NORTHSTAR/NWNL
VARIABLE ACCOUNT
ANNUAL REPORT
FOR THE PERIOD ENDED
DECEMBER 31, 1995
[LOGO]
This report has been prepared to provide information to owners of Northstar/NWNL
Variable Account Contracts. If it is used for any other purpose, it must be
accompanied or preceded by a current Northstar/NWNL Variable Account Prospectus
which discloses any charges and other important information about the Account,
together with the current Prospectuses for the underlying Funds.
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
Northwestern National Life Insurance
Company and Contract Owners of
Northstar/NWNL Variable Account:
We have audited the accompanying statement of assets and liabilities of
Northstar/NWNL Variable Account as of December 31, 1995 and the related combined
statements of operations and changes in Contract Owners' equity for the year
ended December 31, 1995 and the period from May 6, 1994 to December 31, 1994.
These financial statements are the responsibility of the management of
Northwestern National Life Insurance Company. Our responsibility is to express
an opinion on these financial statements based on our audits.
We have conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Our procedures include
confirmation of the securities owned as of December 31, 1995, by correspondence
with the Account custodians. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Northstar/NWNL Variable Account
as of December 31, 1995, and the results of its operations and changes in
Contract Owners' equity for the year ended December 31, 1995 and the period from
May 6, 1994 to December 31, 1994, in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Minneapolis, Minnesota
February 2, 1996
i
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
STATEMENT OF ASSETS AND LIABILITIES
December 31, 1995
(In Thousands, Except Share and Unit Data)
<TABLE>
<CAPTION>
NORTHSTAR'S NORTHSTAR'S NORTHSTAR'S
ASSETS: INCOME AND NORTHSTAR'S MULTI-SECTOR HIGH YIELD
- ------- GROWTH FUND GROWTH FUND BOND FUND BOND FUND
Investments in mutual funds at market value: ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
NORTHSTAR'S:
Income and Growth Fund
320,192 shares (cost $3,431) $3,647
Growth Fund
29,554 shares (cost $343) $341
Multi-Sector Bond Fund
83,892 shares (cost $420) $431
High Yield Bond Fund
342,853 shares (cost $1,692) $1,728
FIDELITY'S VIPF AND VIPF II:
Money Market Portfolio
0 shares (cost $-)
Overseas Portfolio
0 shares (cost $-)
Asset Manager Portfolio
0 shares (cost $-)
Index 500 Portfolio
51 shares (cost $4)
---------- ---------- ---------- ----------
Total Assets $3,647 $341 $431 $1,728
====== ==== ==== ======
LIABILITIES AND CONTRACT
OWNER'S EQUITY:
Due to Northwestern National Life
Insurance Company for contract charges $ 4 $ - $ - $1
Contract Owners' Equity 3,643 341 431 1,727
---------- ---------- ---------- ----------
Total Liabilities and Contract Owners' Equity $3,647 $341 $431 $1,728
====== ==== ==== ======
Units Outstanding: 301,285.181 27,043.488 37,703.818 149,292.389
Net Asset Value per Unit:
Northstar/NWNL Variable Annuity
Tax Qualified $12.091637 $12.607218 $11.435577 $11.567470
Non-Tax Qualified $12.091637 $12.607218 $11.435577 $11.567470
</TABLE>
The accompanying notes are an integral part of the financial statements.
ii
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES, CONTINUED
<TABLE>
<CAPTION>
IDELITY'S VIP FIDELITY'S VIPF FIDELITY'S VIPF II FIDELITY'S VIPF II
ASSETS: MONEY MARKET OVERSEAS ASSET MANAGER INDEX 500
- ------- PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO TOTAL
Investments in mutual funds at market value: ------------- ------------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
NORTHSTAR'S:
Income and Growth Fund
320,192 shares (cost $3,431) $3,647
Growth Fund
29,554 shares (cost $343) 341
Multi-Sector Bond Fund
83,892 shares (cost $420) 431
High Yield Bond Fund
342,853 shares (cost $1,692) 1,728
FIDELITY'S VIPF AND VIPF II:
Money Market Portfolio
0 shares (cost $-) $- -
Overseas Portfolio
0 shares (cost $-) $- -
Asset Manager Portfolio
0 shares (cost $-) $- -
Index 500 Portfolio
51 shares (cost $4) $4 4
---------- ---------- ---------- ---------- ----------
Total Assets $- $- $- $4 $6,151
== == == == ======
LIABILITIES AND CONTRACT
OWNER'S EQUITY:
Due to Northwestern National Life
Insurance Company for contract charges $- $- $- $- $5
Contract Owners' Equity - - - 4 6,146
---------- ---------- ---------- ---------- ----------
Total Liabilities and Contract Owners' Equity $- $- $- $4 $6,151
== == == == ======
Units Outstanding: - - - 335.333 515,660.209
Net Asset Value per Unit:
Northstar/NWNL Variable Annuity
Tax Qualified $10.288920 $10.651696 $11.143293 $12.048834
Non-Tax Qualified $10.288920 $10.651696 $11.143293 $12.048834
</TABLE>
The accompanying notes are an integral part of the financial statements.
iii
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
STATEMENT OF OPERATIONS AND
CHANGES IN CONTRACT OWNERS' EQUITY
(In Thousands)
<TABLE>
<CAPTION>
Year ended Period from
December 31, May 6, 1994 to
1995 Dec. 31, 1994
--------------- ---------------
<S> <C> <C>
Net investment income:
Reinvested dividend income............................... $ 226 $ 16
Reinvested capital gains................................. 102 9
Administrative expenses.................................. (60) (3)
--------- ---------
Net investment income
and capital gains ........................... 268 22
--------- ---------
Realized and unrealized gains (losses):.......................
Net realized gains (losses) on
redemptions of fund shares ........................ 44 (1)
Increase (decrease) in unrealized
appreciation of investments ....................... 286 (25)
------- ---------
Net realized and unrealized gains (losses) ........ 330 (26)
--------- ---------
Net additions (reductions) from operations... 598 (4)
--------- ---------
Contract Owners' transactions:
Net purchase payments ................................... 4,461 1,381
Surrenders .............................................. (268) (22)
Transfers between Sub-Accounts
and Fixed Account ................................. - -
Annuity payments......................................... - -
Transfers to (from) required reserves.................... - -
--------- ---------
Net additions for Contract
Owners' transactions ........................ 4,193 1,359
--------- ---------
Net additions for the year ............ 4,791 1,355
Contract Owners' Equity, beginning of the year ............... 1,355 -
--------- ---------
Contract Owners' Equity, end of the year ..................... $6,146 $1,355
====== ======
</TABLE>
The accompanying notes are an integral part of the financial statements.
iv
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION AND CONTRACTS:
Northstar/NWNL Variable Account (the Account) is a separate account of
Northwestern National Life Insurance Company (NWNL or Northwestern), a
wholly-owned subsidiary of ReliaStar Financial Corp. (formerly The NWNL
Companies, Inc.). The Account commenced operations on May 6, 1994 and is
registered as a unit investment trust under the Investment Company Act of
1940.
Purchase payments received under the contracts are allocated to Sub-Accounts
of the Account, each of which is invested in one of the Funds listed below
during the period.
NORTHSTAR FUNDS: FIDELITY'S VIPF AND VIPF II:
---------------- ----------------------------
Income and Growth Fund Money Market Portfolio
Growth Fund Overseas Portfolio
Multi-Sector Bond Fund Asset Manager Portfolio
High Yield Bond Fund Index 500 Portfolio
Northstar Investment Management Corporation, an affiliate of NWNL, is the
investment adviser for the four Funds of the Northstar/NWNL Trust and is paid
fees for its services by the Northstar Funds. Fidelity Management & Research
Company is the investment adviser for Fidelity's Variable Insurance Products
Fund (VIPF) and Variable Insurance Products Fund II (VIPF II) and is paid for
its services by the VIPF and VIPF II Portfolios. On April 30, 1995,
Sub-Accounts investing in VIPF and VIPF II Portfolios were made available
under the contracts.
SECURITIES VALUATION TRANSACTIONS AND RELATED INVESTMENT INCOME:
The market value of investments in the Sub-Accounts is based on the closing
net asset values of the Fund shares held at the end of the period. Investment
transactions are accounted for on the trade date (date the order to purchase
or redeem is executed) and dividend income and capital gain distributions are
recorded on the ex-dividend date. Net realized gains and losses on
redemptions of shares of the Funds are determined on the basis of specific
identification of Fund share costs.
VARIABLE ANNUITY RESERVES:
The amount of the reserves for contracts in the distribution period is
determined by actuarial assumptions which meet statutory requirements. Gains
or losses resulting from actual mortality experience, the full responsibility
for which is assumed by NWNL, are offset by transfers to (or from) NWNL.
2. FEDERAL INCOME TAXES:
Under current tax law, the income, gains and losses from the separate account
investments are not taxable to either the Account or NWNL.
3. CONTRACT CHARGES:
No deduction is made for a sales charge from the purchase payments made for
the contracts. However, on certain surrenders, NWNL will deduct from the
contract value a surrender charge as set forth in the contract.
Certain charges are made by NWNL to Contract Owners' Variable Accumulation
Values in the Account in accordance with the terms of the Contracts. These
charges may include: an annual administrative/contract charge of $35 from
each contract on the anniversary date or at the time of surrender, if
surrender is at a time other than the anniversary date; a daily
administrative charge; and a daily charge for mortality and expense risk
assumed by NWNL. NWNL bears the risk of adverse mortality experience and any
costs for sales and administrative services and expenses which exceed these
periodic charges.
Various states and other governmental units levy a premium tax on annuity
contracts issued by insurance companies. If the owner of a contract lives in
a state which levies such a tax, NWNL may deduct the amount of the tax from
the purchase payments received or the value of the contract at annuitization.
v
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
4. INVESTMENTS:
The net realized gains (losses) on redemptions of fund shares for the year
ended December 31, 1995 and the period from May 6, 1994 (date operations
commenced) to December 31, 1994, were as follows, (in thousands):
<TABLE>
<CAPTION>
NORTHSTAR'S
INCOME AND NORTHSTAR'S
TOTAL GROWTH FUND GROWTH FUND
----------------------------- ------------------------------ -----------------------------
Year ended Period from Year ended Period from Year ended Period from
Dec. 31, May 6, 1994 Dec. 31, May 6, 1994 Dec. 31, May 6, 1994
1995 to Dec. 31, 1994 1995 to Dec. 31, 1994 1995 to Dec. 31, 1994
------------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Proceeds from redemptions........ $1461 $65 $986 $24 $23 $14
Cost............................. 1,417 66 954 25 20 14
--------- --------- --------- --------- --------- ---------
Net realized gains (losses) on
redemptions of fund shares.. $ 44 ($1) $32 ($1) $ 3 $ -
======= === === === === ====
<CAPTION>
FIDELITY'S VIPF FIDELITY'S VIPF II FIDELITY'S VIPF II
OVERSEAS ASSET MANAGER INDEX 500
PORTFOLIO PORTFOLIO PORTFOLIO
------------------------------ ----------------------------- ------------------------------
Year ended Period from Year ended Period from Year ended Period from
Dec. 31, May 6, 1994, Dec. 31, May 6, 1994 Dec. 31, May 6, 1994
1995 to Dec. 31, 1994 1995 to Dec. 31, 1994 1995 to Dec. 31, 1994
------------ ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Proceeds from redemptions .......... $- $- $- $- $- $-
Cost................................ - - - - - -
--------- --------- --------- --------- --------- ---------
Net realized gains (losses) on
redemptions of fund shares... $- $- $- $- $- $-
= = = = = =
</TABLE>
vi
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
NORTHSTAR'S NORTHSTAR'S FIDELITY'S VIPF
MULTI-SECTOR HIGH YIELD MONEY MARKET
BOND FUND BOND FUND PORTFOLIO
------------------------------- ------------------------------ ----------------------------
Year ended Period from Year ended Period from Year ended Period from
Dec. 31, May 6, 1994 Dec. 31, May 6, 1994 Dec. 31, May 6, 1994
1995 to Dec. 31, 1994 1995 to Dec. 31, 1994 1995 to Dec. 31, 1994
------------ -------------- ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Proceeds from redemptions.......... $271 $4 $181 $23 $- $-
Cost............................... 267 4 176 23 - -
--------- --------- --------- --------- --------- ---------
Net realized gains (losses) on
redemptions of fund shares.... $ 4 $- $ 5 $ - $- $-
====== == ====== ==== == ==
</TABLE>
vii
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
5. CONTRACT OWNERS' TRANSACTIONS:
Unit transactions in each Sub-Account during the year ended December 31,
1995 and the period from May 6, 1994 (date operations commenced) to
December 31, 1994, were as follows:
<TABLE>
<CAPTION>
NORTHSTAR'S NORTHSTAR'S
INCOME AND NORTHSTAR'S MULTI-SECTOR
GROWTH FUND GROWTH FUND BOND FUND
----------------------------- ----------------------------- ----------------------------
Year ended Period from Year ended Period from Year ended Period from
Dec. 31, May 6, 1994 Dec. 31, May 6, 1994 Dec. 31, May 6, 1994
1995 to Dec. 31, 1994 1995 to Dec. 31, 1994 1995 to Dec. 31, 1994
------------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Units outstanding,
beginning of the year...... 100,955.441 - 8,738.734 - 15,492.534 -
Units purchased............... 272,482.821 102,017.017 16,561.980 8,900.561 34,047.693 15,492.534
Units redeemed................ (12,532.790) (1,061.576) (1,662.223) (626.685) (10.440) -
Units transferred between
Sub-Accounts and/or
Fixed Account ............. (59,620.291) - 3,404.997 464.858 (11,825.969) -
----------- ----------- ----------- ----------- ----------- -----------
Units outstanding,
end of the year............ 301,285.181 100,955.441 27,043.488 8,738.734 37,703.818 15,492.534
=========== =========== ========== ========= ========== ==========
<CAPTION>
FIDELITY'S VIPF FIDELITY'S VIPF II FIDELITY'S VIPF II
OVERSEAS ASSET MANAGER INDEX 500
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------- ---------------------------- ----------------------------
Year ended Period from Year ended Period from Year ended Period from
Dec. 31, May 6, 1994 Dec. 31, May 6, 1994 Dec. 31, May 6, 1994
1995 to Dec. 31, 1994 1995 to Dec. 31, 1994 1995 to Dec. 31, 1994
------------- ------------ ------------- ------------ ------------- ------------
<S> <C>
Units outstanding,
beginning of the year....... - - - - - -
Units purchased ............... - - - - - -
Units redeemed ................ - - - - - -
Units transferred between
Sub-Accounts and/or
Fixed Account .............. - - - - 335.333 -
----------- ----------- ----------- ----------- ----------- -----------
Units outstanding,
end of the year ............ - - - - 335.333 -
======= ======= ======= ======= ======= =======
</TABLE>
viii
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
NORTHSTAR'S FIDELITY'S VIPF
HIGH YIELD MONEY MARKET
BOND FUND PORTFOLIO
----------------------------- -----------------------------
Year ended Period from Year ended Period from
Dec. 31, May 6, 1994 Dec. 31, May 6, 1994
1995 to Dec. 31, 1994 1995 to Dec. 31, 1994
------------- ------------ ------------- ------------
<S> <C> <C>
Units outstanding,
beginning of the year............ 8,985.149 - - -
Units purchased..................... 83,081.624 10,139.023 - -
Units redeemed...................... (10,401.395) (658.699) - -
Units transferred between
Sub-Accounts and/or
Fixed Account ................... 67,627.011 (495.175) - -
----------- ----------- ----------- -----------
Units outstanding,
end of the year.................. 149,292.389 8,985.149 - -
=========== ========= =========== ===========
</TABLE>
ix
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
6. COMBINING STATEMENT OF OPERATIONS AND CHANGES IN CONTRACT OWNERS' EQUITY.
Operations and changes in Contract Owners' equity for the year ended
December 31, 1995 were as follows (in thousands):
<TABLE>
<CAPTION>
NORTHSTAR'S NORTHSTAR'S NORTHSTAR'S
INCOME AND NORTHSTAR'S MULTI-SECTOR HIGH YIELD
TOTAL GROWTH FUND GROWTH FUND BOND FUND BOND FUND
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net investment income:
Reinvested dividend income $226 $91 $3 $28 $104
Reinvested capital gains ... 102 81 21 - -
Administrative expenses .... (60) (38) (3) (5) (14)
--------- --------- --------- --------- ---------
Net investment income
and capital gains .... 268 134 21 23 90
--------- --------- --------- --------- ---------
Realized and unrealized gains:
Net realized gains on
redemptions of fund shares 44 32 3 4 5
Increase in unrealized
appreciation of investments 286 233 - 15 38
--------- --------- --------- --------- ---------
Net realized and unrealized
gains ................ 330 265 3 19 43
--------- --------- --------- --------- ---------
Net additions
from operations 598 399 24 42 133
--------- --------- --------- --------- ---------
Contract Owners' transactions:
Net purchase payments ...... 4,461 2,985 202 358 916
Surrenders ................. (268) (136) (19) - (113)
Transfers between Sub-Accounts
and/or Fixed Account .... - (626) 44 (125) 703
Annuity payments............ - - - - -
Transfers to (from)
required reserves......... - - - - -
--------- --------- --------- --------- ---------
Net additions for
Contract Owners' transactions 4,193 2,223 227 233 1,506
--------- --------- --------- --------- ---------
Net additions
for the year ... 4,791 2,622 251 275 1,639
Contract Owners' Equity,
beginning of the year ...... 1,355 1,021 90 156 88
--------- --------- --------- --------- ---------
Contract Owners' Equity,
end of the year ............ $6,146 $3,643 $341 $431 $1,727
====== ====== ==== ==== ======
</TABLE>
x
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
NOTES TO FINANCIAL STATEMENTS, CONTINUED
<TABLE>
<CAPTION>
FIDELITY'S VIPF FIDELITY'S VIPF FIDELITY'S VIPF II FIDELITY'S VIPF II
MONEY MARKET OVERSEAS ASSET MANAGER INDEX 500
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------ -------------- -------------- --------------
<S> <C> <C> <C> <C>
Net investment income:
Reinvested dividend income $- $- $- $-
Reinvested capital gains ... - - - -
Administrative expenses .... - - - -
--------- --------- --------- ---------
Net investment income
and capital gains .... - - - -
--------- --------- --------- ---------
Realized and unrealized gains:
Net realized gains on
redemptions of fund shares - - - -
Increase in unrealized
appreciation of investments - - - -
--------- --------- --------- ---------
Net realized and unrealized
gains ................ - - - -
--------- --------- --------- ---------
Net additions
from operations - - - -
--------- --------- --------- ---------
Contract Owners' transactions:
Net purchase payments ...... - - - -
Surrenders ................. - - - -
Transfers between Sub-Accounts
and/or Fixed Account .... - - - 4
Annuity payments............ - - - -
Transfers to (from)
required reserves......... - - - -
--------- --------- --------- ---------
Net additions for
Contract Owners' transactions - - - 4
--------- --------- --------- ---------
Net additions
for the year ... - - - 4
Contract Owners' Equity,
beginning of the year ...... - - - -
--------- --------- --------- ---------
Contract Owners' Equity,
end of the year ............ $- $- $- $4
== == == ==
</TABLE>
xi
<PAGE>
NORTHSTAR/NWNL VARIABLE ACCOUNT
[LOGO] 20 Washington Avenue South
Minneapolis, Minnesota 55401
(612) 372-5507
44642a
