<PAGE>
- --------------------------------------------------------------------------------
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
JUNE 30, 1997
SEMI-ANNUAL REPORT
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT VA-1 FUNDING
THE CHAIRMAN-TM-
COMBINATION FIXED AND VARIABLE ANNUITY CONTRACTS
PRINCIPAL OFFICE LOCATED AT:
#1 Franklin Square
Springfield, Illinois 62713
Semi-Annual Report Dated June 30, 1997
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
JUNE 30, 1997
SEMI-ANNUAL REPORTS
- --------------------------------------------------------------------------------
VARIABLE INSURANCE PRODUCTS FUND
VARIABLE INSURANCE PRODUCTS FUND II
PRINCIPAL OFFICE OF BOTH FIDELITY FUNDS LOCATED AT:
82 Devonshire Street
Boston, Massachusetts 02109
MFS VARIABLE INSURANCE TRUST
PRINCIPAL OFFICE LOCATED AT:
500 Boylston Street
Boston, Massachusetts 02116
Semi-Annual Reports Dated June 30, 1997
The Semi-Annual Report of Separate Account VA-1 is prepared and provided by The
American Franklin Life Insurance Company. The Semi-Annual Reports of the
Variable Insurance Products Fund and the Variable Insurance Products Fund II are
prepared by Fidelity Investments. The Semi-Annual Report of MFS Variable
Insurance Trust is prepared by MFS Investment Management.
- --------------------------------------------------------------------------------
This Semi-Annual Report is not to be construed as an offering for sale of any
American Franklin Life contract. No offering is made except in conjunction with
a prospectus which must precede or accompany this report.
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
STATEMENT OF NET ASSETS
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MONEY EQUITY- HIGH
MARKET INCOME GROWTH OVERSEAS INCOME
ASSETS DIVISION DIVISION DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments in Variable Insurance Products Fund,
Variable Insurance Products Fund II, and MFS
Variable Insurance Trust, at fair value:
(Cost: See below) $ 655,591 $ 970,280 $ 572,941 $ 144,656 $ 163,044
Due from (to) General Account 1 38 22 5 361
--------------------------------------------------------------------------------
NET ASSETS $ 655,592 $ 970,318 $ 572,963 $ 144,661 $ 163,405
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Unit value, at June 30, 1997 $ 5.03 $ 5.58 $ 5.38 $ 5.85 $ 5.43
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Units outstanding, at June 30, 1997 130,222.96 173,894.34 106,579.48 24,727.58 30,066.11
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cost $ 655,591 $ 919,241 $ 541,020 $ 137,969 $ 161,342
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
1
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
STATEMENT OF NET ASSETS
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MFS
INVESTMENT ASSET INDEX CONTRA- EMERGING
GRADE BOND MANAGER 500 FUND GROWTH
ASSETS DIVISION DIVISION DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments in Variable Insurance Products Fund,
Variable Insurance Products Fund II, and MFS
Variable Insurance Trust, at fair value:
(Cost: See below) $ 62,753 $ 241,540 $ 685,492 $ 310,026 $ 586,491
Due from (to) General Account (12) 9 27 11 (67)
--------------------------------------------------------------------------------
NET ASSETS $ 62,741 $ 241,549 $ 685,519 $ 310,037 $ 586,424
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Unit value, at June 30, 1997 $ 5.05 $ 5.43 $ 5.76 $ 5.39 $ 5.20
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Units outstanding, at June 30, 1997 12,413.43 44,463.96 118,955.93 57,488.87 112,749.29
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cost $ 62,471 $ 233,435 $ 645,632 $ 296,176 $ 552,689
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
2
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
STATEMENT OF NET ASSETS
JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MFS GROWTH
MFS RESEARCH WITH INCOME MFS TOTAL MFS UTILITIES MFS VALUE
ASSETS DIVISION DIVISION RETURN DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investments in Variable Insurance Products Fund,
Variable Insurance Products Fund II, and MFS
Variable Insurance Trust, at fair value:
(Cost: See below) $ 777,192 $ 231,731 $ 697,810 $ 47,513 $ 91,532
Due from (to) General Account 30 (207) (134) (9) 242
--------------------------------------------------------------------------------
NET ASSETS $ 777,222 $ 231,524 $ 697,676 $ 47,504 $ 91,774
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Unit value, at June 30, 1997 $ 5.46 $ 5.69 $ 5.36 $ 5.20 $ 5.42
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Units outstanding, at June 30, 1997 142,306.36 40,701.49 130,247.84 9,143.96 16,926.75
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Cost $ 728,031 $ 220,499 $ 678,607 $ 45,964 $ 85,347
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
3
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION TO JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MONEY EQUITY- HIGH
MARKET INCOME GROWTH OVERSEAS INCOME
INVESTMENT INCOME DIVISION DIVISION DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income
Dividends from Variable Insurance Products
Fund, Variable Insurance Products Fund II,
and MFS Variable Insurance Trust $ 4,050 $ 0 $ 0 $ 0 $ 0
Expenses
Mortality and expense risk charge 1,283 1,299 827 168 186
--------------------------------------------------------------------------------
Net investment income (expense) 2,767 (1,299) (827) (168) (186)
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain 0 0 0 17 0
Net unrealized appreciation
Beginning of period 0 0 0 0 0
End of period 0 51,039 31,921 6,687 1,702
--------------------------------------------------------------------------------
Net change in unrealized appreciation
during the period 0 51,039 31,921 6,687 1,702
--------------------------------------------------------------------------------
Net realized and unrealized gain on investments 0 51,039 31,921 6,704 1,702
--------------------------------------------------------------------------------
Net increase in net assets resulting from
operations $ 2,767 $ 49,740 $ 31,094 $ 6,536 $ 1,516
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
4
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION TO JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MFS
INVESTMENT ASSET INDEX CONTRA- EMERGING
GRADE BOND MANAGER 500 FUND GROWTH
INVESTMENT INCOME DIVISION DIVISION DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income
Dividends from Variable Insurance Products
Fund, Variable Insurance Products Fund II,
and MFS Variable Insurance Trust $ 0 $ 0 $ 0 $ 0 $ 0
Expenses
Mortality and expense risk charge 59 512 1,515 (47) 806
--------------------------------------------------------------------------------
Net investment income (expense) (59) (512) (1,515) 47 (806)
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain 0 3,330 3,542 2,963 41
Net unrealized appreciation
Beginning of period 0 0 0 0 0
End of period 282 8,105 39,860 13,850 33,802
--------------------------------------------------------------------------------
Net change in unrealized appreciation
during the period 282 8,105 39,860 13,850 33,802
--------------------------------------------------------------------------------
Net realized and unrealized gain on investments 282 11,435 43,402 16,813 33,843
--------------------------------------------------------------------------------
Net increase in net assets resulting from
operations $ 223 $ 10,923 $ 41,887 $ 16,860 $ 33,037
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
5
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
STATEMENT OF OPERATIONS
FOR THE PERIOD FROM INCEPTION TO JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MFS GROWTH
MFS RESEARCH WITH INCOME MFS TOTAL MFS UTILITIES MFS VALUE
INVESTMENT INCOME DIVISION DIVISION RETURN DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income
Dividends from Variable Insurance Products
Fund, Variable Insurance Products Fund II,
and MFS Variable Insurance Trust $ 0 $ 0 $ 0 $ 0 $ 0
Expenses
Mortality and expense risk charge 1,450 420 (47) 43 175
--------------------------------------------------------------------------------
Net investment income (expense) (1,450) (420) 47 (43) (175)
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS
Net realized gain 7,044 3,753 10,482 380 0
Net unrealized appreciation
Beginning of period 0 0 0 0 0
End of period 49,161 11,232 19,203 1,549 6,185
--------------------------------------------------------------------------------
Net change in unrealized appreciation
during the period 49,161 11,232 19,203 1,549 6,185
--------------------------------------------------------------------------------
Net realized and unrealized gain on investments 56,205 14,985 29,685 1,929 6,185
--------------------------------------------------------------------------------
Net increase in net assets resulting from
operations $ 54,755 $ 14,565 $ 29,732 $ 1,886 $ 6,010
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
6
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION TO JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MONEY EQUITY- HIGH
MARKET INCOME GROWTH OVERSEAS INCOME
CHANGE IN NET ASSETS DIVISION DIVISION DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (expense) $ 2,767 $ (1,299) $ (827) $ (168) $ (186)
Net realized gain on investments 0 0 0 17 0
Net change in unrealized appreciation
on investments 0 51,039 31,921 6,687 1,702
--------------------------------------------------------------------------------
Net increase in net assets from operations 2,767 49,740 31,094 6,536 1,516
FROM CONTRACT RELATED TRANSACTIONS:
Net contract purchase payments 693,854 919,175 541,895 137,845 161,089
Transfers for contract related transactions (4,500) (1,372) (826) 280 0
Transfers between Separate Account VA-1's
Divisions, net (36,529) 2,775 800 0 800
--------------------------------------------------------------------------------
Net increase in net assets from contract related
transactions 652,825 920,578 541,869 138,125 161,889
--------------------------------------------------------------------------------
Increase in net assets 655,592 970,318 572,963 144,661 163,405
Net assets, beginning of period 0 0 0 0 0
--------------------------------------------------------------------------------
Net assets, end of period $ 655,592 $ 970,318 $ 572,963 $ 144,661 $ 163,405
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
7
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION TO JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MFS
INVESTMENT ASSET INDEX CONTRA- EMERGING
GRADE BOND MANAGER 500 FUND GROWTH
CHANGE IN NET ASSETS DIVISION DIVISION DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (expense) $ (59) $ (512) $ (1,515) $ 47 $ (806)
Net realized gain on investments 0 3,330 3,542 2,963 41
Net change in unrealized appreciation
on investments 282 8,105 39,860 13,850 33,802
--------------------------------------------------------------------------------
Net increase in net assets from operations 223 10,923 41,887 16,860 33,037
FROM CONTRACT RELATED TRANSACTIONS:
Net contract purchase payments 62,518 298,374 705,730 288,125 548,659
Transfers for contract related transactions 0 (68,161) (68,901) (25) (634)
Transfers between Separate Account VA-1's
Divisions, net 0 413 6,803 5,077 5,362
--------------------------------------------------------------------------------
Net increase in net assets from contract related
transactions 62,518 230,626 643,632 293,177 553,387
--------------------------------------------------------------------------------
Increase in net assets 62,741 241,549 685,519 310,037 586,424
Net assets, beginning of period 0 0 0 0 0
--------------------------------------------------------------------------------
Net assets, end of period $ 62,741 $ 241,549 $ 685,519 $ 310,037 $ 586,424
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
8
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
STATEMENT OF CHANGES IN NET ASSETS
FOR THE PERIOD FROM INCEPTION TO JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
MFS GROWTH
MFS RESEARCH WITH INCOME MFS TOTAL MFS UTILITIES MFS VALUE
CHANGE IN NET ASSETS DIVISION DIVISION RETURN DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FROM OPERATIONS:
Net investment income (expense) $ (1,450) $ (420) $ 47 $ (43) $ (175)
Net realized gain on investments 7,044 3,753 10,482 380 0
Net change in unrealized appreciation
on investments 49,161 11,232 19,203 1,549 6,185
--------------------------------------------------------------------------------
Net increase in net assets from operations 54,755 14,565 29,732 1,886 6,010
FROM CONTRACT RELATED TRANSACTIONS:
Net contract purchase payments 784,061 284,265 731,260 45,618 85,502
Transfers for contract related transactions (71,052) (68,937) (66,385) 0 (77)
Transfers between Separate Account VA-1's
Divisions, net 9,458 1,631 3,069 0 339
--------------------------------------------------------------------------------
Net increase in net assets from contract related
transactions 722,467 216,959 667,944 45,618 85,764
--------------------------------------------------------------------------------
Increase in net assets 777,222 231,524 697,676 47,504 91,774
Net assets, beginning of period 0 0 0 0 0
--------------------------------------------------------------------------------
Net assets, end of period $ 777,222 $ 231,524 $ 697,676 $ 47,504 $ 91,774
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
9
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1997
1. NATURE OF OPERATIONS
The American Franklin Life Insurance Company (American Franklin) is a
wholly-owned subsidiary of The Franklin Life Insurance Company. American
Franklin established Separate Account VA-1 (Account) as a unit investment
trust registered under the Investment Company Act of 1940. The Account,
which consists of fifteen investment divisions, was established on May 22,
1996 in conformity with Illinois Insurance Law. The assets in each
division are invested in units of beneficial interest (shares) of a
designated portfolio (Portfolio) of three mutual funds, sponsored by
Fidelity Investments (Variable Insurance Products Fund and Variable
Insurance Products Fund II) and MFS Investment Management (MFS Variable
Insurance Trust) (Funds). The Money Market, Equity-Income, Growth,
Overseas, and High Income Divisions of the Account are invested in shares
of a corresponding Portfolio of Variable Insurance Products Fund; the
Investment Grade Bond, Asset Manager, Index 500, and Contrafund Divisions
of the Account are invested in shares of a corresponding Portfolio of
Variable Insurance Products Fund II; and the MFS Emerging Growth, MFS
Research, MFS Growth With Income, MFS Total Return, MFS Utilities, and MFS
Value Divisions of the Account are invested in shares of a corresponding
Portfolio of MFS Variable Insurance Trust. The Account's financial
statements should be read in conjunction with the financial statements of
the Funds. The Account commenced operations on February 28, 1997.
The Account was established by American Franklin to support the operations
of American Franklin's The Chairman-TM- Combination Fixed and Variable
Annuity Contracts (the Contracts). At June 30, 1997, American Franklin had
obtained the necessary state insurance department approvals for the sale of
the Contracts in 28 states.
Franklin Financial Services Corporation, a wholly-owned subsidiary of The
Franklin Life Insurance Company, acts as the principal underwriter, as
defined in the Investment Company Act of 1940, of the Contracts. The
assets of the Account are the property of American Franklin. The portion
of the Account's assets applicable to the Contracts is not chargeable with
liabilities arising out of any other business American Franklin may
conduct.
The net assets of the Account may not be less than the reserves applicable
to the Contracts. Assets may also be set aside in American Franklin's
General Account based on the amounts allocated under the Contracts to
American Franklin's Fixed Account. Additional assets are set aside in
American Franklin's General Account to provide for other contract benefits.
2. SIGNIFICANT ACCOUNTING POLICIES
The significant accounting policies of the Account are as follows:
Investments in shares of the Funds are carried at fair value. Investments
in shares of the Funds are valued at the net asset values of the respective
Portfolios of the Funds corresponding to the investment divisions of the
Account. Investment transactions are recorded on the trade date.
Dividends are recorded as received. Realized gains and losses on sales of
the Funds' shares are determined based on the specific identification
method.
The operations of the Account are included in the federal income tax return
of American Franklin. Under the provisions of the Contracts, American
Franklin has the right to charge the Account for federal income tax
attributable to the Account. No charge is currently being made against the
Account for such tax since, under current tax law, American Franklin pays
no tax on investment income and capital gains of the Account on assets held
in the Account. However, American Franklin retains the right to charge for
any federal income tax incurred which is attributable to the Account if the
law is changed. Charges for state and local taxes, if any, attributable to
the Account may also be made.
10
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1997
3. SALES AND ADMINISTRATIVE CHARGES
Certain jurisdictions require that deductions be made from premium payments
for taxes. The amount of such deductions varies and may be up to 5% of the
premium or purchase payment. Other jurisdictions assess a premium tax at
the point of annuitization. The balance of a purchase payment remaining
after any such deduction is placed by American Franklin in an account
established for each contractowner. Each year American Franklin makes a
charge of $30 against each contractowner's account for administrative
expenses. This annual fee is currently waived if cumulative purchase
payments are at least $75,000. In addition, American Franklin will make
charges for a transfer between investment divisions in any contract year in
which twelve transfers have already been made ($25 for each additional
transfer in a given contract year). American Franklin assumes mortality
and expense risks related to the operations of the Account and deducts a
charge from the assets of the Account at an effective annual rate of 1.40%
of the Account's average daily net asset value to cover these risks and to
offset other administrative expenses not covered by the annual contract
fee. The total charges paid by the Account to American Franklin were
$10,500 for the period from inception to June 30, 1997.
American Franklin will impose a surrender charge on the amount of each
purchase payment that is withdrawn during the first seven years after it
was received, unless the withdrawal is exempt from the surrender charge.
The maximum surrender charge is 6% of purchase payments withdrawn during
the first two years after they were received; the percentage declines
depending on how many years have passed since the withdrawn purchase
payment was made and reduces to 0% after the seventh year.
11
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1997
4. SUMMARY OF UNIT VALUES AND CHANGES IN OUTSTANDING UNITS
Unit value information and a summary of changes in outstanding units is
shown below:
FOR THE PERIOD FROM INCEPTION TO JUNE 30, 1997
<TABLE>
<CAPTION>
MONEY EQUITY- HIGH
MARKET INCOME GROWTH OVERSEAS INCOME
DIVISION DIVISION DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period $0.00 $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Unit value, end of period $5.03 $5.58 $5.38 $5.85 $5.43
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Number of units outstanding,
beginning of period 0 0 0 0 0
Net contract purchase payments 138,387 173,660 106,603 24,676 29,918
Transfers for contract related
transactions 0 (268) (175) (3) 0
Transfers between Separate Account
VA-1's Divisions, Net (8,164) 502 151 55 148
--------------------------------------------------------------------------------
Number of units outstanding,
end of period 130,223 173,894 106,579 24,728 30,066
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<CAPTION>
INVESTMENT MFS
GRADE ASSET INDEX CONTRA- EMERGING
BOND MANAGER 500 FUND GROWTH
DIVISION DIVISION DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period $0.00 $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Unit value, end of period $5.05 $5.43 $5.76 $5.39 $5.20
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Number of units outstanding,
beginning of period 0 0 0 0 0
Net contract purchase payments 12,413 57,266 130,204 56,549 111,844
Transfers for contract related
transactions 0 0 (171) (5) (127)
Transfers between Separate Account
VA-1's Divisions, Net 0 (12,802) (11,077) 944 1,032
--------------------------------------------------------------------------------
Number of units outstanding,
end of period 12,413 44,464 118,956 57,488 112,749
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
THE AMERICAN FRANKLIN LIFE INSURANCE COMPANY
SEPARATE ACCOUNT VA-1
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
JUNE 30, 1997
4. SUMMARY OF UNIT VALUES AND CHANGES IN OUTSTANDING UNITS
Unit value information and a summary of changes in outstanding units is
shown below:
FOR THE PERIOD FROM INCEPTION TO JUNE 30, 1997
<TABLE>
<CAPTION>
MFS MFS GROWTH MFS TOTAL MFS MFS
RESEARCH WITH INCOME RETURN UTILITIES VALUE
DIVISION DIVISION DIVISION DIVISION DIVISION
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period $0.00 $0.00 $0.00 $0.00 $0.00
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Unit value, end of period $5.46 $5.69 $5.36 $5.20 $5.42
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
Number of units outstanding,
beginning of period 0 0 0 0 0
Net contract purchase payments 154,071 53,119 142,456 9,144 16,878
Transfers for contract related
transactions (332) 0 (147) 0 (14)
Transfers between Separate Account
VA-1's Divisions, Net (11,433) (12,418) (12,061) 0 63
--------------------------------------------------------------------------------
Number of units outstanding,
end of period 142,306 40,701 130,248 9,144 16,927
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
</TABLE>
5. REMUNERATION OF MANAGEMENT
The Account incurs no liability for remuneration to directors, members of
advisory boards, officers or any other person who might provide a service
for the Account, except as described in Note 3.
13
