% + 0.21%) 1.15% 2.61% $ 86 $309
Core Bond 1.46% (1.25% + 0.21%) 0.80% 2.26% $ 83 $280
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
**TOTAL ANNUAL INSURANCE CHARGES INCLUDE THE INSURANCE CHARGES OF 1.25% PLUS
0.21% OF THE ASSETS TO REFLECT THE $30 CONTRACT FEE, BASED ON ACTUAL CONTRACT
FEES COLLECTED DIVIDED BY AVERAGE ASSETS OF THE SUB-ACCOUNT. THE ACTUAL IMPACT
OF THE CONTRACT FEE MAY BE GREATER OR LESS THAN 0.21%, DEPENDING UPON THE VALUE
OF YOUR CONTRACT. WE MAY INCREASE THE INSURANCE CHARGES TO A MAXIMUM RATE OF
1.50%. WE WILL NOT INCREASE THE CHARGES FOR AT LEAST FIVE YEARS FROM THE DATE OF
THE PROSPECTUS.
6. TAXES As a general rule, earnings on your Contract are not taxed until they
are withdrawn or taken as monthly annuity payments. A 10% federal tax penalty
may apply if you make withdrawals from the Contract before the employee reaches
age 59 1/2.
7. ACCESS TO YOUR MONEY You may take money out of your Contract at any time
before monthly annuity payments begin. For the Front Load Contract there is no
charge for withdrawals. For the Back Load Contract there is a withdrawal charge
of 6% or less, depending on how much money has been paid into the Contract and
how long it has been held there. Each purchase payment has its own withdrawal
charge period. When you make a withdrawal, we use the amounts that produce the
lowest withdrawal charge. After the first year, 10% of the Contract value on the
prior anniversary may be withdrawn without a withdrawal charge if the Contract
value is at least $10,000. For both Front Load and Back Load Contracts, you may
also have to pay income tax and a tax penalty on amounts you take out.
8. PERFORMANCE The value of your Contract will vary up or down reflecting the
performance of the investment portfolios you select. The chart below shows total
returns for each of the investment portfolios that was in operation, and used
with the Account, during the years shown. Performance is not shown for the
portfolios that have not been in operation for one calendar year. These numbers,
for the Front Load Contract and the Back Load Contract, reflect the asset-based
charges for mortality and expense risks, the annual Contract fees and investment
expenses for each portfolio. The numbers include the annual Contract fee in the
amount of 0.02% for the Front Load Contract and 0.21% for the Back Load
Contract. The numbers do not reflect deductions from purchase payments for the
Front Load Contract or any withdrawal charge for the Back Load Contract. Those
charges, if applied, would reduce the performance. Past performance does not
guarantee future results.
PROFILE-iii
<PAGE> 7
[NORTHWESTERN MUTUAL LIFE(R) LOGO]
<TABLE>
<CAPTION>
PERFORMANCE
============================================================================================================================
FRONT LOAD CONTRACT
CALENDAR YEAR
PORTFOLIO 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwestern Mutual Series
Fund, Inc.
Aggressive Growth Stock 43.09 7.00 13.27 17.08 38.57 4.86 18.49 5.39 55.19 NA
International Equity 22.26 4.27 11.70 20.38 13.98 -0.62 NA NA NA NA
Growth Stock 21.86 26.04 29.18 20.28 30.15 NA NA NA NA NA
Growth and Income Stock 6.92 22.50 29.37 19.34 30.44 NA NA NA NA NA
Index 500 Stock 20.33 28.06 32.51 22.11 36.54 0.67 9.20 6.70 28.89 NA
Balanced 10.66 18.26 20.89 12.86 25.74 -0.53 9.01 4.77 23.30 0.56
High Yield Bond -0.97 -2.35 15.25 19.15 16.17 NA NA NA NA NA
Select Bond -1.54 6.52 8.90 2.77 18.48 -3.34 9.76 6.43 16.27 7.77
Money Market 4.56 4.88 4.93 4.74 5.28 3.52 2.32 2.80 5.14 7.47
============================================================================================================================
<CAPTION>
BACK LOAD CONTRACT
CALENDAR YEAR
PORTFOLIO 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
============================================================================================================================
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Northwestern Mutual Series
Fund, Inc.
Aggressive Growth Stock 41.71 6.00 12.22 15.98 37.28 3.88 17.39 4.41 53.74 NA
International Equity 21.12 3.28 10.66 19.25 12.92 -1.54 NA NA NA NA
Growth Stock 20.72 24.86 27.98 19.15 28.93 NA NA NA NA NA
Growth and Income Stock 5.93 21.36 28.15 18.22 29.23 NA NA NA NA NA
Index 500 Stock 19.16 26.86 31.27 20.96 35.27 -0.27 8.18 5.70 27.68 NA
Balanced 9.59 17.16 19.76 11.80 24.57 -1.46 7.99 3.79 22.14 -0.42
High Yield Bond -1.90 -3.26 14.18 18.03 15.09 NA NA NA NA NA
Select Bond -2.46 5.52 7.88 1.81 17.38 -4.24 8.74 5.44 15.19 6.75
Money Market 3.58 3.90 3.95 3.75 4.29 2.55 1.36 1.84 4.16 6.47
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
9. DEATH BENEFIT If you die before age 75, and before monthly annuity payments
begin, your beneficiary will receive a death benefit. The amount will be the
value of your Contract or, if greater, the amount you have paid in. We offer an
enhanced death benefit at extra cost. We increase the enhanced death benefit on
each Contract anniversary, up to age 80, if the Contract value has increased.
The death benefit may be adjusted, of course, for any withdrawals you have made.
The death benefit will be paid as a lump sum or your beneficiary may select a
monthly annuity payment plan, or the Contract may be continued in force with a
contingent annuitant.
10. OTHER INFORMATION
FREE LOOK. If you return the Contract within ten days after you receive it (or
whatever period is required in your state), we will send your money back. There
is no charge for our expenses but the amount you receive may be more or less
than what you paid, based on actual investment experience following the date we
received your purchase payment.
AVOID PROBATE. In most cases, when you die, your beneficiary will receive the
full death benefit of your Contract without going through probate.
AUTOMATIC DOLLAR-COST AVERAGING. With our Dollar-Cost Averaging Plan, you can
arrange to have a regular amount of money ($100 minimum) automatically
transferred from the Money Market Portfolio into the portfolio or portfolios you
have chosen on a monthly or quarterly basis.
ELECTRONIC FUNDS TRANSFER (EFT). Another convenient way to invest using the
dollar-cost averaging approach is through our EFT Plan. These automatic
checkbook withdrawals allow you to add to your portfolio(s) on a regular monthly
basis through payments drawn directly on your checking account.
SYSTEMATIC WITHDRAWAL PLAN. You can arrange to have regular amounts of money
sent to you while your Contract is still in the accumulation phase. Our
Systematic Withdrawal Plan allows you to automatically redeem accumulation units
PROFILE-iv
<PAGE> 8
[NORTHWESTERN MUTUAL LIFE(R) LOGO]
to generate monthly payments. Of course you may have to pay taxes on amounts you
receive.
AUTOMATIC REQUIRED MINIMUM DISTRIBUTIONS. You can arrange for annual required
minimum distributions to be sent to you automatically once you turn age 70 1/2.
PORTFOLIO REBALANCING. To help you maintain your asset allocation plan over time
we offer a rebalancing service. This will automatically readjust your current
investment option allocations, on a periodic basis, back to the allocation
percentages you have selected.
INTEREST SWEEPS. If you select this service we will automatically sweep or
transfer interest from the Guaranteed Interest Fund to any combination of
variable investment options. Interest earnings can be swept monthly, quarterly,
semi-annually or annually.
NML EXPRESS. 1-800-519-4NML (1-800-519-4665). Get up-to-date information about
your contract at your convenience with your contract number and your Personal
Identification Number (PIN). Call toll-free to review contract values and unit
values, transfer among portfolios, change the allocation and obtain fund
performance information.
INTERNET. For information about Northwestern Mutual, visit us on our Website.
Included are daily unit values, fund performance information and access to
current values for Contracts you own.
WWW.NORTHWESTERNMUTUAL.COM
11. INQUIRIES If you need more information, please contact us at:
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, 720 EAST WISCONSIN AVENUE,
MILWAUKEE, WISCONSIN 53202; 1-888-455-2232.
PROFILE-v
<PAGE> 9
P R O S P E C T U S
NML VARIABLE ANNUITY ACCOUNT A
This prospectus describes individual variable annuity contracts (the
"Contracts") offered by The Northwestern Mutual Life Insurance Company
("Northwestern Mutual") to provide retirement annuity benefits for self-employed
individuals (and their eligible employees) who adopt plans meeting the
requirements of Sections 401 or 403(a) of the Internal Revenue Code of 1986, as
amended. These plans, popularly called HR-10 Plans, afford certain federal
income tax benefits to employers and to employees and their beneficiaries.
We use NML Variable Annuity Account A (the "Account") to keep the money you
invest separate from our general assets. The money in the Account is invested in
the eleven portfolios of Northwestern Mutual Series Fund, Inc. and the five
Russell Insurance Funds. You select the Portfolios or Funds in which you want to
invest. Northwestern Mutual Series Fund, Inc.: Small Cap Growth Stock,
Aggressive Growth Stock, International Equity, Index 400 Stock, Growth Stock,
Growth and Income Stock, Index 500 Stock, Balanced, High Yield Bond, Select
Bond, Money Market. Russell Insurance Funds: Multi-Style Equity, Aggressive
Equity, Non-U.S., Real Estate Securities, Core Bond.
The Account has 16 Divisions that correspond to the 11 Portfolios and 5 Funds in
which you may invest. The Contracts also permit you to invest on a fixed basis,
at rates that we determine. This prospectus describes only the Account and the
variable provisions of the Contracts except where there are specific references
to the fixed provisions.
We offer two versions of the Contracts: Front Load Contracts and Back Load
Contracts. See the Expense table on page 3 and the Deductions section, beginning
on page 19.
This prospectus is a concise description of the information you should know
before you buy a Contract. We have filed additional information about the
Contracts with the Securities and Exchange Commission in a Statement of
Additional Information. We incorporate the Statement of Additional Information
into this prospectus by reference. We will send you the Statement of Additional
Information without charge if you write to The Northwestern Mutual Life
Insurance Company, 720 East Wisconsin Avenue, Milwaukee, Wisconsin, 53202, or
call us at Telephone Number (414) 271-1444. You will find the table of contents
for the Statement of Additional Information following page 22 of this
prospectus.
This prospectus is valid only when accompanied by the current prospectuses for
Northwestern Mutual Series Fund, Inc. and Russell Insurance Funds which are
attached to this prospectus. You should retain this prospectus for future
reference.
The Securities and Exchange Commission has not approved or disapproved these
securities or passed upon the adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
The date of this prospectus and the Statement of Additional Information is March
31, 2000.
1
<PAGE> 10
CONTENTS FOR THIS PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS......................................1
NML Variable Annuity Account A..............1
INDEX OF SPECIAL TERMS..........................3
EXPENSE TABLE...................................3
ACCUMULATION UNIT VALUES........................7
THE COMPANY....................................12
NML VARIABLE ANNUITY
ACCOUNT A...................................12
THE FUNDS......................................12
THE CONTRACTS..................................13
Purchase Payments Under the Contracts......13
Amount and Frequency.....................13
Application of Purchase Payments.........13
Net Investment Factor......................14
Benefits Provided Under the Contracts......14
Withdrawal Amount........................14
Death Benefit............................14
Maturity Benefit.........................15
Variable Payment Plans.....................15
Description of Payment Plans.............15
Amount of Annuity Payments...............15
Assumed Investment Rate..................15
Additional Information.....................16
Transfers Between Divisions and
Payment Plans..........................16
Gender-Based Annuity Payment Rates.......16
Owners of the Contracts..................16
Deferment of Benefit Payments............16
Dividends................................16
Substitution and Change..................17
Fixed Annuity Payment Plans..............17
Financial Statements.....................17
THE GUARANTEED INTEREST FUND...................17
FEDERAL INCOME TAXES...........................18
Contribution Limits........................18
Taxation of Contract Benefits..............18
Minimum Distribution Requirements..........18
Taxation of Northwestern Mutual............19
DEDUCTIONS.....................................19
Sales Load.................................19
Mortality Rate and Expense Risk Charges....19
Contract Fee...............................20
Withdrawal Charge..........................20
Enhanced Death Benefit Charge..............20
Premium Taxes..............................20
Expenses for the Portfolios and Funds......21
Contracts Issued Prior to March 31, 2000...21
Contracts Issued Prior to March 31, 1995...21
Contracts Issued Prior to
December 17, 1981........................21
Dividends for Contracts Issued Prior to
March 31, 2000...........................21
Reduced Charges for Exchange
Transactions.............................21
DISTRIBUTION OF THE CONTRACTS..................22
</TABLE>
THE TABLE OF CONTENTS FOR THE STATEMENT OF ADDITIONAL INFORMATION APPEARS ON THE
PAGE FOLLOWING PAGE 22 OF THIS PROSPECTUS.
2
<PAGE> 11
INDEX OF SPECIAL TERMS
The following special terms used in this prospectus are discussed at the pages
indicated.
<TABLE>
<CAPTION>
TERM PAGE TERM PAGE
- ---- ---- ---- ----
<S> <C> <C> <C>
ACCUMULATION UNIT...................................13 ANNUITANT.........................................16
ANNUITY (or ANNUITY PAYMENTS).......................15 MATURITY DATE.....................................15
NET INVESTMENT FACTOR...............................14 OWNER.............................................16
PAYMENT PLANS.......................................15 WITHDRAWAL AMOUNT.................................14
================================================================================================================
<CAPTION>
EXPENSE TABLE
<S> <C> <C> <C>
FRONT LOAD CONTRACT ANNUAL EXPENSES OF THE ACCOUNT
TRANSACTION EXPENSES FOR CONTRACTOWNERS (AS A PERCENTAGE OF ASSETS)
Maximum Sales Load (as a percentage Current Mortality and Expense Risk Fees*.......0.50%
of purchase payments)..........................4.5% Maximum Mortality and Expense Risk
Withdrawal Charge..............................None Fees*.......................................0.75%
Other Expenses.................................None
Total Current Separate Account Annual
Expenses*...................................0.50%
Total Maximum Separate Account Annual
Expenses*...................................0.75%
ANNUAL CONTRACT FEE
$30; waived if the Contract Value equals or exceeds
$25,000
================================================================================================================
<CAPTION>
<S> <C> <C> <C>
BACK LOAD CONTRACT ANNUAL EXPENSES OF THE ACCOUNT
TRANSACTION EXPENSES FOR CONTRACTOWNERS (AS A PERCENTAGE OF ASSETS)
Sales Load (as a percentage of purchase Current Mortality and Expense Risk Fees*.......1.25%
payments)......................................None Maximum Mortality and Expense Risk
Withdrawal Charge for Sales Expenses Fees*.......................................1.50%
(as a percentage of amounts paid)..............0%-6% Other Expenses.................................None
Total Current Separate Account Annual
Expenses*...................................1.25%
Total Maximum Separate Account Annual
Expenses*...................................1.50%
ANNUAL CONTRACT FEE
$30; waived if the Contract Value equals or exceeds
$25,000
*WE GUARANTEE THE CURRENT MORTALITY AND EXPENSE RISK FEES FOR FIVE YEARS FROM
THE DATE OF THIS PROSPECTUS. THEREAFTER, WE RESERVE THE RIGHT TO INCREASE THE
MORTALITY AND EXPENSE RISK FEES TO A MAXIMUM ANNUAL RATE OF 0.75% FOR THE FRONT
LOAD CONTRACT AND 1.50% FOR THE BACK LOAD CONTRACT.
</TABLE>
3
<PAGE> 12
<TABLE>
<CAPTION>
ANNUAL EXPENSES OF THE PORTFOLIOS AND FUNDS TOTAL ANNUAL
(AS A PERCENTAGE OF THE ASSETS) EXPENSES
MANAGEMENT FEES OTHER (AFTER EXPENSE
(AFTER FEE WAIVER) EXPENSES REIMBURSEMENT)
------------------ -------- --------------
<S> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
Small Cap Growth Stock* 0.79% 0.21% 1.00%
Aggressive Growth Stock 0.51% 0.00% 0.51%
International Equity 0.67% 0.07% 0.74%
Index 400 Stock* 0.25% 0.10% 0.35%
Growth Stock 0.43% 0.00% 0.43%
Growth and Income Stock 0.57% 0.00% 0.57%
Index 500 Stock 0.20% 0.00% 0.20%
Balanced 0.30% 0.00% 0.30%
High Yield Bond 0.49% 0.01% 0.50%
Select Bond 0.30% 0.00% 0.30%
Money Market 0.30% 0.00% 0.30%
Russell Insurance Funds*
Multi-Style Equity 0.77% 0.15% 0.92%
Aggressive Equity 0.86% 0.39% 1.25%
Non-U.S. 0.75% 0.55% 1.30%
Real Estate Securities 0.85% 0.30% 1.15%
Core Bond 0.54% 0.26% 0.80%
==========================================================================================================
* FOR THE RUSSELL INSURANCE FUNDS (THE "FUND"), THE SMALL CAP GROWTH STOCK
PORTFOLIO AND THE INDEX 400 STOCK PORTFOLIO (THE "PORTFOLIOS"), THE ADVISER HAS
VOLUNTARILY AGREED TO WAIVE A PORTION OF THE MANAGEMENT FEE, UP TO THE FULL
AMOUNT OF THE FEE, EQUAL TO THE AMOUNT BY WHICH THE FUND'S AND PORTFOLIOS' TOTAL
OPERATING EXPENSES EXCEED THE AMOUNTS SHOWN ABOVE UNDER "TOTAL ANNUAL EXPENSES
(AFTER EXPENSE REIMBURSEMENT)". THE ADVISER HAS ALSO AGREED TO REIMBURSE THE
FUND AND PORTFOLIOS FOR ALL REMAINING EXPENSES AFTER FEE WAIVERS WHICH EXCEED
THE AMOUNTS SHOWN ABOVE UNDER THAT HEADING. ABSENT THE FEE WAIVER AND EXPENSE
REIMBURSEMENT, THE MANAGEMENT FEES AND TOTAL ANNUAL EXPENSES WOULD BE 0.78% AND
0.93% FOR THE MULTI-STYLE EQUITY FUND; 0.95% AND 1.34% FOR THE AGGRESSIVE EQUITY
FUND; 0.95% AND 1.50% FOR THE NON-U.S. FUND; 0.85% AND 1.15% FOR THE REAL ESTATE
SECURITIES FUND; 0.60% AND 0.86% FOR THE CORE BOND FUND; 0.79% AND 1.03% FOR THE
SMALL CAP GROWTH STOCK PORTFOLIO; AND 0.25% AND 0.46% FOR THE INDEX 400 STOCK
PORTFOLIO.
==========================================================================================================
</TABLE>
EXAMPLE
FRONT LOAD CONTRACT - You would pay the following expenses on each $1,000
investment, assuming 5% annual return:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
Small Cap Growth Stock $60 $91 $125 $236
Aggressive Growth Stock $55 $76 $ 99 $181
International Equity $57 $83 $111 $206
Index 400 Stock $53 $74 $ 96 $174
Growth Stock $54 $74 $ 95 $172
Growth and Income Stock $56 $78 $102 $187
Index 500 Stock $52 $67 $ 83 $146
Balanced $53 $70 $ 88 $158
High Yield Bond $55 $76 $ 99 $180
Select Bond $53 $70 $ 88 $158
Money Market $53 $70 $ 88 $158
Russell Insurance Funds
Multi-Style Equity $59 $89 $122 $228
Aggressive Equity $62 $100 $140 $267
Non-U.S. $63 $104 $147 $282
Real Estate Securities $61 $95 $132 $248
Core Bond $58 $86 $117 $218
</TABLE>
NOTE: THE MINIMUM INITIAL PURCHASE PAYMENT FOR A FRONT-LOAD CONTRACT IS $10,000.
YOU MUST MULTIPLY THE NUMBERS ABOVE BY 10 TO FIND THE EXPENSES FOR A FRONT-LOAD
CONTRACT OF MINIMUM SIZE.
4
<PAGE> 13
EXAMPLE
BACK LOAD CONTRACT - You would pay the following expenses on a $1,000
investment, assuming (1) 5% annual return and (2) surrender just prior to the
end of each time period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
- -------------------------------------
Small Cap Growth Stock $ 85 $137 $173 $297
Aggressive Growth Stock $ 80 $122 $147 $245
International Equity $ 82 $129 $158 $268
Index 400 Stock $ 76 $117 $141 $237
Growth Stock $ 79 $120 $142 $237
Growth and Income Stock $ 81 $124 $150 $251
Index 500 Stock $ 77 $113 $130 $212
Balanced $ 78 $116 $136 $223
High Yield Bond $ 80 $122 $146 $244
Select Bond $ 78 $116 $136 $223
Money Market $ 78 $116 $136 $223
Russell Insurance Funds
- -----------------------
Multi-Style Equity $ 84 $135 $169 $290
Aggressive Equity $ 87 $146 $187 $326
Non-U.S. $ 88 $150 $194 $341
Real Estate Securities $ 86 $141 $179 $309
Core Bond $ 83 $132 $164 $280
</TABLE>
You would pay the following expenses on the same $1,000 investment, assuming no
surrender or annuitization:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Northwestern Mutual Series Fund, Inc.
- -------------------------------------
Small Cap Growth Stock $25 $77 $133 $297
Aggressive Growth Stock $20 $62 $107 $245
International Equity $22 $69 $118 $268
Index 400 Stock $16 $57 $101 $237
Growth Stock $19 $60 $102 $237
Growth and Income Stock $21 $64 $110 $251
Index 500 Stock $17 $53 $ 90 $212
Balanced $18 $56 $ 96 $223
High Yield Bond $20 $62 $106 $244
Select Bond $18 $56 $ 96 $223
Money Market $18 $56 $ 96 $223
Russell Insurance Funds
- -----------------------
Multi-Style Equity $24 $75 $129 $290
Aggressive Equity $27 $86 $147 $326
Non-U.S. $28 $90 $154 $341
Real Estate Securities $26 $81 $139 $309
Core Bond $23 $72 $124 $280
</TABLE>
The purpose of the table above is to assist a Contract Owner in understanding
the expenses paid by the Account and the Portfolios and Funds and borne by
investors in the Contracts. The sales load for a Front Load Contract depends on
the amount of cumulative purchase payments. For the Back Load Contract the
mortality and expense risk charge and the withdrawal charge depend on the length
of time funds have been held under the Contract and the amounts held. We
guarantee the current mortality and expense risk charges for five years from the
date of this prospectus. Thereafter, we reserve the right to increase the
mortality and expense risk charges to a maximum annual rate of 0.75% for the
Front Load Contract and 1.50% for the Back Load Contract. The table shows the
maximum current charges for both the mortality and expense risk charge and the
withdrawal charge for the first five years. The expenses for the ten years shown
in the table are the maximum expenses if we increase the mortality and expense
risk charge after five years. There is no withdrawal charge when a variable
payment plan is selected, but we may make a withdrawal charge in some
circumstances when a fixed payment plan is selected. See "Withdrawal Charge", p.
20. The $30 annual Contract fee is reflected as 0.02% for the Front Load
Contract and 0.21% for the Back Load
5
<PAGE> 14
Contract based on the annual Contract fees collected divided by the average
assets of the Division. The Contracts provide for charges for transfers between
the Divisions of the Account and for premium taxes, but we are not currently
making such charges. See "Transfers Between Divisions and Payment Plans", p. 16
and "Deductions", p. 19, for additional information about expenses for the
Contracts. The expenses shown in the table for the Portfolios and Funds show the
annual expenses for each, as a percentage of their average net assets, based on
1999 operations for the Portfolios and their predecessors and the Funds.
Expenses for each of the Russell Insurance Funds reflect fee waivers and expense
reimbursements that the Funds' adviser has voluntarily agreed to make for the
year 2000. These may be changed at any time without notice. Absent the fee
waivers and expense reimbursements the expenses would be higher. See the
disclosure at the bottom of page 3. For additional information about expenses of
the Portfolios and Funds, see the prospectuses for Northwestern Mutual Series
Fund, Inc. and the Russell Insurance Funds attached to this prospectus.
The example should not be considered a representation of past or future
expenses. Actual expenses may be greater or less than those shown, subject to
the guarantees of the Contracts.
The tables on the following pages present the accumulation unit values for
Contracts issued prior to the date of this prospectus. The Contracts issued
prior to the date of this prospectus are different in certain material respects
from Contracts offered currently. The values shown below for Back Load Contracts
issued on or after December 17, 1981 and prior to March 31, 2000 are calculated
on the same basis as those for the Class B Accumulation Units for the Back Load
Contracts described in this prospectus.
6
<PAGE> 15
ACCUMULATION UNIT VALUES
CONTRACTS ISSUED ON OR AFTER MARCH 31, 1995 AND PRIOR TO MARCH 31, 2000
NORTHWESTERN MUTUAL SERIES FUND, INC.
- -------------------------------------
<TABLE>
<CAPTION>
FOR YEARS ENDED
DECEMBER 31 FOR THE NINE
----------------------------------------- MONTHS ENDED
1999 1998 1997 1996 DEC. 31, 1995
------ ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C>
SMALL CAP GROWTH STOCK DIVISION
Front Load Version
Beginning of Period* $1.000 -- -- -- --
End of Period $1.856 -- -- -- --
Back Load Version
Beginning of Period* $1.000 -- -- -- --
End of Period $1.846 -- -- -- --
Number of Units
Outstanding, End of Period
Front Load 149,996 -- -- -- --
Back Load 481,140 -- -- -- --
AGGRESSIVE GROWTH STOCK DIVISION
Front Load Version
Beginning of Period $1.859 $1.735 $1.530 $1.305 $1.000
End of Period $2.662 $1.859 $1.735 $1.530 $1.305
Back Load Version
Beginning of Period $3.808 $3.585 $3.188 $2.743 $2.115
End of Period $5.408 $3.808 $3.585 $3.188 $2.743
Number of Units
Outstanding, End of Period
Front Load 1,185,824 1,195,051 832,513 568,732 255,895
Back Load 3,585,337 3,703,653 2,962,218 1,734,023 407,729
INTERNATIONAL EQUITY DIVISION
Front Load Version
Beginning of Period $1.605 $1.537 $1.374 $1.140 $1.000
End of Period $1.964 $1.605 $1.537 $1.374 $1.140
Back Load Version
Beginning of Period $1.893 $1.829 $1.649 $1.380 $1.218
End of Period $2.298 $1.893 $1.829 $1.649 $1.380
Number of Units
Outstanding, End of Period
Front Load 727,940 669,024 575,775 286,469 32,573
Back Load 3,063,127 3,028,502 2,488,184 1,281,128 374,986
INDEX 400 STOCK DIVISION
Front Load Version
Beginning of Period* $1.000 -- -- -- --
End of Period $1.125 -- -- -- --
Back Load Version
Beginning of Period* $1.000 -- -- -- --
End of Period $1.119 -- -- -- --
Number of Units
Outstanding, End of Period
Front Load 162,971 -- -- -- --
Back Load 388,194 -- -- -- --
GROWTH STOCK DIVISION
Front Load Version
Beginning of Period $2.375 $1.883 $1.456 $1.209 $1.000
End of Period $2.898 $2.375 $1.883 $1.456 $1.209
Back Load Version
Beginning of Period $2.491 $1.991 $1.552 $1.300 $1.082
End of Period $3.013 $2.491 $1.991 $1.552 $1.300
Number of Units
Outstanding, End of Period
Front Load 613,097 447,934 422,029 257,158 103,292
Back Load 3,381,484 2,761,432 1,870,296 922,390 227,218
GROWTH AND INCOME STOCK DIVISION
Front Load Version
Beginning of Period $2.271 $1.852 $1.430 $1.197 $1.000
End of Period $2.431 $2.271 $1.852 $1.430 $1.197
Back Load Version
Beginning of Period $2.382 $1.959 $1.525 $1.287 $1.083
End of Period $2.528 $2.382 $1.959 $1.525 $1.287
Number of Units
Outstanding, End of Period
Front Load 757,434 736,836 540,977 208,323 114,414
Back Load 3,306,924 3,046,517 1,940,827 1,215,721 310,321
</TABLE>
<TABLE>
<CAPTION>
FOR YEARS ENDED
DECEMBER 31 FOR THE NINE
----------------------------------------- MONTHS ENDED
1999 1998 1997 1996 DEC. 31, 1995
------ ------ ------ ------ -------------
<S> <C> <C> <C> <C> <C>
INDEX 500 STOCK DIVISION
Front Load Version
Beginning of Period $2.597 $2.026 $1.527 $1.249 $1.000
End of Period $3.128 $2.597 $2.026 $1.527 $1.249
Back Load Version
Beginning of Period $4.037 $3.175 $2.414 $1.991 $1.604
End of Period $4.820 $4.037 $3.175 $2.414 $1.991
Number of Units
Outstanding, End of Period
Front Load 1,247,611 1,057,935 690,248 454,096 278,235
Back Load 5,417,756 4,504,322 3,279,176 1,970,961 471,752
BALANCED DIVISION
Front Load Version
Beginning of Period $1.912 $1.615 $1.334 $1.181 $1.000
End of Period $2.118 $1.912 $1.615 $1.334 $1.181
Back Load Version
Beginning of Period $6.771 $5.768 $4.806 $4.290 $3.655
End of Period $7.436 $6.771 $5.768 $4.806 $4.290
Number of Units
Outstanding, End of Period
Front Load 1,800,477 1,768,955 1,296,330 786,271 164,302
Back Load 2,897,246 2,565,265 2,109,606 1,347,427 372,457
HIGH YIELD BOND DIVISION
Front Load Version
Beginning of Period $1.496 $1.530 $1.326 $1.112 $1.000
End of Period $1.483 $1.496 $1.530 $1.326 $1.112
Back Load Version
Beginning of Period $1.546 $1.595 $1.394 $1.178 $1.067
End of Period $1.520 $1.546 $1.595 $1.394 $1.178
Number of Units
Outstanding, End of Period
Front Load 380,690 400,132 95,718 55,625 --
Back Load 1,174,446 1,400,604 967,118 572,121 138,470
SELECT BOND DIVISION
Front Load Version
Beginning of Period $1.350 $1.266 $1.161 $1.129 $1.000
End of Period $1.331 $1.350 $1.266 $1.161 $1.129
Back Load Version
Beginning of Period $7.088 $6.703 $6.201 $6.078 $5.419
End of Period $6.929 $7.088 $6.703 $6.201 $6.078
Number of Units
Outstanding, End of Period
Front Load 214,565 159,609 72,941 38,713 26,732
Back Load 364,139 368,314 271,027 182,907 50,828
MONEY MARKET DIVISION
Front Load Version
Beginning of Period $1.203 $1.146 $1.091 $1.040 $1.000
End of Period $1.259 $1.203 $1.146 $1.091 $1.040
Back Load Version
Beginning of Period $2.431 $2.335 $2.241 $2.156 $2.086
End of Period $2.523 $2.431 $2.335 $2.241 $2.156
Number of Units
Outstanding, End of Period
Front Load 1,980,615 1,564,597 1,439,686 1,843,605 327,441
Back Load 1,892,502 1,515,128 1,081,227 1,123,081 379,473
</TABLE>
* The initial investments in the Small Cap Growth Stock Division and Index
400 Stock Division were made on April 30, 1999.
** The initial investment was made on April 30, 1999.
7
<PAGE> 16
ACCUMULATION UNIT VALUES
(CONTINUED)
RUSSELL INSURANCE FUNDS
- -----------------------
<TABLE>
<CAPTION>
FOR THE EIGHT MONTHS ENDED FOR THE EIGHT MONTHS ENDED
-------------------------- --------------------------
DECEMBER 31 DECEMBER 31
----------- -----------
1999 1999
---- ----
<S> <C> <C> <C>
MULTI-STYLE EQUITY DIVISION REAL ESTATE SECURITIES DIVISION
Front Load Version Front Load Version
Beginning of Period* $1.000 Beginning of Period* $1.000
End of Period $1.073 End of Period $ .925
Back Load Version Back Load Version
Beginning of Period* $1.000 Beginning of Period* $1.000
End of Period $1.067 End of Period $ .920
Number of Units Number of Units
Outstanding, End of Period Outstanding, End of Period
Front Load 321,514 Front Load 19,288
Back Load 535,268 Back Load 88,176
AGGRESSIVE EQUITY DIVISION CORE BOND DIVISION
Front Load Version Front Load Version
Beginning of Period* $1.000 Beginning of Period* $1.000
End of Period $1.106 End of Period $ .989
Back Load Version Back Load Version
Beginning of Period* $1.000 Beginning of Period* $1.000
End of Period $1.100 End of Period $ .983
Number of Units Number of Units
Outstanding, End of Period Outstanding, End of Period
Front Load 87,678 Front Load 26,817
Back Load 182,385 Back Load 93,910
NON-U.S. DIVISION
Front Load Version
Beginning of Period* $1.000
End of Period $1.250
Back Load Version
Beginning of Period* $1.000
End of Period $1.243
Number of Units
Outstanding, End of Period
Front Load 81,105
Back Load 205,407
</TABLE>
*The initial investment was made on April 30, 1999.
8
<PAGE> 17
ACCUMULATION UNIT VALUES
CONTRACTS ISSUED AFTER DECEMBER 16, 1981 AND PRIOR TO MARCH 31, 1995
NORTHWESTERN MUTUAL SERIES FUND, INC.
- -------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
---------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SMALL CAP GROWTH STOCK DIVISION
Beginning of Period* $1.000 -- -- -- --
End of Period $1.846 -- -- -- --
Number of Units
Outstanding, End of Period 1,898,627 -- -- -- --
AGGRESSIVE GROWTH STOCK DIVISION
Beginning of Period* $3.808 $3.585 $3.188 $2.743 $1.994
End of Period $5.408 $3.808 $3.585 $3.188 $2.743
Number of Units
Outstanding, End of Period 14,666,263 18,213,135 20,861,309 21,479,837 19,083,707
INTERNATIONAL EQUITY DIVISION
Beginning of Period** $1.893 $1.829 $1.649 $1.380 $1.220
End of Period $2.298 $1.893 $1.829 $1.649 $1.380
Number of Units
Outstanding, End of Period 15,307,814 19,261,448 22,910,908 22,132,206 21,338,267
INDEX 400 STOCK DIVISION
Beginning of Period* $1.000 -- -- -- --
End of Period $1.119 -- -- -- --
Number of Units
Outstanding, End of Period 1,241,398 -- -- -- --
GROWTH STOCK DIVISION
Beginning of Period+ $2.491 $1.991 $1.552 $1.300 $1.006
End of Period $3.013 $2.491 $1.991 $1.552 $1.300
Number of Units
Outstanding, End of Period 8,576,102 7,215,894 6,045,075 4,845,965 2,970,905
GROWTH AND INCOME STOCK DIVISION
Beginning of Period+ $2.382 $1.959 $1.525 $1.287 $0.994
End of Period $2.528 $2.382 $1.959 $1.525 $1.287
Number of Units
Outstanding, End of Period 9,502,862 10,866,893 8,963,724 7,054,484 5,605,215
INDEX 500 STOCK DIVISION
Beginning of Period* $4.037 $3.175 $2.414 $1.991 $1.469
End of Period $4.820 $4.037 $3.175 $2.414 $1.991
Number of Units
Outstanding, End of Period 20,900,522 21,467,931 21,531,879 20,092,060 18,961,291
BALANCED DIVISION
Beginning of Period $6.771 $5.768 $4.806 $4.290 $3.436
End of Period $7.436 $6.771 $5.768 $4.806 $4.290
Number of Units
Outstanding, End of Period 35,440,432 40,487,926 44,638,127 48,457,793 52,575,295
HIGH YIELD BOND DIVISION
Beginning of Period+ $1.546 $1.595 $1.394 $1.178 $1.022
End of Period $1.520 $1.546 $1.595 $1.394 $1.178
Number of Units
Outstanding, End of Period 2,904,325 3,974,656 3,770,055 2,456,295 1,609,770
SELECT BOND DIVISION
Beginning of Period $7.088 $6.703 $6.201 $6.078 $5.167
End of Period $6.929 $7.088 $6.703 $6.201 $6.078
Number of Units
Outstanding, End of Period 1,914,749 2,171,879 2,252,704 2,691,481 2,778,441
MONEY MARKET DIVISION
Beginning of Period $2.431 $2.335 $2.241 $2.156 $2.063
End of Period $2.523 $2.431 $2.335 $2.241 $2.156
Number of Units
Outstanding, End of Period 7,329,873 6,699,739 6,270,333 7,029,739 7,896,022
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
-------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SMALL CAP GROWTH STOCK DIVISION
Beginning of Period* -- -- -- -- --
End of Period -- -- -- -- --
Number of Units
Outstanding, End of Period -- -- -- -- --
AGGRESSIVE GROWTH STOCK DIVISION
Beginning of Period* $1.915 $1.628 $1.556 $1.010 $1.000
End of Period $1.994 $1.915 $1.628 $1.556 $1.010
Number of Units
Outstanding, End of Period 17,290,856 11,319,698 7,939,571 3,208,965 81,406
INTERNATIONAL EQUITY DIVISION
Beginning of Period** $1.236 $1.000 -- -- --
End of Period $1.220 $1.236 -- -- --
Number of Units
Outstanding, End of Period 21,538,113 8,548,091 -- -- --
INDEX 400 STOCK DIVISION
Beginning of Period* -- -- -- -- --
End of Period -- -- -- -- --
Number of Units
Outstanding, End of Period -- -- -- -- --
GROWTH STOCK DIVISION
Beginning of Period* $1.000 -- -- -- --
End of Period $1.006 -- -- -- --
Number of Units
Outstanding, End of Period 1,311,686 -- -- -- --
GROWTH AND INCOME STOCK DIVISION
Beginning of Period* $1.000 -- -- -- --
End of Period $0.994 -- -- -- --
Number of Units
Outstanding, End of Period 3,129,287 -- -- -- --
INDEX 500 STOCK DIVISION
Beginning of Period* $1.470 $1.356 $1.280 $1.000 $1.000
End of Period $1.469 $1.470 $1.356 $1.280 $1.000
Number of Units
Outstanding, End of Period 17,624,809 16,051,619 4,774,008 2,593,051 30,451
BALANCED DIVISION
Beginning of Period $3.480 $3.216 $3.092 $2.526 $2.531
End of Period $3.436 $3.480 $3.216 $3.092 $2.526
Number of Units
Outstanding, End of Period 59,200,252 63,940,609 62,756,051 59,013,26 58,632,612
HIGH YIELD BOND DIVISION
Beginning of Period* $1.000 -- -- -- --
End of Period $1.022 -- -- -- --
Number of Units
Outstanding, End of Period 1,215,989 -- -- -- --
SELECT BOND DIVISION
Beginning of Period $5.384 $4.941 $4.677 $4.052 $3.787
End of Period $5.167 $5.384 $4.941 $4.677 $4.052
Number of Units
Outstanding, End of Period 2,923,557 2,937,137 2,667,880 2,087,901 1,970,476
MONEY MARKET DIVISION
Beginning of Period $2.007 $1.976 $1.936 $1.855 $1.739
End of Period $2.063 $2.007 $1.976 $1.936 $1.855
Number of Units
Outstanding, End of Period 8,608,326 7,614,186 8,478,941 9,098,558 10,506,714
</TABLE>
# The initial investments in the Small Cap Growth Stock Division and Index
400 Stock Division were made on April 30, 1999.
* The initial investments in the Aggressive Growth Stock Division and Index
500 Stock Division were made on December 12, 1990.
** The initial investment in the International Equity Division was made on
April 30, 1993.
+ The initial investments in the Growth Stock Division, Growth and Income
Stock Division, and High Yield Bond Division were made on May 3, 1994
9
<PAGE> 18
ACCUMULATION UNIT VALUES
(CONTINUED)
RUSSELL INSURANCE FUNDS
- -----------------------
<TABLE>
<CAPTION>
FOR THE EIGHT MONTHS ENDED FOR THE EIGHT MONTHS ENDED
DECEMBER 31 DECEMBER 31
1999 1999
---- ----
<S> <C> <C> <C>
MULTI-STYLE EQUITY DIVISION REAL ESTATE SECURITIES DIVISION
Beginning of Period* $1.000 Beginning of Period* $1.000
End of Period $1.067 End of Period $ .920
Number of Units Number of Units
Outstanding, End of Period 1,475,825 Outstanding, End of Period 248,726
AGGRESSIVE EQUITY DIVISION CORE BOND DIVISION
Beginning of Period* $1.000 Beginning of Period* $1.000
End of Period $1.100 End of Period $ .983
Number of Units Number of Units
Outstanding, End of Period 760,721 Outstanding, End of Period 580,967
NON-U.S. DIVISION
Beginning of Period* $1.000
End of Period $1.243
Number of Units
Outstanding, End of Period 813,542
</TABLE>
*The initial investment was made on April 30, 1999.
10
<PAGE> 19
ACCUMULATION UNIT VALUES
CONTRACTS ISSUED PRIOR TO DECEMBER 17, 1981
NORTHWESTERN MUTUAL SERIES FUND, INC.
- -------------------------------------
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------------------------------------
1999 1998 1997 1996 1995
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SMALL CAP GROWTH STOCK DIVISION
Beginning of Period# $1.000 -- -- -- --
End of Period $1.852 -- -- -- --
Number of Units
Outstanding, End of Period 95,329 -- -- -- --
AGGRESSIVE GROWTH STOCK DIVISION
Beginning of Period* $3.965 $3.714 $3.286 $2.813 $2.035
End of Period $5.658 $3.965 $3.714 $3.286 $2.813
Number of Units
Outstanding, End of Period 370,788 479,410 640,838 890,850 861,229
INTERNATIONAL EQUITY DIVISION
Beginning of Period** $1.947 $1.872 $1.680 $1.398 $1.230
End of Period $2.376 $1.947 $1.872 $1.680 $1.398
Number of Units
Outstanding, End of Period 630,123 647,767 1,297,660 1,332,812 1,166,796
INDEX 400 STOCK DIVISION
Beginning of Period# $1.000 -- -- -- --
End of Period $1.123 -- -- -- --
Number of Units
Outstanding, End of Period 167,651 -- -- -- --
GROWTH STOCK DIVISION
Beginning of Period+ $2.549 $2.027 $1.573 $1.311 $1.009
End of Period $3.100 $2.549 $2.027 $1.573 $1.311
Number of Units
Outstanding, End of Period 372,659 247,491 327,731 118,168 1,782
GROWTH AND INCOME STOCK DIVISION
Beginning of Period+ $2.438 $1.995 $1.546 $1.298 $0.997
End of Period $2.601 $2.438 $1.995 $1.546 $1.298
Number of Units
Outstanding, End of Period 254,027 310,014 348,188 69,566 9,498
INDEX 500 STOCK DIVISION
Beginning of Period* $4.202 $3.289 $2.488 $2.042 $1.499
End of Period $5.043 $4.202 $3.289 $2.488 $2.042
Number of Units
Outstanding, End of Period 6,687,760 7,343,357 8,175,537 9,600,286 10,111,615
BALANCED DIVISION
Beginning of Period $7.372 $6.248 $5.180 $4.601 $3.667
End of Period $8.137 $7.372 $6.248 $5.180 $4.601
Number of Units
Outstanding, End of Period 2,738,126 3,013,626 3,845,538 4,743,812 5,651,599
HIGH YIELD BOND DIVISION
Beginning of Period+ $1.582 $1.624 $1.412 $1.188 $1.025
End of Period $1.563 $1.582 $1.624 $1.412 $1.188
Number of Units
Outstanding, End of Period 77,269 183,181 600,752 428,588 --
SELECT BOND DIVISION
Beginning of Period $7.719 $7.263 $6.685 $6.520 $5.515
End of Period $7.583 $7.719 $7.263 $6.685 $6.520
Number of Units
Outstanding, End of Period 715,024 899,839 1,012,083 1,215,131 1,172,420
MONEY MARKET DIVISION
Beginning of Period $2.646 $2.529 $2.416 $2.312 $2.201
End of Period $2.761 $2.646 $2.529 $2.416 $2.312
Number of Units
Outstanding, End of Period 898,198 1,723,332 893,452 1,103,625 1,264,988
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEARS ENDED DECEMBER 31
--------------------------------------------------------------------
1994 1993 1992 1991 1990
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
SMALL CAP GROWTH STOCK DIVISION
Beginning of Period# -- -- -- -- --
End of Period -- -- -- -- --
Number of Units
Outstanding, End of Period -- -- -- -- --
AGGRESSIVE GROWTH STOCK DIVISION
Beginning of Period* $1.945 $1.645 $1.564 $1.010 $1.000
End of Period $2.035 $1.945 $1.645 $1.564 $1.010
Number of Units
Outstanding, End of Period 805,409 602,390 459,581 262,149 9,478
INTERNATIONAL EQUITY
DIVISION $1.240 $1.000 -- -- --
Beginning of Period** $1.230 $1.240 -- -- --
End of Period
Number of Units
Outstanding, End of Period 1,529,309 912,421 -- -- --
INDEX 400 STOCK DIVISION
Beginning of Period# -- -- -- -- --
End of Period -- -- -- -- --
Number of Units
Outstanding, End of Period -- -- -- -- --
GROWTH STOCK DIVISION
Beginning of Period+ -- -- -- -- --
End of Period -- -- -- -- --
Number of Units
Outstanding, End of Period -- -- -- -- --
GROWTH AND INCOME STOCK
DIVISION -- -- -- -- --
Beginning of Period+ -- -- -- -- --
End of Period
Number of Units -- -- -- -- --
Outstanding, End of Period
INDEX 500 STOCK DIVISION
Beginning of Period* $1.492 $1.370 $1.287 $1.000 $1.000
End of Period $1.499 $1.492 $1.370 $1.287 $1.000
Number of Units
Outstanding, End of Period 10,735,943 12,320,684 242,871 33,349 13,511
BALANCED DIVISION
Beginning of Period $3.695 $3.398 $3.250 $2.642 $2.635
End of Period $3.667 $3.695 $3.398 $3.250 $2.642
Number of Units
Outstanding, End of Period 6,525,821 7,060,303 8,324,438 8,795,056 9,637,964
HIGH YIELD BOND DIVISION
Beginning of Period+ -- -- -- -- --
End of Period -- -- -- -- --
Number of Units
Outstanding, End of Period -- -- -- -- --
SELECT BOND DIVISION
Beginning of Period $5.719 $5.222 $4.918 $4.239 $3.943
End of Period $5.515 $5.719 $5.222 $4.918 $4.239
Number of Units
Outstanding, End of Period 1,266,751 1,389,667 1,411,347 1,590,698 1,590,884
MONEY MARKET DIVISION
Beginning of Period $2.131 $2.088 $2.035 $1.940 $1.810
End of Period $2.201 $2.131 $2.088 $2.035 $1.940
Number of Units
Outstanding, End of Period 1,020,911 788,050 1,231,018 1,393,920 2,143,153
</TABLE>
# The initial investments in the Small Cap Growth Stock Division and Index
400 Stock Division were made on April 30, 1999.
* The initial investments in the Index 500 Stock Division and Aggressive
Growth Stock Division were made on December 12, 1990.
** The initial investment in the International Equity Division was made on
April 30, 1993.
+ The initial investments in the Growth Stock Division, Growth and Income
Stock Division, and High Yield Bond Division were made on May 3, 1994.
11
<PAGE> 20
ACCUMULATION UNIT VALUES
(CONTINUED)
RUSSELL INSURANCE FUNDS
- -----------------------
<TABLE>
<CAPTION>
FOR THE EIGHT MONTHS ENDED FOR THE EIGHT MONTHS ENDED
DECEMBER 31 DECEMBER 31
1999 1999
---- ----
<S> <C> <C> <C>
MULTI-STYLE EQUITY DIVISION REAL ESTATE SECURITIES DIVISION
Beginning of Period* $1.000 Beginning of Period* $1.000
End of Period $1.071 End of Period $ .923
Number of Units Number of Units
Outstanding, End of Period 7,554 Outstanding, End of Period 4,656
AGGRESSIVE EQUITY DIVISION CORE BOND DIVISION
Beginning of Period* $1.000 Beginning of Period* $1.000
End of Period $1.104 End of Period $ .986
Number of Units Number of Units
Outstanding, End of Period 7,374 Outstanding, End of Period 2,618
NON-U.S. DIVISION
Beginning of Period* $1.000
End of Period $1.247
Number of Units
Outstanding, End of Period 12,237
</TABLE>
*The initial investment was made on April 30, 1999.
THE COMPANY
The Northwestern Mutual Life Insurance Company was organized by a special act of
the Wisconsin Legislature in 1857. It is the nation's fifth largest life
insurance company, based on total assets in excess of $85 billion on December
31, 1999, and is licensed to conduct a conventional life insurance business in
the District of Columbia and in all states of the United States. Northwestern
Mutual sells life and disability income insurance policies and annuity contracts
through its own field force of approximately 6,000 full time producing agents.
The Home Office of Northwestern Mutual is located at 720 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202.
"We" in this prospectus means Northwestern Mutual.
NML VARIABLE ANNUITY ACCOUNT A
We established the Account on February 14, 1968 by action of our Board of
Trustees in accordance with the provisions of the Wisconsin insurance law.
The Account has sixteen Divisions. The money you invest to provide variable
benefits under your Contract is placed in one or more of the Divisions as you
direct.
Under Wisconsin law, the investment operations of the Account are kept separate
from our other operations. The values for your Contract will not be affected by
income, gains or losses for the rest of our business. The income, gains or
losses, realized or unrealized, for the assets we place in the Account for your
Contract will determine the value of your Contract benefits and will not affect
the rest of our business. The assets in the Account are reserved for you and
other Contract owners, although the assets belong to us and we do not hold the
assets as a trustee. We and our creditors cannot reach those assets to satisfy
other obligations until our obligations under your Contract have been satisfied.
But all of our assets (except those we hold in some other separate accounts) are
available to satisfy our obligations under your Contract.
The Account is not registered as an investment company under the Investment
Company Act of 1940.
THE FUNDS
Northwestern Mutual Series Fund, Inc. is composed of eleven separate portfolios
which operate as separate mutual funds. The portfolios are the Small Cap Growth
Stock Portfolio, Aggressive Growth Stock Portfolio, International Equity
Portfolio, Index 400 Stock Portfolio, Growth Stock Portfolio, Growth and Income
Stock Portfolio, Index 500 Stock Portfolio, Balanced Portfolio, High Yield Bond
Portfolio, Select Bond Portfolio and Money Market Portfolio. The Account buys
shares of each Portfolio at net asset value, that is, without any sales charge.
12
<PAGE> 21
Northwestern Mutual Investment Services, LLC ("NMIS"), our wholly-owned
subsidiary, is the investment adviser to the Fund. We provide the people and
facilities that NMIS uses in performing its investment advisory functions, and
we are a party to the investment advisory agreement. NMIS has retained J.P.
Morgan Investment Management, Inc. and Templeton Investment Counsel, Inc. under
investment sub-advisory agreements to provide investment advice to the Growth
and Income Stock Portfolio and the International Equity Portfolio.
The Russell Insurance Funds include five separate portfolios which operate as
separate mutual funds. These are the Multi-Style Equity Fund, Aggressive Equity
Fund, Non-U.S. Fund, Real Estate Securities Fund and Core Bond Fund. The Account
buys shares of each of the Russell Insurance Funds at net asset value, that is,
without any sales charge.
The assets of each of the Russell Insurance Funds are invested by one or more
investment management organizations researched and recommended by Frank Russell
Company ("Russell"), and an affiliate of Russell, Frank Russell Investment
Management Company ("FRIMCo"). FRIMCo also advises, operates and administers the
Russell Insurance Funds. Russell is our majority-owned subsidiary.
FOR MORE INFORMATION REGARDING THE MUTUAL FUNDS, INCLUDING INFORMATION ABOUT
THEIR INVESTMENT OBJECTIVES AND EXPENSES, SEE THE PROSPECTUSES FOR NORTHWESTERN
MUTUAL SERIES FUND, INC. AND RUSSELL INSURANCE FUNDS ATTACHED TO THIS
PROSPECTUS. YOU SHOULD READ THE MUTUAL FUND PROSPECTUSES CAREFULLY BEFORE YOU
INVEST IN THE CONTRACTS.
- --------------------------------------------------------------------------------
THE CONTRACTS
PURCHASE PAYMENTS UNDER THE CONTRACTS
AMOUNT AND FREQUENCY A purchase payment is the money you give us to pay for your
Contract. You may make purchase payments monthly, quarterly, semiannually,
annually or on any other frequency acceptable to us.
For Back Load Contracts the minimum amount for each purchase payment is $25. We
will accept larger purchase payments than due, or payments at other times, but
total purchase payments under any Contract may not exceed $5,000,000 without our
consent. For Front Load Contracts the minimum initial purchase payment is
$10,000. The minimum amount for each subsequent purchase payment is $25 for all
Contracts.
Purchase payments may not exceed the applicable federal income tax limits. See
"Federal Income Taxes", p. 18.
APPLICATION OF PURCHASE PAYMENTS We credit net purchase payments, after
deduction of any sales load, to the Account and allocate them to one or more
Divisions as you direct. We then invest those assets in shares of the Portfolio
or Fund which corresponds to that Division.
We apply purchase payments to provide "Accumulation Units" in one or more
Divisions. Accumulation Units represent your interest in the Account. There are
Class A Accumulation Units and Class B Accumulation Units for the Back Load
Contracts. We credit Class B Accumulation Units to your Back Load Contract each
time you make a purchase payment. We convert Class B Accumulation Units to Class
A Accumulation Units on a basis that reflects the cumulative amount of purchase
payments and the length of time that the funds have been held under a Back Load
Contract. See "Mortality Rate and Expense Risk Charges", p. 19. The number of
Accumulation Units you receive for each net purchase payment is determined by
dividing the amount of the purchase payment to be allocated to a Division by the
value of an Accumulation Unit in that Division, based upon the next valuation of
the assets of the Division we make after we receive your purchase payment at our
Home Office. Receipt of purchase payments at a lockbox facility we have
designated will be considered the same as receipt at the Home Office. We value
assets as of the close of trading on the New York Stock Exchange for each day
the Exchange is open, and at any other time required by the Investment Company
Act of 1940.
The number of your Accumulation Units will be increased by additional purchase
payments or transfers into the Account and decreased by withdrawals or transfers
out of the Account. The investment experience of the Account does not change the
number (as distinguished from the value) of your Accumulation Units.
The value of an Accumulation Unit in each Division varies with the investment
experience of the Division (which in turn is determined by the investment
experience of the corresponding Portfolio or Fund). We determine the value by
multiplying the value on the immediately preceding valuation date by the net
investment factor for the Division. The net investment factor takes into account
the investment experience of the Portfolio or Fund, the deduction for mortality
and expense risks we have assumed and a deduction for any applicable taxes or
for any expenses resulting from a substitution of securities. (See "Net
Investment Factor", p. 14.) Since you bear the investment risk, there is no
guarantee as to the aggregate value of your Accumulation Units. That value may
be less than, equal to, or more than the cumulative net purchase payments you
have made.
13
<PAGE> 22
You may direct all or part of a purchase payment to the Guaranteed Interest
Fund. Amounts you direct to the Guaranteed Interest Fund will be invested on a
fixed basis. See "The Guaranteed Interest Fund", p. 17.
NET INVESTMENT FACTOR
For each Division the net investment factor for any period ending on a valuation
date is 1.000000 plus the net investment rate for the Division for that period.
Under the Contract the net investment rate is related to the assets of the
Division. However, since all amounts are simultaneously invested in shares of
the corresponding Portfolio or Fund when allocated to the Division, calculation
of the net investment rate for each of the Divisions may also be based upon the
change in value of a single share of the corresponding Portfolio or Fund.
Thus, for example, in the case of the Balanced Division the net investment rate
is equal to (a) the change in the net asset value of a Balanced Portfolio share
for the period from the immediately preceding valuation date up to and including
the current valuation date, plus the per share amount of any dividends and other
distributions made by the Balanced Portfolio during the valuation period, less a
deduction for any applicable taxes or for any expenses resulting from a
substitution of securities, (b) divided by the net asset value of a Balanced
Portfolio share on the valuation date immediately preceding the current
valuation date, (c) less an adjustment to provide for the deduction for
mortality rate and expense risks that we have assumed. (See "Deductions", p.
19.)
The Portfolios and Funds will distribute investment income and realized capital
gains to the Account Divisions. We will reinvest those distributions in
additional shares of the same Portfolio or Fund. Unrealized capital gains and
realized and unrealized capital losses will be reflected by changes in the value
of the shares held by the Account.
BENEFITS PROVIDED UNDER THE CONTRACTS
The benefits provided under the Contracts consist of a withdrawal amount, a
death benefit and a maturity benefit. Subject to the restrictions noted below,
we will pay all of these benefits in a lump sum or under the payment plans
described below.
WITHDRAWAL AMOUNT On or prior to the maturity date you are entitled to withdraw
the Accumulation Units credited to your Contract and receive the value thereof
less the applicable withdrawal charge. (See "Withdrawal Charge", p. 20.) The
value, which may be either greater or less than the amount you paid, is based on
the Accumulation Unit value next determined after we receive your written
request for withdrawal on a form we provide. The forms are available from our
Home Office and our agents. You may withdraw a portion of the Accumulation Units
on the same basis, except that we will not grant a partial withdrawal which
would result in a Contract value of less $2,000 remaining; we will treat a
request for such a partial withdrawal as a request to surrender the entire
Contract. Amounts distributed to you upon withdrawal of all or a portion of
Accumulation Units may be subject to federal income tax. (See "Federal Income
Taxes", p. 18.) A 10% penalty tax may be imposed on the taxable portion of
premature payments of benefits (prior to age 59-1/2 or disability) unless
payments are made after the employee separates from service and payments are
either paid in substantially equal installments over the life or life expectancy
of the employee or are paid on account of early retirement after age 55.
If annuity payments are being made under Payment Plan 1 the payee may surrender
the Contract and receive the value of the Annuity Units credited to his
Contract, less the applicable withdrawal charge. (See "Withdrawal Charge", p.
20) Upon death during the certain period of the payee under Plan 2 or both
payees under Plan 3, the beneficiary may surrender the Contract and receive the
withdrawal value of the unpaid payments for the certain period. The withdrawal
value is based on the Annuity Unit value on the withdrawal date, with the unpaid
payments discounted at the Assumed Investment Rate. (See "Description of Payment
Plans", p.15.)
DEATH BENEFIT
1. Amount of the Death Benefit. If the Annuitant dies before the maturity date,
the death benefit will not be less than the Contract value next determined after
we receive proof of death at our Home Office. If the Primary Annuitant dies
before his or her 75th birthday, the death benefit, where permitted by state
law, will not be less than the amount of purchase payments we received, less
withdrawals. There is no death benefit after annuity payments begin. See
"Maturity Benefit", p. 15 and "Variable Payment Plans", p. 15.
An enhanced death benefit is available at extra cost. Prior to the first
Contract anniversary the enhanced death benefit is equal to the total purchase
payments received less any amounts withdrawn. On any Contract anniversary prior
to the Primary Annuitant's 80th birthday, the enhanced death benefit is the
Contract value on that date, but not less than what the enhanced death benefit
was on the last preceding valuation date. On any other valuation date before the
Primary Annuitant's 80th birthday, the enhanced death benefit will be the amount
determined on the most recent Contract anniversary, plus purchase payments we
receive thereafter, less withdrawals. On any valuation date on or after the
Primary Annuitant's 80th birthday the enhanced death benefit will be the
enhanced death benefit on the Contract anniversary immediately prior to the
Primary Annuitant's 80th birthday increased by purchase payments we received and
decreased by any amounts withdrawn after that Contract anniversary. We deduct
the extra cost for the enhanced death benefit from the Contract value on each
Contract anniversary while the enhanced death benefit is in effect. See
"Enhanced Death Benefit Charge", p. 20. The
14
<PAGE> 23
enhanced death benefit is available for issue ages up to 65 and must be elected
when the Contract is issued. The enhanced death benefit will remain in effect
until the maturity date or the death of the Primary Annuitant or you ask us to
remove it from your Contract. You cannot add it to your Contract again after it
has been removed.
2. Distribution of the Death Benefit.
When the employee dies, the contingent Annuitant automatically becomes the new
Annuitant and the Contract continues in force, beginning with a value equal to
the death benefit. The Owner, if living, or otherwise the beneficiary may elect
to receive the death benefit in a lump sum or under a payment plan. See
"Variable Payment Plans", below. If no contingent annuitant has been named, the
death benefit becomes payable to the Owner.
MATURITY BENEFIT Purchase payments under the Contract are payable until the
maturity date specified in the Contract. You may select any date up to age 90 as
the maturity date, subject to applicable tax and state law requirements,
including the minimum distribution requirements (See "Minimum Distribution
Requirements, p. 18). On the maturity date, if you have not elected any other
permissible payment plan, we will change the maturity date to the Contract
anniversary nearest the Annuitant's 90th birthday. On that date, if you have not
elected any other permissible payment plan, we will pay the value of the
Contract in monthly payments for life under a variable payment plan with
payments certain for ten years.
VARIABLE PAYMENT PLANS
We will pay part or all of the benefits under a Contract under a variable
payment plan you select. Under a variable plan, you bear the entire investment
risk, since we make no guarantees of investment return. Accordingly, there is no
guarantee of the amount of the variable payments, and you must expect the amount
of such payments to change from month to month. For a discussion of tax
considerations and limitations regarding the election of payment plans, see
"Federal Income Taxes", p. 18.
DESCRIPTION OF PAYMENT PLANS The following payment plans are available:
1. Payments for a Certain Period. An annuity payable monthly for a specified
period of five to 30 years.
2. Life Annuity with or without Certain Period. An annuity payable monthly until
the payee's death, or until the expiration of a selected certain period,
whichever is later. After the payee's death during the certain period, if any,
we will make payments as they are due to the designated contingent beneficiary.
You may select a certain period of either 10 or 20 years, or you may choose a
plan with no certain period.
3. Joint and Survivor Life Annuity with Certain Period. An annuity payable
monthly for a certain period of 10 years and thereafter to two persons for their
joint lives. On the death of either payee, payments continue for the remainder
of the 10 years certain or the remaining lifetime of the survivor, whichever is
longer. We may limit the election of a payment plan to one that results in an
initial payment of at least $50. A payment plan will continue even if payments
fall to less than $50 after the payment plan begins.
From time to time we may establish payment plan rates with greater actuarial
value than those stated in the Contract and make them available at the time of
settlement. We may also make available other payment plans, with provisions and
rates we publish for those plans.
AMOUNT OF ANNUITY PAYMENTS We will determine the amount of the first annuity
payment on the basis of the particular payment plan you select, the annuity
payment rate and, for plans involving life contingencies, the Annuitant's
adjusted age. We will calculate the amount of the first annuity payment on a
basis that takes into account the length of time over which we expect annuity
payments to continue. The first payment will be lower for an Annuitant who is
younger when payments begin, and higher for an Annuitant who is older, if the
payment plan involves life contingencies. The first payment will be lower if the
payment plan includes a longer certain period. Variable annuity payments after
the first will vary from month to month to reflect the fluctuating value of the
Annuity Units credited to your Contract. Annuity Units represent the interest of
the Contract in each Division of the Account after annuity payments begin. Class
A Accumulation Units become Class A Annuity Units and Class B Accumulated Units
become Class B Annuity Units on the maturity date.
ASSUMED INVESTMENT RATE The variable annuity rate tables for the Contracts are
based upon an Assumed Investment Rate of 3 1/2%. Variable annuity rate tables
based upon an Assumed Investment Rate of 5% are also available where permitted
by state law.
The Assumed Investment Rate affects both the amount of the first variable
payment and the amount by which subsequent payments increase or decrease. The
Assumed Investment Rate does not affect the actuarial value of the future
payments as of the date when payments begin, though it does affect the actual
amount which may be received by an individual Annuitant.
Over a period of time, if each Division achieved a net investment result exactly
equal to the Assumed Investment Rate applicable to a particular payment plan,
the amount of annuity payments would be level. However, if the Division achieved
a net investment result greater than the Assumed Investment Rate, the amount of
annuity payments would increase. Similarly, if the Division achieved a net
investment result smaller than the Assumed Investment Rate, the amount of
annuity payments would decrease.
15
<PAGE> 24
A higher Assumed Investment Rate will result in a larger initial payment but
more slowly rising and more rapidly falling subsequent payments than a lower
Assumed Investment Rate.
ADDITIONAL INFORMATION
TRANSFERS BETWEEN DIVISIONS AND PAYMENT PLANS You may change the allocation of
purchase payments among the Divisions and transfer values from one Division to
another both before and after annuity payments begin. In order to take full
advantage of these features you should carefully consider, on a continuing
basis, which Division or apportionment is best suited to your long-term
investment needs.
You may at any time change the allocation of purchase payments among the
Divisions by written notice to us. Purchase payments we receive at our Home
Office on and after the date on which we receive the notice will be applied to
provide Accumulation Units in one or more Divisions on the basis of the new
allocation.
Before the effective date of a payment plan you may, upon written request,
transfer Accumulation Units from one Division to another. After the effective
date of a payment plan the payee may transfer Annuity Units from one Division to
another. We will adjust the number of Accumulation or Annuity Units to be
credited to reflect the respective value of the Accumulation and Annuity Units
in each of the Divisions. For Accumulation Units the minimum amount which may be
transferred is the lesser of $100 or the entire value of the Accumulation Units
in the Division from which the transfer is being made. For each transfer
beginning with the thirteenth in any Contract year we may deduct a transfer fee
of $25 from the amount transferred. We currently make no charge for transfers.
If you contemplate the transfer of funds from one Division to another, you
should consider the risk inherent in a switch from one investment medium to
another. In general, frequent transfers based on short-term expectations for the
stock and bond markets, especially transfers of large sums, will tend to
accentuate the danger that a transfer will be made at an inopportune time.
You may transfer amounts which you have invested on a fixed basis to any
Division of the Account, and the value of Accumulation Units in any Division of
the Account to the Guaranteed Interest Fund for investment on a fixed basis,
subject to the restrictions described in the Contract. See "The Guaranteed
Interest Fund", p. 17.
After the effective date of a payment plan which does not involve a life
contingency (i.e., Plan 1) a payee may transfer to either form of life annuity
at no charge. We will apply the value of the remaining payments to the new plan
selected. We will determine the amount of the first annuity payment under the
new plan on the basis of the particular plan selected, the annuity payment rate
and the Annuitant's adjusted age and sex. Subsequent payments will vary to
reflect changes in the value of the Annuity Units credited. We permit other
transfers between payment plans subject to such limitations we may reasonably
determine. Generally, however, we do not permit transfer from a payment plan
involving a life contingency to a payment plan which does not involve the same
life contingency.
You may make transfers from the Money Market Division at any time while a
payment plan is in force. The Contracts provide that transfers between the other
Divisions and transfers between payment plans may be made after the payment plan
has been in force for at least 90 days and thereafter whenever at least 90 days
have elapsed since the date of the last transfer. At present we permit transfers
at any time. We will make the transfer as of the close of business on the
valuation date coincident with or next following the date on which we receive
the request for transfer at our Home Office, or at a later date you request.
GENDER-BASED ANNUITY PAYMENT RATES Federal law, and the laws of certain states,
may require that annuity considerations and annuity payment rates be determined
without regard to the sex of the Annuitant. Because we offer the Contracts for
use with HR-10 Plans where these rules may have general application, the annuity
payment rates in the Contracts do not distinguish between male and female
Annuitants. However, Contracts with sex-distinct rates are available on request.
Prospective purchasers of the Contracts should review any questions in this area
with qualified counsel.
OWNERS OF THE CONTRACTS The Owner of the Contract has the sole right to exercise
all rights and privileges under the Contract, except as the Contract otherwise
provides. The Owner is ordinarily the retirement plan, but may be the employer
or the Annuitant or other person. The Annuitant is the person upon whose life
the Contract is issued and Contract benefits depend. The Primary Annuitant is
the person upon whose life the Contract is initially issued. The Contingent
Annuitant is the person who becomes the Annuitant upon the death of the
Annuitant. In this prospectus, "you" means the Owner or a prospective purchaser
of the Contract.
DEFERMENT OF BENEFIT PAYMENTS We reserve the right to defer determination of the
withdrawal value of the Contracts, or the payment of benefits under a variable
payment plan, until after the end of any period during which the right to redeem
shares of either of the mutual funds is suspended, or payment of the redemption
value is postponed, and for any period during which the New York Stock Exchange
is closed or trading thereon is restricted or an emergency exists, so that
valuation of the assets of the Fund or disposal of securities they hold is not
reasonably practical; or as such deferment is otherwise permitted by applicable
law.
DIVIDENDS The Contracts share in our divisible surplus, to the extent we
determine annually, except while payments are being made under a variable
payment
16
<PAGE> 25
plan. Distributions of divisible surplus are commonly referred to as
"dividends". Any contributions to our divisible surplus would result from more
favorable expense experience than we have assumed in determining the deductions.
We do not expect the Contracts to make a significant contribution to our
divisible surplus and we do not expect to pay dividends on the Contracts.
For the Back Load Contracts we reduce expense charges by converting Class B
Accumulation Units to Class A Accumulation Units on larger, older Contracts. See
"Mortality Rate and Expense Risk Charges", p. 19. The Contracts issued prior to
the date of this prospectus do not include this conversion feature, and we
currently pay dividends on some of those Contracts. See "Dividends for Contracts
Issued Prior to March 31, 2000", p. 21.
SUBSTITUTION AND CHANGE Pursuant to authority of our Board of Trustees, (a) we
may invest the assets of a Division in securities of another mutual fund or
another issuer, instead of the Portfolio or Fund in which you have invested, as
a substitute for the shares you already have or as the securities to be
purchased in the future, or (b) we may modify the provisions of the Contracts to
assure qualification for the benefits provided by the provisions of the Internal
Revenue Code relating to retirement annuity or variable annuity contracts, or to
comply with any other applicable federal or state laws. In the event of any such
substitution or change, we may make appropriate endorsement on Contracts having
an interest in the Account and take such other action as may be necessary to
effect the substitution or change.
FIXED ANNUITY PAYMENT PLANS We will also pay Contract benefits under fixed
annuity payment plans which are not described in this Prospectus. If you select
a fixed annuity, we will cancel the Accumulation Units credited to your Deferred
Contract, we will transfer the withdrawal value of the Contract to our general
account, and you will no longer have any interest in the Account. We may make a
withdrawal charge in determining the withdrawal value. (See "Withdrawal Amount",
p. 14, and "Withdrawal Charge", p. 20)
FINANCIAL STATEMENTS Financial statements of the Account and financial
statements of Northwestern Mutual appear in the Statement of Additional
Information.
- --------------------------------------------------------------------------------
THE GUARANTEED INTEREST FUND
You may direct all or part of your purchase payments to the Guaranteed Interest
Fund for investment on a fixed basis. You may transfer amounts previously
invested in the Account Divisions to the Guaranteed Interest Fund, prior to the
maturity date, and you may transfer amounts in the Guaranteed Interest Fund to
the Account Divisions. In each case these transfers are subject, to the
restrictions described in the Contract.
Amounts you invest in the Guaranteed Interest Fund become part of our general
assets. In reliance on certain exemptive and exclusionary provisions, we have
not registered interests in the Guaranteed Interest Fund under the Securities
Act of 1933 and we have not registered the Guaranteed Interest Fund as an
investment company under the Investment Company Act of 1940. Accordingly,
neither the Guaranteed Interest Fund nor any interests therein are generally
subject to these Acts. We have been advised that the staff of the Securities and
Exchange Commission has not reviewed the disclosure in this prospectus relating
to the Guaranteed Interest Fund. This disclosure, however, may be subject to
certain generally applicable provisions of the federal securities laws relating
to the accuracy and completeness of statements made in prospectuses.
Amounts you invest in the Guaranteed Interest Fund earn interest at rates we
declare from time to time. We will guarantee the interest rate for each amount
for at least one year. The interest rate will be at an annual effective rate of
at least 3%. At the expiration of the period for which we guarantee the interest
rate, a new interest rate may apply. We credit interest and compound it daily.
We determine the effective date for a transaction involving the Guaranteed
Interest Fund in the same manner as the effective date for a transaction
involving a Division of the Account.
Investments in the Guaranteed Interest Fund are subject to a maximum limit of
$1,000,000 ($250,000 in New York) without our prior consent. To the extent that
a purchase payment or transfer from a Division of the Account causes the
Contract's interest in the Guaranteed Interest Fund to exceed this maximum
limit, we will place the amount of the excess in the Money Market Division and
it will remain there until the you instruct us otherwise.
Transfers from the Guaranteed Interest Fund to the Account Divisions are subject
to limits. After a transfer from the Guaranteed Interest Fund we will allow no
further transfers from the Guaranteed Interest Fund for a period of 365 days; in
addition, we will allow no further transfers back into the Guaranteed Interest
Fund for a period of 90 days. The maximum amount that you may transfer from the
Guaranteed Interest Fund in one transfer is the greater of (1) 25% of the amount
that you had invested in the Guaranteed Interest Fund as of the last Contract
anniversary preceding the transfer and (2) the amount of your most recent
transfer from the Guaranteed Interest Fund. But in no event will this maximum
transfer amount be less than $1,000 or more than $50,000. (The $50,000 limit
does not apply in New York.)
The deduction for mortality rate and expense risks, as described below, is not
assessed against amounts in the Guaranteed Interest Fund, and amounts in the
Guaranteed Interest Fund do not bear any expenses of
17
<PAGE> 26
either of the mutual funds. Other charges under the Contracts apply for amounts
in the Guaranteed Interest Fund as they are described in this prospectus for
amounts you invest on a variable basis. (See "Deductions", p. 19). For purposes
of allocating and deducting the annual Contract fee, we consider any investment
in the Guaranteed Interest Fund as though it were an investment of the same
amount in one of the Account Divisions.
- --------------------------------------------------------------------------------
FEDERAL INCOME TAXES
We offer the Contracts only for use under tax-qualified plans meeting the
requirements of Sections 401 and 403(a) of the Code. However, in the event
Contracts should be issued pursuant to HR-10 Plans, trusts or custodial accounts
which at the time of issuance are not qualified under the Code, some or all of
the tax benefits described herein may be lost.
CONTRIBUTION LIMITS
Any employer, including a self-employed person, can establish a plan under
Section 401(a) or 403(a) for participating employees. As a general rule, annual
contributions to a defined contribution plan made by the employer and the
employee cannot exceed the lesser of $30,000 or 25% of compensation or earned
income (up to $170,000, indexed).
Qualified plans are subject to minimum coverage, nondiscrimination and spousal
consent requirements. In addition, "top heavy" rules apply if more than 60% of
the contributions or benefits are allocated to certain highly compensated
employees. Violations of the contribution limits or other requirements may
disqualify the plan and/or subject the employer to taxes and penalties.
TAXATION OF CONTRACT BENEFITS
No tax is payable as a result of any increase in the value of a Contract until
benefits from the Contract are received. Benefits received as annuity payments
will be taxable as ordinary income when received in accordance with Section 72
of the Code. As a general rule, where an employee makes nondeductible
contributions to the Plan, the payee may exclude from income that portion of
each benefit payment which represents a return of the employee's "investment in
the contract" as defined in Section 72 until the entire "investment in the
contract" is recovered. In addition, a 10% penalty tax may be imposed on
benefits paid in excess of the benefits provided under the Plan formula if the
payee is or was a "5% owner" of the employer while a participant in the Plan.
Benefits paid in a form other than an annuity will be taxed as ordinary income
when received except for that portion of the payment, if any, which represents a
return of the employee's "investment in the contract." Benefits received as a
"lump sum distribution" may be eligible for a separate tax averaging calculation
and, with certain limited exceptions, all benefits are subject to the tax-free
rollover provisions of the Code. A 10% penalty tax may be imposed on the taxable
portion of premature payments of benefits (prior to age 59-1/2 or disability)
unless payments are made after the employee separates from service and payments
are either paid in substantially equal installments over the life or life
expectancy of the employee or are paid on account of early retirement after age
55 or unless payments are made for medical expenses in excess of 7.5% of the
employee's Adjusted Gross Income.
A loan from the Plan to an employee, other than an owner-employee, may be
taxable as ordinary income depending on the amount and terms of the loan. A loan
to an owner-employee is a prohibited transaction under the Code and could
disqualify the Plan.
Benefit payments will be subject to mandatory 20% withholding unless (1) they
are rolled over directly to another tax-qualified plan or an individual
retirement arrangement, (2) they are paid in substantially equal installments
over the life or life expectancy of the employee (or of the employee and the
employee's beneficiary) or over a period of 10 years or more, or (3) they are
"required minimum distributions."
MINIMUM DISTRIBUTION REQUIREMENTS As a general rule, the Plan is required to
make certain required distributions to the employee during the employee's life
and to the employee's beneficiary following the employee's death. A 50% penalty
tax may be imposed on payments to the extent they are less than certain required
minimum amounts.
The Plan must make the first required distribution by the "required beginning
date" and subsequent required distributions by December 31 of that year and each
year thereafter. Payments must be made over the life or life expectancy of the
employee or the lives or life expectancies of the employee and the employee's
beneficiary. The required beginning date is April 1 of the calendar year
following the later of the calendar year in which the employee attains age 70
1/2 or, if the employee is not a "5% owner" of the employer, the calendar year
in which the employee retires.
Upon the death of the employee, the Plan must make distributions under one of
the following two rules.
If the employee dies on or after the required beginning date, any remaining
interest of the employee must be distributed at least as rapidly as it was under
the method of distribution in effect on the date of death. The method of
distribution is determined by the age of the employee and the beneficiary and
whether their life expectancies are being recalculated each year.
If the employee dies before the required beginning date, the employee's entire
interest must be distributed by
18
<PAGE> 27
December 31 of the calendar year containing the fifth anniversary of the
employee's death. If the employee's interest is payable to a beneficiary
designated by the employee, the employee's interest may be paid over the life or
life expectancy of that beneficiary, provided distribution begins by December 31
of the calendar year following the year of the employee's death. If the sole
designated beneficiary is the employee's spouse, the spouse may roll over the
Contract into an IRA owned by the spouse.
The rules governing Plan provisions, payments and deductions and taxation of
distributions from such Plans and Trusts, as set forth in the Code and the
regulations relating thereto, are complex and cannot be readily summarized.
Furthermore, special rules are applicable in many situations, and prospective
purchasers desiring to adopt an HR-10 pension or profit-sharing plan or trust
should consult qualified tax counsel.
TAXATION OF NORTHWESTERN MUTUAL
We may charge the appropriate Contracts with their shares of any tax liability
which may result from the maintenance or operation of the Divisions of the
Account. We are currently making no charge. (See "Net Investment Factor", p. 14
and "Deductions", below.)
- --------------------------------------------------------------------------------
DEDUCTIONS
We will make the following deductions:
SALES LOAD For the Front Load Contract we deduct a sales load from all purchase
payments we receive. The sales load compensates us for the costs we incur in
selling the Contracts. We base the deduction on cumulative purchase payments we
have received and the rates in the table below:
<TABLE>
<CAPTION>
Cumulative Purchase Payments
Paid Under the Contract Rate
- ----------------------- ----
<S> <C>
First $100,000 4.5%
Next $400,000 2.0%
Next $500,000 1.0%
Balance over $1,000,000 0.5%
</TABLE>
MORTALITY RATE AND EXPENSE RISK CHARGES
Amount of Mortality Rate and Expense Risk Charges. The net investment factor
(see "Net Investment Factor", p. 14) we use in determining the value of
Accumulation and Annuity Units reflects a deduction on each valuation date for
mortality rate and expense risks we have assumed. For the Front Load Contract,
the deduction from Accumulation Units and Annuity Units is at a current annual
rate of 0.5% of the assets of the Account. For the Back Load Contract the
deduction for Class B Accumulation Units and Class B Annuity Units is at a
current annual rate of 1.25% of the assets of the Account. For the Back Load
Contracts the deduction for Class A Accumulation Units and Class A Annuity Units
is at a current annual rate of 0.5% of the assets of the Account. Our Board of
Trustees may increase or decrease the deduction, but in no event may the
deduction exceed an annual rate of 0.75% for the Front Load Contract, 1.50% for
the Back Load Contract Class B Accumulation and Annuity Units, and 0.75% for the
Back Load Contract Class A Accumulation and Annuity Units. We will not increase
the deduction for mortality and expense risks for at least five years from the
date of this prospectus.
Reduction in Mortality Rate and Expense Risk Charges. For the Back Load
Contracts we convert Class B Accumulation Units to Class A Accumulation Units on
a Contract anniversary if the Contract value is at least $25,000 and the
purchase payment which paid for the Class B Accumulation Units has reached
Category Zero, that is, its withdrawal charge rate is 0%. See "Withdrawal
Charge" p. 20.
As a result of the conversion, the mortality rate and expense risks charge is
reduced from 1.25% to 0.50% on these units based on current rates. The
conversion amount includes the purchase payment in Category Zero and a
proportionate share of investment earnings. We allocate the conversion amount
proportionately to each Division, and we adjust the number of Accumulation Units
in each Division to reflect the relative values for Class A and Class B
Accumulation Units on the date of the conversion. The same conversion process
and a similar result applies to amounts in the Guaranteed Interest Fund. We do
not convert Class A Accumulation Units back to Class B Accumulation Units even
if the value of your Contract falls below $25,000. We do not convert Annuity
Units from Class B to Class A.
Risks and Expenses. The risks we assume are (a) the risk that annuity payments
will continue for longer periods than anticipated because the Annuitants as a
group live longer than expected, and (b) the risk that the charges we make may
be insufficient to cover the actual costs we incur in connection with the
Contracts. We assume these risks for the duration of the Contract. The deduction
for these risks is the only expense item paid by the Account to date. The mutual
funds pay expenses which are described in the attached prospectuses for the
mutual funds.
The net investment factor also reflects the deduction of any reasonable expenses
which may result if there were a substitution of other securities for shares of
the mutual funds as described under "Substitution and Change", p. 17, and any
applicable taxes, i.e., any tax liability we have paid or reserved for resulting
from the maintenance or operation of a Division of the Account, other than
applicable premium taxes which we may deduct directly from considerations. We do
not presently anticipate that we will make any deduction for federal income
taxes (see "Taxation of Northwestern Mutual", p. 19), nor do we anticipate that
maintenance
19
<PAGE> 28
or operation of the Account will give rise to any deduction for state or local
taxes. However, we reserve the right to charge the appropriate Contracts with
their shares of any tax liability which may result under present or future tax
laws from the maintenance or operation of the Account or to deduct any such tax
liability in the computation of the net investment factor for such Contracts.
CONTRACT FEE On each Contract anniversary prior to the maturity date we make a
deduction of $30 for administrative expenses relating to a Deferred Contract
during the prior year. We make the charge by reducing the number of Accumulation
Units credited to the Contract. For purposes of allocating and deducting the
annual Contract fee, we consider any investment in the Guaranteed Interest Fund
as though it were an investment of the same amount in one of the Account
Divisions. We cannot increase this charge. The charge is intended only to
reimburse us for our actual administrative expenses. We currently are waiving
the charge, if the Contract value on the Contract anniversary is $25,000 or
more.
WITHDRAWAL CHARGE
Withdrawal Charge Rates. For Back Load Contracts, a withdrawal charge free
amount is available on a Contract if the Contract value is at least $10,000 on
the Contract anniversary preceding the withdrawal. For each Contract year after
the first one, the withdrawal charge free amount is 10% of the value of the
Class B Accumulation Units on the last Contract anniversary. Otherwise, we will
deduct a withdrawal charge for sales expenses if you withdraw Class B
Accumulation Units for cash. We will base the withdrawal charge on the
Categories and the Rates in the table below. We base the amount in each Category
on cumulative purchase payments you have made and on the number of Contract
anniversaries that have occurred since you made each purchase payment.
<TABLE>
<CAPTION>
Category Rate
- -------- ----
<S> <C>
Eight.............................................6%
Seven.............................................6
Six...............................................6
Five..............................................5
Four..............................................4
Three.............................................3
Two...............................................2
One...............................................1
Zero..............................................0
</TABLE>
The first $100,000 of total purchase payments paid over the life of the Contract
start in Category Eight, the next $400,000 start in Category Four, and all
additional purchase payments paid start in Category Two. As of each Contract
anniversary, we move any amount in a Category to the next lower Category until
the Contract anniversary on which that amount reaches Category Zero. The total
withdrawal charge will be the sum of all the results calculated by multiplying
the amount in each Category by the Rate for that Category. The amounts we use
will be taken first from the withdrawal charge free amount; next from the Class
A Accumulation Units; next from the Class B Accumulation Units in the order that
produces the lowest withdrawal charge; and last from any remaining value in the
contract. However, any amounts we use to determine the charge for a partial
withdrawal will not be used to determine subsequent withdrawal charges.
Waiver of Withdrawal Charges. When we receive proof of death of the Primary
Annuitant, we will waive withdrawal charges applicable at the date of death by
moving purchase payments received prior to the date of death to Category Zero.
We will waive the withdrawal charge if the Primary Annuitant has a terminal
illness, or is confined to a nursing home or hospital after the first contract
year, in accordance with the terms of the Contract. You may not make purchase
payments after we are given proof of a terminal illness or confinement.
We will make no withdrawal charge when you select a variable payment plan.
However, we will make the withdrawal charge if you make a withdrawal, or partial
withdrawal, within five years after the beginning of a variable payment plan
which is not contingent on the payee's life (Plan 1).
For fixed payment plans the Contract provides for deduction of the withdrawal
charge when the payment plan is selected. By current administrative practice, we
will waive the withdrawal charge upon selection of a fixed payment plan for a
certain period of 12 years or more (Plan 1) or any fixed payment plan which
involves a life contingency (Plans 2 or 3) if you select the payment plan after
the Contract has been in force for at least one full year.
ENHANCED DEATH BENEFIT CHARGE On each Contract anniversary on which the enhanced
death benefit is in effect, we deduct from the Contract value a charge based on
the amount of the enhanced death benefit on the Contract Anniversary and the age
of the Annuitant when the Contract was issued. The charge is 0.10% of the amount
of the enhanced death benefit for issue age 45 or less, 0.20% for issue age
46-55, and 0.40% for issue age 56-65. This charge is for the risks we assume in
guaranteeing the enhanced death benefit. We deduct the charge from the Divisions
of the Account and the Guaranteed Interest Fund in proportion to the amounts you
have invested.
PREMIUM TAXES The Contracts provide for the deduction of applicable premium
taxes, if any, from purchase payments or from Contract benefits. Various
jurisdictions levy premium taxes. Premium taxes presently range from 0% to 1% of
total purchase payments. Many jurisdictions presently exempt from premium taxes
annuities such as the Contracts. As a matter of current practice, we do not
deduct premium taxes from purchase payments received under the
20
<PAGE> 29
Contracts or from Contract benefits. However, we reserve the right to deduct
premium taxes in the future.
EXPENSES FOR THE PORTFOLIOS AND FUNDS The expenses borne by the Portfolios and
Funds in which the assets of the Account are invested are described in the
prospectuses for Northwestern Mutual Series Fund, Inc. and the Russell Insurance
Funds. See the prospectuses attached to this prospectus.
CONTRACTS ISSUED PRIOR TO MARCH 31, 2000 During the period prior to March 31,
2000 and after March 31, 1995 we issued both Front Load Contracts and Back Load
Contracts. For the Front Load Contracts the deduction for sales expenses is 4%
on the first $100,000, 2% on the next $400,000, 1% the next $500,000, and 0.5%
on purchase payments in excess of $1 million, based on total cumulative purchase
payments paid under the Contract. The charge against Accumulation Units for
mortality and expense risks is 0.4% of the assets of the Account, which we may
raise to a maximum rate of 0.75%. The charge against Annuity Units for mortality
and expense risks is zero, which we may raise to a maximum rate of 0.75%. For
the Back Load Contracts there is a surrender charge of 8% on the first $100,000
of purchase payments, 4% on the next $400,000, 2% on the next $500,000, and 1%
on purchase payments in excess of $1 million, based on total cumulative purchase
payments paid under the Contract. The surrender charge applicable for each
purchase payment reduces by 1% on each Contract anniversary. A withdrawal charge
free amount is available, but the amount is limited by the excess of the
Contract value over the cumulative purchase payments on the date of the
withdrawal. The charge for mortality and expense risks for these Contracts is
1.25% of the assets of the Account, which we may raise to a maximum annual rate
of 1.50%. The Annual Contract fee is $30. We currently waive the Contract fee if
the Contract value is $50,000 or more.
CONTRACTS ISSUED PRIOR TO MARCH 31, 1995 For Contracts issued prior to March 31,
1995 and after December 16, 1981 there is no front-end sales load but there is a
surrender charge of 8% on the first $25,000 of purchase payments, 4% on the next
$75,000 and 2% on purchase payments in excess of $100,000, based on total
cumulative purchase payments paid under the Contract. The surrender charge
applicable for each purchase payment reduces by 1% on each Contract anniversary.
A withdrawal charge free amount is available, but the amount is limited by the
excess of the Contract value over the cumulative purchase payments on the date
of the withdrawal. The charge for mortality and expense risks for those
Contracts is 1.25% of the assets of the Account. The annual Contract fee is the
lesser of $30 or 1% of the Contract value. See the table of accumulation unit
values on page 9.
CONTRACTS ISSUED PRIOR TO DECEMBER 17, 1981 For Contracts issued prior to
December 17, 1981 there is no surrender charge, but purchase payments are
subject to a deduction for sales expenses. The deduction is 8% on the first
$5,000 received during a single Contract year as defined in the Contract, 4% on
the next $20,000, 2% on the next $75,000 and 1% on the excess over $100,000. The
charge for mortality and expense risks for these Contracts is 0.75% of the
assets of the Account, which we may raise to a maximum annual rate of 1%. There
is no annual Contract fee. See the table of accumulation unit values on page 11.
DIVIDENDS FOR CONTRACTS ISSUED PRIOR TO MARCH 31, 2000 During the year 2000 we
are paying dividends on approximately 20% of the in-force variable annuity
Contracts we issued prior to March 31, 2000. Dividends are not guaranteed to be
paid in future years. The dividend amount is volatile since it is based on the
average variable Contract value which is defined as the value of the
Accumulation units on the last Contract anniversary adjusted to reflect any
transactions since that date which increased or decreased the Contract's
interest in the Account.
Dividends on these variable annuities arise principally as a result of more
favorable expense experience than that which we assumed in determining
deductions. Such favorable experience is generated primarily by older and/or
larger Contracts, which have a mortality and expense risk charge of at least
0.75%. In general, we are not paying dividends on Contracts with an average
variable Contract value of less than $30,000, and about 75% of those with a
value above $30,000 will receive dividends. The expected dividend payout for the
year 2000 represents about 0.39% of the average variable Contract value for
those Contracts that will receive dividends. The maximum dividend we are paying
on a specific contract is about 0.70%.
We pay any dividend for a Contract on the anniversary date of that Contract. We
apply the dividend as a net purchase payment unless you elect to have the
dividend paid in cash.
REDUCED CHARGES FOR EXCHANGE TRANSACTIONS As a matter of current practice, we
permit owners of fixed dollar annuities we have previously issued to exchange
those contracts for Front Load or Back Load Contracts without paying a second
charge for sales expenses. This rule is subject to a number of exceptions and
qualifications. We may change or withdraw it at any time.
In general, we make a $25 administrative charge on these exchange transactions
and we permit only one such transaction in any 12-month period. Transactions on
this basis are subject to a limit of 20% of the amount held under the fixed
annuity contract in any 12-month period, but we are presently waiving this
limit.
Amounts exchanged from a fixed contract which provides for a surrender charge
are not charged for sales expenses when the exchange is effected. We place these
amounts in the same withdrawal charge category under the new Back Load Contract
as they were before.
21
<PAGE> 30
We place exchange proceeds from fixed contracts which have no surrender charge
provisions in the 0% withdrawal charge category. As an alternative, exchange
proceeds from such a fixed contract may be added to a Front Load Contract or to
a Deferred Contract issued prior to December 17, 1981 without any deduction for
sales expenses.
Fixed annuity contracts (which are not described in this prospectus) are
available in exchange for the Contracts on a comparable basis.
- --------------------------------------------------------------------------------
DISTRIBUTION OF THE CONTRACTS
We sell the Contracts through individuals who are licensed insurance agents
appointed by Northwestern Mutual and are registered representatives of
Northwestern Mutual Investment Services, LLC, our wholly-owned subsidiary.
Northwestern Mutual Investment Services, LLC is located at 720 East Wisconsin
Avenue, Milwaukee, Wisconsin 53202. Northwestern Mutual Investment Services, LLC
is a registered broker-dealer under the Securities Exchange Act of 1934, and a
member of the National Association of Securities Dealers. Where state law
requires, these agents will also be licensed securities salesmen. Commissions
paid to the agents on sales of the Contracts will not exceed 4% of purchase
payments.
22
<PAGE> 31
TABLE OF CONTENTS FOR STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DISTRIBUTION OF THE
CONTRACTS.....................................B-2
DETERMINATION OF ANNUITY
PAYMENTS......................................B-2
Amount of Annuity Payments..................B-2
Annuity Unit Value..........................B-3
Illustrations of Variable Annuity
Payments..................................B-3
VALUATION OF ASSETS OF THE
ACCOUNT.......................................B-4
TRANSFERABILITY RESTRICTIONS....................B-4
EXPERTS.........................................B-4
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
FINANCIAL STATEMENTS OF THE
ACCOUNT (for the two years ended
December 31, 1999)...........................B-5
REPORT OF INDEPENDENT
ACCOUNTANTS (for the two
years ended December 31, 1999)...............B-17
FINANCIAL STATEMENTS OF
NORTHWESTERN MUTUAL
(for the three years ended
December 31, 1999)..........................B-18
REPORT OF INDEPENDENT
ACCOUNTANTS (for the three years
ended December 31, 1999)....................B-29
</TABLE>
This Prospectus sets forth concisely the information about NML Variable
Annuity Account A that a prospective investor ought to know before investing.
Additional information about Account A has been filed with the Securities and
Exchange Commission in a Statement of Additional Information which is
incorporated herein by reference. The Statement of Additional Information is
available upon request and without charge from The Northwestern Mutual Life
Insurance Company. To receive a copy, return the request form to the address
listed below, or telephone 1-888-455-2232.
TO: The Northwestern Mutual Life Insurance Company
Annuity and Accumulation Products Marketing Department
Room E12J
720 East Wisconsin Avenue
Milwaukee, WI 53202
Please send a Statement of Additional Information for NML Variable
Annuity Account A to:
Name
---------------------------------------------------------------------
Address
------------------------------------------------------------------
-------------------------------------------------------------------------
City State Zip
-------------------------------- -------------- ---------------
<PAGE> 32
More information about Northwestern Mutual Series Fund, Inc. is included in the
Fund's Statement of Additional Information (SAI), incorporated by reference in
this prospectus, which is available free of charge.
More information about the Fund's investments is included in the Fund's annual
and semi-annual reports, which discuss the market conditions and investment
strategies that significantly affected each Portfolio's performance during the
previous fiscal period.
To request a free copy of the Fund's SAI, or current annual or semi-annual
report, call us at 1-888-455-2232. Information about the Fund (including the
SAI) can be reviewed and copied at the Public Reference Room of the Securities
and Exchange Commission (SEC) in Washington, DC. Information on the operation of
the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330.
Reports and other information about the Fund are available on the SEC's Internet
site at http://www.sec.gov. Copies of this information may be obtained, upon
payment of a duplicating fee, by writing the Public Reference Section of the
SEC, Washington, DC 20549-6009.
N O R T H W E S T E R N M U T U A L L I F E
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
for Retirement Plans of Self-Employed Persons
and Their Employees
NML VARIABLE ANNUITY ACCOUNT A
NORTHWESTERN MUTUAL SERIES FUND, INC.
RUSSELL INSURANCE FUNDS
P R O S P E C T U S
Investment Company Act File Nos. 811-3990 and 811-5371
NORTHWESTERN
MUTUAL LIFE(R)
PO Box 3095
Milwaukee WI 53201-3095
Change Service Requested
<PAGE> 33
STATEMENT OF ADDITIONAL INFORMATION
VARIABLE ANNUITY CONTRACTS
(for Retirement Plans of Self-Employed Persons and their Employees)
NML VARIABLE ANNUITY ACCOUNT A
(the "Account"),
a separate investment account of
The Northwestern Mutual Life Insurance Company
("Northwestern Mutual")
- --------------------------------------------------------------------------------
This Statement of Additional Information is not a prospectus
but supplements and should be read in conjunction with the
prospectus for the Contracts. A copy of the prospectus may be
obtained from The Northwestern Mutual Life Insurance Company,
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202,
telephone number (414) 271-1444.
- --------------------------------------------------------------------------------
The Date of the Prospectus to which this Statement of
Additional Information Relates is March 31, 2000.
The Date of this Statement of Additional Information is March
31, 2000.
B-1
<PAGE> 34
DISTRIBUTION OF THE CONTRACTS
The Contracts are offered on a continuous basis exclusively through
individuals who, in addition to being life insurance agents of Northwestern
Mutual, are registered representatives of Northwestern Mutual Investment
Services, LLC ("NMIS").
NMIS may be considered the underwriter of the Contracts for purposes of
the federal securities laws. The following amounts of commissions were paid on
sales of the Contracts, including commissions on sales of variable annuity
contracts to corporate pension plans, during each of the last three years:
<TABLE>
<CAPTION>
Year Amount
---- ------
<S> <C> <C>
1999 $2,679,128
1998 $2,760,049
1997 $2,203,105
</TABLE>
DETERMINATION OF ANNUITY PAYMENTS
The following discussion of the method for determining the amount of
monthly annuity payments under a variable payment plan is intended to be read in
conjunction with these sections of the prospectus for the Contracts: "Variable
Payment Plans", p. 15, including "Description of Payment Plans", p. 15, "Amount
of Annuity Payments", p. 15, and "Assumed Investment Rate", p. 15; "Dividends",
p. 16; "Net Investment Factor", p. 14; and "Deductions", p. 19.
AMOUNT OF ANNUITY PAYMENTS The amount of the first annuity payment under a
variable Payment Plan will be determined on the basis of the particular Payment
Plan selected, the annuity payment rate and, for plans involving life
contingencies, the Annuitant's adjusted age. The amount of the first payment is
the sum of the payments from each Division of the Account determined by applying
the appropriate annuity payment rate to the product of the number of
Accumulation Units in the Division on the effective date of the Payment Plan and
the Accumulation Unit value for the Division on that date. Annuity rates
currently in use are based on the 1983 a Table with age adjustment.
Variable annuity payments after the first will vary from month to month
and will depend upon the number and value of Annuity Units credited to the
Annuitant. After the effective date of a Payment Plan a Contract will not share
in the divisible surplus of Northwestern Mutual.
The number of Annuity Units in each Division is determined by dividing the
amount of the first annuity payment from the Division by the value of an Annuity
Unit on the effective date of the Payment Plan. The number of Annuity Units thus
credited to the Annuitant in each Division remains constant throughout the
annuity period. However, the value of Annuity Units in each Division will
fluctuate with the investment experience of the Division.
The amount of each variable annuity payment after the first is the sum of
payments from each Division determined by multiplying this fixed number of
Annuity Units each month by the value of an Annuity Unit for the Division on (a)
the fifth valuation date prior to the payment due date if the payment due date
is a valuation date, or (b) the sixth valuation date prior to the payment due
date if the payment due date is not a valuation date. To illustrate, if a
payment due date falls on a Friday, Saturday or Sunday, the amount of the
payment will normally be based upon the Annuity Unit value calculated on the
preceding Friday. The preceding Friday would be the fifth valuation date prior
to the Friday due date, and the sixth valuation date prior to the Saturday or
Sunday due dates.
B-2
<PAGE> 35
ANNUITY UNIT VALUE The value of an Annuity Unit for each Division was
established at $1.00 as of the date operations began for that Division. The
value of an Annuity Unit on any later date varies to reflect the investment
experience of the Division, the Assumed Investment Rate on which the annuity
rate tables are based, and the deduction for mortality rate and expense risks
assumed by Northwestern Mutual.
The Annuity Unit value for each Division on any valuation date is
determined by multiplying the Annuity Unit value on the immediately preceding
valuation date by two factors: (a) the net investment factor for the current
period for the Division; and (b) an adjustment factor to neutralize the Assumed
Investment Rate used in calculating the annuity rate tables.
ILLUSTRATIONS OF VARIABLE ANNUITY PAYMENTS To illustrate the manner in
which variable annuity payments are determined consider this example. Item (4)
in the example shows the applicable monthly payment rate for an annuitant,
adjusted age 65, who has elected a life annuity Payment Plan with a certain
period of 10 years with an Assumed Investment Rate of 3-1/2% (Plan 2, as
described in the prospectus). The example is for a Contract with sex-distinct
rates.
<TABLE>
<S> <C>
(1) Assumed number of Accumulation Units in
Balanced Division on maturity date ....................................... 25,000
(2) Assumed Value of an Accumulation Unit in
Balanced Division at maturity............................................. $2.000000
(3) Cash Value of Contract at maturity, (1) X (2)............................. $50,000
(4) Assumed applicable monthly payment rate per
$1,000 from annuity rate table............................................ $5.35
(5) Amount of first payment from Balanced Division,
(3) X (4) divided by $1,000............................................... $267.50
(6) Assumed Value of Annuity Unit in
Balanced Division at maturity............................................. $1.500000
(7) Number of Annuity Units credited in
Balanced Division, (5) divided by (6)..................................... 178.33
</TABLE>
The $50,000 value at maturity provides a first payment from the Balanced
Division of $267.50, and payments thereafter of the varying dollar value of
178.33 Annuity Units. The amount of subsequent payments from the Balanced
Division is determined by multiplying 178.33 units by the value of an Annuity
Unit in the Balanced Division on the applicable valuation date. For example, if
that unit value is $1.501000, the monthly payment from the Division will be
178.33 multiplied by $1.501000, or $267.68.
However, the value of the Annuity Unit depends entirely on the
investment performance of the Division. Thus in the example above, if the net
investment rate for the following month was less than the Assumed Investment
Rate of 3-1/2%, the Annuity Unit would decline in value. If the Annuity Unit
value declined to $1.499000 the succeeding monthly payment would then be 178.33
X $1.499000, or $267.32.
For the sake of simplicity the foregoing example assumes that all of
the Annuity Units are in the Balanced Division. If there are Annuity Units in
two or more Divisions, the annuity payment from each Division is calculated
separately, in the manner illustrated, and the total monthly payment is the sum
of the payments from the Divisions.
B-3
<PAGE> 36
VALUATION OF ASSETS OF THE ACCOUNT
The value of Portfolio or Fund shares held in each Division of the
Account at the time of each valuation is the redemption value of such shares at
such time. If the right to redeem shares of a Portfolio or Fund has been
suspended, or payment of redemption value has been postponed, for the sole
purpose of computing annuity payments the shares held in the Account (and
Annuity Units) may be valued at fair value as determined in good faith by the
Board of Trustees of Northwestern Mutual.
TRANSFERABILITY RESTRICTIONS
Ownership of a Contract cannot be changed or the Contract sold,
assigned or pledged as collateral for a loan, or for any other purpose, to any
person other than Northwestern Mutual; except, that if the Owner of the Contract
is a trustee of an employee trust qualified under the Code, or the custodian of
a custodial account treated as such, it may transfer the Contract to a successor
trustee or custodian. In addition, the trustee or custodian, as well as the
employer under a qualified non-trusted pension plan, may assign the Contract to
an employee upon termination of employment.
EXPERTS
The financial statements of the Account as of December 31, 1999 and for
each of the two years in the period ended December 31, 1999 and of Northwestern
Mutual as of December 31, 1999 and 1998 and for each of the three years in the
period ended December 31, 1999 included in this Statement of Additional
Information have been so included in reliance on the reports of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting. PricewaterhouseCoopers LLP
provides audit services for the Account. The address of PricewaterhouseCoopers
LLP is 100 East Wisconsin Avenue, Suite 1500, Milwaukee, Wisconsin 53202.
B-4
<PAGE> 37
NML VARIABLE ANNUITY ACCOUNT A
Statement of Assets and Liabilities
December 31, 1999
(in thousands)
<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS
Investments at Market Value:
Northwestern Mutual Series Fund, Inc.
Small Cap Growth Stock
2,702 shares (cost $4,384)......................... $ 4,847
Aggressive Growth Stock
21,708 shares (cost $63,877)....................... 104,344
International Equity
25,519 shares (cost $39,067)....................... 45,439
Index 400 Stock
1,981 shares (cost $2,051)......................... 2,205
Growth Stock
14,699 shares (cost $29,389)....................... 39,031
Growth and Income Stock
22,898 shares (cost $34,015)....................... 35,735
Index 500 Stock
43,711 shares (cost $89,440)....................... 169,861
Balanced
143,907 shares (cost $230,277)..................... 319,678
High Yield Bond
8,444 shares (cost $8,362)......................... 6,940
Select Bond
19,599 shares (cost $23,331)....................... 22,162
Money Market
28,967 shares (cost $28,967)....................... 28,975
Russell Insurance Funds
Multi-Style Equity
148 shares (cost $2,438)........................... 2,500
Aggressive Equity
85 shares (cost $1,024)............................ 1,142
Non-U.S.
98 shares (cost $1,229)............................ 1,383
Real Estate Securities
38 shares (cost $342).............................. 332
Core Bond
72 shares (cost $716).............................. 693 $785,267
--------
Due from Sale of Fund Shares.............................. 1,329
Due from Northwestern Mutual Life Insurance Company....... 1,012
--------
Total Assets..................................... $787,608
========
LIABILITIES
Due to Participants....................................... $ 1,063
Due to Northwestern Mutual Life Insurance Company......... 1,329
Due on Purchase of Fund Shares............................ 1,012
--------
Total Liabilities................................ 3,404
--------
EQUITY (NOTE 8)
Contracts Issued Prior to December 17, 1981............... 74,251
Contracts Issued After December 16, 1981 and Prior to
March 31, 1995.......................................... 584,436
Contracts Issued On or After March 31, 1995:
Front Load Version...................................... 20,716
Back Load Version....................................... 104,801
--------
Total Equity..................................... 784,204
--------
Total Liabilities and Equity..................... $787,608
========
</TABLE>
The Accompanying Notes are an Integral Part of the Financial Statements
B- 5 Account A Financial Statements
<PAGE> 38
NML VARIABLE ANNUITY ACCOUNT A
Statement of Operations
(in thousands)
<TABLE>
<CAPTION>
SMALL CAP
GROWTH STOCK AGGRESSIVE GROWTH
COMBINED DIVISION# STOCK DIVISION
---------------------------- ------------ ----------------------------
EIGHT MONTHS
YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income............................ $ 56,817 $ 34,233 $ 149 $ 2,871 $ 3,294
Annuity Rate and Expense Guarantees........ 8,722 8,067 13 1,001 1,049
-------- -------- ------ ------- -------
Net Investment Income (Loss)............... 48,095 26,166 136 1,870 2,245
-------- -------- ------ ------- -------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS
Realized Gain (Loss) on Investments........ 51,300 37,625 550 10,360 6,752
Unrealized Appreciation (Depreciation) of
Investments During the Period............ 9,270 36,250 464 18,776 (3,928)
-------- -------- ------ ------- -------
Net Gain (Loss) on Investments............. 60,570 73,875 1,014 29,136 2,824
-------- -------- ------ ------- -------
Increase (Decrease) in Equity Derived from
Investment Activity...................... $108,665 $100,041 $1,150 $31,006 $ 5,069
======== ======== ====== ======= =======
</TABLE>
# The initial investment in this Division was made on April 30, 1999.
The Accompanying Notes are an Integral Part of the Financial Statements
Account A Financial Statements B- 6
<PAGE> 39
<TABLE>
<CAPTION>
INDEX 400
STOCK GROWTH & INCOME
INTERNATIONAL EQUITY DIVISION DIVISION# GROWTH STOCK DIVISION STOCK DIVISION
- ------------------------------- -------------- --------------------------- ---------------------------
EIGHT MONTHS
YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$6,194 $ 2,855 $ 30 $1,225 $ 461 $ 4,191 $ 294
520 591 8 397 263 442 353
------ ------- ---- ------ ------ ------- ------
5,674 2,264 22 828 198 3,749 (59)
------ ------- ---- ------ ------ ------- ------
2,516 3,000 18 2,300 1,743 1,705 1,022
193 (3,655) 154 3,411 2,872 (3,315) 4,954
------ ------- ---- ------ ------ ------- ------
2,709 (655) 172 5,711 4,615 (1,610) 5,976
------ ------- ---- ------ ------ ------- ------
$8,383 $ 1,609 $194 $6,539 $4,813 $ 2,139 $5,917
====== ======= ==== ====== ====== ======= ======
<CAPTION>
INDEX 500
IN STOCK DIVISION
- --- ---------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
- --- ---------------------------
<S> <C> <C>
$ 3,676 $ 4,267
1,766 1,404
------- -------
1,910 2,863
------- -------
13,204 8,567
13,045 18,919
------- -------
26,249 27,486
------- -------
$28,159 $30,349
======= =======
</TABLE>
B- 7 Account A Financial Statements
<PAGE> 40
NML VARIABLE ANNUITY ACCOUNT A
Statement of Operations
(in thousands)
<TABLE>
<CAPTION>
BALANCED DIVISION HIGH YIELD BOND DIVISION SELECT BOND DIVISION
---------------------------- ---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(CONTINUED) 1999 1998 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividend Income.................. $ 34,011 $19,089 $ 821 $ 951 $ 2,088 $1,768
Annuity Rate and Expense
Guarantees..................... 3,881 3,750 94 113 265 277
-------- ------- ----- ------- ------- ------
Net Investment Income (Loss)..... 30,130 15,339 727 838 1,823 1,491
-------- ------- ----- ------- ------- ------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Realized Gain (Loss) on
Investments.................... 21,154 16,661 (847) (220) 370 100
Unrealized Appreciation
(Depreciation) of Investments
During the Period.............. (21,022) 18,160 (22) (925) (2,715) (147)
-------- ------- ----- ------- ------- ------
Net Gain (Loss) on Investments... 132 34,821 (869) (1,145) (2,345) (47)
-------- ------- ----- ------- ------- ------
Increase (Decrease) in Equity
Derived from Investment
Activity....................... $ 30,262 $50,160 $(142) $ (307) $ (522) $1,444
======== ======= ===== ======= ======= ======
</TABLE>
# The initial investment in this Division was made on April 30, 1999.
The Accompanying Notes are an Integral Part of the Financial Statements
Account A Financial Statements B- 8
<PAGE> 41
<TABLE>
<CAPTION>
RUSSELL
RUSSELL RUSSELL RUSSELL REAL ESTATE RUSSELL
MULTI-STYLE AGGRESSIVE NON-U.S. SECURITIES CORE BOND
EQUITY DIVISION# EQUITY DIVISION# DIVISION# DIVISION# DIVISION#
MONEY MARKET DIVISION ---------------- ---------------- -------------- -------------- --------------
- ------------------------------- EIGHT MONTHS EIGHT MONTHS EIGHT MONTHS EIGHT MONTHS EIGHT MONTHS
YEAR ENDED YEAR ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1999 1999 1999 1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$1,410 $1,254 $ 76 $ 4 $ 37 $ 12 $ 22
315 267 9 4 4 1 2
------ ------ ---- ---- ---- ---- ----
1,095 987 67 -- 33 11 20
------ ------ ---- ---- ---- ---- ----
-- -- (3) (34) 10 (2) (1)
-- -- 62 118 154 (10) (23)
------ ------ ---- ---- ---- ---- ----
-- -- 59 84 164 (12) (24)
------ ------ ---- ---- ---- ---- ----
$1,095 $ 987 $126 $ 84 $197 $ (1) $ (4)
====== ====== ==== ==== ==== ==== ====
</TABLE>
B- 9 Account A Financial Statements
<PAGE> 42
NML VARIABLE ANNUITY ACCOUNT A
Statement of Changes in Equity
(in thousands)
<TABLE>
<CAPTION>
SMALL CAP
GROWTH STOCK AGGRESSIVE GROWTH
COMBINED DIVISION# STOCK DIVISION
---------------------------- ------------ ----------------------------
EIGHT MONTHS
YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
OPERATIONS
Net Investment Income...................... $ 48,095 $ 26,166 $ 136 $ 1,870 $ 2,245
Net Realized gain (loss)................... 51,300 37,625 550 10,360 6,752
Net Change in unrealized appreciation
(depreciation)........................... 9,270 36,250 464 18,776 (3,928)
--------- -------- ------- -------- --------
Increase (Decrease) in Equity Derived from
Investment Activity........................ 108,665 100,041 1,150 31,006 5,069
--------- -------- ------- -------- --------
EQUITY TRANSACTIONS
Contract Owners' Net Payments.............. 55,489 62,325 398 6,945 10,359
Annuity Payments........................... (1,469) (1,306) -- (36) (41)
Surrenders and Other (net)................. (102,935) (80,848) (85) (12,324) (8,661)
Transfers from Other Divisions or
Sponsor.................................. 125,332 95,967 7,491 13,400 8,930
Transfers to Other Divisions or Sponsor.... (126,511) (98,941) (4,107) (22,500) (17,180)
--------- -------- ------- -------- --------
Increase (Decrease) in Equity Derived from
Equity Transactions........................ (50,094) (22,803) 3,697 (14,515) (6,593)
--------- -------- ------- -------- --------
Net Increase (Decrease) in Equity............ 58,571 77,238 4,847 16,491 (1,524)
EQUITY
Beginning of Period........................ 725,633 648,395 -- 87,879 89,403
--------- -------- ------- -------- --------
End of Period.............................. $ 784,204 $725,633 $ 4,847 $104,370 $ 87,879
========= ======== ======= ======== ========
</TABLE>
# The initial investment in this Division was made on April 30, 1999.
The Accompanying Notes are an Integral Part of the Financial Statements
Account A Financial Statements B- 10
<PAGE> 43
<TABLE>
<CAPTION>
INDEX 400
STOCK GROWTH & INCOME
INTERNATIONAL EQUITY DIVISION DIVISION# GROWTH STOCK DIVISION STOCK DIVISION
- ------------------------------- -------------- --------------------------- ---------------------------
EIGHT MONTHS
YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1999 1998 1999 1998
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 5,674 $ 2,264 $ 22 $ 828 $ 198 $ 3,749 $ (59)
2,516 3,000 18 2,300 1,743 1,705 1,022
193 (3,655) 154 3,411 2,872 (3,315) 4,954
------- -------- ------ ------- ------- ------- -------
8,383 1,609 194 6,539 4,813 2,139 5,917
------- -------- ------ ------- ------- ------- -------
3,455 4,941 410 3,966 3,618 3,728 4,697
(25) (32) -- (6) (4) (71) (55)
(6,125) (5,289) (93) (3,594) (2,367) (3,578) (2,704)
3,673 5,056 2,621 13,108 7,949 8,139 9,679
(8,861) (11,484) (937) (7,589) (4,660) (10,849) (4,854)
------- -------- ------ ------- ------- ------- -------
(7,883) (6,808) 2,001 5,885 4,536 (2,631) 6,763
------- -------- ------ ------- ------- ------- -------
500 (5,199) 2,195 12,424 9,349 (492) 12,680
44,912 50,111 -- 26,604 17,255 36,228 23,548
------- -------- ------ ------- ------- ------- -------
$45,412 $ 44,912 $2,195 $39,028 $26,604 $35,736 $36,228
======= ======== ====== ======= ======= ======= =======
<CAPTION>
INDEX 500
IN STOCK DIVISION
- --- ---------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
- --- ---------------------------
<S> <C> <C>
$ 1,910 $ 2,863
13,204 8,567
13,045 18,919
-------- --------
28,159 30,349
-------- --------
11,822 11,699
(489) (411)
(19,188) (12,885)
24,383 17,648
(18,154) (14,119)
-------- --------
(1,626) 1,932
-------- --------
26,533 32,281
143,176 110,895
-------- --------
$169,709 $143,176
======== ========
</TABLE>
B- 11 Account A Financial Statements
<PAGE> 44
NML VARIABLE ANNUITY ACCOUNT A
Statement of Changes in Equity
(in thousands)
<TABLE>
<CAPTION>
BALANCED DIVISION HIGH YIELD BOND DIVISION SELECT BOND DIVISION
---------------------------- ---------------------------- ----------------------------
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
(CONTINUED) 1999 1998 1999 1998 1999 1998
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
OPERATIONS
Net Investment Income............ $ 30,130 $ 15,339 $ 727 $ 838 $ 1,823 $ 1,491
Net Realized gain (loss)......... 21,154 16,661 (847) (220) 370 100
Net Change in unrealized
appreciation (depreciation).... (21,022) 18,160 (22) (925) (2,715) (147)
---------- ---------- -------- -------- -------- --------
Increase (Decrease) in Equity
Derived from Investment
Activity......................... 30,262 50,160 (142) (307) (522) 1,444
---------- ---------- -------- -------- -------- --------
EQUITY TRANSACTIONS
Contract Owners' Net Payments.... 15,663 17,160 989 2,104 1,638 2,145
Annuity Payments................. (742) (662) (5) (5) (55) (59)
Surrenders and Other (net)....... (45,409) (35,226) (1,234) (806) (4,343) (3,234)
Transfers from Other Divisions or
Sponsor........................ 17,537 10,851 1,293 4,761 2,826 3,443
Transfers to Other Divisions or
Sponsor........................ (23,181) (19,108) (3,220) (5,233) (3,264) (3,102)
---------- ---------- -------- -------- -------- --------
Increase (Decrease) in Equity
Derived from Equity
Transactions..................... (36,132) (26,985) (2,177) 821 (3,198) (807)
---------- ---------- -------- -------- -------- --------
Net Increase (Decrease) in
Equity........................... (5,870) 23,175 (2,319) 514 (3,720) 637
EQUITY
Beginning of Period.............. 324,803 301,628 9,258 8,744 25,862 25,225
---------- ---------- -------- -------- -------- --------
End of Period.................... $ 318,933 $ 324,803 $ 6,939 $ 9,258 $ 22,142 $ 25,862
========== ========== ======== ======== ======== ========
</TABLE>
# The initial investment in this Division was made on April 30, 1999.
The Accompanying Notes are an Integral Part of the Financial Statements
Account A Financial Statements B- 12
<PAGE> 45
<TABLE>
<CAPTION>
RUSSELL
RUSSELL RUSSELL RUSSELL REAL ESTATE RUSSELL
MULTI-STYLE AGGRESSIVE NON-U.S. SECURITIES CORE BOND
EQUITY DIVISION# EQUITY DIVISION# DIVISION# DIVISION# DIVISION#
MONEY MARKET DIVISION ---------------- ---------------- -------------- -------------- --------------
- ------------------------------- EIGHT MONTHS EIGHT MONTHS EIGHT MONTHS EIGHT MONTHS EIGHT MONTHS
YEAR ENDED YEAR ENDED ENDED ENDED ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1999 1999 1999 1999
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 1,095 $ 987 $ 67 $ -- $ 33 $ 11 $ 20
-- -- (3) (34) 10 (2) (1)
-- -- 62 118 154 (10) (23)
-------- -------- ------ ------ ------ ---- ----
1,095 987 126 84 197 (1) (4)
-------- -------- ------ ------ ------ ---- ----
5,147 5,602 750 285 189 33 71
(40) (37) -- -- -- -- --
(6,872) (9,676) (36) (22) (31) (1) --
24,985 27,650 1,993 1,498 1,372 324 689
(22,381) (19,201) (333) (703) (344) (24) (64)
-------- -------- ------ ------ ------ ---- ----
839 4,338 2,374 1,058 1,186 332 696
-------- -------- ------ ------ ------ ---- ----
1,934 5,325 2,500 1,142 1,383 331 692
26,911 21,586 -- -- -- -- --
-------- -------- ------ ------ ------ ---- ----
$ 28,845 $ 26,911 $2,500 $1,142 $1,383 $331 $692
======== ======== ====== ====== ====== ==== ====
</TABLE>
B- 13 Account A Financial Statements
<PAGE> 46
NML VARIABLE ANNUITY ACCOUNT A
Notes to Financial Statements
December 31, 1999
NOTE 1 -- NML Variable Annuity Account A (the "Account") is a segregated asset
account of The Northwestern Mutual Life Insurance Company ("Northwestern Mutual"
or "Sponsor") used to fund variable annuity contracts ("contracts") for HR-10
and corporate pension and profit-sharing plans which qualify for special tax
treatment under the Internal Revenue Code. Beginning March 31, 1995 two versions
of the contract are offered: Front Load contracts with a sales charge up to 4%
of purchase payments and Back Load contracts with a withdrawal charge of 0-8%.
NOTE 2 -- The preparation of the 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
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. Actual results could differ from those estimates. Principal
accounting policies are summarized below.
NOTE 3 -- All assets of each Division of the Account are invested in shares of
the corresponding Portfolio of Northwestern Mutual Series Fund, Inc. and the
Russell Insurance Funds (collectively known as "the Funds"). The shares are
valued at the Funds' offering and redemption prices per share.
The Funds are open-end investment companies registered under the Investment
Company Act of 1940.
NOTE 4 -- Annuity reserves are based on published annuity tables with age
adjustment and benefit payments which reflect actual investment experience. For
variable payment plans issued prior to January 1, 1974, annuity reserves are
based on the 1955 American Annuity Table with assumed interest rates of 3% or
5%. For variable payment plans issued on or after January 1, 1974 and before
January 1, 1985, annuity reserves are based on the 1971 Individual Annuity Table
with assumed interest rates of 3 1/2% or 5%. For variable payment plans issued
on or after January 1, 1985, annuity reserves are based on the 1983 Table a with
assumed interest rates of 3 1/2% or 5%.
NOTE 5 -- Dividend income from the Funds is recorded on the record date of the
dividends. Transactions in the Funds shares are accounted for on the trade date.
The basis for determining cost on sale of the Funds shares is identified cost.
Purchases and sales of the Funds shares for the period ended December 31, 1999
by each Division are shown below:
<TABLE>
<CAPTION>
DIVISIONS PURCHASES SALES
--------- --------- -----
<S> <C> <C>
Small Cap Growth Stock.... $ 7,208,705 $ 3,374,541
Aggressive Growth Stock... 9,958,208 22,717,778
International Equity...... 7,974,310 10,228,782
Index 400 Stock........... 2,853,810 821,170
Growth Stock.............. 11,793,727 5,237,895
Growth & Income Stock..... 9,919,814 9,006,288
Index 500 Stock........... 20,410,794 20,135,029
Balanced.................. 44,419,512 50,211,717
High Yield Bond........... 2,095,955 3,579,846
Select Bond............... 4,931,954 6,390,659
Money Market.............. 20,905,226 18,848,756
Russell Multi-Style Equity
Fund.................... 2,666,402 225,476
Russell Aggressive Equity
Fund.................... 1,593,605 535,192
Russell Non-U.S. Fund..... 1,498,221 279,802
Russell Real Estate
Securities Fund......... 357,723 13,625
Russell Core Bond Fund.... 758,431 41,756
</TABLE>
NOTE 6 -- A deduction for annuity rate and expense guarantees is determined
daily and paid to Northwestern Mutual as compensation for assuming the risk that
annuity payments will continue for longer periods than anticipated because the
annuitants as a group live longer than expected, and the risk that the charges
made by Northwestern Mutual may be insufficient to cover the actual costs
incurred in connection with the contracts.
For contracts issued on or after March 31, 1995, for the Front Load version and
the Back Load version, the deduction for annuity rate and expense guarantees is
determined daily at annual rates of 4/10 of 1% and 1 1/4%, respectively, of the
net assets of each Division attributable to these contracts and is paid to
Northwestern Mutual. For these contracts, the rates may be increased or
decreased by the Board of Trustees of Northwestern Mutual not to exceed 3/4 of
1% and 1 1/2%, respectively.
For contracts issued after December 16, 1981 and prior to March 31, 1995, the
deduction is at an annual rate of 1 1/4% of the net assets of each division
attributable to these contracts. For these contracts, the rate may be increased
or decreased by the Board of Trustees of Northwestern Mutual not to exceed a
1 1/2% annual rate.
Notes to Financial Statements B- 14
<PAGE> 47
For contracts issued prior to December 17, 1981, the deduction is at an annual
rate of 3/4 of 1% of the net assets of each Division attributable to these
contracts. For these contracts, the rate may be increased or decreased by the
Board of Trustees of Northwestern Mutual not to exceed a 1% annual rate.
Since 1995, Northwestern Mutual has paid a dividend to certain contracts. The
dividend is re-invested in the Account and has been reflected as a Contract
Owners' Net Deposit in the accompanying financial statements.
NOTE 7 -- Northwestern Mutual is taxed as a "life insurance company" under the
Internal Revenue Code and the operations of the Account form a part of and are
taxed with those of Northwestern Mutual. Under current law, no federal income
taxes are payable with respect to the Account. Accordingly, no provision for any
such liability has been made.
B- 15 Notes to Financial Statements
<PAGE> 48
NML VARIABLE ANNUITY ACCOUNT A
Notes to Financial Statements
December 31, 1999
(in thousands)
NOTE 8 -- Equity Values by Division are shown below:
<TABLE>
<CAPTION>
CONTRACTS ISSUED:
CONTRACTS ISSUED: AFTER DECEMBER 16, 1981 AND
PRIOR TO DECEMBER 17, 1981 PRIOR TO MARCH 31, 1995
-------------------------------------- ---------------------------------------
ACCUMULATION UNITS ACCUMULATION UNITS
DIVISION UNIT VALUE OUTSTANDING EQUITY UNIT VALUE OUTSTANDING EQUITY
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth Stock................... $1.851783 95 $ 176 $1.845580 1,899 $ 3,505
Aggressive Growth Stock.................. 5.658407 371 2,099 5.407959 14,666 79,313
International Equity..................... 2.375600 630 1,497 2.297694 15,308 35,173
Index 400 Stock.......................... 1.122676 167 187 1.118909 1,241 1,389
Growth Stock............................. 3.099518 373 1,156 3.012947 8,576 25,839
Growth and Income Stock.................. 2.600855 254 661 2.528256 9,503 24,026
Index 500 Stock.......................... 5.043329 6,688 33,729 4.820195 20,901 100,747
Balanced................................. 8.136959 2,738 22,279 7.436406 35,440 263,546
High Yield Bond.......................... 1.563339 77 120 1.519653 2,904 4,413
Select Bond.............................. 7.582833 715 5,422 6.928532 1,915 13,268
Money Market............................. 2.760791 898 2,479 2.523294 7,330 18,496
Russell Multi-Style Equity............... 1.070614 8 9 1.067018 1,475 1,574
Russell Aggressive Equity................ 1.103591 7 8 1.099895 761 837
Russell Non-U.S. ........................ 1.247160 12 15 1.242993 814 1,012
Russell Real Estate Securities........... 0.922768 5 5 0.919674 249 229
Russell Core Bond........................ 0.986452 3 3 0.983142 581 571
------- --------
Equity................................. 69,845 573,938
Annuity Reserves....................... 4,406 10,498
------- --------
Total Equity........................... $74,251 $584,436
======= ========
</TABLE>
<TABLE>
<CAPTION>
CONTRACTS ISSUED: CONTRACTS ISSUED:
ON OR AFTER MARCH 31, 1995 ON OR AFTER MARCH 31, 1995
FRONT LOAD VERSION BACK LOAD VERSION
-------------------------------------- ---------------------------------------
ACCUMULATION UNITS ACCUMULATION UNITS
DIVISION UNIT VALUE OUTSTANDING EQUITY UNIT VALUE OUTSTANDING EQUITY
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Small Cap Growth Stock................... $1.856086 150 $ 278 $1.845580 481 $ 888
Aggressive Growth Stock.................. 2.661899 1,186 3,157 5.407959 3,585 19,388
International Equity..................... 1.964300 728 1,430 2.297694 3,063 7,038
Index 400 Stock.......................... 1.125296 163 183 1.118909 388 434
Growth Stock............................. 2.898070 613 1,777 3.012947 3,382 10,190
Growth and Income Stock.................. 2.431081 757 1,840 2.528256 3,307 8,361
Index 500 Stock.......................... 3.127888 1,247 3,901 4.820195 5,418 26,115
Balanced................................. 2.117903 1,801 3,814 7.436406 2,897 21,543
High Yield Bond.......................... 1.483036 381 565 1.519653 1,175 1,786
Select Bond.............................. 1.331215 215 286 6.928532 364 2,522
Money Market............................. 1.259407 1,980 2,494 2.523294 1,893 4,777
Russell Multi-Style Equity............... 1.073107 322 346 1.067018 535 571
Russell Aggressive Equity................ 1.106159 88 97 1.099895 183 201
Russell Non-U.S. ........................ 1.250059 81 101 1.242993 205 255
Russell Real Estate Securities........... 0.924920 19 18 0.919674 88 81
Russell Core Bond........................ 0.988747 27 27 0.983142 94 92
------- --------
Equity................................. 20,314 104,242
Annuity Reserves....................... 402 559
------- --------
Total Equity........................... $20,716 $104,801
======= ========
</TABLE>
Notes to Financial Statements B- 16
<PAGE> 49
[PRICEWATERHOUSECOOPERS LLC - LETTERHEAD]
Report of Independent Accountants
To The Northwestern Mutual Life Insurance Company and
Contract Owners of NML Variable Annuity Account A
In our opinion, the accompanying combined statement of assets and liabilities
and the related combined and separate statements of operations and of changes in
equity present fairly, in all material respects, the financial position of NML
Variable Annuity Account A and the Small Cap Growth Stock Division, Aggressive
Growth Stock Division, International Equity Division, Index 400 Stock Division,
Growth Stock Division, Growth & Income Stock Division, Index 500 Stock Division,
Balanced Division, High Yield Bond Division, Select Bond Division, Money Market
Division, Russell Multi-Style Equity Division, Russell Aggressive Equity
Division, Russell Non-U.S. Division, Russell Real Estate Securities Division and
Russell Core Bond Division thereof at December 31, 1999, the results of each of
their operations for each of the two years or the period then ended and the
changes in each of their equity for the two years or the period then ended in
conformity with accounting principles generally accepted in the United States.
These financial statements are the responsibility of The Northwestern Mutual
Life Insurance Company's management; our responsibility is to express an opinion
on these financial statements based on our audits. We conducted our audits of
these financial statements in accordance with auditing standards generally
accepted in the United States which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included direct confirmation of the number of shares owned at
December 31, 1999 with Northwestern Mutual Series Fund, Inc. and the Russell
Insurance Funds, provide a reasonable basis for the opinion expressed above.
[PRICEWATERHOUSECOOPERS LLP]
Milwaukee, Wisconsin
January 27, 2000
B- 17 Accountants' Report
<PAGE> 50
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
Consolidated Statement of Financial Position
(in millions)
The following financial statements of Northwestern Mutual should be considered
only as bearing upon the ability of Northwestern Mutual Life to meet its
obligations under the Policies.
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Bonds..................................................... $36,792 $34,888
Common and preferred stocks............................... 7,108 6,062
Mortgage loans............................................ 13,416 12,250
Real estate............................................... 1,666 1,481
Policy loans.............................................. 7,938 7,580
Other investments......................................... 3,443 2,353
Cash and temporary investments............................ 1,159 1,275
------- -------
TOTAL INVESTMENTS....................................... 71,522 65,889
Due and accrued investment income......................... 893 827
Other assets.............................................. 1,409 1,313
Separate account assets................................... 12,161 9,966
------- -------
TOTAL ASSETS............................................ $85,985 $77,995
======= =======
LIABILITIES AND SURPLUS
Reserves for policy benefits.............................. $56,246 $51,815
Policy benefit and premium deposits....................... 1,746 1,709
Policyowner dividends payable............................. 3,100 2,870
Interest maintenance reserve.............................. 491 606
Asset valuation reserve................................... 2,371 1,994
Income taxes payable...................................... 1,192 1,161
Other liabilities......................................... 3,609 3,133
Separate account liabilities.............................. 12,161 9,966
------- -------
TOTAL LIABILITIES....................................... 80,916 73,254
Surplus................................................... 5,069 4,741
------- -------
TOTAL LIABILITIES AND SURPLUS........................... $85,985 $77,995
======= =======
</TABLE>
The Accompanying Notes are an Integral Part of these Financial Statements
Consolidated Statement of Financial Position
B- 18
<PAGE> 51
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
Consolidated Statement of Operations
(in millions)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-------------------------------
1999 1998 1997
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUE
Premiums and deposits..................................... $ 8,344 $ 8,021 $ 7,294
Net investment income..................................... 4,766 4,536 4,171
Other income.............................................. 970 922 861
------- ------- -------
TOTAL REVENUE......................................... 14,080 13,479 12,326
------- ------- -------
BENEFITS AND EXPENSES
Benefit payments to policyowners and beneficiaries........ 4,023 3,602 3,329
Net additions to policy benefit reserves.................. 4,469 4,521 4,026
Net transfers to separate accounts........................ 516 564 566
------- ------- -------
TOTAL BENEFITS........................................ 9,008 8,687 7,921
Operating expenses........................................ 1,287 1,297 1,138
------- ------- -------
TOTAL BENEFITS AND EXPENSES........................... 10,295 9,984 9,059
------- ------- -------
GAIN FROM OPERATIONS BEFORE DIVIDENDS AND TAXES....... 3,785 3,495 3,267
Policyowner dividends....................................... 3,091 2,869 2,636
------- ------- -------
GAIN FROM OPERATIONS BEFORE TAXES..................... 694 626 631
Income tax expense.......................................... 203 301 356
------- ------- -------
NET GAIN FROM OPERATIONS.............................. 491 325 275
Net realized capital gains.................................. 846 484 414
------- ------- -------
NET INCOME............................................ $ 1,337 $ 809 $ 689
======= ======= =======
</TABLE>
The Accompanying Notes are an Integral Part of these Financial Statements
B- 19 Consolidated Statement of Operations
<PAGE> 52
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
Consolidated Statement of Changes in Surplus
(in millions)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
--------------------------------
1999 1998 1997
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BEGINNING OF YEAR........................................... $4,741 $4,101 $3,515
Net income................................................ 1,337 809 689
Increase (decrease) in net unrealized gains............... 213 (147) 576
Increase in investment reserves........................... (377) (20) (526)
Charge-off of goodwill (Note 7)........................... (842) -- --
Other, net................................................ (3) (2) (153)
------ ------ ------
NET INCREASE IN SURPLUS................................... 328 640 586
------ ------ ------
END OF YEAR BALANCE......................................... $5,069 $4,741 $4,101
====== ====== ======
</TABLE>
The Accompanying Notes are an Integral Part of these Financial Statements
Consolidated Statement of Changes in Surplus
B- 20
<PAGE> 53
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
Consolidated Statement of Cash Flows
(in millions)
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
-----------------------------------
1999 1998 1997
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Insurance and annuity premiums............................ $ 9,260 $ 8,876 $ 8,093
Investment income received................................ 4,476 4,216 3,928
Disbursement of policy loans, net of repayments........... (358) (416) (360)
Benefits paid to policyowners and beneficiaries........... (4,012) (3,572) (3,316)
Net transfers to separate accounts........................ (516) (564) (565)
Policyowner dividends paid................................ (2,862) (2,639) (2,347)
Operating expenses and taxes.............................. (1,699) (1,749) (1,722)
Other, net................................................ (56) (83) 124
------- ------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES............ 4,233 4,069 3,835
------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
PROCEEDS FROM INVESTMENTS SOLD OR MATURED
Bonds.................................................. 20,788 28,720 38,284
Common and preferred stocks............................ 13,331 10,359 9,057
Mortgage loans......................................... 1,356 1,737 1,012
Real estate............................................ 216 159 302
Other investments...................................... 830 768 398
------- ------- -------
36,521 41,743 49,053
------- ------- -------
COST OF INVESTMENTS ACQUIRED
Bonds.................................................. 22,849 30,873 41,169
Common and preferred stocks............................ 13,794 9,642 9,848
Mortgage loans......................................... 2,500 3,135 2,309
Real estate............................................ 362 268 202
Other investments...................................... 1,864 567 359
------- ------- -------
41,369 44,485 53,887
------- ------- -------
Net increase (decrease) in securities lending and other... 499 (624) 440
------- ------- -------
NET CASH USED IN INVESTING ACTIVITIES................ (4,349) (3,366) (4,394)
------- ------- -------
NET (DECREASE) INCREASE IN CASH AND TEMPORARY
INVESTMENTS......................................... (116) 703 (559)
Cash and temporary investments, beginning of year........... 1,275 572 1,131
------- ------- -------
Cash and temporary investments, end of year................. $ 1,159 $ 1,275 $ 572
======= ======= =======
</TABLE>
The Accompanying Notes are an Integral Part of these Financial Statements
B- 21 Consolidated Statement of Cash Flows
<PAGE> 54
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
Notes to Consolidated Statutory Financial Statements
December 31, 1999, 1998 and 1997
NOTE 1 -- BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated statutory financial statements include the
accounts of The Northwestern Mutual Life Insurance Company ("Company") and its
wholly-owned subsidiary, Northwestern Long Term Care Insurance Company
("Subsidiary"). The Company and its Subsidiary offer life, annuity, disability
income and long-term care products to the personal, business, estate and
tax-qualified markets.
The consolidated financial statements have been prepared using accounting
policies prescribed or permitted by the Office of the Commissioner of Insurance
of the State of Wisconsin ("statutory basis of accounting").
In 1998, the National Association of Insurance Commissioners ("NAIC") adopted
the Codification of Statutory Accounting Principles ("Codification") guidance,
which will replace the current Accounting Practices and Procedures manual as the
NAIC's primary guidance on statutory accounting. The NAIC is now considering
amendments to Codification that would also be effective upon implementation.
Codification provides guidance for areas where statutory accounting has been
silent and changes current statutory accounting in some areas (e.g., deferred
income taxes are recorded). The Office of the Commissioner of Insurance of the
State of Wisconsin ("OCI") intends to adopt Codification effective January 1,
2001. The Company has not determined the potential effect of Codification, and
the eventual effect of adoption could differ if changes are made prior to the
effective date of January 1, 2001.
Financial statements prepared on the statutory basis of accounting vary from
financial statements prepared on the basis of generally accepted accounting
principles ("GAAP") primarily because on a GAAP basis: (1) policy acquisition
costs are deferred and amortized, (2) investment valuations and insurance
reserves are based on different assumptions, (3) funds received under
deposit-type contracts are not reported as premium revenue, and (4) deferred
taxes are provided for temporary differences between book and tax basis of
certain assets and liabilities. The effects on the financial statements of the
differences between the statutory basis of accounting and GAAP are material to
the Company.
The preparation of financial statements in conformity with the statutory basis
of accounting requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual future results could differ from these estimates.
INVESTMENTS
The Company's investments are valued on the following bases:
Bonds -- Amortized cost using the interest method; loan-backed and structured
securities are amortized using estimated prepayment rates and, generally, the
prospective adjustment method
Common and preferred stocks -- Common stocks are carried at fair value,
preferred stocks are generally carried at cost, and unconsolidated subsidiaries
are recorded using the equity method
Mortgage loans -- Amortized cost
Real estate -- Lower of cost, less depreciation and encumbrances, or estimated
net realizable value
Policy loans -- Unpaid principal balance, which approximates fair value
Other investments -- Consists primarily of joint venture investments which are
valued at equity in ventures' net assets
Cash and temporary investments -- Amortized cost, which approximates fair value
TEMPORARY INVESTMENTS
Temporary investments consist of debt securities that have maturities of one
year or less at acquisition.
NET INVESTMENT INCOME AND CAPITAL GAINS
Net investment income includes interest and dividends received or due and
accrued on investments, equity in unconsolidated subsidiaries' earnings and the
Company's share of joint venture income. Net investment income is reduced by
investment management expenses, real estate depreciation, depletion related to
energy assets and costs associated with securities lending.
Realized investment gains and losses are reported in income based upon specific
identification of securities sold. Unrealized investment gains and losses
include changes in the fair
Notes to Consolidated Statutory Financial Statements
B- 22
<PAGE> 55
value of common stocks and changes in valuation allowances made for bonds,
preferred stocks, mortgage loans and other investments considered by management
to be impaired.
INTEREST MAINTENANCE RESERVE
The Company is required to maintain an interest maintenance reserve ("IMR"). The
IMR is used to defer realized gains and losses, net of tax, on fixed income
investments resulting from changes in interest rates. Net realized gains and
losses deferred to the IMR are amortized into investment income over the
approximate remaining term to maturity of the investment sold.
INVESTMENT RESERVES
The Company is required to maintain an asset valuation reserve ("AVR"). The AVR
establishes a general reserve for invested asset valuation using a formula
prescribed by state regulations. The AVR is designed to stabilize surplus
against potential declines in the value of investments. In addition, the Company
maintained a $200 million voluntary investment reserve at each of December 31,
1999 and 1998 to absorb potential investment losses exceeding those considered
by the AVR formula. Increases or decreases in these investment reserves are
recorded directly to surplus.
SEPARATE ACCOUNTS
Separate account assets and related policy liabilities represent the segregation
of funds deposited by "variable" life insurance and annuity policyowners.
Policyowners bear the investment performance risk associated with variable
products. Separate account assets are invested at the direction of the
policyowner in a variety of Company-managed mutual funds. Variable product
policyowners also have the option to invest in a fixed interest rate annuity in
the general account of the Company. Separate account assets are reported at fair
value.
PREMIUM REVENUE AND OPERATING EXPENSES
Life insurance premiums are recognized as revenue at the beginning of each
policy year. Annuity and disability income premiums are recognized when received
by the Company. Operating expenses, including costs of acquiring new policies,
are charged to operations as incurred.
OTHER INCOME
Other income includes considerations on supplementary contracts, ceded
reinsurance expense allowances and miscellaneous policy charges.
BENEFIT PAYMENTS TO POLICYOWNERS AND BENEFICIARIES
Benefit payments to policyowners and beneficiaries include death, surrender and
disability benefits, matured endowments and supplementary contract payments.
RESERVES FOR POLICY BENEFITS
Reserves for policy benefits are determined using actuarial estimates based on
mortality and morbidity experience tables and valuation interest rates
prescribed by the OCI. (See Note 3.)
POLICYOWNER DIVIDENDS
Almost all life insurance policies, and certain annuity and disability income
policies issued by the Company are participating. Annually, the Company's Board
of Trustees approves dividends payable on participating policies in the
following fiscal year, which are accrued and charged to operations when
approved.
RECLASSIFICATION
Certain financial statement balances for 1998 and 1997 have been reclassified to
conform to the current year presentation.
Notes to Consolidated Statutory Financial Statements
B- 23
<PAGE> 56
NOTE 2 -- INVESTMENTS
DEBT SECURITIES
Debt securities consist of all bonds and fixed-maturity preferred stocks. The
estimated fair values of debt securities are based upon quoted market prices, if
available. For securities not actively traded, fair values are estimated using
independent pricing services or internally developed pricing models.
Statement value, which principally represents amortized cost, and estimated fair
value of the Company's debt securities at December 31, 1999 and 1998 were as
follows:
<TABLE>
<CAPTION>
RECONCILIATION TO ESTIMATED FAIR VALUE
-----------------------------------------------
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED FAIR
DECEMBER 31, 1999 VALUE GAINS LOSSES VALUE
----------------- --------- ---------- ---------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
U.S. Government and
political
obligations........ $ 3,855 $ 72 $ (167) $ 3,760
Mortgage-backed
securities......... 7,736 65 (256) 7,545
Corporate and other
debt securities.... 25,201 249 (1,088) 24,362
------- ------ ------- -------
36,792 386 (1,511) 35,667
Preferred stocks..... 85 2 -- 87
------- ------ ------- -------
Total........... $36,877 $ 388 $(1,511) $35,754
======= ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
RECONCILIATION TO ESTIMATED FAIR VALUE
-----------------------------------------------
GROSS GROSS ESTIMATED
STATEMENT UNREALIZED UNREALIZED FAIR
DECEMBER 31, 1998 VALUE GAINS LOSSES VALUE
----------------- --------- ---------- ---------- ---------
(IN MILLIONS)
<S> <C> <C> <C> <C>
U.S. Government and
political
obligations........ $ 3,904 $ 461 $ (11) $ 4,354
Mortgage-backed
securities......... 7,357 280 (15) 7,622
Corporate and other
debt securities.... 23,627 1,240 (382) 24,485
------- ------ ------- -------
34,888 1,981 (408) 36,461
Preferred stocks..... 189 4 (1) 192
------- ------ ------- -------
Total........... $35,077 $1,985 $ (409) $36,653
======= ====== ======= =======
</TABLE>
The statement value and estimated fair value of debt securities by contractual
maturity at December 31, 1999 is shown below. Expected maturities may differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
STATEMENT ESTIMATED
VALUE FAIR VALUE
--------- ----------
(IN MILLIONS)
<S> <C> <C>
Due in one year or less.......... $ 931 $ 942
Due after one year through five
years.......................... 5,420 5,412
Due after five years through ten
years.......................... 11,168 10,796
Due after ten years.............. 11,622 11,059
------- -------
29,141 28,209
Mortgage-backed securities....... 7,736 7,545
------- -------
$36,877 $35,754
======= =======
</TABLE>
STOCKS
The estimated fair values of common and perpetual preferred stocks are based
upon quoted market prices, if available. For securities not actively traded,
fair values are estimated using independent pricing services or internally
developed pricing models.
The adjusted cost of common and preferred stock held by the Company at December
31, 1999 and 1998 was $4.9 billion and $4.3 billion, respectively.
MORTGAGE LOANS AND REAL ESTATE
Mortgage loans are collateralized by properties located throughout the United
States and Canada. The Company attempts to minimize mortgage loan investment
risk by diversification of geographic locations and types of collateral
properties.
The fair value of mortgage loans as of December 31, 1999 and 1998 was $13.2
billion and $12.9 billion, respectively. The fair value of the mortgage loan
portfolio is estimated by discounting the future estimated cash flows using
current interest rates of debt securities with similar credit risk and
maturities, or utilizing net realizable values.
At December 31, 1999 and 1998, real estate includes $39 million and $61 million,
respectively, acquired through foreclosure and $114 million and $120 million,
respectively, of home office real estate.
Notes to Consolidated Statutory Financial Statements
B- 24
<PAGE> 57
REALIZED AND UNREALIZED GAINS AND LOSSES
Realized investment gains and losses for the years ended December 31, 1999, 1998
and 1997 were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1999
--------------------------------
NET
REALIZED
REALIZED REALIZED GAINS
GAINS LOSSES (LOSSES)
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Bonds..................... $ 219 $(404) $ (185)
Common and preferred
stocks.................. 1,270 (255) 1,015
Mortgage loans............ 22 (12) 10
Real estate............... 92 -- 92
Other invested assets..... 308 (189) 119
------ ----- ------
$1,911 $(860) 1,051
====== ===== ------
Less: Capital gains
taxes................... 244
Less: IMR (losses)
gains................... (39)
------
Net realized capital
gains................... $ 846
======
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1998
--------------------------------
NET
REALIZED
REALIZED REALIZED GAINS
GAINS LOSSES (LOSSES)
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Bonds..................... $ 514 $(231) $ 283
Common and preferred
stocks.................. 885 (240) 645
Mortgage loans............ 18 (11) 7
Real estate............... 41 -- 41
Other invested assets..... 330 (267) 63
------ ----- ------
$1,788 $(749) 1,039
====== ===== ------
Less: Capital gains
taxes................... 358
Less: IMR (losses)
gains................... 197
------
Net realized capital
gains................... $ 484
======
</TABLE>
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1997
--------------------------------
NET
REALIZED
REALIZED REALIZED GAINS
GAINS LOSSES (LOSSES)
-------- -------- --------
(IN MILLIONS)
<S> <C> <C> <C>
Bonds..................... $ 518 $(269) $249
Common and preferred
stocks.................. 533 (150) 383
Mortgage loans............ 14 (14) --
Real estate............... 100 (2) 98
Other invested assets..... 338 (105) 233
------ ----- ----
$1,503 $(540) 963
====== ===== ----
Less: Capital gains
taxes................... 340
Less: IMR (losses)
gains................... 209
----
Net realized capital
gains................... $414
====
</TABLE>
Changes in unrealized net investment gains and losses for the years ended
December 31, 1999, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31,
----------------------
1999 1998 1997
---- ---- ----
(IN MILLIONS)
<S> <C> <C> <C>
Bonds......................... $(178) $ (97) $ 43
Common and preferred stocks... 415 29 528
Mortgage loans................ (10) (16) (7)
Real estate................... (2) -- --
Other......................... (12) (63) 12
----- ----- ----
$ 213 $(147) $576
===== ===== ====
</TABLE>
SECURITIES LENDING
The Company has entered into securities lending agreements whereby certain
securities are loaned to third parties, primarily major brokerage firms. The
Company's policy requires a minimum of 102% of the fair value of the loaned
securities as collateral, calculated on a daily basis in the form of either cash
or securities. Collateral assets received and related liability due to
counterparties of $2.1 billion and $1.5 billion, respectively, are included in
the consolidated statements of financial position at December 31, 1999 and 1998,
and approximate the statement value of securities loaned at those dates.
INVESTMENT IN MGIC
The Company owns 11.3% (11.9 million shares) of the outstanding common stock of
MGIC Investment Corporation ("MGIC"). This investment is accounted for using the
equity method. At December 31, 1999 and 1998, the fair value of the Company's
investment in MGIC exceeded the statement value of $201 million and $180
million, respectively, by $518 million and $296 million, respectively.
In August 1998, the Company delivered 8.9 million shares of MGIC to a brokerage
firm to settle a forward contract. In conjunction with the settlement, the
Company recorded a $114 million realized gain.
DERIVATIVE FINANCIAL INSTRUMENTS
In the normal course of business, the Company enters into transactions to reduce
its exposure to fluctuations in interest rates, foreign currency exchange rates
and market volatility. These hedging strategies include the use of forwards,
futures, options and swaps.
The Company held the following positions for hedging purposes at December 31,
1999 and 1998:
Notes to Consolidated Statutory Financial Statements
B- 25
<PAGE> 58
<TABLE>
<CAPTION>
NOTIONAL AMOUNTS
---------------------------
DECEMBER 31, DECEMBER 31,
DERIVATIVE FINANCIAL INSTRUMENT 1999 1998 RISKS REDUCED
------------------------------- ------------ ------------ -------------
(IN MILLIONS)
<S> <C> <C> <C>
Foreign Currency
Forward Contracts...................... $967 $601 Currency exposure on foreign-denominated
investments
Common Stock Futures..................... 620 657 Stock market price fluctuation.
Bond Futures............................. 50 379 Bond market price fluctuation.
Options to acquire Interest Rate Swaps... 419 419 Interest rates payable on certain annuity
and insurance contracts.
Foreign Currency and
Interest Rate Swaps.................... 203 94 Interest rates on variable rate notes and
currency exposure on foreign-denominated
bonds.
Default Swaps............................ 52 -- Default exposure on certain bond
investments.
</TABLE>
The notional or contractual amounts of derivative financial instruments are used
to denominate these types of transactions and do not represent the amounts
exchanged between the parties.
In addition to the use of derivatives for hedging purposes, equity swaps were
held for investment purposes during 1999 and 1998. The notional amount of equity
swaps outstanding at December 31, 1999 and 1998 was $136 million and $138
million, respectively.
Foreign currency forwards, foreign currency swaps, stock futures and equity
swaps are reported at fair value. Resulting gains and losses on these contracts
are unrealized until expiration of the contract. There is no statement value
reported for interest rate swaps, bond futures and options to acquire interest
rate swaps prior to the settlement of the contract, at which time realized gains
and losses are deferred to IMR. Changes in the value of derivative instruments
are expected to offset gains and losses on the hedged investments. During 1999
and 1998, net realized and unrealized gains on investments were partially offset
by net realized losses of $55 million and $104 million, respectively, and net
unrealized gains (losses) of $17 million and $(58) million, respectively, on
derivative instruments. The effect of derivative instruments in 1997 was not
material to the Company's results of operations.
NOTE 3 -- RESERVES FOR POLICY BENEFITS
Life insurance reserves on substantially all policies issued since 1978 are
based on the Commissioner's Reserve Valuation Method with interest rates ranging
from 3 1/2% to 5 1/2%. Other life policy reserves are primarily based on the net
level premium method employing various mortality tables at interest rates
ranging from 2% to 4 1/2%.
Deferred annuity reserves on contracts issued since 1985 are valued primarily
using the Commissioner's Annuity Reserve Valuation Method with interest rates
ranging from 3 1/2% to 6 1/4%. Other deferred annuity reserves are based on
contract value. Immediate annuity reserves are based on present values of
expected benefit payments at interest rates ranging from 3 1/2% to 7 1/2%.
Active life reserves for disability income ("DI") policies issued since 1987 are
primarily based on the two-year preliminary term method using a 4% interest rate
and the 1985 Commissioner's Individual Disability Table A ("CIDA") for
morbidity. Active life reserves for prior DI policies are based on the net level
premium method, a 3% to 4% interest rate and the 1964 Commissioner's Disability
Table for morbidity. Disabled life reserves for DI policies are based on the
present values of expected benefit payments primarily using the 1985 CIDA
(modified for Company experience in the first four years of disability) with
interest rates ranging from 3% to 5 1/2%.
Use of these actuarial tables and methods involves estimation of future
mortality and morbidity. Actual future experience could differ from these
estimates.
NOTE 4 -- EMPLOYEE AND AGENT BENEFIT PLANS
The Company sponsors noncontributory defined benefit retirement plans for all
eligible employees and agents. The expense associated with these plans is
generally recorded by the Company in the period contributions are funded. As of
January 1, 1999, the most recent actuarial valuation date available, the
qualified defined benefit plans were fully funded. The Company recorded a
liability of $109 million and $98 million for nonqualified defined benefit plans
at
Notes to Consolidated Statutory Financial Statements
B- 26
<PAGE> 59
December 31, 1999 and 1998, respectively. In addition, the Company has a
contributory 401(k) plan for eligible employees and a noncontributory defined
contribution plan for all full-time agents. The Company's contributions are
expensed in the period contributions are made to the plans. The Company recorded
$31 million, $29 million and $27 million of total expense related to its defined
benefit and defined contribution plans for the years ended December 31, 1999,
1998 and 1997, respectively. The defined benefit and defined contribution plans'
assets of $2.2 billion and $1.9 billion at December 31, 1999 and 1998,
respectively, were primarily invested in the separate accounts of the Company.
In addition to pension and retirement benefits, the Company provides certain
health care and life insurance benefits ("postretirement benefits") for retired
employees. Substantially all employees may become eligible for these benefits if
they reach retirement age while working for the Company. Postretirement benefit
costs for the years ended December 31, 1999, 1998 and 1997 were a net expense
(benefit) of $5.0 million, $1.8 million and ($1.3) million, respectively.
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------------ ------------------
<S> <C> <C>
Unfunded postretirement
benefit obligation
for retirees and
other fully eligible
employees (Accrued in
statement of
financial
position)............ $40 million $35 million
Estimated
postretirement
benefit obligation
for active non-vested
employees (Not
accrued until
employee vests)...... $68 million $56 million
Discount rate.......... 7% 7%
Health care cost trend
rate................. 10% to an ultimate 10% to an ultimate
5%, declining 1% 5%, declining 1%
for 5 years for 5 years
</TABLE>
If the health care cost trend rate assumptions were increased by 1%, the accrued
postretirement benefit obligation as of December 31, 1999 and 1998 would have
been increased by $6 million and $5 million, respectively.
At December 31, 1999 and 1998, the recorded postretirement benefit obligation
was reduced by $28 million and $23 million, respectively, for health care
benefit plan assets. These assets were primarily invested in the separate
accounts of the Company.
NOTE 5 -- REINSURANCE
In the normal course of business, the Company seeks to limit its exposure to
loss on any single insured and to recover a portion of benefits paid by ceding
to reinsurers under excess coverage and coinsurance contracts. The Company
retains a maximum of $25 million of coverage per individual life and $35 million
maximum of coverage per joint life. The Company has an excess reinsurance
contract for disability income policies with retention limits varying based upon
coverage type.
The amounts shown in the accompanying consolidated financial statements are net
of reinsurance. Reserves for policy benefits at December 31, 1999 and 1998 were
reported net of ceded reserves of $584 million and $518 million, respectively.
The effect of reinsurance on premiums and benefits for the years ended December
31, 1999, 1998 and 1997 was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
------ ------ ------
(IN MILLIONS)
<S> <C> <C> <C>
Direct premiums and
deposits................... $8,785 $8,426 $7,647
Premiums ceded............... (441) (405) (353)
------ ------ ------
Net premium and deposits..... $8,344 $8,021 $7,294
====== ====== ======
Benefits to policyowners and
beneficiaries.............. 9,205 $8,869 $8,057
Benefits ceded............... (197) (182) (136)
------ ------ ------
Net benefits to policyowners
and beneficiaries.......... $9,008 $8,687 $7,921
====== ====== ======
</TABLE>
In addition, the Company received $133 million, $121 million and $115 million
for the years ended December 31, 1999, 1998 and 1997, respectively, from
reinsurers representing allowances for reimbursement of commissions and other
expenses. These amounts are included in other income in the consolidated
statement of operations.
Reinsurance contracts do not relieve the Company from its obligations to
policyowners. Failure of reinsurers to honor their obligations could result in
losses to the Company; consequently, allowances are established for amounts
deemed uncollectible. The Company evaluates the financial condition of its
reinsurers and monitors concentrations of credit risk arising from similar
geographic regions, activities or economic characteristics of the reinsurers to
minimize its exposure to significant losses from reinsurer insolvencies.
Notes to Consolidated Statutory Financial Statements
B- 27
<PAGE> 60
NOTE 6 -- INCOME TAXES
Provisions for income taxes are based on current income tax payable without
recognition of deferred taxes. The Company files a consolidated life-nonlife
federal income tax return. Federal income tax returns for years through 1995 are
closed as to further assessment of tax. Adequate provision has been made in the
financial statements for any additional taxes, which may become due with respect
to the open years.
The Company's taxable income can vary significantly from gain from operations
before taxes due to differences between book and tax valuation of assets and
liabilities (e.g., investments and policy benefit reserves). The Company pays a
tax that is assessed only on the surplus of mutual life insurance companies
("equity tax"), and also, the Company must capitalize and amortize, as opposed
to immediately deducting, an amount deemed to represent the cost of acquiring
new business ("DAC tax").
The Company's effective tax rate on gains from operations before taxes for the
years ended December 31, 1999, 1998 and 1997 was 29%, 48%, and 56% respectively.
In 1999, the effective rate was less than the federal corporate rate of 35% due
primarily to differences between book and tax investment income. In 1998 and
1997, the effective rate was greater than 35% due primarily to the equity tax
and DAC tax.
NOTE 7 -- RELATED PARTY TRANSACTIONS
The Company acquired Frank Russell Company ("Frank Russell") effective January
1, 1999 for a purchase price of approximately $950 million. Frank Russell is a
leading investment management and consulting firm, providing investment advice,
analytical tools and investment vehicles to institutional and individual
investors in more than 30 countries. This investment is accounted for using the
equity method and is included in common stocks in the consolidated statement of
financial position. In 1999, the Company charged-off directly from surplus
approximately $842 million, representing the total goodwill associated with the
acquisition. The Company has received permission from the OCI for this
charge-off. The Company has unconditionally guaranteed certain debt obligations
of Frank Russell, including $350 million of senior notes and up to $150 million
of other credit facilities.
During 1999, the Company transferred appreciated equity investments to a
wholly-owned subsidiary as a capital contribution to the subsidiary. A realized
capital gain of $287 million was recorded on this transaction based on the fair
value of the assets upon transfer.
NOTE 8 -- CONTINGENCIES
The Company has guaranteed certain obligations of its other affiliates. These
guarantees totaled approximately $101 million at December 31, 1999 and are
generally supported by the underlying net asset values of the affiliates.
In addition, the Company routinely makes commitments to fund mortgage loans or
other investments in the normal course of business. These commitments aggregated
to $1.9 billion at December 31, 1999 and were extended at market interest rates
and terms.
The Company is engaged in various legal actions in the normal course of its
investment and insurance operations. In the opinion of management, any losses
resulting from such actions would not have a material effect on the Company's
financial position.
Notes to Consolidated Statutory Financial Statements
B- 28
<PAGE> 61
[PRICEWATERHOUSECOOPERS LLP - LETTERHEAD]
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Policyowners of
The Northwestern Mutual Life Insurance Company
We have audited the accompanying consolidated statement of financial position of
The Northwestern Mutual Life Insurance Company and its subsidiary as of December
31, 1999 and 1998, and the related consolidated statements of operations, of
changes in surplus and of 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 consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. 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.
As described in Note 1 to the financial statements, the Company prepared these
consolidated financial statements using accounting practices prescribed or
permitted by the Office of the Commissioner of Insurance of the State of
Wisconsin (statutory basis of accounting), which practices differ from
accounting principles generally accepted in the United States. Accordingly, the
consolidated financial statements are not intended to represent a presentation
in accordance with generally accepted accounting principles. The effects on the
consolidated financial statements of the variances between the statutory basis
of accounting and generally accepted accounting principles, although not
reasonably determinable, are presumed to be material.
In our opinion, the consolidated financial statements audited by us (1) do not
present fairly in conformity with generally accepted accounting principles, the
financial position of The Northwestern Mutual Life Insurance Company and its
subsidiary as of December 31, 1999 and 1998, or the results of their operations
or their cash flows for each of the three years in the period ended December 31,
1999 because of the effects of the variances between the statutory basis of
accounting and generally accepted accounting principles referred to in the
preceding paragraph and (2) do present fairly, in all material respects, the
financial position of The Northwestern Mutual Life Insurance Company and its
subsidiary 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, on the basis of accounting described in Note 1.
/s/ PriceWaterhousecoopers LLP
January 24, 2000
Accountants' Report B- 29
<PAGE> 62
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DISTRIBUTION OF THE CONTRACTS...............................................B-2
DETERMINATION OF ANNUITY PAYMENTS...........................................B-2
Amount of Annuity Payments.........................................B-2
Annuity Unit Value.................................................B-3
Illustrations of Variable Annuity Payments.........................B-3
VALUATION OF ASSETS OF THE ACCOUNT..........................................B-4
TRANSFERABILITY RESTRICTIONS................................................B-4
EXPERTS.....................................................................B-4
FINANCIAL STATEMENTS OF THE ACCOUNT.........................................B-5
(for the two years ended December 31, 1999)
REPORT OF INDEPENDENT ACCOUNTANTS..........................................B-17
(for the two years ended December 31, 1999)
FINANCIAL STATEMENTS OF NORTHWESTERN MUTUAL................................B-18
(for the three years ended December 31, 1999)
REPORT OF INDEPENDENT ACCOUNTANTS..........................................B-29
(for the three years ended December 31, 1999)
</TABLE>
B-30
<PAGE> 63
PART C
OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements
The financial statements of NML Variable Annuity
Account A and The Northwestern Mutual Life Insurance
Company are included in the Statement of Additional
Information.
NML Variable Annuity Account A
(for the two years ended December 31, 1999)
Statement of Assets and Liabilities
Statement of Operations
Changes in Equity
Notes to Financial Statements
Report of Independent Accountants
The Northwestern Mutual Life Insurance Company
(for the three years ended December 31, 1999)
Consolidated Statement of Financial Position
Consolidated Statement of Operations
Consolidated Statement of Changes in Surplus
Consolidated Statement of Cash Flows
Notes to Consolidated Statutory Financial Statements
Report of Independent Accountants
(b) Exhibits
Exhibit B(10) Consent of PricewaterhouseCoopers LLP
The following exhibits were filed in electronic format with the
Registration Statement on Form N-4 for NML Variable Annuity Account A,
File No. 333-72913, CIK 0000790162, dated January 27, 2000, and are
incorporated herein by reference:
Exhibit B(4)(a) Flexible Payment Variable Annuity
Front Load Contract, RR.V.A. (032000) (sex
neutral)
Exhibit B(4)(a)(1) Flexible Payment Variable Annuity Back
Load Contract, RR.V.A. (032000) (sex
neutral)
Exhibit B(4)(b) Variable Annuity Front Load and
Back Load Contract Payment Rate Tables,
RR.V.A.B (032000), included in Exhibits
B(4)(a) and B(4)(a)(1) above (sex
distinct)
Exhibit B(4)(c) Enhanced Death Benefit for Front
Load and Back Load Contracts, VA. EDB.
(032000), included in Exhibits B(4)(a) and
B(4)(a)(1) above
Exhibit B(4)(d) Waiver of Withdrawal Charge for
Back Load Contract, VA.WWC. (032000),
included in Exhibit B(4)(a)(1) above
Exhibit B(5) Application forms for Front Load and
Back Load Contracts, included in Exhibits
B(4)(a) and B(4)(a)(1) above
C-1
<PAGE> 64
The following exhibits were filed in electronic format with the
Registration Statement on Form N-4 for NML Variable Annuity Account A,
File No. 333-72913, CIK 0000790162, dated February 25, 1999, and are
incorporated herein by reference:
Exhibit B(8)(a) Form of Participation Agreement
Among Russell Insurance Funds, Russell
Fund Distributors, Inc. and The
Northwestern Mutual Life Insurance Company
Exhibit B(8)(b) Form of Administrative Service Fee
Agreement between The Northwestern Mutual
Life Insurance Company and Frank Russell
Company
The following exhibit was filed in electronic format with the
Registration Statement on Form S-6 for Northwestern Mutual Variable
Life Account, File No. 333-59103, CIK 0000742277, dated July 15, 1998,
and is incorporated herein by reference.
Exhibit A(6)(b) Amended By-Laws of The Northwestern
Mutual Life Insurance Company dated
January 28, 1998
The following exhibits were filed in electronic format with the
Registration Statement on Form N-4 for NML Variable Annuity Account A,
File No. 333-22455, CIK 0000790162, dated February 27, 1997, and are
incorporated herein by reference:
Exhibit 99(b) Resolution of the Board of Trustees
of The Northwestern Mutual Life Insurance
Company creating the Account and
resolution of the Executive Committee
designating the formations of "NML
Variable Annuity Account A" and "NML
Variable Annuity Account B"
Exhibit A(3)(A) Distribution Contract
The following exhibit was filed in electronic format with
Post-Effective Amendment No. 6 on Form N-4 for NML Variable Annuity
Account A, File No. 33-58476, CIK 0000790162, dated November 13, 1995,
and is incorporated herein by reference:
EX-99.B1 Restated Articles of Incorporation of The
Northwestern Mutual Life Insurance Company
Item 25. Directors and Officers of the Depositor
The following lists include all of the Trustees, executive officers and other
officers of The Northwestern Mutual Life Insurance Company as of March 1, 2000,
without regard to their activities relating to variable annuity contracts or
their authority to act or their status as "officers" as that term is used for
certain purposes of the federal securities laws and rules thereunder.
TRUSTEES
<TABLE>
<CAPTION>
Name Business Address
- ---- ----------------
<S> <C>
R. Quintus Anderson Aarque Capital Corporation
20 West Fairmount Avenue
P.O. Box 109
Lakewood, NY 14750-0109
Edward E. Barr Sun Chemical Corporation
222 Bridge Plaza South
Fort Lee, NJ 07024
</TABLE>
C-2
<PAGE> 65
<TABLE>
<S> <C>
Gordon T. Beaham III Faultless Starch/Bon Ami Co.
1025 West Eighth Street
Kansas City, MO 64101
Robert C. Buchanan Fox Valley Corporation
100 West Lawrence Street
P.O. Box 727
Appleton, WI 54911
George A. Dickerman Spalding Sports Worldwide
425 Meadow Street
P.O. Box 901
Chicopee, MA 01021-0901
Pierre S. du Pont Richards, Layton and Finger
P.O. Box 551
1 Rodney Square
Wilmington, DE 19899
James D. Ericson The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
J. E. Gallegos Gallegos Law Firm
460 St. Michaels Drive
Building 300
Santa Fe, NM 87505
Stephen N. Graff 805 Lone Tree Road
Elm Grove, WI 53122-2014
Patricia Albjerg Graham Graduate School of Education
Harvard University
420 Gutman
Cambridge, MA 02138
Stephen F. Keller 101 South Las Palmas Avenue
Los Angeles, CA 90004
Barbara A. King Landscape Structures, Inc.
Route 3
601-7th Street South
Delano, MN 55328
J. Thomas Lewis 228 St. Charles Avenue
Suite 1024
New Orleans, LA 70130
Daniel F. McKeithan, Jr. Tamarack Petroleum Company, Inc.
Suite 1920
777 East Wisconsin Avenue
Milwaukee, WI 53202
</TABLE>
C-3
<PAGE> 66
<TABLE>
<S> <C>
Guy A. Osborn Universal Foods Corp.
433 East Michigan Street
Milwaukee, WI 53202
Timothy D. Proctor Diageo plc
8 Henrietta Place
London W1M 9AG
United Kingdom
H. Mason Sizemore, Jr. The Seattle Times
Fairview Avenue North and John Street
P.O. Box 70
Seattle, WA 98109
Harold B. Smith, Jr. Illinois Tool Works, Inc.
3600 West Lake Avenue
Glenview, IL 60625-5811
Sherwood H. Smith, Jr. Carolina Power & Light Company
411 Fayetteville Street Mall
P.O. Box 1551
Raleigh, NC 27602
Peter M. Sommerhauser Godfrey & Kahn, S.C.
780 North Water Street
Milwaukee, WI 53202-3590
John E. Steuri Advanced Thermal Technologies
2102 Riverfront Drive, Suite 120
Little Rock, AR 72202-1747
John J. Stollenwerk Allen-Edmonds Shoe Corporation
201 East Seven Hills Road
P.O. Box 998
Port Washington, WI 53074-0998
Barry L. Williams Williams Pacific Ventures, Inc.
100 First Street
Suite 2350
San Francisco, CA 94105
Kathryn D. Wriston c/o Shearman & Sterling
599 Lexington Avenue
Room 1126
New York, NY 10022
Edward J. Zore The Northwestern Mutual Life
Insurance Company
720 East Wisconsin Avenue
Milwaukee, WI 53202
</TABLE>
C-4
<PAGE> 67
EXECUTIVE OFFICERS
<TABLE>
<CAPTION>
Name Title
- ---- -----
<S> <C>
Deborah A. Beck Senior Vice President
William H. Beckley Senior Vice President
Robert J. Berdan Vice President
John M. Bremer Executive Vice President, General Counsel & Secretary
Peter W. Bruce Executive Vice President
Steven T. Catlett Vice President
Mark G. Doll Senior Vice President
Thomas E. Dyer Vice President
James D. Ericson President and Chief Executive Officer, Trustee
Richard L. Hall Senior Vice President
William C. Koenig, FSA Senior Vice President and Chief Actuary
Gary E. Long Vice President and Controller
Susan A. Lueger Vice President
Meridee J. Maynard Vice President
Donald L. Mellish Senior Vice President
Bruce L. Miller Senior Vice President
Gregory C. Oberland Vice President
Barbara F. Piehler Vice President
James F. Reiskytl Vice President
Mason G. Ross Senior Vice President
John E. Schlifske Vice President
Leonard F. Stecklein Senior Vice President - Policyowner Services
Frederic H. Sweet Senior Vice President
J. Edward Tippetts Vice President
Martha M. Valerio Vice President
W. Ward White Vice President
Walt J. Wojcik Senior Vice President
Edward J. Zore Executive Vice President and Trustee
</TABLE>
OTHER OFFICERS
<TABLE>
<CAPTION>
Name Title
- ---- -----
<S> <C>
John M. Abbott Associate Director - Benefits Research
Carl G. Amick Director - Disability Benefits
Thomas R. Anderson Vice President - Marketing
Maria J. Avila Assistant Controller
Michael J. Backus Associate Director - Information Systems
John E. Bailey Senior Actuary
Nicholas H. Bandow Assistant Director - Information Systems
Lynn F. Bardele Assistant Director - Field Training & Development
Margaret A. Barkley Assistant Director
Walter L. Barlow Assistant Director - Education
Rebekah B. Barsch Director - NML Foundation
Sandra L. Barton Assistant Director - Marketing
Bradford P. Bauer Assistant Director - Advanced Marketing
Beth M. Berger Assistant General Counsel & Assistant Secretary
Frederick W. Bessette Assistant General Counsel & Assistant Secretary
Carrie L. Bleck Assistant Director
</TABLE>
C-5
<PAGE> 68
<TABLE>
<S> <C>
D. Rodney Bluhm Assistant General Counsel
Jessica J. Borgmann Assistant Director - Agency Recruiting
Willette Bowie Employee Relations Director
Martin R. Braasch Director - Underwriting Standards & Services
Patricia R. Braeger Associate Director - Information Systems
James A. Brewer Investment Research Officer
William J. Buholzer Employee Relations Director
Michael S. Bula Assistant General Counsel
Jerry C. Burg Associate Director - Field Benefits
Pency P. Byhardt Assistant Director - New Business
Gregory B. Bynan Director - Corporate Services
Kim M. Cafaro Assistant General Counsel & Assistant Secretary
John E. Cain Assistant Director - Life Benefits
Gwen C. Canady Assistant Director-Mutual Funds
Shanklin B. Cannon, M.D. Medical Director - Life Products/Research
Terese J. Capizzi Assistant Director
Kurt P. Carbon Assistant Regional Director
John P. Carrick Assistant Director - Investment Services
Michael G. Carter Assistant General Counsel & Assistant Secretary
William W. Carter Associate Actuary
John E. Caspari Assistant Director - Advertising & Corporate
Information
Walter J. Chossek Associate Controller
Thomas R. Christenson Director - Advanced Marketing
Eric P. Christophersen Associate Director
Alan E. Close Associate Controller
Carolyn M. Colbert Assistant Director - New Business
Margaret Winter Combe Director - Corporate Development
Virginia A. Corwin Assistant Director - New Business
Barbara E. Courtney Associate Director - Mutual Funds
Dennis J. Darland Assistant Director - Disability Income
Thomas H. Davis Associate Director - Information Systems
Nicholas De Fino Assistant Director
Carol A. Detlaf Director - Annuity Administration
Colleen Devlin Assistant Director - Communications
Glen W. DeZeeuw Director - Agency Services
Joseph Dobering, III Director - Underwriting Standards & Services
Jennifer L. Docea Actuary
Lisa C. Dodd Actuary
Richard P. Dodd Assistant Director - Agency
Daniel C. Dougherty Director - Personal Markets
Margaret T. Dougherty Assistant Director - Information Systems
John R. Dowell Director - Workforce Diversity
William O. Drehfal Assistant Director - Media Services
Steven J. Dryer Associate Director
Jeffrey S. Dunn Vice President
John E. Dunn Assistant General Counsel & Assistant Secretary
Somayajulu Durvasula Associate Director - Field Financial
James R. Eben Assistant General Counsel & Assistant Secretary
Magda El Sayed Assistant Director - Information Systems
Michael S. Ertz Assistant Director - Advanced Marketing
Thomas F. Fadden Assistant Director - Information Systems
Christina H. Fiasca Director - Policyowner Services
Zenia J. Fieldbinder Assistant Director - Annuity Accumulation
</TABLE>
C-6
<PAGE> 69
<TABLE>
<S> <C>
Richard F. Fisher Senior Actuary
Dennis J. Fitzpatrick Director - Advanced Marketing
Jon T. Flaschner Director - Policyowner Services
Kate M. Fleming Assistant General Counsel & Assistant Secretary
Carol J. Flemma Assistant Director - Marketing
John E. Fobes II Assistant Director - Agency Services
Donald Forecki Investment Officer
Phillip B. Franczyk Vice President
Stephen H. Frankel Vice President
Anne A. Frigo Assistant Director - New Business
Richard R. Garthwait Vice President - Field Financial
David L. Georgenson Director - Agent Development
Timothy L. Gergens Financial Officer
Paulette A. Getschman Assistant Director - Policyowner Services
James W. Gillespie Vice President
Walter M. Givler Director - Corporate Services
Robert P. Glazier Director - New Business
Robert K. Gleeson, M.D. Vice President - Medical Director
Mark J. Gmach Director - Agency
Jason G. Goetze Assistant Director - Marketing
David Lee Gosse Assistant Director - Disability Benefits
William F. Grady Director of Field Finances
John M. Grogan Director - Disability Income
Thomas C. Guay Director - Field Financial
Gerald A. Haas Assistant Director - Information Systems
Patricia Ann Hagen Assistant Director - Information Systems
Ronald D. Hagen Vice President
Lori A. Hanes Director - Human Resources
William M. Harris Assistant Regional Director - South
Dennis R. Hart Assistant Director - Agent Development
James C. Hartwig Vice President - Advanced Marketing
Paul F. Heaton Assistant General Counsel & Assistant Secretary
William L. Hegge Associate Director of Telecommunications
Wayne F. Heidenreich Medical Director
Jacquelyn F. Heise Associate Director - Information Systems
Robert L. Hellrood Director - New Business
Herbert F. Hellwig Assistant Director - Personal Markets
Jane A. Herman Director - Term Upgrade
Gary M. Hewitt Vice President & Treasurer
Donna R. Higgins Associate Director - Information Systems
David L. Hilbert Investment Officer
Karla D. Hill Human Resource Officer
Susan G. Hill Assistant Director
John D. Hillmer Assistant Director - Information Systems
Hugh L. Hoffman Assistant Director - Information Systems
Richard S. Hoffmann Director - Audit
Terence J. Holahan Assistant Director - Long Term Care Sales
Bruce Holmes Associate Actuary
Elizabeth S. Idleman Assistant General Counsel & Assistant Secretary
Scott C. Iodice Assistant Director - Agency
Joseph P. Jansky Assistant Director - Corporate Planning
Michael D. Jaquint Assistant Actuary
Dolores A. Juergens Associate Director of Restaurant Operations
Mark Kaprelian Assistant General Counsel & Assistant Secretary
</TABLE>
C-7
<PAGE> 70
<TABLE>
<S> <C>
Marilyn J. Katz Assistant Director - Medical Consultants
John C. Kelly Associate Controller
Kevin C. Kennedy Assistant Director - Architecture
James B. Kern Regional Director - Central Region
Donald C. Kiefer Vice President
Jason T. Klawonn Assistant Actuary
Allen B. Kluz Director - Field Financial
Beatrice C. Kmiec Assistant Regional Director - East
James A. Koelbl Assistant General Counsel & Assistant Secretary
John L. Kordsmeier Director - Policyowner Services
Robert J. Kowalsky Chief Architect
Carol L. Kracht Assistant General Counsel & Assistant Secretary
Martha Krawczak Officer - Life and Disability
Jeffrey J. Krygiel Assistant Actuary
Todd L. Laszewski Associate Actuary
Patrick J. Lavin Director - Disability Benefits
James L. Lavold Associate Director - Meetings
Elizabeth J. Lentini Assistant General Counsel & Assistant Secretary
Sally Jo Lewis Assistant General Counsel & Assistant Secretary
Mark P. Lichtenberger Associate Director - LINK Technical Planning
Paul E. Lima Vice President-International Insurance Operations
Steven M. Lindstedt Assistant Director - Information Systems
Melissa C. Lloyd Assistant Director - Advanced Marketing
James Lodermeier Assistant Director - Tax Planning
George R. Loxton Assistant General Counsel & Assistant Secretary
Mary M. Lucci Director - New Business
Christine M. Lucia Human Resources Officer
Mark J. Lucius Corporate Information Officer
Merrill C. Lundberg Assistant General Counsel & Assistant Secretary
Jon K. Magalska Associate Actuary
Jean M. Maier Vice President - Life Benefits
Joseph Maniscalco Associate Director - Information Systems
Raymond J. Manista Assistant General Counsel & Assistant Secretary
Steven C. Mannebach Assistant Director - Field Financial Services
Jeffrey S. Marks Multi Life, Research & Reinsurance Officer
Steve Martinie Assistant General Counsel & Assistant Secretary
Ted A. Matchulat Actuarial Products Officer
Shawn P. Mauser Assistant Director - Personal Markets
Margaret McCabe Director - Policy Benefits Systems
Richard A. McComb Director - Human Resources
William L. McCown Vice President & Investment Counsel
Paul E. McElwee Assistant General Counsel & Assistant Secretary
James L. McFarland Assistant General Counsel & Assistant Secretary
Daniel E. McGinley Director - Management Development
Allan J. McDonell Assistant Director - Equity Compliance
Mark J. McLennon Assistant Director
Arthur J. Mees Jr. Assistant Actuary
Robert J. Meiers Ad Valorem Tax Manager
Larry S. Meihsner Assistant General Counsel & Assistant Secretary
Robert G. Meilander Vice President
Richard E. Meyers Assistant General Counsel
Patricia A. Michel Assistant Director - Policyowner Services
Jay W. Miller Vice President & Tax Counsel
Sara K. Miller Vice President
</TABLE>
C-8
<PAGE> 71
<TABLE>
<S> <C>
Jill Mocarski Associate Medical Director
Tom M. Mohr Director of Policyowner Services - South
Richard C. Moore Associate Actuary
Scott J. Morris Assistant General Counsel & Assistant Secretary
Sharon A. Morton Investment Officer
Adrian J. Mullin Assistant Director - Personal Markets
Timothy P. Murphy Assistant Director-Marketing
Randolph J. Musil Assistant Director - Advanced Marketing
John E. Muth Assistant Director - Advanced Marketing
David K. Nelson Assistant General Counsel
Ronald C. Nelson Director
Timothy Nelson Assistant Director - Marketing
Leon W. Nesbitt Vice President-Agency
Karen M. Niessing Director - Policyowner Services
Daniel J. O'Meara Director - Field Financial
Mary Joy O'Meara Assistant Director - Advanced Marketing
Kathleen A. Oman Associate Director - Information Systems
Thomas A. Pajewski Investment Research Officer
Arthur V. Panighetti Director - Tax Planning
Christen L. Partleton Associate Director - Policyowner Services
Jeffrey L. Pawlowski Assistant Director - Agency Development
David W. Perez Assistant General Counsel
Judith L. Perkins Assistant General Counsel & Assistant Secretary
Wilson D. Perry Assistant General Counsel & Assistant Secretary
Gary N. Peterson Actuary
John C. Peterson Director of Policyowner Services - West
Harvey W. Pogoriler Assistant General Counsel
Randolph R. Powell, M.D. Medical Director
Mark A. Prange Associate Director - Information Systems
Brian R. Pray Assistant Regional Director - New Business
Thomas O. Rabenn Assistant General Counsel & Assistant Secretary
David R. Remstad Senior Actuary
David R. Retherford Assistant Director of New Business - Central
Stephen M. Rhode Assistant Director - Qualified Benefits
Richard R. Richter Vice President
Daniel A. Riedl Assistant General Counsel
Marcia Rimai Vice President - Litigation Counsel
Kathleen M. Rivera Vice President - Insurance Counsel
Faith B. Rodenkirk Assistant Director - Group Marketing
James S. Rolfsmeyer Assistant Director - Information Systems
Lora A. Rosenbaum Director - New Business
Robert K. Roska Associate Director - Information Systems
Sue M. Roska Director - Systems and Services
Harry L. Ruppenthal Director of Policyowner Services - East
Stephen G. Ruys Assistant Director - Information Systems
Rose Kordich Sasich Assistant Director of Systems
Mary Ann Schachtner Director - Field Training & Development
Linda Ann Schaefer Assistant Director - Marketing
Timothy G. Schaefer Assistant Director - Investment Services Architecture
Thomas F. Scheer Assistant General Counsel & Assistant Secretary
Carlen A. Schenk Associate Director
Jane A. Schiltz Vice President - Disability Income
Kathleen H. Schluter Assistant General Counsel & Assistant Secretary
Calvin R. Schmidt Associate Director - Information Systems
</TABLE>
C-9
<PAGE> 72
<TABLE>
<S> <C>
Rodd Schneider Assistant General Counsel & Assistant Secretary
Sarah R. Schneider Assistant Director - Corporate Project
John O. Schnorr Assistant Director
Margaret R. Schoewe Vice President - Information Systems
John F. Schroeder Associate Director of Field Office Real Estate
Donna L. Schwartz Assistant Director - Customer Service
Melva T. Seabron Director - Corporate Services
Norman W. Seguin, II Investment Officer - Ad Valorem Taxes
Catherine L. Shaw Assistant General Counsel & Assistant Secretary
John E. Sheaffer, Jr. Assistant Director - Agent Development
Janet Z. Silverman Director - New Business
Stephen M. Silverman Assistant General Counsel
David W. Simbro Managing Director - Life Marketing
Paul W. Skalecki Associate Actuary
Cynthia S. Slavik Assistant Director - Environmental Engineer
Landon T. Smith Assistant Director - Replacements
Mark W. Smith Assistant General Counsel & Assistant Secretary
Warren L. Smith, Jr. Investment Officer - Architecture
Steven W. Speer Director - Annuity & Mutual Fund Marketing
Robert J. Spellman, M.D. Vice President & Chief Medical Director
Steve P. Sperka Assistant Actuary
Mark A. Stalsberg Assistant Director - Agency
Barbara J. Stansberry Director - New Business
Bonnie L. Steindorf Director - Department Operations
Steven H. Steidinger Assistant Director - Marketing
Karen J. Stevens Assistant General Counsel & Assistant Secretary
Steven J. Stribling Associate Actuary
Stephen J. Strommen Associate Actuary
Theodore H. Strupp Assistant Director
Daniel J. Suprenant Director - Group Disability Marketing
Victoria A. Sweigart Human Resources Officer
Rachel L. Taknint Assistant General Counsel & Assistant Secretary
Thomas Talajkowski Assistant Director - Tax Compliance
Paul B. Tews Director - Investment Planning
Deanna L. Tillisch Assistant Director - Media Relations
Susan M. Tompkins Director - Agency
Thomas W. Towers Associate Director - Public Relations
Gloria E. Tracy Assistant Director - Marketing
Linda K. Tredupp Assistant Director - Information Systems
Chris G. Trost Associate Actuary
Mark J. Van Cleave Assistant Director of Marketing Research
Michael T. Van Grinsven Assistant Director - Management Development
Mary Beth Van Groll Vice President - Information Systems
Gloria J. Venski Associate Director - Disability Benefits
Janine L. Wagner Assistant Director - Investment Services
Scott E. Wallace Assistant Director - Projects
Hal W. Walter Vice President
P. Andrew Ware Vice President
Mary L. Wehrle-Schnell Associate Director - Information Systems
Daniel T. Weidner Assistant Director - Information Systems
Joel S. Weiner Assistant Medical Director
Ronald J. Weir Associate Director - Information Systems
</TABLE>
C-10
<PAGE> 73
<TABLE>
<S> <C>
Kenneth R. Wentland Assistant Director of Policyowner Services - East
David B. Wescoe Vice President to President
Sandra D. Wesley Associate Director of Special Projects
Catherine A. Wilbert Assistant General Counsel & Assistant Secretary
David L. Wild Director - Corporate Services
Donald R. Wilkinson Vice President - Agency
Jeffrey B. Williams Risk Manager
John K. Wilson Director - Personal Markets
Penelope A. Woodcock Associate Director - Benefit Systems
Richard W. Woody Assistant Director - Agency
Stanford A. Wynn Assistant Director - Advanced Marketing
Catherine M. Young Assistant General Counsel & Assistant Secretary
Michael L. Youngman Vice President - Legislative Representative
James A. Youngquist Associate Actuary
Richard S. Zakrzewski Associate Research Officer
John Zao Assistant Director - Information Systems
Diana M. Zawada Associate Director
Rick T. Zehner Director - Corporate Planning
Patricia A. Zimmermann Investment Officer - Real Estate Systems
Ray Zimmermann Director - LINK Information Network
Philip R. Zwieg Vice President - Technical Support
Robert E. Zysk Director - Tax Compliance
</TABLE>
The business addresses for all of the executive officers and other officers is
720 East Wisconsin Avenue, Milwaukee, Wisconsin 53202.
Item 26. Persons Controlled By or Under Common Control with the Depositor or
Registrant
The subsidiaries of The Northwestern Mutual Life Insurance Company
("Northwestern Mutual"), as of December 31, 1999 are set forth on pages C-12 and
C-13. In addition to the subsidiaries set forth pages on C-12 and C-13, the
following separate investment accounts (which include the Registrant) may be
deemed to be either controlled by, or under common control with, Northwestern
Mutual:
1. NML Variable Annuity Account A
2. NML Variable Annuity Account B
3. NML Variable Annuity Account C
4. Northwestern Mutual Variable Life Account
Northwestern Mutual Series Fund, Inc. and Russell Insurance Funds (the
"Funds"), shown on page C-12 as subsidiaries of Northwestern Mutual, are
investment companies registered under the Investment Company Act of 1940,
offering their shares to the separate accounts identified above; and the shares
of the Funds held in connection with certain of the accounts are voted by
Northwestern Mutual in accordance with voting instructions obtained from the
persons who own, or are receiving payments under, variable annuity contracts or
variable life insurance policies issued in connection with the accounts, or in
the same proportions as the shares which are so voted.
C-11
<PAGE> 74
NML CORPORATE STRUCTURE*
(AS OF DECEMBER 31, 1999)
THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
General Account
NML Variable Annuity Account A
NML Variable Annuity Account B
NML Variable Annuity Account C
NML Group Annuity Separate Account
NML Variable Life Account
Eiger Corporation - 100%
Frank Russell Company and its subsidiaries - 100%
Bradford, Inc. - 100%
NML/Tallahassee, Inc. - 100%
Northwestern Investment Management Company - 100%
Northwestern Mutual Las Vegas, Inc. - 100%
Northwestern Long Term Care Insurance Company - 100%
Northwestern International Holdings, Inc. - 100%
Northwestern Foreign Holdings B.V. - 100%
Saskatoon Centre, Limited - 100% (inactive)
Northwestern Mutual Series Fund, Inc. (and its 11 portfolios) - 100%
Russell Insurance Funds (and its 5 funds) - 70.8%
Mason Street Funds, Inc. (and its 11 funds) - 77.03%
MGIC Investment Corporation - 11%. MGIC holds 100% of the voting stock of the
following:
Mortgage Guaranty Reinsurance Corporation, MGIC, MGIC Reinsurance
Corporation of Wisconsin, MGIC Mortgage Insurance Corporation, and various
subsidiaries.
Baird Financial Corporation - 80%. Baird Financial Corporation holds 80% of
the voting stock of Robert W. Baird & Co., Incorporated and various
subsidiaries.
Northwestern Mutual Investment Services, LLC - 100%
Northwestern Reinsurance Holdings N.V. - 100%
Northwestern Financial Group LLC - 100% (inactive)
NML - CBO, LLC - 49%
<TABLE>
<S> <C>
NML REAL ESTATE HOLDINGS, LLC - 100%
The Grand Avenue Corporation - 98.54% Mitchell, Inc. - 100%
Marina Pacific, Ltd. - 100% Cass Corporation - 100%
Solar Resources, Inc. - 100% Burgundy, Inc. - 100%
Rocket Sports, Inc. - 100% (inactive) Amber, Inc. - 100%
Summit Sports, Inc. - 100% (inactive) Olive, Inc. - 100%
Greenway Sports, Inc. - 100% (inactive) Bayridge, Inc. - 100%
RE Corporation - 100% Ryan, Inc. - 100%
INV Corp. - 100% Pembrook, Inc. - 100%
Buffalo Promotions, Inc. - 100% (inactive) PBClub, Inc. - 100%
NW Greenway #1 - 100% (inactive) Diversey, Inc. - 100%
NW Greenway #9 - 100% (inactive) Larkin, Inc. - 100% (inactive)
Logan, Inc. - 100% Russet, Inc. - 100% (inactive)
</TABLE>
* Except for MGIC Investment Corporation and its subsidiaries, includes all NML
mutual funds and other corporations of which 50% or more voting power is
controlled by NML.
C-12
<PAGE> 75
NML CORPORATE STRUCTURE, CONTINUED*
(AS OF DECEMBER 31, 1999)
NML SECURITIES HOLDINGS, LLC-100%
<TABLE>
<S> <C>
NW Pipeline, Inc. - 100% Kristina International Sales, Inc. - 100%
Painted Rock Development Corporation - 100% NML/Mid Atlantic, Inc. - 100%
NML Development Corporation - 100% KerryAnne International Sales, Inc. - 100%
Stadium and Arena Management, Inc. - 100% Regina International Sales, Inc. - 100%
Carlisle Ventures, Inc. - 100%
Park Forest Northeast, Inc. - 100%
Travers International Sales, Inc. - 100%
Highbrook International Sales, Inc. - 100%
Elderwood International Sales, Inc. - 100%
Mallon International Sales, Inc. - 100%
Higgins, Inc. - 100%
Hobby, Inc. - 100%
Baraboo, Inc. - 100%
Elizabeth International Sales, Inc. - 100%
Sean International Sales, Inc. - 100%
Alexandra International Sales, Inc. - 100%
Brian International Sales, Inc. - 100%
Jack International Sales, Inc. - 100%
Brendan International Sales, Inc. - 100%
Justin International FSC, Inc. - 100%
Mason & Marshall, Inc. - 100%
North Van Buren, Inc. - 100%
Northwestern Mutual Life
International, Inc. - 100%
White Oaks, Inc. - 100%
Hazel, Inc. - 100%
Maroon, Inc. - 100%
Coral, Inc. - 100%
Lydell, Inc. - 100%
Klode, Inc. - 100%
Chateau, Inc. - 100% (inactive)
Lake Bluff, Inc. - 100% (inactive)
Nicolet, Inc. - 100% (inactive)
Tupelo, Inc. - 100% (inactive)
</TABLE>
* Except for MGIC Investment Corporation and its subsidiaries, includes all NML
mutual funds and other corporations of which 50% or more voting power is
controlled by NML.
C-13
<PAGE> 76
Item 27. Number of Contract Owners
As of February 29, 2000, 16,690 variable annuity contracts issued in
connection with NML Variable Annuity Account A were outstanding. All such
contracts were issued as contracts for plans qualifying for special treatment
under various provisions of the Internal Revenue Code.
Item 28. Indemnification
That portion of the By-laws of Northwestern Mutual relating to
indemnification of Trustees and officers is set forth in full in Article VII of
the By-laws of Northwestern Mutual, amended by resolution and previously filed
as an exhibit to the Registration Statement.
Item 29. Principal Underwriters
(a) Northwestern Mutual Investment Services, LLC ("NMIS"), the
broker-dealer subsidiary of Northwestern Mutual, may be considered the principal
underwriter currently distributing securities of the Registrant. NMIS is also
co-depositor, and may be considered the principal underwriter, for NML Variable
Annuity Account B and Northwestern Mutual Variable Life Account, separate
investment accounts of Northwestern Mutual registered under the Investment
Company Act of 1940 as unit investment trusts. In addition NMIS is the
investment adviser for Northwestern Mutual Series Fund, Inc.
(b) The directors and officers of NMIS are as follows:
<TABLE>
<CAPTION>
Name Position
- ---- --------
<S> <C>
Maria J. Avila Assistant Treasurer
Barbara Bay Assistant Director, Equity Compliance, NMIS Office of
Supervisory Jurisdiction
Deborah A. Beck Director and Vice President, Variable Life Administration
William H. Beckley Executive Vice President, Sales
Peter W. Bruce Director
Thomas A. Carroll Vice President - Common Stocks
Walter J. Chossek Treasurer
Barbara E. Courtney Assistant Treasurer
Jefferson V. De Angelis Vice President - Fixed Income Securities
Mark G. Doll Executive Vice President, Investment Advisory Services
James R. Eben Assistant Secretary
Richard L. Hall Vice President, Variable Life Marketing
Lisa M. Heise Assistant Director, Equity Compliance, NMIS Office of
Supervisory Jurisdiction
Laila V. Hick Assistant Director, Equity Compliance, NMIS Office of
Supervisory Jurisdiction
Beatrice C. Kmiec Assistant Vice President, Variable Life Administration
Merrill C. Lundberg Secretary
Meridee J. Maynard President and CEO
Allan J. McDonell Vice President and Chief Compliance Officer
Ignatius L. Smetek Vice President - Common Stocks
Leonard F. Stecklein Vice President - Trust Services
Steven P. Swanson Vice President
Carla A. Thoke Director, Equity Compliance, NMIS Office of Supervisory
Jurisdiction
J. Edwards Tippetts Vice President, Sales Support
Julie Van Cleave Vice President - Common Stocks
Patricia L. Van Kampen Vice President - Common Stocks
</TABLE>
C-14
<PAGE> 77
<TABLE>
<S> <C>
William R. Walker Vice President
Robert J. Ziegler Assistant Treasurer
Edward J. Zore Director
</TABLE>
The address for each director and officer of NMIS is 720 East Wisconsin Avenue,
Milwaukee, Wisconsin 53202.
(c) During 1999 life insurance agents of Northwestern Mutual who are
also registered representatives of NMIS received commissions, including general
agent overrides, in the aggregate amount of $2,679,128 for sales of variable
annuity contracts, and interests therein, issued in connection with the
Registrant. NMIS received compensation for its investment advisory services from
Northwestern Mutual Series Fund, Inc., the investment company in which assets of
the Registrant are invested.
Item 30. Location of Accounts and Records
All accounts, books or other documents required to be maintained in
connection with the Registrant's operations are maintained in the physical
possession of Northwestern Mutual at 720 East Wisconsin Avenue, Milwaukee,
Wisconsin 53202.
Item 31. Management Services
There are no contracts, other than those referred to in Part A or Part
B of this Registration Statement, under which management-related services are
provided to the Registrant and pursuant to which total payments of $5,000 or
more were made during any of the last three fiscal years.
Item 32. Undertakings
(a) The Registrant undertakes to file a post-effective amendment to
this Registration Statement as frequently as is necessary to ensure that the
audited financial statements in the Registration Statement are never more than
16 months old for so long as payments under the variable annuity contracts may
be accepted.
(b) The Registrant undertakes to include either (1) as part of any
application to purchase a contract offered by the prospectus, a space that an
applicant can check to request a Statement of Additional Information, or (2) a
post card or similar written communication affixed to or included in the
prospectus that the applicant can remove to send for a Statement of Additional
Information.
(c) The Registrant undertakes to deliver any Statement of Additional
Information and any financial statements required to be made available under
this Form promptly upon written or oral request.
(d) Reference is made to the indemnification provisions disclosed in
response to Item 28. Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the registered securities, the Registrant 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.
C-15
<PAGE> 78
SIGNATURES
As required by the Securities Act of 1933, the Registrant, NML Variable
Annuity Account A, certifies that it meets all of the requirements for
effectiveness of this Amended Registration Statement pursuant to Rule 485 (b)
under the Securities Act of 1933 and has duly caused this Amended Registration
Statement to be signed on its behalf, in the City of Milwaukee, and State of
Wisconsin, on the 23rd day of March, 2000.
NML VARIABLE ANNUITY ACCOUNT A
(Registrant)
By THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
Attest: JOHN M. BREMER By: JAMES D. ERICSON
-------------------------------- ------------------------------
John M. Bremer, Executive Vice James D. Ericson, President
President, General Counsel and Chief Executive Officer
and Secretary
As required by the Securities Act of 1933, this Amended Registration
Statement has been signed by the depositor on the 23rd day of March, 2000.
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
(Depositor)
Attest: JOHN M. BREMER By: JAMES D. ERICSON
-------------------------------- ------------------------------
John M. Bremer, Executive Vice James D. Ericson, President
President, General Counsel and Chief Executive Officer
and Secretary
As required by the Securities Act of 1933, this Amended Registration
Statement has been signed by the following persons in the capacities with the
depositor and on the dates indicated:
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C> <C>
Trustee, President and
JAMES D. ERICSON Principal Executive and
- ---------------------------------------- Financial Officer
James D. Ericson
GARY E. LONG Vice President, Controller
- ---------------------------------------- and Principal Accounting
Gary E. Long Officer
EDWARD J. ZORE Trustee Dated
- ---------------------------------------- March 23, 2000
Edward J. Zore
HAROLD B. SMITH* Trustee
- ----------------------------------------
Harold B. Smith
</TABLE>
C-16
<PAGE> 79
<TABLE>
<S> <C> <C>
J. THOMAS LEWIS* Trustee
- ----------------------------------------
J. Thomas Lewis
PATRICIA ALBJERG GRAHAM* Trustee
- ----------------------------------------
Patricia Albjerg Graham*
R. QUINTUS ANDERSON* Trustee
- ----------------------------------------
R. Quintus Anderson
STEPHEN F. KELLER* Trustee
- ----------------------------------------
Stephen F. Keller
PIERRE S. du PONT* Trustee
- ----------------------------------------
Pierre S. du Pont
J. E. GALLEGOS* Trustee Dated
- ---------------------------------------- March 23, 2000
J. E. Gallegos
KATHRYN D. WRISTON* Trustee
- ----------------------------------------
Kathryn D. Wriston
BARRY L. WILLIAMS* Trustee
- ----------------------------------------
Barry L. Williams
GORDON T. BEAHAM III* Trustee
- ----------------------------------------
Gordon T. Beaham III
DANIEL F. McKEITHAN, JR.* Trustee
- ----------------------------------------
Daniel F. McKeithan, Jr.
EDWARD E. BARR* Trustee
- ----------------------------------------
Edward E. Barr
ROBERT C. BUCHANAN* Trustee
- ----------------------------------------
Robert C. Buchanan
SHERWOOD H. SMITH, JR.* Trustee
- ----------------------------------------
Sherwood H. Smith, Jr.
H. MASON SIZEMORE, JR.* Trustee
- ----------------------------------------
H. Mason Sizemore, Jr.
</TABLE>
C-17
<PAGE> 80
<TABLE>
<S> <C> <C>
JOHN J. STOLLENWERK* Trustee
- ----------------------------------------
John J. Stollenwerk
GEORGE A. DICKERMAN* Trustee
- ----------------------------------------
George A. Dickerman
GUY A. OSBORN* Trustee Dated
- ---------------------------------------- March 23, 2000
Guy A. Osborn
JOHN E. STEURI* Trustee
- ----------------------------------------
John E. Steuri
STEPHEN N. GRAFF* Trustee
- ----------------------------------------
Stephen N. Graff
BARBARA A. KING* Trustee
- ----------------------------------------
Barbara A. King
TIMOTHY D. PROCTOR* Trustee
- ----------------------------------------
Timothy D. Proctor
PETER M. SOMMERHAUSER* Trustee
- ----------------------------------------
Peter M. Sommerhauser
*By: JAMES D. ERICSON
- ----------------------------------------
James D. Ericson, Attorney in Fact,
pursuant to the Power of Attorney
previously filed on January 27, 2000
</TABLE>
C-18
<PAGE> 81
EXHIBIT INDEX
EXHIBITS FILED WITH FORM N-4
POST-EFFECTIVE AMENDMENT NO. 2 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
FOR
NML VARIABLE ANNUITY ACCOUNT A
Exhibit Number Exhibit Name
- -------------- ------------
Exhibit B(10) Consent of PricewaterhouseCoopers LLP
<PAGE> 1
Exhibit B(10)
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 2 to the registration
statement on Form N-4 (the "Registration Statement") of our report dated January
24, 2000, relating to the financial statements of The Northwestern Mutual Life
Insurance Company, and of our report dated January 27, 2000, relating to the
financial statements of NML Variable Annuity Account A, which appear in such
Statement of Additional Information, and to the incorporation by reference of
such reports into the Prospectus which constitutes part of this Registration
Statement. We also consent to the reference to us under the heading "Experts" in
such Statement of Additional Information.
PricewaterhouseCoopers LLP
Milwaukee, Wisconsin
March 27, 2000
