As filed with the Securities and Exchange Registration No. 33-75996*
Commission on April 11, 2000 Registration No. 811-2512
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
- --------------------------------------------------------------------------------
POST-EFFECTIVE AMENDMENT NO. 22 TO
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
and Amendment to
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
- --------------------------------------------------------------------------------
Variable Annuity Account B of Aetna Life Insurance and Annuity Company
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, TS31, Hartford, Connecticut 06156
Depositor's Telephone Number, including Area Code: (860) 273-4686
Julie E. Rockmore, Counsel
Aetna Life Insurance and Annuity Company
151 Farmington Avenue, TS31, Hartford, Connecticut 06156
(Name and Address of Agent for Service)
- --------------------------------------------------------------------------------
It is proposed that this filing will become effective:
immediately upon filing pursuant to paragraph (b) of Rule 485
------
X on May 1, 2000 pursuant to paragraph (b) of Rule 485
------
*Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has
included a combined prospectus under this Registration Statement which includes
all the information which would currently be required in a prospectus relating
to the securities covered by the following earlier Registration Statements:
33-88722, 2-52448; and the individual deferred compensation contracts covered by
Registration Statement No. 33-76000.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
CROSS REFERENCE SHEET
<TABLE>
<CAPTION>
FORM N-4 LOCATION - PROSPECTUS DATED
ITEM NO. PART A (PROSPECTUS) MAY 1, 2000
<S> <C> <C>
1 Cover Page............................. Cover Page
2 Definitions............................ Not Applicable
3 Synopsis............................... Contract Overview; Fee Table
4 Condensed Financial Information........ Condensed Financial Information;
Appendix V - Condensed Financial
Information
5 General Description of Registrant,
Depositor, and Portfolio Companies..... Other Topics - The Company; Variable
Annuity Account B; Appendix IV - Fund
Descriptions
6 Deductions and Expenses................ Fees
7 General Description of Variable
Annuity Contracts...................... Contract Overview; Other Topics
8 Annuity Period......................... The Income Phase
9 Death Benefit.......................... Death Benefit
10 Purchases and Contract Value........... Contract Purchase and Participation;
Your Account Value
11 Redemptions............................ Right to Cancel; Withdrawals; Systematic
Distribution Options
12 Taxes.................................. Taxation
13 Legal Proceedings...................... Other Topics - Legal Matters and
Proceedings
14 Table of Contents of the Statement of Contents of the Statement of Additional
Additional Information................. Information
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LOCATION - STATEMENT OF
FORM N-4 PART B (STATEMENT OF ADDITIONAL ADDITIONAL INFORMATION
ITEM NO. INFORMATION) DATED MAY 1, 2000
<S> <C> <C>
15 Cover Page............................. Cover page
16 Table of Contents...................... Table of Contents
17 General Information and History........ General Information and History
18 Services............................... General Information and History;
Independent Auditors
19 Purchase of Securities Being Offered... Offering and Purchase of Contracts
20 Underwriters........................... Offering and Purchase of Contracts
21 Calculation of Performance Data........ Performance Data; Average Annual
Total Return Quotations
22 Annuity Payments....................... Income Phase Payments
23 Financial Statements................... Financial Statements
</TABLE>
PART C (OTHER INFORMATION)
Information required to be included in Part C is set forth under the appropriate
item, so numbered, in Part C to this Registration Statement.
<PAGE>
VARIABLE ANNUITY ACCOUNT B
Aetna Life Insurance and Annuity Company
Supplement Dated May 1, 2000
To the Prospectus and Contract Prospectus Summary dated May 1, 2000
Group Variable Annuity Contracts for Employer-Sponsored Deferred Compensation
Plans
Producers' Deferred Compensation Plan and Producers' Incentive Savings Plan
This supplement relates to the Producers' Deferred Compensation Plan and the
Producers' Incentive Savings Plan (the "Plans") for career agents and certain
brokers of Aetna Life Insurance Company and Aetna Life Insurance and Annuity
Company. The Plans have met the criteria allowing for the reduction or
elimination of certain charges under the contract. The Company will not deduct
a maintenance fee or an early withdrawal charge under the contract. See "Fees."
XCS.75996-00AB May 2000
<PAGE>
VARIABLE ANNUITY ACCOUNT B
Aetna Life Insurance and Annuity Company
Supplement Dated May 1, 2000
To the Prospectus and Contract Prospectus Summary dated May 1, 2000
Group Variable Annuity Contracts for Employer-Sponsored Deferred Compensation
Plans
The following is a negotiated provision regarding the early withdrawal charge
applicable to the participants of the American Chamber of Commerce Executives
Deferred Compensation Plan. See "Fees."
In addition to the applicable reasons listed in this Prospectus, an early
withdrawal charge is not deducted for any Account Value which is withdrawn due
to the Participant's separation from service.
XCS.75996-00CC May 2000
<PAGE>
Prospectus - May 1, 2000
- --------------------------------------------------------------------------------
The Funds
Aetna Ascent VP
Aetna Balanced VP, Inc.
Aetna Income Shares d/b/a Aetna Bond VP
Aetna Crossroads VP
Aetna Growth VP
Aetna Variable Fund d/b/a Aetna Growth and Income VP
Aetna High Yield VP(1)
Aetna Index Plus Large Cap VP
Aetna Index Plus Mid Cap VP
Aetna Index Plus Small Cap VP
Aetna International VP
Aetna Legacy VP
Aetna Variable Encore Fund d/b/a Aetna Money Market VP
Aetna Real Estate Securities VP(1)
Aetna Small Company VP
Aetna Technology VP
Aetna Value Opportunity VP o
AIM V.I. Capital Appreciation Fund
AIM V.I. Growth Fund
AIM V.I. Growth and Income Fund
AIM V.I. Value Fund
Calvert Social Balanced Portfolio
Fidelity Variable Insurance Products Fund (VIP) Equity-Income Portfolio
Fidelity Variable Insurance Products Fund (VIP) Growth Portfolio
Fidelity Variable Insurance Products Fund (VIP) Overseas Portfolio
Fidelity Variable Insurance Products Fund II (VIP II) Contrafund[RegTM]
Portfolio
Janus Aspen Aggressive Growth Portfolio
Janus Aspen Balanced Portfolio
Janus Aspen Flexible Income Portfolio
Janus Aspen Growth Portfolio
Janus Aspen Worldwide Growth Portfolio
Lexington Natural Resources Trust(2)
Oppenheimer Global Securities Fund/VA
Oppenheimer Strategic Bond Fund/VA
Portfolio Partners, Inc. (PPI) MFS Capital Opportunities Portfolio (formerly
PPI MFS Value Equity Portfolio)
Portfolio Partners, Inc. (PPI) MFS Emerging Equities Portfolio
Portfolio Partners, Inc. (PPI) MFS Research Growth Portfolio
Portfolio Partners, Inc. (PPI) Scudder International Growth Portfolio
Portfolio Partners, Inc. (PPI) T. Rowe Price Growth Equity Portfolio
The Contracts. The contracts described in this prospectus are group deferred
variable annuity contracts issued by Aetna Life Insurance and Annuity Company
(the Company). They are intended to be used as funding vehicles for certain
types of retirement plans, including those that qualify for beneficial tax
treatment, and/or to provide current income reduction under certain sections of
the Internal Revenue Code of 1986, as amended (Tax Code). The contracts were
formerly sold as both group contracts and employer-owned individual contracts.
- --------------------------------------------------------------------------------
Why Reading this Prospectus is Important. Before you participate in the
contract through a retirement plan, you should read this prospectus. It
provides facts about the contract and its investment options. Plan sponsors
(generally your employer) should read this prospectus to help determine if the
contract is appropriate for their plan. Keep this document for future
reference.
Table of Contents . . . page 4
- --------------------------------------------------------------------------------
Investment Options. The contracts offer variable investment options and fixed
interest options. When we establish your account(s), the contract holder, or
you if permitted by the plan, instructs us to direct account dollars to any of
the available options. Some investment options may be unavailable through
certain contracts and plans, or in some states.
Variable Investment Options. These options are called subaccounts. The
subaccounts are within Variable Annuity Account B (the separate account), a
separate account of the Company. You do not invest directly in or hold shares
of the funds. Each subaccount invests in one of the mutual funds (funds) listed
on this page. Earnings on amounts invested in a subaccount will vary depending
upon the performance and fees of its underlying fund.
Risks Associated with Investing in the Funds. Information about the risks of
investing in the funds is located in the "Investment Option" section of this
prospectus at page 11 and in each fund prospectus. Read this prospectus in
conjunction with the fund prospectus, and retain the prospectus for future
reference.
Getting Additional Information. You may obtain the May 1, 2000, Statement of
Additional Information (SAI) by indicating your request on your enrollment
materials or calling the Company at 1-800-262-3862. You may also obtain an SAI
for any of the funds by calling that number. This prospectus, the SAI and other
information about the separate account are posted on the Securities and
Exchange Commission (SEC) web site, www.sec.gov and copies of this information
may also be obtained, after paying a duplicating fee, by contacting the SEC
Public Reference Room electronically at the following e-mail address:
[email protected], or by writing the Commission's Public Reference Section,
Washington, D.C. 20549-0102. This information can be reviewed and copied at the
Commission's Public Reference Room in Washington D.C. and information on the
operation of the Public Reference Room may be obtained by calling
1-202-942-8090. The SAI table of contents is listed on page 37 of this
prospectus. The SAI is incorporated into this prospectus by reference.
Additional Disclosure Information. Neither the SEC, nor any state securities
commission, has approved or disapproved the securities offered through this
- -------------------------
(1) Effective May 15, 2000, transfers or deposits are not allowed into the
subaccount investing in this fund except those made pursuant to standing
customer instructions (e.g., payroll deduction allocations, dollar cost
averaging) in effect prior to this date. See "Important Information
Regarding Aetna High Yield VP and Aetna Real Estate Securities VP
Subaccounts."
(2) Transfers or deposits are not allowed into the subaccount investing in this
fund, except from accounts established under the contract before May 1,
1998. As soon as all those who have current allocations to the subaccount
under the contract have redirected their allocations to other investment
options, we will close the subaccount to all investments.
<PAGE>
Prospectus - May 1, 2000 (continued)
- --------------------------------------------------------------------------------
prospectus or passed on the accuracy or adequacy of this prospectus. Any
representation to the contrary is a criminal offense. This prospectus is valid
only when accompanied by current prospectuses of the funds and the Guaranteed
Accumulation Account. We do not intend for this prospectus to be an offer to
sell or a solicitation of an offer to buy these securities in any state that
does not permit their sale. We have not authorized anyone to provide you with
information that is different than that contained in this prospectus.
Fixed Interest Options.
> Guaranteed Accumulation Account
> Fixed Plus Account
> Fixed Account
Except as specifically mentioned, this prospectus describes only the variable
investment options. However, we describe the fixed interest options in the
appendices to this prospectus. There is also a separate prospectus for the
Guaranteed Accumulation Account.
Important Information Regarding Aetna High Yield VP and Aetna Real Estate
Securities VP Subaccounts
Subaccounts to be Closed to New Investments.
Effective May 15, 2000, the Aetna High Yield VP and Aetna Real Estate
Securities VP subaccounts will no longer be available for new investment. After
that date, the Company will only accept deposits into those subaccounts that
are made pursuant to standing customer instructions (e.g., payroll deduction
allocations, dollar cost averaging, etc.) in effect before the close of
business on May 12, 2000.
Fund Shares to be Substituted with Shares of Aetna Money Market VP.
Plan of Substitution. On or before September 1, 2000, subject to applicable
regulatory approvals and the requisite vote of shareholders of the applicable
fund, all existing balances in Aetna High Yield VP and Aetna Real Estate
Securities VP will be invested in (substituted with) shares of Aetna Money
Market VP. Contract owners or participants will not incur any fees or charges
as a result of the substitution. In addition, on and after September 1, 2000,
all investment allocations then being directed to the Aetna High Yield VP and
Aetna Real Estate Securities VP subaccounts will be redirected to the Aetna
Money Market VP subaccount. The Company believes that the substitution will not
create any tax liability for contract owners or participants.
Transfer Rights. At any time prior to the date of substitution, contract owners
or participants may transfer their accumulation values from the subaccounts
investing in substituted funds into any other investment options available
under the contract, and no transfer fees or other charges will be imposed. From
and after the
<PAGE>
Prospectus - May 1, 2000 (continued)
- --------------------------------------------------------------------------------
date of substitution, contract owners or participants who had values
transferred from a subaccount as a result of a substitution may transfer among
any of the remaining investment options in accordance with the terms of the
contract, also free of any transfer fees and charges.
Surrender Rights. If a contract owner or participant whose shares are
substituted elects to make a surrender under the contract (if permitted by the
plan and applicable tax law) within 30 days after the date of the substitution,
the Company will waive any early withdrawal charge on amounts transferred as a
result of the substitution. This offer to waive the early withdrawal charge
will not apply to amounts transferred after April 10, 2000 from the other
investment options to the Aetna High Yield VP or Aetna Real Estate Securities
VP subaccounts. A contract owner or participant who exercises this surrender
right may incur income tax liability and a tax penalty. See the "Taxation"
section of this prospectus for a discussion of tax consequences resulting from
surrender. Contract owners or participants should seek qualified tax advice
before exercising their surrender rights.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
- ------------------------------------------------------------------------
Contract Overview ................................................. 5
Questions: Contacting the Company (sidebar)
Sending Forms and Written Requests in Good Order (sidebar)
Who's Who
The Contract and Your Retirement Plan
Contract Rights
Contract Facts
Contract Phases: The Accumulation Phase, The Income Phase ......... 6
- ------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Fee Table ......................................................... 7
Condensed Financial Information ................................... 11
Investment Options ................................................ 11
Transfers ......................................................... 12
Contract Purchase and Participation ............................... 13
Contract Ownership and Rights ..................................... 15
Right to Cancel ................................................... 15
Fees .............................................................. 16
Your Account Value ................................................ 20
Withdrawals ....................................................... 22
Systematic Distribution Options ................................... 23
Death Benefit ..................................................... 24
The Income Phase .................................................. 25
Taxation .......................................................... 29
Other Topics ...................................................... 33
</TABLE>
The Company -- Variable Annuity Account B -- Performance Reporting -- Voting
Rights -- Contract Distribution -- Contract Modification -- Legal Matters and
Proceedings -- Payment Delay or Suspension -- Transfer of Ownership; Assignment
<TABLE>
<S> <C>
Contents of the Statement of Additional Information ............... 37
Appendix I -- Guaranteed Accumulation Account ..................... 38
Appendix II -- Fixed Account ...................................... 40
Appendix III -- Fixed Plus Account ................................ 41
Appendix IV -- Fund Descriptions .................................. 43
Appendix V -- Condensed Financial Information ..................... 46
</TABLE>
4
<PAGE>
Questions: Contacting the Company. Contact your local representative or write
or call our Home Office:
Aetna Financial Services
Annuity Services
151 Farmington Avenue
Hartford, CT 06156-1277
1-800-262-3862
Sending Forms and Written Requests in Good Order.
If you are writing to change your beneficiary, request a withdrawal, or for any
other purpose, contact your local representative or the Company to learn what
information is required in order for the request to be in "good order." We can
only act upon written requests that are received in good order.
Contract Overview
- --------------------------------------------------------------------------------
The following is intended as a summary. Please read each section of this
prospectus for additional information.
- --------------------------------------------------------------------------------
Who's Who
- --------------------------------------------------------------------------------
You (the participant): The individual participating in a retirement plan, where
the plan uses the contract as a funding option.
Plan Sponsor: The sponsor of your retirement plan. Generally, your employer.
Contract Holder: The person or entity to whom we issue the contract. Generally,
the plan sponsor.
We (the Company): Aetna Life Insurance and Annuity Company. We issue the
contract.
For greater detail, please review "Contract Ownership and Rights" and "Contract
Purchase and Participation".
- --------------------------------------------------------------------------------
The Contract and Your Retirement Plan
- --------------------------------------------------------------------------------
Retirement plan (plan): A plan sponsor has established a retirement plan for
you. This contract is offered as a funding option for that plan. We are not a
party to the plan, so the terms and the conditions of the contract and the plan
may differ.
Plan Type. We refer to plans in this prospectus as 457 plans or non-457 plans.
For a description of each. See "Taxation--Your Retirement Plan".
- --------------------------------------------------------------------------------
Contract Rights
- --------------------------------------------------------------------------------
The contract holder holds all rights under the contract, but may permit you to
exercise those rights through the plan.
For example: The contract may permit the contract holder to select investment
options for your account dollars. The plan may permit you to exercise that
right. For greater detail see "Contract Ownership and Rights".
- --------------------------------------------------------------------------------
Contract Facts
- --------------------------------------------------------------------------------
Free Look/Right to Cancel: Contract holders may cancel the contract no later
than 10 days after they receive the contract (or a longer period if required by
state law). See "Right To Cancel".
Death Benefit: A beneficiary may receive a benefit in the event of your death
prior to the income phase. Any death benefit during the income phase will
depend upon the income phase payment option selected. See "Death Benefit" and
"The Income Phase".
Withdrawals: During the accumulation phase, the contract holder may, on your
behalf and subject to the limits in the contract, withdraw all or a part of
your account value. Certain fees and taxes may apply. See "Withdrawals" and
"Taxation".
Systematic Distribution Options: The contract holder may elect on your behalf
for you to receive regular payments from your account, while retaining the
account in the accumulation phase. See "Systematic Distribution Options".
Fees: Certain fees are deducted from your account value. See "Fee Table" and
"Fees".
5
<PAGE>
Taxation: You will not generally pay taxes on any earnings from the annuity
contract described in this prospectus until they are withdrawn (or otherwise
made available to you or a beneficiary). Tax-qualified retirement arrangements
(e.g. 457 plans) also defer payment of taxes on earnings until they are
withdrawn (or otherwise made available to you or a beneficiary). When an
annuity contract is used to fund a tax-qualified retirement arrangement, you
should know that the annuity contract does not provide any additional tax
deferral of earnings beyond the tax deferral provided by the tax-qualified
retirement arrangement. However, annuities do provide other features and
benefits which may be valuable to you. You should discuss your alternatives
with your financial representative.
Amounts you receive as a distribution will be generally included in your gross
income and will be subject to taxation. Tax penalties may apply in some
circumstances. See "Taxation".
- --------------------------------------------------------------------------------
Contract Phases
- --------------------------------------------------------------------------------
------------------
Payments to
Your Account
------------------
Step 1
---------------------------------------------------
Aetna Life Insurance and Annuity Company
---------------------------------------------------
(a) Step 2 (b)
- --------- ---------------------------------------------------
Variable Annuity
Fixed Account B
Interest
Options Variable Investment Options
- ---------
---------------------------------------------------
The Subaccounts
---------------------------------------------------
A B Etc.
---------------------------------------------------
Step 2(b)
---------------------
Mutual Mutual
Fund A Fund B
---------------------
I. The Accumulation Phase
(accumulating retirement
benefits)
STEP 1: You or the contract
holder provide Aetna Life
Insurance and Annuity
Company with your completed
enrollment materials. The
contract holder directs us to
set up an account for you.
STEP 2: The contract holder,
or you if permitted by your
plan, directs us to invest your
account dollars in any of the:
(a) Fixed Interest Options;
and/or
(b) Variable Investment
Options. (The variable
investment options are the
subaccounts of Variable
Annuity Account B. Each one
invests in a specific mutual
fund.)
The subaccount(s) selected
purchases shares of its
corresponding fund.
II. The Income Phase The contract offers several payment options. See "The
Income Phase". In general, you may:
> Receive income phase payments over a lifetime or for a specified period;
> Receive income phase payments monthly, quarterly, semi-annually or annually;
> Select an option that provides a death benefit to beneficiaries; or
> Select fixed income phase payments or payments that vary based on the
performance of the variable investment options you select.
6
<PAGE>
In This Section:
> Maximum Transaction Fees
> Maximum Fees Deducted from the Subaccounts
> Fees Deducted by the Funds; and
> Examples of Fee Deductions
Also see the "Fees" section for:
> Early Withdrawal Charge Schedules;
> HOw, When and Why Fees are Deducted;
> Reduction, Waiver and/or Elimination of Certain Fees; and
> Premium and Other Taxes.
See "The Income Phase" for:
> Fees during the income phase.
Fee Table
- --------------------------------------------------------------------------------
The tables and examples in this section show the fees your account may incur
while accumulating dollars under the contract (the Accumulation Phase). See
"The Income Phase" for fees that may apply after you begin receiving payments
under the contract. The fees shown below do not include premium taxes that may
be applicable.
Maximum Transaction Fees
Early Withdrawal Charge. (As a percentage of the amount withdrawn)
Early Withdrawal Charge Schedules
<TABLE>
<CAPTION>
Installment Purchase Payment Accounts Single Purchase Payment Accounts
- ------------------------------------------ -----------------------------------
<S> <C> <C> <C>
Purchase Payment Early Withdrawal Account Years Early Withdrawal
Periods Completed Charge Completed Charge
- --------------------- ------------------ --------------- -----------------
Fewer than 5 5% Fewer than 5 5%
5 or more but 5 or more but
fewer than 7 4% fewer than 6 4%
7 or more but 6 or more but
fewer than 9 3% fewer than 7 3%
9 or more but 7 or more but
fewer than 10 2% fewer than 8 2%
8 or more but
10 or more 0% fewer than 9 1%
9 or more 0%
</TABLE>
Annual Maintenance Fee
Installment Purchase Payment Accounts.................................$20.00(1)
Single Purchase Payment Accounts.......................................$0.00
Maximum Fees Deducted From the Subaccounts
(Daily deductions equal to the given percentage on an annual basis)
Mortality and Expense Risk Charge......................................1.25%(1)
Administrative Expense Charge..........................................0.25%(2)
------
Total Separate Account Expenses........................................1.50%
------
------
- -------------------------
(1) These charges may be waived, reduced or eliminated in certain circumstances.
See "Fees".
(2) We only impose this charge under some contracts. See "Fees".
7
<PAGE>
Fees Deducted by the Funds
Using this Information. The following table shows the investment advisory fees
and other expenses charged annually by each fund. Fund fees are one factor that
impacts the value of a fund share. To learn about additional factors, refer to
the fund prospectus.
How Fees are Deducted. Fund fees are not deducted from account values. Instead,
fees are deducted from the value of fund shares on a daily basis, which in turn
will affect the value of each subaccount on a daily basis. Except as noted
below, the following figures are a percentage of the average net assets of each
fund, and are based on figures for the year ended December 31, 1999.
Fund Expense Table
<TABLE>
<CAPTION>
Total Fund Net Fund
Annual Annual
Expenses Expenses
Investment Without Total After
Advisory Other Waivers or Waivers and Waivers or
Fund Name Fees(1) Expenses Reductions Reductions Reductions
- ------------------------------------------------- ------------ ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP(2) 0.60% 0.14% 0.74% 0.00% 0.74%
Aetna Balanced VP, Inc. 0.50% 0.09% 0.59% -- 0.59%
Aetna Bond VP 0.40% 0.09% 0.49% -- 0.49%
Aetna Crossroads VP(2) 0.60% 0.14% 0.74% 0.04% 0.70%
Aetna Growth VP(2) 0.60% 0.11% 0.71% 0.00% 0.71%
Aetna Growth and Income VP 0.50% 0.08% 0.58% -- 0.58%
Aetna High Yield VP(2) 0.65% 0.48% 1.13% 0.33% 0.80%
Aetna Index Plus Large Cap VP(2) 0.35% 0.10% 0.45% 0.00% 0.45%
Aetna Index Plus Mid Cap VP(2) 0.40% 0.40% 0.80% 0.20% 0.60%
Aetna Index Plus Small Cap VP(2) 0.40% 0.50% 0.90% 0.30% 0.60%
Aetna International VP(2) 0.85% 0.77% 1.62% 0.47% 1.15%
Aetna Legacy VP(2) 0.60% 0.15% 0.75% 0.10% 0.65%
Aetna Money Market VP 0.25% 0.09% 0.34% -- 0.34%
Aetna Real Estate Securities VP(2) 0.75% 0.74% 1.49% 0.54% 0.95%
Aetna Small Company VP(2) 0.75% 0.13% 0.88% 0.00% 0.88%
Aetna Technology VP(2)(3) 0.95% 0.25% 1.20% 0.05% 1.15%
Aetna Value Opportunity VP(2) 0.60% 0.13% 0.73% 0.00% 0.73%
AIM V.I. Capital Appreciation Fund 0.62% 0.11% 0.73% -- 0.73%
AIM V.I. Growth Fund 0.63% 0.10% 0.73% -- 0.73%
AIM V.I. Growth and Income Fund 0.61% 0.16% 0.77% -- 0.77%
AIM V.I. Value Fund 0.61% 0.15% 0.76% -- 0.76%
Calvert Social Balanced Portfolio(4) 0.70% 0.19% 0.89% 0.00% 0.89%
Fidelity VIP Equity-Income Portfolio(5) 0.48% 0.09% 0.57% -- 0.57%
Fidelity VIP Growth Portfolio(5) 0.58% 0.08% 0.66% -- 0.66%
Fidelity VIP Overseas Portfolio(5) 0.73% 0.18% 0.91% -- 0.91%
Fidelity VIP II Contrafund[RegTM] Portfolio(5) 0.58% 0.09% 0.67% -- 0.67%
Janus Aspen Aggressive Growth Portfolio(6) 0.65% 0.02% 0.67% 0.00% 0.67%
Janus Aspen Balanced Portfolio(6) 0.65% 0.02% 0.67% 0.00% 0.67%
Janus Aspen Flexible Income Portfolio(6) 0.65% 0.07% 0.72% 0.00% 0.72%
Janus Aspen Growth Portfolio(6) 0.65% 0.02% 0.67% 0.00% 0.67%
Janus Aspen Worldwide Growth Portfolio(6) 0.65% 0.05% 0.70% 0.00% 0.70%
Lexington Natural Resources Trust 1.00% 0.33% 1.33% -- 1.33%
Oppenheimer Global Securities Fund/VA 0.67% 0.02% 0.69% -- 0.69%
Oppenheimer Strategic Bond Fund/VA 0.74% 0.04% 0.78% -- 0.78%
PPI MFS Capital Opportunities Portfolio(7) 0.65% 0.25% 0.90% 0.00% 0.90%
PPI MFS Emerging Equities Portfolio(7) 0.67% 0.13% 0.80% 0.00% 0.80%
PPI MFS Research Growth Portfolio(7) 0.70% 0.15% 0.85% 0.00% 0.85%
PPI Scudder International Growth Portfolio(7) 0.80% 0.20% 1.00% 0.00% 1.00%
PPI T. Rowe Price Growth Equity Portfolio(7) 0.60% 0.15% 0.75% 0.00% 0.75%
</TABLE>
8
<PAGE>
Footnotes to the "Fund Expense Table"
(1) Certain of the fund advisers reimburse the company for administrative
costs incurred in connection with administering the funds as variable
funding options under the contract. These reimbursements are generally
paid out of the Investment Advisory Fees and are not charged to
investors. For the AIM Funds, the reimbursements may be paid out of fund
assets in an amount up to 0.25% annually. Any such reimbursements paid
from the AIM Funds' assets are included in the "Other Expenses" column.
(2) The investment adviser is contractually obligated through December 31,
2000 to waive all or a portion of its investment advisory fee and/or its
administrative services fee and/or to reimburse a portion of other
expenses in order to ensure that the fund's "Total Fund Annual Expenses
Without Waivers or Reductions" do not exceed the percentage reflected
under "Net Fund Annual Expenses After Waivers or Reductions."
(3) Aetna Technology VP commenced operations on May 1, 2000. Amounts
reflected in "Other Expenses" and "Total Fund Annual Expenses Without
Waivers or Reductions" are estimated amounts for the current fiscal year
based on expenses for comparable funds. Actual expenses may vary from
those shown.
(4) "Other Expenses" reflect an indirect fee of 0.03% relating to an expense
offset arrangement with the portfolio's custodian. The amount shown under
Total Waivers and Reductions does not reflect a voluntary reduction of
fees paid indirectly. If this voluntary reduction of fees paid indirectly
was reflected, the amount shown under Net Fund Annual Expenses After
Waiver or Reductions would be 0.86%.
(5) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, through arrangements with certain
funds', or the investment adviser on behalf of certain funds', custodian,
credits realized as a result of uninvested cash balances were used to
reduce a portion of each applicable fund's expenses. These credits are
not included under Total Waivers and Reductions. If these credits had
been included, the amounts shown under Net Fund Annual Expenses After
Waivers or Reductions presented in the table would have been 0.56% for
Fidelity VIP Equity-Income Portfolio; 0.65% for Fidelity VIP Growth
Portfolio; 0.87% for Fidelity VIP Overseas Portfolio; and 0.65% for
Fidelity VIP II Contrafund[RegTM] Portfolio.
(6) Expenses are based upon expenses for the fiscal year ended December 31,
1999, restated to reflect a reduction in the management fee for
Aggressive Growth, Balanced, Growth and Worldwide Growth Portfolios. All
expenses are shown without the effect of expense offset arrangements.
(7) The investment adviser has agreed to reimburse the portfolios for
expenses and/or waive its fees, so that, through at least April 30, 2001,
the aggregate of each portfolio's expenses will not exceed the combined
investment advisory fees and other expenses shown under the Net Fund
Annual Expenses After Waivers or Reductions column above.
9
<PAGE>
Hypothetical Examples
Account Fees Incurred Over Time. The following hypothetical examples show the
fees paid over time if $1000 is invested in a subaccount, assuming a 5% annual
return on the investment. For the purpose of these examples, we deducted the
maximum allowed under the contract for the following fees: mortality and
expense risk charge of 1.25% annually, an administrative expense charge of
0.25% annually and maintenance fee of $20 (converted to a percentage of assets
equal to 0.005%). The total annual fund expenses used are those shown in the
column "Total Annual Expenses without Waivers or Reductions" in the Fund
Expense Table.
<TABLE>
<CAPTION>
- ---------------------------------------------
> These examples are purely hypothetical.
> They should not be considered a
representation of past or future fees or
expected returns.
> Actual fees and/or returns may be more or
less than those shown in these examples.
- ---------------------------------------------
EXAMPLE A EXAMPLE B
--------------------------------------- --------------------------------------
If you leave your entire account
If you withdraw your entire account value invested or if you select an
value at the end of the periods shown, income phase payment option at the
you would pay the following fees, end of the periods shown, you would
including any applicable Early pay the following fees (no Early
Withdrawal Charge assessed:* Withdrawal Charge is reflected):**
1 Year 3 Years 5 Years 10 Years 1 Year 3 Years 5 Years 10 Years
-------- --------- --------- ---------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aetna Ascent VP $74 $124 $178 $258 $23 $70 $120 $258
Aetna Balanced VP, Inc. $73 $120 $170 $243 $21 $66 $113 $243
Aetna Bond VP $72 $117 $166 $232 $20 $63 $108 $232
Aetna Crossroads VP $74 $124 $178 $258 $23 $70 $120 $258
Aetna Growth VP $74 $124 $176 $255 $22 $69 $119 $255
Aetna Growth and Income VP $73 $120 $170 $242 $21 $65 $112 $242
Aetna High Yield VP $78 $136 $196 $297 $27 $82 $140 $297
Aetna Index Plus Large Cap VP $71 $116 $164 $228 $20 $61 $105 $228
Aetna Index Plus Mid Cap VP $75 $126 $180 $264 $23 $72 $123 $264
Aetna Index Plus Small Cap VP $76 $129 $185 $274 $24 $75 $128 $274
Aetna International VP $82 $149 $219 $343 $32 $96 $164 $343
Aetna Legacy VP $74 $125 $178 $259 $23 $70 $121 $259
Aetna Money Market VP $70 $113 $158 $216 $19 $58 $100 $216
Aetna Real Estate Securities VP $81 $146 $213 $331 $30 $93 $157 $331
Aetna Small Company VP $75 $128 $184 $272 $24 $74 $127 $272
Aetna Technology VP $79 $138 $199 $304 $27 $84 $143 $304
Aetna Value Opportunity VP $74 $124 $177 $257 $23 $70 $120 $257
AIM V.I. Capital Appreciation Fund $74 $124 $177 $257 $23 $70 $120 $257
AIM V.I. Growth Fund $74 $124 $177 $257 $23 $70 $120 $257
AIM V.I. Growth and Income Fund $74 $125 $179 $261 $23 $71 $122 $261
AIM V.I. Value Fund $74 $125 $178 $260 $23 $71 $121 $260
Calvert Social Balanced Portfolio $76 $129 $185 $273 $24 $75 $128 $273
Fidelity VIP Equity-Income Portfolio $73 $120 $169 $241 $21 $65 $112 $241
Fidelity VIP Growth Portfolio $73 $122 $174 $250 $22 $68 $116 $250
Fidelity VIP Overseas Portfolio $76 $129 $186 $275 $24 $75 $129 $275
Fidelity VIP II Contrafund[RegTM] Portfolio $73 $122 $174 $251 $22 $68 $117 $251
Janus Aspen Aggressive Growth Portfolio $73 $122 $174 $251 $22 $68 $117 $251
Janus Aspen Balanced Portfolio $73 $122 $174 $251 $22 $68 $117 $251
Janus Aspen Flexible Income Portfolio $74 $124 $177 $256 $23 $70 $119 $256
Janus Aspen Growth Portfolio $73 $122 $174 $251 $22 $68 $117 $251
Janus Aspen Worldwide Growth Portfolio $74 $123 $176 $254 $22 $69 $118 $254
Lexington Natural Resources Trust $80 $141 $205 $316 $29 $88 $150 $316
Oppenheimer Global Securities Fund/VA $74 $123 $175 $253 $22 $69 $118 $253
Oppenheimer Strategic Bond Fund/VA $75 $126 $179 $262 $23 $71 $122 $262
PPI MFS Capital Opportunities Portfolio $76 $129 $185 $274 $24 $75 $128 $274
PPI MFS Emerging Equities Portfolio $75 $126 $180 $264 $23 $72 $123 $264
PPI MFS Research Growth Portfolio $75 $128 $183 $269 $24 $73 $126 $269
PPI Scudder International Growth Portfolio $77 $132 $190 $284 $25 $78 $133 $284
PPI T. Rowe Price Growth Equity Portfolio $74 $125 $178 $259 $23 $70 $121 $259
</TABLE>
- -----------------
*This example reflects deduction of an early withdrawal charge calculated
using the schedule applicable to Installment Purchase Payment Accounts.
Under that schedule, if only one $1,000 payment was made as described above,
fewer than 5 purchase payment periods would have been completed at the end
of years 1, 3 and 5, and the 5% charge would apply. At the end of the tenth
account year, the early withdrawal charge is waived regardless of the number
of purchase payment periods completed, and no early withdrawal charge would
apply.
**This example does not apply if during the income phase, a nonlifetime
payment option with variable payments is selected and a lump-sum withdrawal
is requested within 3 years after payments start. In this case, the lump-sum
payment is treated as a withdrawal during the accumulation phase and may be
subject to an early withdrawal charge as shown in Example A.
10
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
Understanding Condensed Financial Information. In Appendix V, we provide
condensed financial information about the Variable Annuity Account B (the
separate account) subaccounts available under the contracts. The tables show
the value of the subaccounts over the past 10 years. For subaccounts that were
not available 10 years ago, we give a history from the date of first
availability.
Investment Options
- --------------------------------------------------------------------------------
The contract offers variable investment options and fixed interest options.
When we establish your account(s), the contract holder, or you if permitted by
the plan, instructs us to direct account dollars to any of the available
options.
Variable Investment Options. These options are called subaccounts. The
subaccounts are within Variable Annuity Account B (the separate account), a
separate account of the Company. Earnings on amounts invested in a subaccount
will vary depending upon the performance and fees of its underlying fund. You
do not invest directly in or hold shares of the funds.
>Fund Descriptions. We provide brief descriptions of the funds in Appendix IV.
Please refer to the fund prospectuses for additional information. Fund
prospectuses may be obtained, free of charge, from our Home Office at the
address and telephone number listed in "Contract Overview", by accessing the
SEC's web site or by contacting the SEC's Public Reference Room.
Fixed Interest Options. For descriptions of the fixed interest options, see
Appendices I, II, and III and the Guaranteed Accumulation Account prospectus.
- --------------------------------------------------------------------------------
Selecting Investment Options
o Choose options appropriate for you. Your Aetna representative can help you
evaluate which subaccounts or fixed interest options may be appropriate for
your financial goals.
o Understand the risks associated with the options you choose. Some subaccounts
invest in funds that are considered riskier than others. Funds with
additional risks are expected to have a value that rises and falls more
rapidly and to a greater degree than other funds. For example: funds
investing in foreign or international securities are subject to additional
risks not associated with domestic investments, and their performance may
vary accordingly. Also, funds using derivatives in their investment strategy
may be subject to additional risks.
o Be informed. Read this prospectus, the fund prospectus, fixed interest option
appendices and the Guaranteed Accumulation Account prospectus.
- --------------------------------------------------------------------------------
Limits on Option Availability. Some subaccounts and fixed interest options may
not be available through certain contracts and plans or in some states. We may
add, withdraw or substitute investment options, subject to the conditions in
the contract and regulatory requirements.
Limits on Number of Options Selected. No more than 18 investment options may be
selected for your account at any one time. Each subaccount, the Fixed
11
<PAGE>
Account, the Fixed Plus Account and each classification of the Guaranteed
Accumulation Account selected counts as one option.
Limits Imposed by the Underlying Fund. Orders for the purchase of fund shares
may be subject to acceptance by the fund. We reserve the right to reject,
without prior notice, any allocation of a purchase payment to a subaccount if
the subaccount's investment in the corresponding fund is not accepted by the
fund for any reason.
Additional Risks of Investing in the Funds. (Mixed and Shared Funding)
"Shared funding" occurs when shares of a fund, which the subaccounts buy for
variable annuity contracts, are also bought by other insurance companies for
their variable annuity contracts.
"Mixed funding" occurs when shares of a fund, which the subaccounts buy for
variable annuity contracts, is bought for variable life insurance contracts
issued by us or other insurance companies.
> Shared--bought by more than one company
> Mixed--bought for annuities and life insurance
It is possible that a conflict of interest may arise due to mixed and/or shared
funding, that could adversely impact the value of a fund. For example, if a
conflict of interest occurred and one of the subaccounts withdrew its
investment in a fund, the fund may be forced to sell its securities at
disadvantageous prices, causing its share value to decrease. Each fund's board
of directors or trustees will monitor events to identify any conflicts which
might arise and to determine what action, if any, should be taken to address
such conflicts.
Transfers
- --------------------------------------------------------------------------------
Transfers Among Investment Options. During the accumulation phase, and under
some contracts the income phase, the contract holder, or you if permitted by
the plan, may transfer amounts of $500 or more among investment options.
Subject to the contract holder's approval, you may make a request in writing,
by telephone or, where applicable, electronically. Transfers must be made in
accordance with the terms of the contract and your plan. Transfers from fixed
interest options are restricted as outlined in Appendices I, II and III. See
"The Income Phase".
Value of Transferred Dollars. The value of amounts transferred into or out of
the funds will be based on the subaccount unit values next determined after we
receive your transfer request in good order at our Home Office, or if you are
participating in the dollar cost averaging program, after your scheduled
transfer.
Telephone and Electronic Transfers: Security Measures. To prevent fraudulent
use of telephone or electronic transactions (including, but not limited to,
internet transactions), we have established security procedures. These include
recording calls on our toll-free telephone lines and requiring use of a
personal identification number (PIN) to execute transactions. You are
responsible for keeping your PIN and account information confidential. If we
fail to follow reasonable security procedures, we may be liable for losses due
to unauthorized or fraudulent telephone or other electronic transactions. We
are not liable for losses resulting
12
<PAGE>
from following telephone or electronic instructions we believe to be genuine.
If a loss occurs when we rely on such instructions, you will bear the loss.
Limits on Frequent Transfers. The contracts are not designed to serve as
vehicles for frequent trading in response to short-term fluctuations in the
market. Such frequent trading can disrupt management of a fund and raise its
expenses. This in turn can have an adverse effect on fund performance.
Accordingly, organizations or individuals that use market-timing investment
strategies and make frequent transfers should not purchase the contracts.
We reserve the right to restrict, in our sole discretion and without prior
notice, transfers initiated by a market-timing organization or individual or
other party authorized to give transfer instructions on behalf of multiple
contract holders or participants. Such restrictions could include: (1) not
accepting transfer instructions from an agent acting on behalf of more than one
contract holder or participant; and (2) not accepting preauthorized transfer
forms from market timers or other entities acting on behalf of more than one
contract holder or participant at a time.
We further reserve the right to impose, without prior notice, restrictions on
any transfers that we determine, in our sole discretion, will disadvantage or
potentially hurt the rights or interests of other contract holders or
participants.
The Dollar Cost Averaging Program. If available under your plan, you may
participate in our dollar cost averaging program. There is no additional charge
for this service. Dollar cost averaging is a system for investing that buys
fixed dollar amounts of an investment at regular intervals, regardless of
price. Our program transfers, at regular intervals, a fixed dollar amount to
one or more subaccounts that you select. Dollar cost averaging is not permitted
into the Lexington Natural Resources Trust subaccount. Dollar cost averaging
neither ensures a profit nor guarantees against loss in a declining market. You
should consider your financial ability to continue purchases through periods of
low price levels. For additional information about this program, contact your
local representative or call the Company at the number listed in "Contract
Overview--Questions."
Contract Purchase and Participation
- --------------------------------------------------------------------------------
Contracts Available for Purchase. The contracts are designed for deferred
compensation plans sponsored by an employer for its employees and/or
independent contractors. The plans may be sponsored by:
(1) Non-governmental tax-exempt organizations for deferrals that are subject to
Code Section 457 (457 Plans);
(2) Tax-exempt organizations for deferrals not subject to Code Section 457; or
(3) Taxable organizations.
The types of plans described in (2) and (3) above are referred to as non-457
plans.
Purchasing the Contract.
(1) The contract holder submits the required forms and application to the
Company.
13
<PAGE>
(2) We approve the forms and issue a contract to the contract holder.
Participating in the Contract. To participate in the contract, complete an
enrollment form and submit it to us. If your enrollment is accepted, we
establish an account for you under the contract.
Acceptance or Rejection. We must accept or reject an application or your
enrollment materials within two business days of receipt. If the forms are
incomplete, we may hold any forms and accompanying purchase payments for five
business days, unless you consent to our holding them longer. Under limited
circumstances, we may also agree, for a particular plan, to hold purchase
payments for longer periods with the permission of the contract holder. If we
agree to do this, we will deposit the purchase payments in the Aetna Money
Market VP subaccount until the forms are completed (or for a maximum of 105
days). If we reject the application or enrollment, we will return the forms and
any purchase payments.
Methods of Purchase Payment. The following purchase payment methods are
available:
> Continuous payments over time into an installment purchase payment account.
Payments to an installment purchase payment account must be at least $100 per
month ($1,200 annually). No payment may be less than $25.
> Lump-sum transfer from a previous plan into a single purchase payment
account, in accordance with our procedures in effect at the time of purchase.
If you participate in a 457 plan, the Tax Code places limits on how much of
your compensation may be deferred annually. See "Taxation" for further
information.
Allocation of Purchase Payments. The contract holder or you, if the contract
holder permits, directs us to allocate initial contributions to the investment
options available under the plan. Generally you will specify this information
on your enrollment materials. After your enrollment, changes to allocations for
future purchase payments or transfer of existing balances among investment
options may be requested in writing and, where available, by telephone or
electronically.
Allocations must be in whole percentages and there may be limitations on the
number of investment options that can be selected at any one time. See
"Investment Options" and "Transfers".
Transfer Credits. The Company may provide a transfer credit on transferred
assets, subject to certain conditions and state approvals. Transferred assets
are the value of contributions made on your behalf under the plan or a prior
plan before such amounts are applied to the contract. The transfer credit
equals a percentage of the transferred assets remaining in the contract after a
specified period of time. Once a transfer credit is applied to the contract, it
will not be recaptured by the Company; however, all applicable provisions and
limitations of the contract will apply to those amounts. This benefit is
provided on a nondiscriminatory basis. If a transfer credit is due under the
contract, you will be provided with additional information specific to the
contract.
Tax Code Restrictions. The Tax Code places some limitations on contributions
to your account. See "Taxation".
14
<PAGE>
Contract Ownership and Rights
- --------------------------------------------------------------------------------
Who owns the Contract? The contract holder. This is the person or entity to
whom we issue the contract.
Who Owns Money Accumulated under the Contract? All dollars accumulated under
the contracts, including contributions attributable to deferred compensation,
are part of your employer's general assets and subject to the claims of its
general creditors. The plan exclusively governs what benefits are available to
you and those benefits are provided from your employer's general assets.
What Rights Do I Have under The Contract? The contract holder, usually your
employer, holds all rights under the contract. The contract holder's plan,
which you participate in, may permit you to exercise some of those rights.
Right to Cancel
- --------------------------------------------------------------------------------
When and How to Cancel. The contract holder may cancel the contract within ten
days after receiving it (or as otherwise allowed by state law) by returning it
to the Company along with a written notice of cancellation.
Refunds to Contract Holders. We will produce a refund to the contract holder
not later than seven days after we receive the contract and the written notice
of cancellation at our Home Office. The refund will equal the dollars
contributed to the contract plus any earnings or less any losses attributable
to those contributions allocated to the variable investment options, unless
otherwise required by law.
15
<PAGE>
Types of Fees.
There are three types of fees your account may incur:
>Transaction Fees
o Early Withdrawal Charge
o Annual Maintenance Fee
>Fees Deducted from the Subaccounts
o Mortality and Expense Risk Charge
o Administrative Expense Charge
>Fees Deducted by the Funds
o Investment Advisory Fees
o Other Expenses
Terms to Understand
in Schedules
> Account Year -- a 12-month period measured from the date we establish your
account, or measured from any anniversary of that date.
> Purchase Payment Period (for installment purchase payments)--the period of
time it takes to complete the number of installment payments expected to be
made to your account over a year. For example, if your payment frequency is
monthly, a payment period is completed after 12 purchase payments are made.
If only 11 purchase payments are made, the payment period is not completed
until the twelfth purchase payment is made. At any given time, the number of
payment periods completed cannot exceed the number of account years
completed, regardless of the number of payments made.
Fees
- --------------------------------------------------------------------------------
The following repeats and adds to information provided in the "Fee Table"
section. Please review both this section and the Fee Table for information on
fees.
I. Transaction Fees
Early Withdrawal Charge
Withdrawals of all or a portion of your account value may be subject to a
charge.
Purpose. This is a deferred sales charge. It reimburses us for some of the
sales and administrative expenses associated with the contract. If our expenses
are greater than the amount we collect for the early withdrawal charge, we may
use any of our corporate assets, including potential profit that may arise from
the mortality and expense risk charge, to make up any difference.
Amount. This charge is a percentage of the amount withdrawn. The percentage is
determined by the early withdrawal charge schedule that applies to your
account. It will never be more than 8.5% of your total purchase payments to
your account.
Early Withdrawal Charge Schedules
<TABLE>
<CAPTION>
Installment Purchase Payment Accounts Single Purchase Payment Accounts
- ------------------------------------------ -----------------------------------
<S> <C> <C> <C>
Purchase Payment Early Withdrawal Account Years Early Withdrawal
Periods Completed Charge Completed Charge
- --------------------- ------------------ --------------- -----------------
Fewer than 5 5% Fewer than 5 5%
5 or more but 5 or more but
fewer than 7 4% fewer than 6 4%
7 or more but 6 or more but
fewer than 9 3% fewer than 7 3%
9 or more but 7 or more but
fewer than 10 2% fewer than 8 2%
8 or more but
10 or more 0% fewer than 9 1%
9 or more 0%
</TABLE>
Waiver. The early withdrawal charge is waived for portions of a withdrawal that
are:
> Used to provide payments to you during the income phase;
> Paid because of your death before income phase payments begin;
> Paid where your account value is $3,500 or less (or, if applicable, as
otherwise allowed by the plan for lump-sum cashout without participant's
consent) and no part of the account has been taken as a withdrawal or used to
provide income phase payments within the prior 12 months (If the contract
holder makes a full withdrawal from more than one of the accounts on your
behalf, the value of those accounts will be added together to be eligible for
the $3,500 exemption. This option is not available for contracts where we do
not maintain participant accounts or for withdrawals of all accounts under
one contract);
> Taken because of the election of a systematic distribution option, See
"Systematic Distribution Options";
> Taken when you are 59 1/2 or older, have an installment purchase payment
account and have completed at least nine purchase payment periods;
> Taken on or after the tenth anniversary of the effective date of the account
or plan account;
16
<PAGE>
> For 457 plans only, withdrawn due to a hardship resulting from an
unforseeable emergency, or
> For contracts issued in connection with retirement programs for select
management and highly compensated healthcare employees in plans formerly
carried under certain hospital association endorsements, withdrawn due to
your separation from service with your current employer.
Reduction, Waiver or Elimination. In addition to the specific waivers described
above, we may reduce, waive or eliminate the early withdrawal charge for a
particular plan. Any such reduction will reflect the differences we expect in
distribution costs or services meant to be defrayed by this charge. Factors we
consider for a reduction include, but are not limited to, the following:
> The number of participants under the plan;
> The expected level of assets or cash flow under the plan;
> Our agent's involvement in sales activities;
> Our sales-related expenses;
> Distribution provisions under the plan;
> The plan's purchase of one or more other variable annuity contracts from us
and the features of those contracts;
> The level of employer involvement in determining eligibility for
distributions under the contract; and
> Our assessment of financial risk to the Company relating to withdrawals.
We will not reduce the early withdrawal charge in a manner that is unfairly
discriminatory against any person.
We may also apply different early withdrawal charge provisions in contracts
issued to certain employer groups or associations which have negotiated the
contract terms on behalf of their employees. We will offer any resulting early
withdrawal charge uniformly to all employees in the group.
Maintenance Fee
Maximum Amount. $20.00 (This fee only applies to installment purchase payment
accounts.)
When/How. For those plans that have a maintenance fee, each year during the
accumulation phase we deduct this fee from your account value. We deduct it on
your account anniversary and, in some cases, at the time of full withdrawal. It
is deducted on a pro rata basis from your account value invested in the
subaccounts and the fixed interest options.
Purpose. This fee helps defray the administrative expenses we incur in
establishing and maintaining your account.
Reduction, Waiver or Elimination. When the plan meets certain criteria, we may
reduce, waive or eliminate the maintenance fee. Factors we consider reflect
differences in our level of administrative costs and services, such as:
> The size, type and nature of the group for which a contract is issued;
> The anticipated level of administrative expenses such as billing for
payments, producing periodic reports, providing for the direct payment of
account charges rather than having them deducted from account values, and any
other factors pertaining to the level and expense of administrative services
we will provide; and
17
<PAGE>
> The number of eligible participants and the program's participation rate.
We will not unfairly discriminate against any person if we reduce or eliminate
the maintenance fee. We will make any reduction or elimination of this fee
according to our own rules in effect at the time an application for a contract
is approved. We reserve the right to change these rules from time to time.
II. Fees Deducted from the Subaccounts
Mortality and Expense Risk Charge
Maximum Amount. 1.25% annually of your account value invested in the
subaccount.
When/How. This fee is deducted daily from the subaccount. We do not deduct this
from any fixed interest option. This fee is assessed during the accumulation
phase and the income phase.
Purpose. This fee compensates us for the mortality and expense risks we assume
under the contracts.
> The mortality risks are those risks associated with our promise to make
lifetime income phase payments based on annuity rates specified in the
contracts and our funding of the death benefit and other payments we make to
owners or beneficiaries of the accounts.
> The expense risk is the risk that the actual expenses we incur under the
contracts will exceed the maximum costs that we can charge.
If the amount we deduct for this fee is not enough to cover our mortality costs
and expenses under the contracts, we will bear the loss. We may use any excess
to recover distribution costs relating to the contract and as a source of
profit. We expect to make a profit from this fee.
Reduction. We may reduce the mortality and expense risk charge from the maximum
when the plan meets certain criteria and we agree to the reduction with the
contract holder in writing. Some contracts have a reduced mortality and expense
risk charge only during the accumulation phase of the account which then
increases during the income phase (but not beyond the maximum amount). Any
reduction will reflect differences in expenses for administration based on such
factors as:
> The plan design (for example, the plan may favor stability of invested assets
and limit the conditions for withdrawals and available investment options,
which in turn lowers administrative expenses);
> The size of the prospective group, projected annual number of eligible
participants and the program's participation rate, or the number of
participants estimated to choose the contract;
> The frequency, consistency and method of submitting payments;
> The method and extent of onsite services we provide and the contract holder's
involvement in services such as enrollment and ongoing participant services;
> The contract holder's support and involvement in the communication,
enrollment, participant education and other administrative services;
> The projected frequency of distributions; and
> The type and level of other factors that affect the overall administrative
expense.
We will determine any reduction of mortality and expense risk on a basis that
is not unfairly discriminatory according to our rules in effect at the time a
18
<PAGE>
contract application is approved. We reserve the right to change these rules
from time to time.
Administrative Expense Charge
Maximum Amount. 0.25% annually of your account value invested in the
subaccount.
When/How. For all participants who became covered under a contract on or before
November 5, 1984, we reserve the right to charge an administrative expense fee
of up to 0.25% annually. This fee may be assessed during the accumulation phase
and/or the income phase. If we are imposing this fee under the contract issued
in connection with your plan when you enter the income phase, the fee will
apply to you during the entire income phase.
> We do not currently impose this charge under any contracts issued in
connection with retirement programs for select management and highly
compensated healthcare employees in plans formerly carried under certain
hospital association endorsements.
> For contracts not in the above category, beginning on April 4, 1997 we began
to deduct this charge during the accumulation phase only for contracts
effective before October 31, 1996 where the number of participants was less
than 30 as of November 30, 1996 and the contract holder had chosen not to
elect one of the Company's electronic standards for cash collection and
application of participant contribution data. However, we do not impose the
administrative expense charge for participants under those contracts who
enrolled in a group contract or became covered under an individual contract
before November 5, 1984.
> We do not currently deduct an administrative expense charge during the
accumulation phase for any contracts other than those described above.
> We do not currently deduct an administrative expense charge during the income
phase for any contracts.
Purpose. This fee helps defray our administrative expenses that cannot be
covered by the mortality and expense risk charge described above. The fee is
not intended to exceed the average expected cost of administering the
contracts. We do not expect to make a profit from this fee.
III. Fund Expenses
Maximum Amount. Each fund determines its own advisory fees and expenses. For a
list of fund fees see "Fee Table." The fees are described in more detail in
each fund prospectus.
When/How. Fund fees are not deducted from your account. Fund advisory fees and
expenses are reflected in the daily value of the fund shares, which will in
turn affect the daily value of each subaccount.
Purpose. These amounts help to pay the funds' investment advisor and operating
expenses.
Premium and Other Taxes
Maximum Amount. Some states and municipalities charge a premium tax on
annuities. These taxes currently range from 0% to 4%, depending upon the
jurisdiction.
19
<PAGE>
When/How. We reserve the right to deduct premium taxes from your account value
or from purchase payments to your account at any time, but not before there is
a tax liability under state law. Our current practice is to deduct premium
taxes at the time of a full withdrawal or the commencement of income phase
payments. We will not deduct any municipal premium tax of 1% or less, but we
reserve the right to reflect such an expense in our annuity purchase rates.
In addition, the Company reserves the right to assess a charge for any federal
taxes due against the separate account. See "Taxation".
Your Account Value
- --------------------------------------------------------------------------------
During the accumulation phase, your account value at any given time equals:
> Account dollars directed to the fixed interest options, including interest
earnings to date;
> Less any deductions from the fixed interest options (e.g. withdrawals, fees);
and
> Plus the current dollar value of amounts invested in the subaccounts.
Subaccount Accumulation Units. When a fund is selected as an investment option,
your account dollars invest in "accumulation units" of the Variable Annuity
Account B subaccount corresponding to that fund. The subaccount invests
directly in the fund shares. The value of your interests in a subaccount is
expressed as the number of accumulation units you hold multiplied by an
"Accumulation Unit Value," as described below, for each unit.
Accumulation Unit Value (AUV). The value of each accumulation unit in a
subaccount is called the accumulation unit value or AUV. The value of
accumulation units vary daily in relation to the underlying fund's investment
performance. The value also reflects deductions for fund fees and expenses, the
mortality and expense risk charge, and the administrative charge (if any). We
discuss these deductions in more detail in "Fee Table" and "Fees."
Valuation. We determine the AUV every business day after the close of the New
York Stock Exchange. At that time, we calculate the current AUV by multiplying
the AUV last calculated by the "net investment factor" of the subaccount. The
net investment factor measures the investment performance of the subaccount
from one valuation to the next.
Current AUV = Prior AUV x Net Investment Factor
Net Investment Factor. The net investment factor for a subaccount between two
consecutive valuations, equals the sum of 1.0000 plus the net investment rate.
Net Investment Rate. The net investment rate is computed according to a formula
that is equivalent to the following:
> The net assets of the fund held by the subaccount as of the current
valuation, minus;
> The net assets of the fund held by the subaccount at the preceding valuation,
plus or minus;
> Taxes or provisions for taxes, if any, due to subaccount operations (with any
20
<PAGE>
federal income tax liability offset by foreign tax credits to the extent
allowed);
>Divided by the total value of the subaccount units at the preceding valuation;
>Less a daily deduction for the mortality and expense risk charge and the
administrative expense charge, if any, and any other fees deducted from
investments in the separate account (such as guarantee charges for the Aetna
GET Fund). See "Fees".
The net investment rate may be either positive or negative.
Hypothetical Illustration. As a hypothetical illustration, assume that an
investor contributes $5,000 to his account and directs us to invest $3,000 in
Fund A and $2,000 in Fund B. After receiving the contribution and following the
next close of business of the New York Stock Exchange, the applicable AUV's are
$10 for Subaccount A, and $25 for Subaccount B. The investor's account is
credited with 300 accumulation units of Subaccount A and 80 accumulation units
of Subaccount B.
---------------------
$5,000 contribution
---------------------
Step 1
---------------------------------------------------
Aetna Life Insurance and Annuity Company
---------------------------------------------------
Step 2
---------------------------------------------------
Variable Annuity Account B
---------------------------------------------------
Subaccount A Subaccount B Etc
300 80
accumulation accumulation
units units
---------------------------------------------------
Step 3
---------- -----------
Fund A Fund B
---------- -----------
Step 1: An Investor contributes $5000
Step 2:
A. He directs us to invest $3,000 in Fund A. His dollars purchase 300
accumulation units of Subaccount A ($3,000 divided by the current $10 AUV).
B. He directs us to invest $2,000 in Fund B. His dollars purchase 80
accumulation units of Subaccount B ($2,000 divided by the current $25 AUV).
Step 3: The separate account then purchases shares of the applicable funds at
the current market value (net asset value or NAV).
The fund's subsequent investment performance, expenses and charges, and the
daily charges deducted from the subaccount, will cause the AUV to move up or
down on a daily basis.
21
<PAGE>
Taxes, Fees and Deductions
Amounts withdrawn may be subject to one or more of the following:
>Early Withdrawal Charge. See "Fees--Early Withdrawal Charge";
>Maintenance Fee. See "Fees--Maintenance Fee";
>Market Value Adjustment. See Appendix I;
>Tax Penalty. See "Taxation"; and/or
>Tax Withholding. See "Taxation".
To determine which may apply, refer to the appropriate sections of this
prospectus, contact your Aetna representative or call the Company at the number
listed in "Contract Overview--
Questions."
Purchase Payments to Your Account. If all or a portion of initial purchase
payments are directed to the subaccounts, they will purchase subaccount
accumulation units at the AUV next computed after our acceptance of the
applicable application or enrollment forms. Subsequent purchase payments or
transfers directed to the subaccounts that we receive by the close of business
of the New York Stock Exchange (Exchange) will purchase subaccount accumulation
units at the AUV computed after the close of the Exchange on that day. The
value of subaccounts may vary day to day.
Withdrawals
- --------------------------------------------------------------------------------
Making a Withdrawal. Subject to limitations on withdrawals from the Fixed Plus
Account, the contract holder may withdraw all or a portion of your account
value (on your behalf) at any time during the accumulation phase.
Steps for Making A Withdrawal. The contract holder, or you if permitted by the
plan must:
> Select the Withdrawal Amount;
1) Full Withdrawal: You will receive, reduced by any required withholding tax,
your account value allocated to the subaccounts, the Guaranteed
Accumulation Account (plus or minus any applicable market value adjustment)
and to the Fixed Account, minus any applicable early withdrawal charge,
plus the amount available for withdrawal from the Fixed Plus Account.
2) Partial Withdrawal (Percentage or Specified Dollar Amount): You will
receive, reduced by any required withholding tax, the amount you specify,
subject to the value available in your account. However, the amount
actually withdrawn from your account will be adjusted by any applicable
early withdrawal charge for amounts withdrawn from the subaccounts, the
Guaranteed Accumulation Account or the Fixed Account, and any positive or
negative market value adjustment for amounts withdrawn from the Guaranteed
Accumulation Account. The amount available from the Fixed Plus Account may
be limited.
For a description of limitations on withdrawals from the Fixed Plus
Account, see Appendix III.
> Select Investment Option (if this is not specified, we will withdraw dollars
proportionally from each investment option in which you have an account
value); and
> Properly complete a disbursement form and submit it to our Home Office.
Calculation of Your Withdrawal. We determine your account value every normal
business day after the close of the New York Stock Exchange. We pay withdrawal
amounts based on your account value either: (1) as of the next valuation after
we receive a request for withdrawal in good order at our Home Office, or (2) on
such later date as specified on the disbursement form.
Delivery of Payment. Payments for withdrawal requests will be made in
accordance with SEC requirements. Normally, the payment will be sent not later
than seven calendar days following our receipt of the disbursement form in good
order.
22
<PAGE>
Features of a Systematic Distribution Option
A Systematic Distribution Option allows the contract holder to elect for you to
receive regular payments from your account, without moving into the income
phase. By maintaining your account in the accumulation phase, certain rights
and flexibility are retained and any accumulation phase fees may apply.
Systematic Distribution Options
- --------------------------------------------------------------------------------
Availability of Systematic Distribution Options. To exercise one of these
options the account value must meet any minimum dollar amount and age criteria
applicable to that option. To determine what Systematic Distribution Options
are available, check with the contract holder or the Company.
The Systematic Distribution Options currently available under the contract
include the following:
> SWO--Systematic Withdrawal Option. SWO is a series of automatic partial
withdrawals from your account based on the payment method selected. It is
designed for those who want a periodic income while retaining investment
flexibility for amounts accumulated under the contract.
> ECO--Estate Conservation Option. ECO offers the same investment flexibility
as SWO, but is designed for those who want to receive only the minimum
distribution that the Tax Code requires each year. Under ECO, we calculate
the minimum distribution amount required by law, generally at age 70 1/2,
and pay you that amount once a year. ECO is available under 457 plans only.
> Other Systematic Distribution Options. We may add additional Systematic
Distribution Options from time to time. You may obtain additional information
relating to any of the Systematic Distribution Options from your local
representative or from our Home Office.
Availability of Systematic Distribution Options The Company may discontinue the
availability of one or all of the Systematic Distribution Options at any time,
and/or change the terms of future elections.
Terminating a Systematic Distribution Option Once a Systematic Distribution
Option is elected, the contract holder may revoke it at any time by submitting
a written request to our Home Office. Any revocation will apply only to the
amount not yet paid. Once an option is revoked for an account, it may not be
elected again, nor may any other Systematic Distribution Option be elected.
Charges and Taxation When the contract holder elects a Systematic Distribution
Option for your account, your account value remains in the accumulation phase
and subject to the charges and deductions described in the "Fees" section.
Taking a withdrawal through a Systematic Distribution Option or revocation of
election of a Systematic Distribution Option may have tax consequences. If you
are concerned about tax implications consult a tax adviser before one of these
options is elected.
23
<PAGE>
During the Income Phase.
This section provides information about the accumulation phase. For death
benefit information applicable to the income phase, see "The Income Phase".
Death Benefit
- --------------------------------------------------------------------------------
The contract provides a death benefit in the event of your death, which is
payable to the contract holder (usually your employer). The contract holder may
direct that we make any payments to the beneficiary you name under the plan
(plan beneficiary).
During the Accumulation Phase
Payment Process.
1. Following your death, the contract holder (on behalf of your plan
beneficiary) must provide the Company with proof of death acceptable to us
and a payment request in good order.
2. The payment request should include selection of a benefit payment option.
3. Within seven days after we receive proof of death acceptable to us and
payment request in good order at our Home Office, we will mail payment,
unless otherwise requested.
Until a payment option is selected, account dollars will remain invested as at
the time of your death, and no distribution will be made.
If you die during the accumulation phase of your account, the following payment
options are available to your plan beneficiary, if allowed by your contract
holder and the Tax Code:
> Lump-sum payment;
> Payment in accordance with any of the available income phase payment options
(see "The Income Phase--Payment Options"); and
> If the plan beneficiary is your spouse, payment in accordance with an
available Systematic Distribution Option. See "Systematic Distribution
Options".
The following options are also available; however, the Tax Code limits how long
the death benefit proceeds may be left in these options:
> Leaving your account value invested in the contract; or
> Under some contracts, leaving your account value on deposit in the Company's
general account, and receiving monthly, quarterly, semi-annual or annual
interest payments at the interest rate then being credited on such deposits.
The beneficiary may withdraw the balance on deposit at any time or request to
receive payment in accordance with any of the available income phase payment
options. See "The Income Phase--Payment Options".
The Value of the Death Benefit. The death benefit will be based on your account
value as calculated on the next valuation following the date on which we
receive proof of death in good order. Interest, if any, will be paid from the
date of death at a rate no less than required by law. For amounts held in the
Guaranteed Accumulation Account (GAA), any positive aggregate market value
adjustment (the sum of all market value adjustments calculated due to a
withdrawal) will be included in your account value. If a negative market value
adjustment applies, it would be deducted only if the death benefit is withdrawn
more than six months after your death. We describe the market value adjustment
in Appendix I and in the GAA prospectus.
Tax Code Requirements. The Tax Code requires distribution of death benefit
proceeds within a certain period of time. Failure to begin receiving death
benefit payments within those time periods can result in tax penalties.
Regardless of the method of payment, death benefit proceeds will generally be
taxed to the beneficiary in the same manner as if you had received those
payments. See "Taxation" for additional information.
24
<PAGE>
We may have used the following terms in prior prospectuses:
Annuity Phase--Income Phase
Annuity Option--Payment Option
Annuity Payment--Income Phase Payment
Annuitization--Initiating Income Phase Payments
The Income Phase
- --------------------------------------------------------------------------------
During the income phase you receive payments from your accumulated account
value.
Initiating Income Phase Payments. At least 30 days prior to the date you want
to start receiving payments, the contract holder or you, if permitted by the
plan, must notify us in writing of the following:
> Start date;
> Income Phase Payment option (see the income phase payment options table in
this section);
> Income Phase Payment frequency (i.e., monthly, quarterly, semi-annually or
annually);
> Choice of fixed or variable payments;
> Selection of an assumed net investment rate (only if variable payments are
elected); and
> Under some plans, certification from your employer and/or submission of the
appropriate forms is also required.
The account will continue in the accumulation phase until the contract holder
or you, as applicable, properly initiate income phase payments. Once an income
phase payment option is selected, it may not be changed; however, certain
options allow you to withdraw a lump sum.
What Affects Income Phase Payment Amounts? Some of the factors that may affect
income phase payment amounts include: your age, your account value, the income
phase payment option selected, number of guaranteed payments (if any) selected,
and whether variable or fixed payments are selected.
Fixed Payments. Amounts funding fixed income phase payments will be held in the
Company's general account. Fixed payment amounts do not vary over time.
Variable Payments. Amounts funding your variable income phase payments will be
held in the subaccount(s) selected. The contracts may restrict the subaccounts
available, the number of investment options to be selected and how many
transfers, if any, are allowed among options during the income phase. For
variable income phase payments, an assumed net investment rate must be selected.
Payments from the Fixed Plus Account. If a nonlifetime payment option is
selected, payments from the Fixed Plus Account may only be made on a fixed
basis.
Assumed Net Investment Rate. If you select income phase payments, an assumed
net investment rate must also be selected. If you select a 5% rate, your first
payment will be higher, but subsequent income phase payments will increase only
if the investment performance of the subaccounts selected is greater than 5%
annually, after deduction of fees. Payment amounts will decline if the
investment performance is less than 5%, after deduction of fees.
If a 3 1/2% rate is selected, your first income phase payment will be lower and
subsequent payments will increase more rapidly or decline more slowly
25
<PAGE>
depending upon the investment performance of the subaccounts selected. For more
information about selecting an assumed net investment rate, request a copy of
the Statement of Additional Information by calling us. See "Contract
Overview--Questions".
Required Minimum Payment Amounts. The income phase payment option selected must
meet the minimum stated in the contract.
> A first income phase payment of at least $20; or
> Total yearly income phase payments of at least $100.
If your account value is too low to meet these minimum payment amounts, the
contract holder, on your behalf, must elect a lump-sum payment.
Fees Deducted. If variable income phase payments are selected, we make a daily
deduction for mortality and expense risks from any amounts held in the
subaccounts. If you choose variable income phase payments and a nonlifetime
income phase option, we still make this deduction from the subaccounts
selected, even though we no longer assume any mortality risk for you. The
maximum mortality and expense risk charge during the income phase is 1.25% on
an annual basis of your account value invested in the subaccount.
We may also deduct a daily administrative charge from amounts held in the
separate account. We currently charge this under some contracts and reserve the
right to charge it under all others. The maximum amount is 0.25% on an annual
basis of your account value invested in the subaccount. If we are currently
imposing this fee under the contract issued in connection with your plan when
you enter the income phase, the fee will apply throughout the entire income
phase.
Death Benefit During the Income Phase. The death benefits that may be available
to a beneficiary are outlined in the income phase payment option table below.
If a lump-sum payment is due as a death benefit, we will make payment within
seven calendar days after we receive proof of death acceptable to us in good
order and the payment request in good order at our Home Office.
Taxation. To avoid certain tax penalties, you and any beneficiary must meet the
distribution rules imposed by the Tax Code. See "Taxation".
26
<PAGE>
Income Phase Payment Options
The following tables list the income phase payment options and accompanying
death benefits which may be available under the contracts. Some contracts
restrict the options and the terms available. Check with your contract holder
for details. We may offer additional income phase payment options under the
contract from time to time.
Terms Used in the Tables:
Annuitant: The person(s) on whose life expectancy the income phase payments are
calculated.
Beneficiary: The person designated to receive the death benefit payable under
the contract.
- --------------------------------------------------------------------------------
Lifetime Income Phase Payment Options
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Length of Payments: For as long as the annuitant lives. It is possible that only one payment will be
made should the annuitant die prior to the second payment's due date.
Life Income Death Benefit--None: All payments end upon the annuitant's death.
- ------------------------------------------------------------------------------------------------------------------------------
Length of Payments: For as long as the annuitant lives, with payments guaranteed for a choice of
5-20 years or as otherwise specified in the contract.
Life Income-- Death Benefit--Payment to the Beneficiary: If the annuitant dies before we have made all the
Guaranteed guaranteed payments, we will continue to pay the beneficiary the remaining payments. Unless
Payments prohibited by a prior election of the contract holder, the beneficiary may elect to receive a lump-
sum payment equal to the present value of the remaining guaranteed payments.
- ------------------------------------------------------------------------------------------------------------------------------
Length of Payments: For as long as either annuitant lives. It is possible that only one payment will
be made should both annuitants die before the second payment's due date.
Continuing Payments:
(a) This option allows a choice of 100%, 66 2/3% or 50% of the payment to continue to the
Life Income-- surviving annuitant after the first death; or
Two Lives (b) 100% of the payment to continue to the annuitant on the second annuitant's death, and 50%
of the payment to continue to the second annuitant on the annuitant's death.
Death Benefit--None: All Payments end after the deaths of both annuitants.
- ------------------------------------------------------------------------------------------------------------------------------
Length of Payments: For as long as either annuitant lives, with payments guaranteed for a
minimum of 120 months, or as otherwise specified in the contract.
Life Income-- Continuing Payments: 100% of the payment to continue to the surviving annuitant after the first
Two Lives-- death.
Guaranteed Death Benefit--Payment to the Beneficiary: If both annuitants die before the guaranteed
Payments payments have all been paid, we will continue to pay the beneficiary the remaining payments.
Unless prohibited by a prior election of the contract holder, the beneficiary may elect to receive
a lump-sum payment equal to the present value of the remaining guaranteed payments.
- ------------------------------------------------------------------------------------------------------------------------------
Life Income--
Cash Refund Length of Payments: For as long as the annuitant lives.
Option (limited Death Benefit--Payment to the Beneficiary: Following the annuitant's death, we will pay a lump-
availability--fixed sum payment equal to the amount originally applied to the income phase payment option (less
payment only) any premium tax) and less the total amount of fixed income phase payments paid.
- ------------------------------------------------------------------------------------------------------------------------------
Life Income--
Two Lives--Cash Length of Payments: For as long as either annuitant lives.
Refund Option Continuing Payment: 100% of the payment to continue after the first death.
(limited Death Benefit--Payment to the Beneficiary: When both annuitants die, we will pay a lump-sum
availability--fixed payment equal to the amount applied to the income phase payment option (less any premium
payment only) tax) and less the total amount of fixed income phase payments paid.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
Nonlifetime Income Phase Payment Options
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Length of Payments: Payments generally may be fixed or variable and may be made for 3-30 years.
However, for amounts held in the Fixed Plus Account during the accumulation phase, the
payment must be on a fixed basis and must be for at least 5 years. In certain cases a lump-sum
Nonlifetime-- payment may be requested at any time (see below).
Guaranteed Death Benefit--Payment to the Beneficiary: If the annuitant dies before we make all the
Payments guaranteed payments, we will continue to pay the beneficiary the remaining payments. Unless
prohibited by a prior election of the contract holder, the beneficiary may elect to receive a lump-
sum payment equal to the present value of the remaining guaranteed payments. We will not
impose any early withdrawal charge.
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Lump-sum Payment: If the Nonlifetime--Guaranteed Payments option is elected
with variable payments, you may request at any time that all or a portion of
the present value of the remaining payments be paid in one lump sum. A lump sum
elected before three years of income phase payments have been completed will be
treated as a withdrawal during the accumulation phase and we will charge any
applicable early withdrawal charge. If the early withdrawal charge is based on
completed purchase payment periods, each year that passes after income payments
begin will be treated as a completed purchase payment period, even if no
additional purchase payments are made. See "Fees--Early Withdrawal Charge."
Lump-sum payments will be sent within seven calendar days after we receive the
request for payment in good order at our Home Office.
Calculation of Lump-sum Payments: If a lump-sum payment is available to a
beneficiary or to you in the income phase payment options above, the rate we
use to calculate the present value of the remaining guaranteed payments is the
same rate we use to calculate the income phase payments (i.e., the actual fixed
rate used for the fixed payments, or the 31/2% or 5% assumed net investment
rate for variable payments).
- --------------------------------------------------------------------------------
28
<PAGE>
In This Section
> Introduction
> Your Retirement Plan
> Withdrawals and other Distributions
> Taxation of Distributions
> Withholding for Federal Income Tax Liability
> Minimum Distribution Requirements
> Contribution and Distribution Limits
> 415(m) Arrangements
> Bona Fide Severance Pay Plans
> Taxation of the Company
When consulting a tax adviser, be certain that he or she has expertise in the
Tax Code sections applicable to your tax concerns.
Taxation
- --------------------------------------------------------------------------------
Introduction
This section discusses our understanding of current federal income tax laws
affecting the contract. You should keep the following in mind when reading it:
>Your tax position (or the tax position of the beneficiary, as applicable)
determines federal taxation of amounts held or paid out under the contract.
>Tax laws change. It is possible that a change in the future could affect
contracts issued in the past.
>This section addresses federal income tax rules and does not discuss federal
estate and gift tax implications, state and local taxes or any other tax
provisions.
>We do not make any guarantee about the tax treatment of the contract or
transactions involving the contract.
- --------------------------------------------------------------------------------
We do not intend this information to be tax advice. For advice about the
effect of federal income taxes or any other taxes on amounts held or paid out
under the contract, consult a tax adviser. For more comprehensive information
contact the Internal Revenue Service.
- --------------------------------------------------------------------------------
Your Retirement Plan
The tax rules applicable to retirement plans vary according to plan type, and
terms and conditions of the plan. To understand what tax rules apply, you need
to know the code section under which your plan qualifies. Contact your plan
sponsor, local representative or the Company to learn which code section
applies to your plan.
Plan Types. The contract is designed for use with deferred compensation plans
that qualify under code section 457 or non-section 457 deferred compensation
plans. Code section 457 provides for certain deferred compensation plans. These
plans may be offered by state governments, local governments, political
subdivisions, agencies, instrumentalities and certain affiliates of such
entities, and non-governmental tax exempt organizations. A code section 457
plan may be either a 457(b) (eligible) plan or a 457 (f) (ineligible) plan.
Either type of plan may permit participants to specify the form of investment
for their deferred compensation account. A non-section 457 deferred
compensation plan may be either a deferred compensation plan of a tax-exempt
employer that is "grandfathered" and not subject to 457 rules, or a deferred
compensation plan of a for-profit employer. The contract may also be used with
code section 415(m) arrangements.
You will not generally pay taxes on any earnings from the annuity contract
described in this prospectus until they are withdrawn (or otherwise made
available to you or a beneficiary). Tax qualified arrangements under Tax Code
section 457 and other types of deferred compensation arrangements also
generally defer payment of taxes of earnings until they are withdrawn (or
otherwise made available to you or a beneficiary), (see "Taxation of
Distributions" later in this "Taxation" section for a discussion of how
distributions under the plan are taxed). When an annuity contract is used to
fund one of these tax-qualified retirement arrangements, you should know that
the annuity contract does not provide any additional tax deferral of earnings
29
<PAGE>
beyond the tax deferral provided by the tax-qualified retirement arrangement.
However, annuities do provide other features and benefits which may be valuable
to you. You should discuss your alternatives with your financial
representative.
The Contract and Retirement Plans. We make this contract available to plans
subject to code section 457 only if a non-governmental employer sponsors the
plan. Under such plans, as well as non-section 457 deferred compensation plans,
all amounts of deferred compensation, all property and rights purchased with
such amounts and all income attributable to such amounts, property and rights
remains solely the property and rights of the employer and is subject to the
claims of the employer's general creditors. Contract holders and contract
participants are responsible for determining that contributions, distributions
and other transactions satisfy applicable laws. Legal counsel and a tax adviser
should be consulted regarding the suitability of the contract.
Because the plan is not part of the contract, we are not bound by any plan's
terms or conditions.
Withdrawals and Other Distributions
Certain tax rules apply to distributions from the contract. A distribution is
any amount taken from the contract including withdrawals, income payments,
transfers and death benefit proceeds.
We report the taxable portion of all distributions to the IRS.
Taxation of Distributions
457(b) Plans. All amounts received under a 457(b) plan are includible in gross
income when paid or otherwise made available to you or your beneficiary.
457(f) Plans. Compensation deferred under a 457(f) plan is includible in gross
income in the first year when it is no longer subject to a "substantial risk of
forfeiture" as defined by the Tax Code.
Non-Section 457 Deferred Compensation Plans. Compensation deferred under a
non-Section 457 deferred compensation plan is includible in gross income in the
first year when paid or otherwise made available to you or your beneficiary.
Taxation of Death Benefit Proceeds. In general, payments received by your
beneficiaries after your death are taxed in the same manner as if you had
received those payments.
Withholding for Federal Income Tax Liability
Any distributions under the contracts are generally subject to withholding.
Federal income tax liability rates vary according to the type of distribution
and the recipient's tax status.
All distributions, except death benefit proceeds, are subject to mandatory
federal income tax withholding as wages. No withholding is required on payments
to beneficiaries.
Non-resident Aliens. If you or a beneficiary is a non-resident alien, then any
withholding is governed by code section 1441 based on the individual's
citizenship, the country of domicile and treaty status.
30
<PAGE>
Minimum Distribution Requirements
To avoid certain tax penalties, you and any beneficiary must meet the minimum
distribution requirements imposed by the Tax Code. These requirements only
apply to 457(b) plans. These rules may dictate one or more of the following:
> Start date for distributions;
> The time period in which all amounts in your account(s) must be distributed;
and/or
> Distribution amounts.
Start Date. Generally, you must begin receiving distributions by April 1 of the
calendar year following the calendar year in which you attain age 70 1/2 or
retire, whichever occurs later, unless you are a 5% owner, in which case such
distributions must begin by April 1 of the calendar year following the calendar
year in which you attain age 70 1/2.
Time Period. We must pay out distributions from the contract over one of the
following time periods:
> Over your life or the joint lives of you and your beneficiary, or
> Over a period not greater than your life expectancy or the joint life
expectancies of you and your beneficiary.
Amount. Any distribution from a 457(b) plan, payable over a period of more than
one year, must be made in substantially non-increasing amounts.
50% Excise Tax. If you fail to receive the minimum required distribution for
any tax year, a 50% excise tax is imposed on the required amount that was not
distributed.
Minimum Distribution of Death Benefit Proceeds. The following only applies to
457(b) plans. Different distribution requirements apply if your death occurs:
> After you begin receiving minimum distributions under the contract, or
> Before you begin receiving such distributions.
If your death occurs after you begin receiving minimum distributions under the
contract, distributions must be made at least as rapidly as under the method in
effect at the time of your death. Code section 401(a)(9) provides specific
rules for calculating the minimum required distributions at your death. The
rules differ, dependent upon the following:
> Whether your minimum required distribution was calculated each year based on
your single life expectancy or the joint life expectancies of you and your
beneficiary; and
> Whether life expectancy was recalculated.
The rules are complex and any beneficiary should consult with a tax adviser
before electing the method of calculation to satisfy the minimum distribution
requirements.
Should you die before you begin receiving minimum distributions under the
contract, your entire balance must be distributed by December 31 of the
calendar year containing the fifth anniversary of the date of your death. For
example, if you die on September 1, 2000, your entire balance must be
distributed to the beneficiary by December 31, 2005. However, if the
distribution begins by
31
<PAGE>
December 31 of the calendar year following the calendar year of your death,
then payments may be made in one of the following time-frames:
> Over the life of the beneficiary, or
> Over a period not extending beyond the life expectancy of the beneficiary.
For 457(b) plans, if the beneficiary is not your spouse, the time-frame may not
exceed fifteen years.
Start Dates for Spousal Beneficiaries. If the beneficiary is your spouse, the
distribution must begin on or before the later of the following:
> December 31 of the calendar year following the calendar year of your death;
or
> December 31 of the calendar year in which you would have attained age 70 1/2.
Contribution and Distribution Limits
457(b) Plan. If your employer's plan is a 457(b) plan, the Tax Code imposes a
maximum limit on annual contributions to your account(s) that may be excluded
from your gross income. For Section 457(b) plan participants, such limit is
generally the lesser of $8,000, as adjusted to reflect changes in the cost of
living, or 33% of your includible compensation (25% of gross compensation).
Under a 457(b) plan, amounts may not be made available to you earlier than (1)
the calendar year you attain age 70 1/2, (2) when you separate from service with
the employer, or (3) when you are faced with an unforeseeable emergency. A
457(b) plan may permit a one-time in-service distribution if the total amount
payable to the participant does not exceed $5,000 and no amounts have been
deferred by the participant during the 2-year period ending on the date of
distribution.
457(f) Plan. A 457(f) plan is not subject to restrictions on contributions or
distributions, but must contain a "substantial risk of forfeiture" as defined
by the Tax Code. Generally, substantial risk of forfeiture means that your
right to receive deferred compensation is dependent upon your performance of
future services to an employer or other entity.
Non-Section 457 Deferred Compensation Plans. Non-Section 457 Deferred
Compensation Plans are not subject to restrictions on contributions or
distributions.
415(m) Arrangements
If you participate in the contract through a qualified governmental excess
benefit arrangement, defined in code section 415(m), the amounts provided under
the contract may be subject to the same requirements as those applied to code
section 457(b) plans described above, except that the limits described in
"Contribution and Distribution Limits" do not apply. If the code section 415(m)
arrangement is not designed to meet the requirements of code section 457(b),
then the amounts provided under the contract are taxed in accordance with code
section 451 and are generally taxable when paid or made available to you.
Bona Fide Severance Pay Plans
If you participate in the contract through certain bona fide severance pay
plans, described in code section 457(e)(11), amounts provided under the
contract are not generally taxable until paid or made available to you.
However,
32
<PAGE>
because these plans are not clearly defined in the Code, it may be determined
that your plan does not qualify as a bona fide severance pay plan. If the plan
does not qualify, then amounts provided under the contract are taxable in the
year in which they are deferred. Because of this lack of clarity, it is
imperative that you consult your tax adviser for guidance regarding taxation.
Taxation of the Company
We are taxed as a life insurance company under the Tax Code. Variable Annuity
Account B is not a separate entity from us. Therefore, it is not taxed
separately as a "regulated investment company," but is taxed as part of the
Company.
We automatically apply investment income and capital gains attributable to the
separate account to increase reserves under the contracts. Because of this,
under existing federal tax law we believe that any such income and gains will
not be taxed to the extent that such income and gains are applied to increase
reserves under the contracts. In addition, any foreign tax credits attributable
to the separate account will be first used to reduce any income taxes imposed
on the separate account before being used by the Company.
In summary, we do not expect that we will incur any federal income tax
liability attributable to the separate account and we do not intend to make any
provision for such taxes. However, changes in federal tax laws and/or their
interpretation may result in our being taxed on income or gains attributable to
the separate account. In this case, we may impose a charge against the separate
account (with respect to some or all of the contracts) to set aside provisions
to pay such taxes. We may deduct this amount from the separate account,
including from your account value invested in the subaccounts.
Other Topics
- --------------------------------------------------------------------------------
The Company
Aetna Life Insurance and Annuity Company (the Company, we, us, our) issues the
contracts described in this prospectus and is responsible for providing each
contract's insurance and annuity benefits.
We are a stock life insurance company organized under the insurance laws of the
State of Connecticut in 1976 and an indirect wholly-owned subsidiary of Aetna
Inc. Through a merger, our operations include the business of Aetna Variable
Annuity Life Insurance Company (formerly known as Participating Annuity Life
Insurance Company, an Arkansas life insurance company organized in 1954).
We are engaged in the business of issuing life insurance and annuities. Our
principal executive offices are located at:
151 Farmington Avenue
Hartford, Connecticut 06156
Variable Annuity Account B
We established Variable Annuity Account B (the separate account) in 1976 as a
segregated asset account to fund our variable annuity contracts. The separate
33
<PAGE>
account is registered as a unit investment trust under the Investment Company
Act of 1940 (the "40 Act"). It also meets the definition of "separate account"
under the federal securities laws.
The separate account is divided into "subaccounts." These subaccounts invest
directly in shares of a corresponding fund.
Although we hold title to the assets of the separate account, such assets are
not chargeable with the liabilities of any other business that we conduct.
Income, gains or losses of the separate account are credited to or charged
against the assets of the separate account without regard to other income,
gains or losses of the Company. All obligations arising under the contracts are
obligations of the Company.
Performance Reporting
We may advertise different types of historical performance for the subaccounts
including:
> standardized average annual total returns; and
> non-standardized average annual total returns.
We may also advertise certain ratings, rankings or other information related to
the Company, the subaccounts or the funds. For further details regarding
performance reporting and advertising, request a Statement of Additional
Information at the number listed in "Contract Overview--Questions."
Standardized Average Annual Total Returns. We calculate standardized average
annual total returns according to a formula prescribed by the SEC. This shows
the percentage return applicable to $1,000 invested in the subaccount over the
most recent one, five and 10-year periods. If the investment option was not
available for the full period, we give a history from the date money was first
received in that option under the separate account. We include all recurring
charges during each period (e.g., mortality and expense risk charges, annual
maintenance fees, administrative expense charges (if any) and any applicable
early withdrawal charges).
Non-Standardized Average Annual Total Returns. We calculate non-standardized
average annual total returns in a similar manner as that stated above, except
we do not include the deduction of any applicable early withdrawal charge. Some
non-standardized returns may also exclude the effect of a maintenance fee. If
we reflected these charges in the calculation, they would decrease the level of
performance reflected by the calculation. Non-standardized returns may also
include performance from the Fund's inception date, if that date is earlier
than the one we use for standardized returns.
Voting Rights
Each of the subaccounts holds shares in a fund and each is entitled to vote at
regular and special meetings of that fund. Under our current view of applicable
law, we will vote the shares for each subaccount as instructed by persons
having a voting interest in the subaccount. Under the contracts described in
this prospectus, the contract holder, not the plan participants, has all voting
rights. We will vote shares for which instructions have not been received in
the same proportion as those for which we received instructions. Each person
who has a voting interest in the separate account will receive periodic reports
relating to the funds in which he or she has an interest, as
34
<PAGE>
well as any proxy materials and a form on which to give voting instructions.
Voting instructions will be solicited by a written communication at least 14
days before the meeting.
The number of votes (including fractional votes) the contract holder is
entitled to direct will be determined as of the record date set by any fund the
contract holder invests in through the subaccounts.
> During the accumulation phase, the number of votes is equal to the portion of
the account value invested in the fund, divided by the net asset value of one
share of that fund.
> During the income phase, the number of votes is equal to the portion of
reserves set aside for the contract's share of the fund, divided by the net
asset value of one share of that fund.
Contract Distribution
The Company will serve as the principal underwriter for the securities sold by
this prospectus. The Company is registered as a broker-dealer with the SEC and
is a member of the National Association of Securities Dealers, Inc.
As principal underwriter, the Company will enter into arrangements with one or
more registered broker-dealers, including at least one affiliate of the
Company, to offer and sell the contracts described in this prospectus. We call
these entities "distributors."
We and one or more of our affiliates may also sell the contracts directly. All
individuals offering and selling the contracts must be registered
representatives of a broker-dealer and must be licensed as insurance agents to
sell variable annuity contracts.
Commission Payments. We may pay commissions to persons who offer and sell the
contracts. The maximum percentage amount we ever pay with respect to a given
purchase payment is the first-year percentage which ranges from 1% to 6% of the
first year of payments to an account. We may also pay renewal commissions on
payments made after the first year and, under group contracts, asset-based
service fees. The average of all commissions and asset-based service fees paid
is estimated to equal approximately 3% of the total payments made over the life
of an average contract. Some sales personnel may receive various types of
non-cash compensation as special sales incentives, including trips and
educational and/or business seminars. However, any such compensation will be
paid in accordance with NASD rules. In addition, we may provide additional
compensation to the Company's supervisory and other management personnel if the
overall amount of investments in funds advised by the Company or its affiliates
increases over time.
We may reimburse the distributor for certain expenses. The name of the
distributor and the registered representative responsible for your account are
stated in your enrollment materials. Commissions and sales related expenses are
paid by us and are not deducted from payments to your account.
Third Party Compensation Arrangements. Occasionally, we may:
> Pay commissions and fees to distributors affiliated or associated with the
contract holder, you and/or other contract participants; and/or
35
<PAGE>
> Enter into agreements with entities associated with the contract holder, you
and/or other participants. Through such agreements, we may pay the entities
for certain services in connection with administering the contract.
In both these circumstances there may be an understanding that the distributor
or entities would endorse us as a provider of the contract. You will be
notified if you are purchasing a contract that is subject to these
arrangements.
Contract Modification
We may change the contract as required by federal or state law. In addition, we
may, upon 30 days' written notice to the contract holder, make other changes to
group contracts that would apply only to individuals who become participants
under that Contract after the effective date of such changes. If the group
contract holder does not agree to a change, we reserve the right to refuse to
establish new accounts under the Contract. Certain changes will require the
approval of appropriate state or federal regulatory authorities.
Legal Matters and Proceedings
We are aware of no material legal proceedings pending which involve the
separate account as a party or which would materially affect the separate
account. The validity of the securities offered by this prospectus has been
passed upon by Counsel to the Company.
In recent years, several life insurance and annuity companies have been named
as defendants in lawsuits, including class action lawsuits, relating to life
insurance and annuity pricing and sales practices. A purported class action
complaint was filed in the Circuit Court of Lauderdale County, Alabama on
March 28, 2000 by Loretta Shaner against the Company (the "Shaner Complaint").
The Shaner Complaint seeks unspecified compensatory damages from the Company and
unnamed affiliates of the Company. The Shaner Complaint claims that the
Company's sale of deferred annuity products for use as investments in
tax-deferred contributory retirement plans (e.g., IRAs) is improper. This
litigation is in the preliminary stages. The Company intends to defend the
action vigorously.
The Company also is a party to other litigation and arbitration proceedings in
the ordinary course of its business, none of which is expected to have a
material adverse effect on the Company.
Payment Delay or Suspension
We reserve the right to suspend or postpone the date of any payment of benefits
or values under the following circumstances:
(a) on any valuation date when the New York Stock Exchange is closed (except
customary weekend and holiday closings) when trading on the Exchange is
restricted;
(b) when an emergency exists as determined by the SEC so that disposal of the
securities held in the subaccounts is not reasonably practicable or it is not
reasonably practicable fairly to determine the value of the subaccount's
assets; or
(c) during any other periods the SEC may, by order, permit for the protection
of investors.
The conditions under which restricted trading or an emergency exists shall be
determined by the rules and regulations of the SEC.
36
<PAGE>
Transfer of Ownership; Assignment
An assignment of a contract will only be binding on us if it is made in writing
and sent to us at our Home Office. We will use reasonable procedures to confirm
that the assignment is authentic, including verification of signature. If we
fail to follow our own procedures, we will be liable for any losses to you
directly resulting from the failure. Otherwise, we are not responsible for the
validity of any assignment. The rights of the contract holder and the interest
of the annuitant and any beneficiary will be subject to the rights of any
assignee we have on our records.
Intent to Confirm Quarterly
Under certain contracts, we will provide confirmation of scheduled transactions
quarterly rather than immediately to the participant.
Contents of the Statement of Additional Information
- --------------------------------------------------------------------------------
The Statement of Additional Information contains more specific information on
the separate account and the contract, as well as the financial statements of
the separate account and the Company. A list of the contents of the SAI is set
forth below:
General Information and History
Variable Annuity Account B
Offering and Purchase of Contracts
Performance Data
General
Average Annual Total Return Quotations
Income Phase Payments
Sales Material and Advertising
Independent Auditors
Financial Statements of the Separate Account
Financial Statements of Aetna Life Insurance and Annuity Company
You may request an SAI by calling the Company at the number listed in "Contract
Overview--Questions."
37
<PAGE>
Appendix I
Guaranteed Accumulation Account
- --------------------------------------------------------------------------------
The Guaranteed Accumulation Account (GAA) is a fixed interest option that may
be available during the accumulation phase under the contracts. This appendix
is only a summary of certain facts about GAA. Please read the GAA prospectus
before investing in this option.
In General. Amounts that you invest in GAA will earn a guaranteed interest rate
if amounts are left in GAA for the specified period of time. If you withdraw or
transfer those amounts before the specified period of time has elapsed, we may
apply a "market value adjustment," which may be positive or negative.
When you decide to invest money in GAA, you will want to contact your
representative or the Company to learn:
> The interest rate we will apply to the amounts that you invest in GAA.
We change this rate periodically, so be certain you know what rate we
guarantee on the day your account dollars are invested into GAA.
> The period of time your account dollars need to remain in GAA in order to
earn that rate.
You are required to leave your account dollars in GAA for a specified period
of time (guaranteed term), in order to earn the guaranteed interest rate.
Deposit Periods. A deposit period is the time during which we offer a specific
interest rate if you deposit dollars for a certain guaranteed term. For a
particular interest rate and guaranteed term to apply to your account dollars,
you must invest them during the deposit period during which that rate and term
are offered.
Interest Rates. We guarantee different interest rates, depending upon when
account dollars are invested in GAA. The interest rate we guarantee is an
annual effective yield; that means that the rate reflects a full year's
interest. We credit interest daily at a rate that will provide the guaranteed
annual effective yield over one year. The guaranteed interest rate will never
be less than the rate stated in the contract.
Fees and Other Deductions. If all or a portion of your account value in GAA is
withdrawn, you may incur the following:
> Market Value Adjustment (MVA)--as described in this appendix and in the GAA
prospectus
> Tax Penalties and/or Tax withholding--see "Taxation"
> Early Withdrawal Charge--see "Fees"
> Maintenance Fee--see "Fees"
We do not make deductions from amounts in the GAA to cover mortality and
expense risks. Rather, we consider these risks when determining the credited
rate.
Market Value Adjustment (MVA). If you withdraw or transfer your account value
from GAA before the guaranteed term is completed, an MVA may apply. The MVA
reflects the change in the value of the investment due to changes in interest
rates since the date of deposit. The MVA may be positive or negative.
> If interest rates at the time of withdrawal have increased since the date of
deposit, the value of the investment decreases and the MVA will be negative.
This could result in your receiving less than the amount you paid into GAA.
> If interest rates at the time of withdrawal have decreased since the date of
deposit, the value of the investment increases and the MVA will be positive.
Guaranteed Terms. The guaranteed term is the period of time account dollars
must be left in GAA in order to earn the guaranteed interest rate specified for
that guaranteed term. We offer different guaranteed terms at different times.
Check with your representative or the Company to learn the details about the
guaranteed term(s) currently being offered.
38
<PAGE>
In general we offer the following guaranteed terms:
> Short-term--three years or fewer; and
> Long-term--ten years or less, but greater than three years.
At the end of a guaranteed term, your contract holder or you if permitted may:
> Transfer dollars to a new guaranteed term;
> Transfer dollars to other available investment options; or
> Withdraw dollars.
Deductions may apply to withdrawals. See "Fees and Other Deductions" in this
section.
Transfer of Account Dollars. Generally, account dollars invested in GAA may be
transferred among guaranteed terms offered through GAA, and/or to other
investment options offered through the contract. However, transfers may not be
made during the deposit period in which your account dollars are invested in
GAA or for 90 days after the close of that deposit period. We will apply an MVA
to transfers made before the end of a guaranteed term.
Income Phase. GAA can not be used as an investment option during the income
phase. However, the contract holder (or you, if permitted) may notify us at
least 30 days in advance to elect a variable payment option and to transfer
your GAA account dollars to any of the subaccounts available during the income
phase.
39
<PAGE>
Appendix II
Fixed Account
- --------------------------------------------------------------------------------
The Fixed Account is an investment option available during the accumulation
phase under the contracts. Amounts allocated to the Fixed Account are held in
the Company's general account which supports insurance and annuity obligations.
- --------------------------------------------------------------------------------
Additional information about this option may be found in the contract.
- --------------------------------------------------------------------------------
General Disclosure. Interests in the Fixed Account have not been registered
with the SEC in reliance upon exemptions under the Securities Act of 1933, as
amended. Disclosure in this prospectus about the Fixed Account may be subject
to certain generally applicable provisions of the federal securities laws
relating to the accuracy and completeness of the statements. Disclosure in this
Appendix regarding the Fixed Account has not been reviewed by the SEC.
Interest Rates. The Fixed Account guarantees that amounts allocated to this
option will earn the minimum interest rate specified in the contract. We may
credit a higher interest rate from time to time, but the rate we credit will
never fall below the guaranteed minimum specified in the contract. Interest
rate guarantees are based on the claims-paying ability of the Company. Amounts
applied to the Fixed Account will earn the interest rate in effect at the time
money is applied. Amounts in the Fixed Account will reflect a compound interest
rate as credited by us. The rate we quote is an annual effective yield.
Our determination of credited interest rates reflects a number of factors,
including mortality and expense risks, interest rate guarantees, the investment
income earned on invested assets and the amortization of any capital gains
and/or losses realized on the sale of invested assets. Under this option, we
assume the risk of investment gain or loss by guaranteeing the amounts you
allocate to this option and promising a minimum interest rate and income phase
payment.
Withdrawals. Under certain emergency conditions, we may defer payment of any
withdrawal for a period of up to 6 months or as provided by federal law.
Additionally, if allowed by state law, we may pay withdrawals in equal payments
with interest, over a period not to exceed 60 months when:
(a) the Fixed Account withdrawal value for the contract or for the total of the
accounts under the contract exceeds $250,000 on the day before withdrawal;
and
(b) the sum of the current Fixed Account withdrawal and total of all Fixed
Account withdrawals from the contract or any account under the contract
within the past 12 calendar months exceeds 20% of the amount in the Fixed
Account on the day before current withdrawal.
The contract describes how we will determine the interest rate credited to
amounts held in the Fixed Account during the payment period, including the
minimum interest rate.
Charges. We do not make deductions from amounts in the Fixed Account to cover
mortality and expense risks. We consider these risks when determining the
credited rate. If you make a withdrawal from amounts in the Fixed Account, an
early withdrawal charge may apply. See "Fees--Early Withdrawal Charge."
Transfers. During the accumulation phase, you may transfer account dollars from
the Fixed Account to any other available investment option. We may vary the
dollar amount that you are allowed to transfer, but it will never be less than
10% of your account value held in the Fixed Account. This 10% limit does not
apply to amounts being transferred into the Fixed Plus Account (if available
under the contract).
By notifying our Home Office at least 30 days before income phase payments
begin, you may elect to have amounts transferred to one or more of the
subaccounts available during the income phase to provide variable payments.
40
<PAGE>
Appendix III
Fixed Plus Account
- --------------------------------------------------------------------------------
The Fixed Plus Account is an investment option available under some contracts.
Amounts allocated to the Fixed Plus Account are held in the Company's general
account which supports insurance and annuity obligations. We reserve the right
to limit investment in or transfers to the Fixed Plus Account.
- --------------------------------------------------------------------------------
Additional information about this option may be found in the contract.
- --------------------------------------------------------------------------------
General Disclosure. Interests in the Fixed Plus Account have not been
registered with the SEC in reliance upon exemptions under the Securities Act of
1933, as amended. Disclosure in this prospectus about the Fixed Plus Account
may be subject to certain generally applicable provisions of the federal
securities laws relating to the accuracy and completeness of the statements.
Disclosure in this Appendix regarding the Fixed Plus Account has not been
reviewed by the SEC.
Interest Rates. The Fixed Plus Account guarantees that amounts allocated to
this option will earn the minimum interest rate specified in the contract. We
may credit a higher interest rate from time to time, but the rate we credit
will never fall below the guaranteed minimum specified in the contract.
Interest rate guarantees are based on the claims-paying ability of the Company.
We credit amounts held in the Fixed Plus Account with a rate 0.25% higher than
the then-declared rate beginning in the tenth year after your account was
established. Amounts applied to the Fixed Plus Account will earn the interest
rate in effect at the time money is applied. Amounts in the Fixed Plus Account
will reflect a compound interest rate as credited by us. The rate we quote is
an annual effective yield. We do not make deductions from amounts in the Fixed
Plus Account to cover mortality and expense risks. We consider these risks in
determining the credited rate.
Our determination of credited interest rates reflects a number of factors,
including mortality and expense risks, interest rate guarantees, the investment
income earned on invested assets and the amortization of any capital gains
and/or losses realized on the sale of invested assets. Under this option, we
assume the risk of investment gain or loss by guaranteeing the amounts you
allocate to this option and promising a minimum interest rate and income phase
payment.
Request for Partial Withdrawal. Partial withdrawals are limited to 20% of the
amount held in the Fixed Plus Account on the day we receive a request in good
order at our Home Office. The 20% limit is reduced by any Fixed Plus
withdrawals, transfers or income phase payments made in last 12 months. In
calculating the 20% limit, we reserve the right to include payments made
through a Systematic Distribution Option.
The 20% limit is waived if a partial withdrawal is taken proportionally from
each investment option in which the account invests and is due to one or more
of the following:
> Election of any income phase payment option with fixed payments or a lifetime
payment option with variable payments; and/or
> Due to your death (the withdrawal must occur within six months after death
and can only be exercised once).
Request for Full Withdrawal. If the contract holder or you, if allowed by the
plan, request a full withdrawal of your Fixed Plus Account value, we will pay
any amounts held in the Fixed Plus Account, with interest, in five annual
payments that will be equal to:
> One-fifth of the Fixed Plus Account value on the day we receive the request,
reduced by any Fixed Plus Account withdrawals, transfers or income phase
payments made during the past 12 months
> One-fourth of the remaining Fixed Plus Account value 12 months later
> One-third of the remaining Fixed Plus Account value 12 months later
> One-half of the remaining Fixed Plus Account value 12 months later, and
> The balance of the Fixed Plus Account value 12 months later
A full withdrawal may be canceled at any time before the end of the
five-payment period.
41
<PAGE>
Once we receive a request for full withdrawal, no further withdrawals or
transfers will be permitted from Fixed Plus Account.
We will waive the above full withdrawal five-payment period if full withdrawal
is made due to any of the following:
> Your death before income phase payments have begun (request must be received
within 6 months after date of death); or
> Election of any income phase payment option with fixed payments or a lifetime
payment option with variable payments; or
> Your account value in the Fixed Plus Account value is $3,500 or less and no
withdrawals, transfers or income phase payments have been made from your
account within the past 12 months.
Charges. We do not make deductions from amounts in the Fixed Plus Account to
cover mortality and expense risks. We consider these risks when determining the
credited rate.
Transfers. Transfers are limited to 20% of the amount held in the Fixed Plus
Account on the day a request in good order is received at our Home Office. The
20% is reduced by any Fixed Plus Account withdrawals, transfers or income phase
payments made in past 12 months. We reserve the right to include payments made
through a Systematic Distribution Option in calculating the 20% limit. The 20%
limit will be waived if your account value in Fixed Plus Account is $1,000 or
less.
Income Phase. Amounts accumulating under the Fixed Plus Account can be
transferred to the subaccounts to fund variable lifetime income options during
the income phase. However, Fixed Plus Account values may not be used to fund
nonlifetime income options with variable payments.
Systematic Withdrawal Option (SWO). SWO described in "Systematic Distribution
Options," may not be elected if you have requested a Fixed Plus Account
transfer or withdrawal within the past 12 months.
42
<PAGE>
Appendix IV
Fund Descriptions
- --------------------------------------------------------------------------------
The investment results of the mutual funds (funds) are likely to differ
significantly and there is no assurance that any of the funds will achieve
their respective investment objectives. Shares of the funds will rise and fall
in value and you could lose money by investing in the funds. Investments in the
funds are not bank deposits and are not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Except as noted,
all funds are diversified, as defined under the Investment Company Act of 1940.
>Aetna Balanced VP, Inc. seeks to maximize investment return, consistent with
reasonable safety of principal by investing in a diversified portfolio of one
or more of the following asset classes: stocks, bonds, and cash equivalents,
based on the investment adviser's judgment of which of those sectors or mix
thereof offers the best investment prospects.(1)
>Aetna Income Shares d/b/a Aetna Bond VP seeks to maximize total return,
consistent with reasonable risk, through investments in a diversified
portfolio consisting primarily of debt securities. It is anticipated that
capital appreciation and investment income will both be major factors in
achieving total return.(1)
>Aetna Variable Fund d/b/a Aetna Growth and Income VP seeks to maximize total
return through investments in a diversified portfolio of common stocks and
securities convertible into common stock. It is anticipated that capital
appreciation and investment income will both be major factors in achieving
total return.(1)
>Aetna Variable Encore Fund d/b/a Aetna Money Market VP seeks to provide high
current return, consistent with preservation of capital and liquidity, through
investment in high-quality money market instruments. An investment in the fund
is neither insured nor guaranteed by the U.S. Government.(1)
>Aetna Generation Portfolios, Inc.--Aetna Ascent VP seeks to provide capital
appreciation. The Portfolio is managed for investors who generally have an
investment horizon exceeding 15 years and who have a high level of risk
tolerance.(1)
>Aetna Generation Portfolios, Inc.--Aetna Crossroads VP seeks to provide total
return (i.e., income and capital appreciation, both realized and unrealized).
The Portfolio is managed for investors who generally have an investment
horizon exceeding 10 years and who have a moderate level of risk tolerance.(1)
>Aetna Generation Portfolios, Inc.--Aetna Legacy VP seeks to provide total
return consistent with preservation of capital. The Portfolio is managed for
investors who generally have an investment horizon exceeding five years and
who have a low level of risk tolerance.(1)
>Aetna Variable Portfolios, Inc.--Aetna Growth VP seeks growth of capital
through investment in a diversified portfolio consisting primarily of common
stocks and securities convertible into common stocks believed to offer growth
potential.(1)
>Aetna Variable Portfolios, Inc.--Aetna High Yield VP seeks high current income
and growth of capital primarily through investment in a diversified portfolio
of fixed-income securities rated lower than BBB- by Standard and Poor's
Corporation or lower than Baa3 by Moody's Investors Service, Inc.(1)
>Aetna Variable Portfolios, Inc.--Aetna Index Plus Large Cap VP seeks to
outperform the total return performance of the Standard & Poor's 500 Composite
Index (S&P 500), while maintaining a market level of risk.(1)
>Aetna Variable Portfolios, Inc.--Aetna Index Plus Mid Cap VP seeks to
outperform the total return performance of the Standard & Poor's MidCap 400
Index (S&P 400), while maintaining a market level of risk.(1)
>Aetna Variable Portfolios, Inc.--Aetna Index Plus Small Cap VP seeks to
outperform the total return performance of the Standard & Poor's SmallCap 600
Index (S&P 600), while maintaining a market level of risk.(1)
>Aetna Variable Portfolios, Inc.--Aetna International VP seeks long-term
capital growth primarily through investment in a diversified portfolio of
common stocks principally traded in countries outside of the United States.
Aetna International VP will not target any given level of current income.(1)
>Aetna Variable Portfolios, Inc.--Aetna Real Estate Securities VP seeks maximum
total return primarily through investment in a diversified portfolio of equity
securities of real estate companies, the majority of which are real estate
investment trusts (REITs).(1)
43
<PAGE>
>Aetna Variable Portfolios, Inc.--Aetna Small Company VP seeks growth of
capital primarily through investment in a diversified portfolio of common
stocks and securities convertible into common stocks of companies with smaller
market capitalizations.(1)
>Aetna Variable Portfolios, Inc.--Aetna Technology VP seeks long-term capital
appreciation.(1)(a)
>Aetna Variable Portfolios, Inc.--Aetna Value Opportunity VP seeks growth of
capital primarily through investment in a diversified portfolio of common
stocks and securities convertible into common stock.(1)
>AIM V.I. Capital Appreciation Fund seeks growth of capital through investment
in common stocks, with emphasis on medium- and small-sized growth
companies.(2)
>AIM V.I. Growth Fund seeks growth of capital primarily by investing in
seasoned and better capitalized companies considered to have strong earnings
momentum.(2)
>AIM V.I. Growth and Income Fund seeks growth of capital with a secondary
objective of current income.(2)
>AIM V.I. Value Fund seeks to achieve long-term growth of capital by investing
primarily in equity securities judged by the fund's investment adviser to be
undervalued relative to the investment adviser's appraisal of the current or
projected earnings of the companies issuing the securities, or relative to
current market values of assets owned by the companies issuing the securities
or relative to the equity market generally. Income is a secondary
objective.(2)
>Calvert Social Balanced Portfolio is a nondiversified portfolio that seeks to
achieve a competitive total return through an actively managed portfolio of
stocks, bonds, and money market instruments which offer income and capital
growth opportunity and which satisfy the investment and social criteria
established for the Portfolio.(3)(a)
>Fidelity Variable Insurance Products Fund Equity-Income Portfolio seeks
reasonable income. The fund will also consider the potential for capital
appreciation. The fund seeks a yield which exceeds the composite yield on the
securities comprising the S&P 500.(4)
>Fidelity Variable Insurance Products Fund-- Growth Portfolio seeks capital
appreciation by investing primarily in common stocks of companies the
investment adviser believes have above-average growth potential.(4)
>Fidelity Variable Insurance Products Fund-- Overseas Portfolio seeks long-term
growth of capital by investing in foreign securities, primarily in common
stocks.(4)(a)
>Fidelity Variable Insurance Products Fund II-- Contrafund[RegTM] Portfolio
seeks long term capital appreciation by investing primarily in common stocks of
companies whose value the investment adviser believes is not fully recognized
by the public.(4)(b)
>Janus Aspen Series--Aggressive Growth Portfolio is a nondiversified portfolio
that seeks long-term growth of capital. The Portfolio pursues its investment
objective by investing primarily in common stocks selected for their growth
potential, and normally invests at least 50% of its equity assets in
medium-sized companies. Medium-sized companies are those whose market
capitalizations at the time of investment fall within the range of companies
in the S&P MidCap 400 Index. Market capitalization is a commonly used measure
of the size and value of a company. The market capitalizations within the
Index will vary, but as of December 31, 1999, they ranged from approximately
$170 million to $37 billion.(5)
>Janus Aspen Series--Balanced Portfolio seeks long-term capital growth,
consistent with preservation of capital and balanced by current income. The
Portfolio pursues its investment objective by normally investing 40%-60% of
its assets in securities selected primarily for their growth potential and
40%-60% of its assets in securities selected primarily for their income
potential. This Portfolio normally invests at least 25% of its assets in
fixed-income securities.(5)
>Janus Aspen Series--Flexible Income Portfolio seeks to obtain maximum total
return, consistent with preservation of capital. The Portfolio pursues its
investment objective by primarily investing in a wide variety of
income-producing securities such as corporate bonds and notes, government
securities and preferred stock. As a fundamental policy, the Portfolio will
invest at least 80% of its assets in income-producing securities. The
Portfolio may own an unlimited amount of high-yield/high-risk securities, and
these may be a big part of the portfolio. This Portfolio generates total
return from a combination of current income and capital appreciation, but
income is usually the dominant portion.(5)
>Janus Aspen Series--Growth Portfolio seeks long-term growth of capital in a
manner consistent with the preservation of capital. The Portfolio pursues
44
<PAGE>
its investment objective by investing primarily in common stocks selected for
their growth potential. Although the Portfolio can invest in companies of any
size, it generally invests in larger, more established issuers.(5)
>Janus Aspen Series--Worldwide Growth Portfolio seeks long-term growth of
capital in a manner consistent with the preservation of capital. The Portfolio
pursues its investment objective by investing primarily in common stocks of
companies of any size throughout the world. The Portfolio normally invests in
issuers from at least five different countries, including the United States.
The Portfolio may at times invest in fewer than five countries or even a
single country.(5)
>Lexington Natural Resources Trust is a nondiversified portfolio that seeks
long-term growth of capital through investment primarily in common stocks of
companies which own or develop natural resources and other basic commodities
or supply goods and services to such companies.(6)(a)
>Oppenheimer Global Securities Fund/VA seeks long-term capital appreciation by
investing a substantial portion of its assets in securities of foreign
issuers, "growth-type" companies, cyclical industries, and special situations
which are considered to have appreciation possibilities.(7)
>Oppenheimer Strategic Bond Fund/VA seeks a high level of current income
principally derived from interest on debt securities and seeks to enhance such
income by writing covered call options on debt securities.(7)
>Portfolio Partners, Inc. (PPI)--MFS Capital Opportunities Portfolio (formerly
known as PPI MFS Value Equity Portfolio) seeks capital appreciation.(8)(a)
>Portfolio Partners, Inc. (PPI)--MFS Emerging Equities Portfolio seeks
long-term growth of capital. (8)(a)
>Portfolio Partners, Inc. (PPI)--MFS Research Growth Portfolio seeks long-term
growth of capital and future income.(8)(a)
>Portfolio Partners, Inc. (PPI)--Scudder International Growth Portfolio seeks
long-term growth of capital.(8)(b)
>Portfolio Partners, Inc. (PPI)--T. Rowe Price Growth Equity Portfolio seeks
long-term capital growth, and secondarily, increasing dividend income. (8)(c)
Investment Adviser:
(1) Investment Adviser: Aeltus Investment Management, Inc.
(a) Elijah Asset Management, LLC (subadviser)
(2) Investment Adviser: A I M Advisors, Inc.
(3) Investment Adviser: Calvert Asset Management Company, Inc.
(a) NCM Capital Management, Inc. (subadviser)
(4) Investment Adviser: Fidelity Management & Research Company
(a) Fidelity Management & Research (U.K.) Inc. (subadviser)
Fidelity Management & Research Far East Inc. (subadviser)
Fidelity International Investment Advisors (subadviser)
Fidelity International Investment Advisors (U.K.) Limited
(subadviser)
Fidelity Investments Japan Limited (subadviser)
(b) Fidelity Management & Research (U.K.) Inc. (subadviser)
Fidelity Management & Research Far East Inc. (subadviser)
Fidelity Investments Japan Limited (subadviser)
(5) Investment Adviser: Janus Capital Corporation
(6) Investment Adviser: Lexington Management Corporation
(a) Market Systems Research Advisors, Inc. (subadviser)
(7) Investment Adviser: OppenheimerFunds, Inc.
(8) Investment Adviser: Aetna Life Insurance and Annuity Company
(a) Massachusetts Financial Services Company (subadviser)
(b) Scudder Kemper Investments, Inc. (subadviser)
(c) T. Rowe Price Associates, Inc. (subadviser)
45
<PAGE>
Appendix V
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<S> <C>
Table I--For Contracts With Total Separate Account Charges of 0.75% ........... 47
Table II--For Contracts With Total Separate Account Charges of 0.80% .......... 51
Table III--For Contracts With Total Separate Account Charges of 0.95% ......... 53
Table IV--For Contracts With Total Separate Account Charges of 1.25% .......... 54
Table V--For Contracts With Total Separate Account Charges of 1.50%
Including A 0.25% Administrative Expense Charge Beginning April 7, 1997 ..... 58
Table VI--For Contracts Containing Limits on Fees ............................. 60
</TABLE>
46
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE I
FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.75%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for each of the years in
the ten-year period ended December 31, 1999 (as applicable), is derived from
the financial statements of the separate account, which have been audited by
KPMG LLP, independent auditors. The financial statements and the independent
auditors' report thereon for the year ended December 31, 1999 are included in
the Statement of Additional Information. The accumulation unit values reflect a
mortality and expense risk charge of 1.25% until February 23, 1996, when the
mortality and expense risk charge was reduced to 0.75% during the accumulation
phase. It will increase to 1.25% during the income phase.
<TABLE>
<CAPTION>
1999 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $16.082 $15.535 $13.055 $10.652
Value at end of period $18.253 $16.082 $15.535 $13.055
Number of accumulation units
outstanding at end of period 129,605 104,608 90,134 35,959
AETNA BALANCED VP, INC
Value at beginning of period $22.244 $19.166 $15.765 $13.803
Value at end of period $25.081 $22.244 $19.166 $15.765
Number of accumulation units
outstanding at end of period 1,579,288 1,798,425 1,970,116 2,141,189
AETNA BOND VP
Value at beginning of period $14.475 $13.486 $12.546 $12.212
Value at end of period $14.260 $14.475 $13.486 $12.546
Number of accumulation units
outstanding at end of period 1,654,932 2,012,308 1,921,538 2,206,334
AETNA CROSSROADS VP
Value at beginning of period $15.312 $14.566 $12.483 $10.594
Value at end of period $16.750 $15.312 $14.566 $12.483
Number of accumulation units
outstanding at end of period 124,069 119,246 100,256 26,260
AETNA GROWTH VP
Value at beginning of period $18.067 $13.239(4)
Value at end of period $24.203 $18.067
Number of accumulation units
outstanding at end of period 626,397 428,697
AETNA GROWTH AND
INCOME VP
Value at beginning of period $25.265 $22.233 $17.246 $13.972
Value at end of period $29.444 $25.265 $22.233 $17.246
Number of accumulation units
outstanding at end of period 11,813,416 12,975,484 14,879,862 14,930,380
AETNA HIGH YIELD VP
Value at beginning of period $9.244 $9.941(6)
Value at end of period $9.822 $9.244
Number of accumulation units
outstanding at end of period 21,598 24,320
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $18.989 $14.538 $10.940 $10.000(7)
Value at end of period $23.427 $18.989 $14.538 $10.940
Number of accumulation units
outstanding at end of period 1,552,902 1,060,363 485,417 72,973
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $10.928 $9.950(8)
Value at end of period $12.561 $10.928
Number of accumulation units
outstanding at end of period 60,811 16,207
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $8.846 $9.407(6)
Value at end of period $9.727 $8.846
Number of accumulation units
outstanding at end of period 76,971 53,460
AETNA INTERNATIONAL VP
Value at beginning of period $9.798 $10.288(6)
Value at end of period $14.718 $9.798
Number of accumulation units
outstanding at end of period 44,538 29,000
<CAPTION>
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $10.000(1)
Value at end of period $10.652
Number of accumulation units
outstanding at end of period 16,791
AETNA BALANCED VP, INC
Value at beginning of period $10.971 $11.164 $10.286 $12.717(2) $10.882 $10.423
Value at end of period $13.803 $10.971 $11.164 $10.286 $12.717 $10.882
Number of accumulation units
outstanding at end of period 6,430,772 3,541,703 318,711 6,537 1,324,822 984,798
AETNA BOND VP
Value at beginning of period $10.457 $11.006 $10.160 $37.815(3) $32.066 $29.752
Value at end of period $12.212 $10.457 $11.006 $10.160 $37.815 $32.066
Number of accumulation units
outstanding at end of period 4,853,662 1,988,960 166,913 4,196 427,893 358,454
AETNA CROSSROADS VP
Value at beginning of period $10.000(1)
Value at end of period $10.594
Number of accumulation units
outstanding at end of period 16,953
AETNA GROWTH VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA GROWTH AND
INCOME VP
Value at beginning of period $10.698 $10.940 $10.378 $84.249(5) $67.496 $66.174
Value at end of period $13.972 $10.698 $10.940 $10.378 $84.249 $67.496
Number of accumulation units
outstanding at end of period 30,554,957 11,117,383 879,670 3,107 908,777 810,126
AETNA HIGH YIELD VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA INTERNATIONAL VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</TABLE>
47
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997 1996
---- ---- ---- -----
<S> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $14.266 $13.441 $11.826 $10.443
Value at end of period $15.164 $14.266 $13.441 $11.826
Number of accumulation units
outstanding at end of period 77,496 120,312 54,849 7,510
AETNA MONEY MARKET VP
Value at beginning of period $12.604 $12.041 $11.502 $11.007
Value at end of period $13.145 $12.604 $12.041 $11.502
Number of accumulation units
outstanding at end of period 2,521,960 2,102,275 2,066,545 2,421,519
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $8.903 $9.678(6)
Value at end of period $8.464 $8.903
Number of accumulation units
outstanding at end of period 60,993 23,760
AETNA SMALL
COMPANY VP
Value at beginning of period $13.751 $13.704 $13.211(11)
Value at end of period $17.859 $13.751 $13.704
Number of accumulation units
outstanding at end of period 177,817 90,092 2,408
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $16.169 $12.632(4)
Value at end of period $19.190 $16.169
Number of accumulation units
outstanding at end of period 93,802 91,722
AIM V.I. CAPITAL
APPRECIATION FUND
Value at beginning of period $9.979(12)
Value at end of period $13.801
Number of accumulation units
outstanding at end of period 11,915
AIM V.I. GROWTH FUND
Value at beginning of period $9.722(12)
Value at end of period $12.111
Number of accumulation units
outstanding at end of period 47,999
AIM V.I. GROWTH AND
INCOME FUND
Value at beginning of period $10.215(13)
Value at end of period $11.756
Number of accumulation units
outstanding at end of period 36,163
AIM V.I. VALUE FUND
Value at beginning of period $9.764(14)
Value at end of period $11.546
Number of accumulation units
outstanding at end of period 83,637
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $20.708 $17.944 $15.056 $13.480
Value at end of period $23.066 $20.708 $17.944 $15.056
Number of accumulation units
outstanding at end of period 37,046 35,544 31,512 33,352
FIDELITY VIP
EQUITY-INCOME
PORTFOLIO
Value at beginning of period $17.650 $15.930 $12.529 $11.054
Value at end of period $18.627 $17.650 $15.930 $12.529
Number of accumulation units
outstanding at end of period 519,885 630,682 744,774 544,657
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $19.430 $14.034 $11.451 $10.066
Value at end of period $26.504 $19.430 $14.034 $11.451
Number of accumulation units
outstanding at end of period 874,557 595,859 444,057 379,385
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $13.984 $12.496 $11.286 $10.052
Value at end of period $19.796 $13.984 $12.496 $11.286
Number of accumulation units
outstanding at end of period 182,517 141,714 102,509 70,271
<CAPTION>
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $10.000(9)
Value at end of period $10.443
Number of accumulation units
outstanding at end of period 2,222
AETNA MONEY MARKET VP
Value at beginning of period $10.509 $10.223 $10.031 $34.122(10) $32.431 $30.285
Value at end of period $11.007 $10.509 $10.223 $10.031 $34.122 $32.431
Number of accumulation units
outstanding at end of period 4,354,272 1,822,449 90,782 2,808 548,425 722,438
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA SMALL
COMPANY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AIM V.I. CAPITAL
APPRECIATION FUND
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AIM V.I. GROWTH FUND
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AIM V.I. GROWTH AND
INCOME FUND
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AIM V.I. VALUE FUND
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $10.518 $11.010 $10.296 $10.000(15)
Value at end of period $13.480 $10.518 $11.010 $10.296
Number of accumulation units
outstanding at end of period 25,730 752 1,383 82
FIDELITY VIP
EQUITY-INCOME
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $11.054
Number of accumulation units
outstanding at end of period 294,244
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.066
Number of accumulation units
outstanding at end of period 288,576
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.052
Number of accumulation units
outstanding at end of period 33,813
</TABLE>
48
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
FIDELITY VIP II
CONTRAFUND[RegTM]
PORTFOLIO
Value at beginning of period $20.018 $15.517 $12.593 $10.468
Value at end of period $24.687 $20.018 $15.517 $12.593
Number of accumulation units
outstanding at end of period 732,243 779,942 710,711 569,561
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $20.726 $15.554 $13.909 $12.992
Value at end of period $46.370 $20.726 $15.554 $13.909
Number of accumulation units
outstanding at end of period 1,056,343 459,710 427,692 433,363
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $20.165 $15.130 $12.484 $10.835
Value at end of period $25.370 $20.165 $15.130 $12.484
Number of accumulation units
outstanding at end of period 545,606 241,070 152,646 111,525
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $15.731 $14.527 $13.096 $12.094
Value at end of period $15.864 $15.731 $14.527 $13.096
Number of accumulation units
outstanding at end of period 190,660 199,467 97,715 73,340
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $20.948 $15.558 $12.770 $10.870
Value at end of period $29.936 $20.948 $15.558 $12.770
Number of accumulation units
outstanding at end of period 668,409 244,107 197,548 144,443
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $21.626 $16.901 $13.940 $10.893
Value at end of period $35.298 $21.626 $16.901 $13.940
Number of accumulation units
outstanding at end of period 1,601,735 1,346,457 1,273,110 803,488
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $11.189 $14.025 $13.188 $10.479
Value at end of period $12.670 $11.189 $14.025 $13.188
Number of accumulation units
outstanding at end of period 65,370 92,175 106,926 73,699
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.053 $10.004(8)
Value at end of period $15.814 $10.053
Number of accumulation units
outstanding at end of period 38,363 9,360
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $9.929 $10.098(8)
Value at end of period $10.133 $9.929
Number of accumulation units
outstanding at end of period 3,553 625
PPI MFS CAPITAL
OPPORTUNITIES
PORTFOLIO
Value at beginning of period $27.097 $21.541 $21.225(11)
Value at end of period $40.017 $27.097 $21.541
Number of accumulation units
outstanding at end of period 202,966 167,065 164,474
PPI MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period $19.769 $15.361 $15.547(11)
Value at end of period $29.605 $19.769 $15.361
Number of accumulation units
outstanding at end of period 457,665 562,097 598,078
PPI MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period $15.703 $12.863 $13.110(11)
Value at end of period $19.332 $15.703 $12.863
Number of accumulation units
outstanding at end of period 331,760 428,785 462,383
<CAPTION>
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
FIDELITY VIP II
CONTRAFUND[RegTM]
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.468
Number of accumulation units
outstanding at end of period 379,862
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.319 $10.000(16)
Value at end of period $12.992 $10.319
Number of accumulation units
outstanding at end of period 723,839 131,702
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.835
Number of accumulation units
outstanding at end of period 7,772
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $9.886 $10.000(16)
Value at end of period $12.094 $9.886
Number of accumulation units
outstanding at end of period 84,048 15,893
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.870
Number of accumulation units
outstanding at end of period 26,022
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.893
Number of accumulation units
outstanding at end of period 227,582
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $9.079 $9.716 $10.000(17)
Value at end of period $10.479 $9.079 $9.716
Number of accumulation units
outstanding at end of period 162,462 141,076 27,908
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PPI MFS CAPITAL
OPPORTUNITIES
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PPI MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PPI MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</TABLE>
49
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ---- ---- ---- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PPI SCUDDER
INTERNATIONAL GROWTH
PORTFOLIO
Value at beginning of period $21.359 $18.070 $17.838(11)
Value at end of period $33.582 $21.359 $18.070
Number of accumulation units
outstanding at end of period 331,362 257,953 280,633
PPI T. ROWE PRICE
GROWTH EQUITY
PORTFOLIO
Value at beginning of period $18.407 $14.534 $14.237(11)
Value at end of period $22.348 $18.407 $14.534
Number of accumulation units
outstanding at end of period 314,992 335,510 360,615
</TABLE>
- -----------------
(1) The initial accumulation unit value was established at $10.000 during
August 1995, when the fund became available under the contract.
(2) The accumulation unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $12.991. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(3) The accumulation unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $39.496. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(4) Funds were first received in this option during January 1998.
(5) The accumulation unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $85.546. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(6) Funds were first received in this option during June 1998.
(7) The initial accumulation unit value was established at $10.000 during
September 1996 when the portfolio became available under the contract.
(8) Funds were first received in this option during July 1998.
(9) The initial accumulation unit value was established at $10.000 during
September 1995, when the fund became available under the contract.
(10) The accumulation unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $34.828. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(11) Funds were first received in this option during November 1997.
(12) Funds were first received in this option during August 1999.
(13) Funds were first received in this option during July 1999.
(14) Funds were first received in this option during May 1999.
(15) The initial accumulation unit value was established at $10.000 on November
2, 1992, the date on which the fund/portfolio became available under the
contract.
(16) The initial accumulation unit value was established at $10.000 during
October 1994, when the funds were first received in this option.
(17) The initial accumulation unit value was established at $10.000 on May 26,
1993, the date on which the fund became available under the contract.
50
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE II
FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.80%
(Selected data for accumulation units outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The condensed financial information presented below for the period ended
December 31, 1999, is derived from the financial statements of the separate
account, which have been audited by KPMG LLP, independent auditors. The
financial statements and the independent auditors' report thereon for the year
ended December 31, 1999 are included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
1999
----
<S> <C>
AETNA BALANCED VP, INC.
Value at beginning of period $10.548(1)
Value at end of period $11.902
Number of accumulation units outstanding at end of period 7,910
AETNA GROWTH VP
Value at beginning of period $11.536(1)
Value at end of period $15.094
Number of accumulation units outstanding at end of period 4,940
AETNA GROWTH AND INCOME VP
Value at beginning of period $10.246(1)
Value at end of period $11.882
Number of accumulation units outstanding at end of period 25,734
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $11.411(1)
Value at end of period $13.677
Number of accumulation units outstanding at end of period 18,623
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $8.325(1)
Value at end of period $10.485
Number of accumulation units outstanding at end of period 10
AETNA LEGACY VP
Value at beginning of period $9.846(1)
Value at end of period $10.713
Number of accumulation units outstanding at end of period 3,827
AETNA SMALL COMPANY VP
Value at beginning of period $8.741(1)
Value at end of period $12.352
Number of accumulation units outstanding at end of period 25,984
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $10.626(1)
Value at end of period $13.007
Number of accumulation units outstanding at end of period 11,412
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $10.184(1)
Value at end of period $10.651
Number of accumulation units outstanding at end of period 654
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $12.390(1)
Value at end of period $16.024
Number of accumulation units outstanding at end of period 4,299
FIDELITY VIP II CONTRAFUND[RegTM] PORTFOLIO
Value at beginning of period $11.460(1)
Value at end of period $13.787
Number of accumulation units outstanding at end of period 5,461
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $12.588(1)
Value at end of period $26.089
Number of accumulation units outstanding at end of period 11,071
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $12.137(1)
Value at end of period $14.479
Number of accumulation units outstanding at end of period 436
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $10.355(1)
Value at end of period $10.404
Number of accumulation units outstanding at end of period 978
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $12.040(1)
Value at end of period $16.313
Number of accumulation units outstanding at end of period 4,195
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $10.532(1)
Value at end of period $16.613
Number of accumulation units outstanding at end of period 17,701
</TABLE>
51
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999
----
<S> <C>
PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO
Value at beginning of period $10.883(1)
Value at end of period $15.732
Number of accumulation units outstanding at end of period 188
PPI MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $10.087(1)
Value at end of period $16.210
Number of accumulation units outstanding at end of period 12,648
PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $10.107(1)
Value at end of period $15.541
Number of accumulation units outstanding at end of period 230
PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $10.925(1)
Value at end of period $13.248
Number of accumulation units outstanding at end of period 1,256
</TABLE>
- -----------------
(1) Funds were first received in this option during March 1999.
52
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE III
FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.95%
(Selected data for accumulation units outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The condensed financial information presented below for the period ended
December 31, 1999, is derived from the financial statements of the separate
account, which have been audited by KPMG LLP, independent auditors. The
financial statements and the independent auditors' report thereon for the year
ended December 31, 1999 are included in the Statement of Additional
Information.
<TABLE>
<CAPTION>
1999
----
<S> <C>
AETNA CROSSROADS VP
Value at beginning of period $15.521(1)
Value at end of period $16.474
Number of accumulation units outstanding at end of period 1,778
AETNA GROWTH VP
Value at beginning of period $15.198(1)
Value at end of period $18.142
Number of accumulation units outstanding at end of period 2,736
AETNA GROWTH AND INCOME VP
Value at beginning of period $263.583(1)
Value at end of period $285.280
Number of accumulation units outstanding at end of period 347
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $22.058(1)
Value at end of period $26.366
Number of accumulation units outstanding at end of period 152
FIDELITY VIP II CONTRAFUND[RegTM] PORTFOLIO
Value at beginning of period $23.549(1)
Value at end of period $27.241
Number of accumulation units outstanding at end of period 4,166
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $32.641(1)
Value at end of period $53.698
Number of accumulation units outstanding at end of period 2,972
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $21.430(1)
Value at end of period $24.954
Number of accumulation units outstanding at end of period 3,842
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $25.578(1)
Value at end of period $32.068
Number of accumulation units outstanding at end of period 597
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $26.861(1)
Value at end of period $38.687
Number of accumulation units outstanding at end of period 1,791
PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO
Value at beginning of period $33.592(1)
Value at end of period $43.155
Number of accumulation units outstanding at end of period 1,516
PPI MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $21.207(1)
Value at end of period $28.739
Number of accumulation units outstanding at end of period 547
PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $21.843(1)
Value at end of period $25.309
Number of accumulation units outstanding at end of period 1,557
</TABLE>
- -----------------
(1) Funds were first received in this option during September 1999.
53
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE IV
FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.25%
(Selected data for accumulation units outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The condensed financial information presented below for each of the periods in
the ten-year period ended December 31, 1999 (as applicable), is derived from
the financial statements of the separate account, which have been audited by
KPMG LLP, independent auditors. The financial statements and the independent
auditors' report thereon for the year ended December 31, 1999 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1999 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.855 $15.392 $12.999 $10.652
Value at end of period $17.905 $15.855 $15.392 $12.999
Number of accumulation units
outstanding at end of period 96,551 274,115 317,579 99,589
AETNA BALANCED VP, INC
Value at beginning of period $21.929 $18.989 $15.698 $13.803
Value at end of period $24.603 $21.929 $18.989 $15.698
Number of accumulation units
outstanding at end of period 2,278,136 2,929,720 3,174,738 3,885,730
AETNA BOND VP
Value at beginning of period $14.270 $13.361 $12.493 $12.212
Value at end of period $13.988 $14.270 $13.361 $12.493
Number of accumulation units
outstanding at end of period 887,371 1,129,589 1,168,988 1,947,629
AETNA CROSSROADS VP
Value at beginning of period $15.095 $14.432 $12.430 $10.594
Value at end of period $16.431 $15.095 $14.432 $12.430
Number of accumulation units
outstanding at end of period 115,324 218,649 175,559 74,128
AETNA GROWTH VP
Value at beginning of period $17.912 $13.173 $14.437(4)
Value at end of period $23.875 $17.912 $13.173
Number of accumulation units
outstanding at end of period 172,425 140,522 2,695
AETNA GROWTH AND
INCOME VP
Value at beginning of period $24.907 $22.028 $17.173 $13.972
Value at end of period $28.883 $24.907 $22.028 $17.173
Number of accumulation units
outstanding at end of period 7,212,849 9,491,619 10,689,845 15,372,944
AETNA HIGH YIELD VP
Value at beginning of period $9.212 $9.954(6)
Value at end of period $9.739 $9.212
Number of accumulation units
outstanding at end of period 2,827 605
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $18.772 $14.444 $10.924 $10.000(7)
Value at end of period $23.044 $18.772 $14.444 $10.924
Number of accumulation units
outstanding at end of period 347,854 527,155 266,429 89,498
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $10.891 $10.107(6)
Value at end of period $12.455 $10.891
Number of accumulation units
outstanding at end of period 6,907 17,011
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $8.815 $9.996(6)
Value at end of period $9.645 $8.815
Number of accumulation units
outstanding at end of period 15,816 55,564
AETNA INTERNATIONAL VP
Value at beginning of period $9.765 $10.149(6)
Value at end of period $14.594 $9.765
Number of accumulation units
outstanding at end of period 10,655 35,872
AETNA LEGACY VP
Value at beginning of period $14.064 $13.317 $11.776 $10.443
Value at end of period $14.875 $14.064 $13.317 $11.776
Number of accumulation units
outstanding at end of period 111,343 197,742 133,741 25,977
<CAPTION>
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $10.000(1)
Value at end of period $10.652
Number of accumulation units
outstanding at end of period 16,791
AETNA BALANCED VP, INC
Value at beginning of period $10.971 $11.164 $10.286 $12.717(2) $10.882 $10.423
Value at end of period $13.803 $10.971 $11.164 $10.286 $12.717 $10.882
Number of accumulation units
outstanding at end of period 6,430,772 3,541,703 318,711 6,537 1,324,822 984,798
AETNA BOND VP
Value at beginning of period $10.457 $11.006 $10.160 $37.815(3) $32.066 $29.752
Value at end of period $12.212 $10.457 $11.006 $10.160 $37.815 $32.066
Number of accumulation units
outstanding at end of period 4,853,662 1,988,960 166,913 4,196 427,893 358,454
AETNA CROSSROADS VP
Value at beginning of period $10.000(1)
Value at end of period $10.594
Number of accumulation units
outstanding at end of period 16,953
AETNA GROWTH VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA GROWTH AND
INCOME VP
Value at beginning of period $10.698 $10.940 $10.378 $84.249(5) $67.496 $66.174
Value at end of period $13.972 $10.698 $10.940 $10.378 $84.249 $67.496
Number of accumulation units
outstanding at end of period 30,554,957 11,117,383 879,670 3,107 908,777 810,126
AETNA HIGH YIELD VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA INTERNATIONAL VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA LEGACY VP
Value at beginning of period $10.000(1)
Value at end of period $10.443
Number of accumulation units
outstanding at end of period 2,222
</TABLE>
54
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
AETNA MONEY MARKET VP
Value at beginning of period $12.425 $11.930 $11.453 $11.007
Value at end of period $12.894 $12.425 $11.930 $11.453
Number of accumulation units
outstanding at end of period 1,034,154 1,146,661 974,714 1,984,269
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $8.873 $10.095(6)
Value at end of period $8.393 $8.873
Number of accumulation units
outstanding at end of period 6,002 17,926
AETNA SMALL
COMPANY VP
Value at beginning of period $13.633 $13.654 $13.503(4)
Value at end of period $17.617 $13.633 $13.654
Number of accumulation units
outstanding at end of period 19,165 91,992 17,392
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $16.030 $13.261 $12.904(4)
Value at end of period $18.930 $16.030 $13.261
Number of accumulation units
outstanding at end of period 23,354 60,870 6,194
AIM V.I. CAPITAL
APPRECIATION FUND
Value at beginning of period $10.008(9)
Value at end of period $13.753
Number of accumulation units
outstanding at end of period 2,630
AIM V.I. GROWTH FUND
Value at beginning of period $9.663(9)
Value at end of period $12.069
Number of accumulation units
outstanding at end of period 1,843
AIM V.I. GROWTH AND
INCOME FUND
Value at beginning of period $9.568(9)
Value at end of period $11.716
Number of accumulation units
outstanding at end of period 10,587
AIM V.I. VALUE FUND
Value at beginning of period $9.891(10)
Value at end of period $11.506
Number of accumulation units
outstanding at end of period 6,924
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $20.415 $17.779 $14.992 $13.480
Value at end of period $22.626 $20.415 $17.779 $14.992
Number of accumulation units
outstanding at end of period 8,236 8,742 20,122 6,303
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $17,400 $15.784 $12.475 $11.054
Value at end of period $18.272 $17.400 $15.784 $12.475
Number of accumulation units
outstanding at end of period 236,374 298,921 328,562 208,072
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $19.155 $13.904 $11.402 $10.066
Value at end of period $25.999 $19.155 $13.904 $11.402
Number of accumulation units
outstanding at end of period 474,649 324,558 229,060 199,720
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $13.786 $12.381 $11.238 $10.052
Value at end of period $19.419 $13.786 $12.381 $11.238
Number of accumulation units
outstanding at end of period 37,275 54,226 51,781 38,994
FIDELITY VIP II
CONTRAFUND[RegTM]
PORTFOLIO
Value at beginning of period $19.735 $15.374 $12.540 $10.468
Value at end of period $24.217 $19.735 $15.374 $12.540
Number of accumulation units
outstanding at end of period 449,134 488,102 465,699 273,189
<CAPTION>
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
AETNA MONEY MARKET VP
Value at beginning of period $10.509 $10.223 $10.031 $34.122(8) $32.431 $30.285
Value at end of period $11.007 $10.509 $10.223 $10.031 $34.122 $32.431
Number of accumulation units
outstanding at end of period 4,354,272 1,822,449 90,782 2,808 548,425 722,438
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA SMALL
COMPANY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AIM V.I. CAPITAL
APPRECIATION FUND
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AIM V.I. GROWTH FUND
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AIM V.I. GROWTH AND
INCOME FUND
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AIM V.I. VALUE FUND
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $10.518 $11.010 $10.296 $10.000(11)
Value at end of period $13.480 $10.518 $11.010 $10.296
Number of accumulation units
outstanding at end of period 25,730 752 1,383 82
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $11.054
Number of accumulation units
outstanding at end of period 294,244
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.066
Number of accumulation units
outstanding at end of period 288,576
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.052
Number of accumulation units
outstanding at end of period 33,813
FIDELITY VIP II
CONTRAFUND[RegTM]
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.468
Number of accumulation units
outstanding at end of period 379,862
</TABLE>
55
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $20.433 $15.410 $13.850 $12.992
Value at end of period $45.486 $20.433 $15.410 $13.850
Number of accumulation units
outstanding at end of period 828,592 512,154 469,230 590,904
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $19.880 $14.990 $12.431 $10.835
Value at end of period $24.886 $19.880 $14.990 $12.431
Number of accumulation units
outstanding at end of period 527,201 334,508 193,429 74,184
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $15.509 $14.393 $13.040 $12.094
Value at end of period $15.562 $15.509 $14.393 $13.040
Number of accumulation units
outstanding at end of period 73,596 85,517 109,812 96,128
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $20.651 $15.414 $12.716 $10.870
Value at end of period $29.366 $20.651 $15.414 $12.716
Number of accumulation units
outstanding at end of period 432,037 217,310 179,226 132,465
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $21.320 $16.745 $13.880 $10.893
Value at end of period $34.626 $21.320 $16.745 $13.880
Number of accumulation units
outstanding at end of period 902,510 1,069,704 953,522 520,275
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $11.030 $13.896 $13.132 $10.479
Value at end of period $12.428 $11.030 $13.896 $13.132
Number of accumulation units
outstanding at end of period 57,916 89,735 149,149 115,869
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.018 $10.027(6)
Value at end of period $15.681 $10.018
Number of accumulation units
outstanding at end of period 12,402 3,998
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $9.895 $9.952(6)
Value at end of period $10.048 $9.895
Number of accumulation units
outstanding at end of period 5,340 3,006
PPI MFS CAPITAL
OPPORTUNITIES
PORTFOLIO
Value at beginning of period $26.713 $21.343 $21.038(4)
Value at end of period $39.254 $26.713 $21.343
Number of accumulation units
outstanding at end of period 278,562 303,746 296,540
PPI MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period $19.489 $15.219 $15.411(4)
Value at end of period $29.040 $19.489 $15.219
Number of accumulation units
outstanding at end of period 485,026 695,813 742,913
PPI MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period $15.481 $12.744 $12.995(4)
Value at end of period $18.963 $15.481 $12.744
Number of accumulation units
outstanding at end of period 408,870 605,271 664,979
PPI SCUDDER
INTERNATIONAL GROWTH
PORTFOLIO
Value at beginning of period $21.057 $17.903 $17.682(4)
Value at end of period $32.942 $21.057 $17.903
Number of accumulation units
outstanding at end of period 316,726 360,392 411,600
<CAPTION>
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.319 $10.000(12)
Value at end of period $12.992 $10.319
Number of accumulation units
outstanding at end of period 723,839 131,702
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.835
Number of accumulation units
outstanding at end of period 7,772
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $9.886 $10.000(12)
Value at end of period $12.094 $9.886
Number of accumulation units
outstanding at end of period 84,048 15,893
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.870
Number of accumulation units
outstanding at end of period 26,022
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.893
Number of accumulation units
outstanding at end of period 227,582
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $9.079 $9.716 $10.000(13)
Value at end of period $10.479 $9.079 $9.716
Number of accumulation units
outstanding at end of period 162,462 141,076 27,908
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PPI MFS CAPITAL
OPPORTUNITIES
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PPI MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PPI MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PPI SCUDDER
INTERNATIONAL GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</TABLE>
56
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PPI T. ROWE PRICE
GROWTH EQUITY
PORTFOLIO
Value at beginning of period $18.146 $14.400 $14.112(4)
Value at end of period $21.922 $18.146 $14.400
Number of accumulation units
outstanding at end of period 177,799 287,914 231,297
</TABLE>
- -----------------
(1) The initial accumulation unit value was established at $10.000 during
August 1995, when the fund became available under the contract.
(2) The accumulation unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $12.991. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(3) The accumulation unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $39.496. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(4) Funds were first received in this option during November 1997.
(5) The accumulation unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $85.546. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(6) Funds were first received in this option during May 1998.
(7) The initial accumulation unit value was established at $10.000 during
September 1996, when the portfolio became available under the contract.
(8) The accumulation unit value was converted to $10.000 on November 2, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $34.828. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(9) Funds were first received in this option during June 1999.
(10) Funds were first received in this option during May 1999.
(11) The initial accumulation unit value was established at $10.000 on November
2, 1992, the date on which the fund/portfolio became available under the
contract.
(12) The initial accumulation unit value was established at $10.000 during
October 1994, when the funds were first received in this option.
(13) The initial accumulation unit value was established at $10.000 on May 26,
1993, the date on which the fund became available under the contract.
57
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE V
FOR CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.50%
INCLUDING A 0.25% ADMINISTRATIVE EXPENSE CHARGE BEGINNING APRIL 7, 1997
(Selected data for accumulation units outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The condensed financial information presented below for each of the periods in
the three-year period ended December 31, 1999 (as applicable), is derived from
the financial statements of the separate account, which have been audited by
KPMG LLP, independent auditors. The financial statements and the independent
auditors' report thereon for the year ended December 31, 1999 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1999 1998 1997
---- ----- ----
<S> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.786 $15.364 $12.994(1)
Value at end of period $17.783 $15.786 $15.364
Number of accumulation units outstanding at end of period 1,438 1,718 911
AETNA BALANCED VP, INC
Value at beginning of period $21.834 $18.954 $15.823(1)
Value at end of period $24.436 $21.834 $18.954
Number of accumulation units outstanding at end of period 28,079 30,064 25,112
AETNA BOND VP
Value at beginning of period $14.208 $13.337 $12.417(1)
Value at end of period $13.893 $14.208 $13.337
Number of accumulation units outstanding at end of period 22,155 18,429 36,018
AETNA CROSSROADS VP
Value at beginning of period $15.030 $14.406 $12.428(1)
Value at end of period $16.319 $15.030 $14.406
Number of accumulation units outstanding at end of period 470 458 7,855
AETNA GROWTH VP
Value at beginning of period $17.834 $15.727(2)
Value at end of period $23.713 $17.834
Number of accumulation units outstanding at end of period 5,532 2,089
AETNA GROWTH AND INCOME VP
Value at beginning of period $24.800 $21.988 $17.728(1)
Value at end of period $28.686 $24.800 $21.988
Number of accumulation units outstanding at end of period 134,360 148,051 188,162
AETNA HIGH YIELD VP
Value at beginning of period $9.677(3)
Value at end of period $9.698
Number of accumulation units outstanding at end of period 619
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $18.691 $14.418 $11.345(1)
Value at end of period $22.887 $18.691 $14.418
Number of accumulation units outstanding at end of period 31,248 23,367 11,672
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $10.872 $8.579(4)
Value at end of period $12.403 $10.872
Number of accumulation units outstanding at end of period 1,361 1,230
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $8.800 $7.685(5)
Value at end of period $9.604 $8.800
Number of accumulation units outstanding at end of period 1,041 807
AETNA LEGACY VP
Value at beginning of period $14.003 $13.292 $12.076(6)
Value at end of period $14.774 $14.003 $13.292
Number of accumulation units outstanding at end of period 502 1,188 397
AETNA MONEY MARKET VP
Value at beginning of period $12.372 $11.908 $11.572(1)
Value at end of period $12.806 $12.372 $11.908
Number of accumulation units outstanding at end of period 28,274 32,767 23,882
AETNA SMALL COMPANY VP
Value at beginning of period $13.574 $13.320(7)
Value at end of period $17.497 $13.574
Number of accumulation units outstanding at end of period 1,733 797
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $15.960 $14.467(8)
Value at end of period $18.801 $15.960
Number of accumulation units outstanding at end of period 299 54
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $17.325 $15.755 $12.668(1)
Value at end of period $18.147 $17.325 $15.755
Number of accumulation units outstanding at end of period 8,863 6,720 9,385
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $19.072 $13.879 $11.373(1)
Value at end of period $25.822 $19.072 $13.879
Number of accumulation units outstanding at end of period 23,653 17,622 8,432
</TABLE>
58
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
= 1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $13.727 $12.358 $11.356(1)
Value at end of period $19.287 $13.727 $12.358
Number of accumulation units outstanding at end of period 1,319 1,827 2,264
FIDELITY VIP II CONTRAFUND[RegTM] PORTFOLIO
Value at beginning of period $19.649 $15.346 $12.473(1)
Value at end of period $24.052 $19.649 $15.346
Number of accumulation units outstanding at end of period 20,988 20,097 19,168
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $20.345 $15.382 $12.282(1)
Value at end of period $45.177 $20.345 $15.382
Number of accumulation units outstanding at end of period 29,490 12,305 10,357
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $19.794 $14.963 $12.742(1)
Value at end of period $24.717 $19.794 $14.963
Number of accumulation units outstanding at end of period 6,163 7,705 7,255
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $15.442 $14.367 $13.043(1)
Value at end of period $15.456 $15.442 $14.367
Number of accumulation units outstanding at end of period 2,080 3,383 2,833
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $20.562 $15.386 $12.975(1)
Value at end of period $29.166 $20.562 $15.386
Number of accumulation units outstanding at end of period 11,840 4,445 3,305
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $21.228 $16.714 $14.460(1)
Value at end of period $34.390 $21.228 $16.714
Number of accumulation units outstanding at end of period 31,115 28,230 23,481
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $10.982 $13.870 $12.300(1)
Value at end of period $12.344 $10.982 $13.870
Number of accumulation units outstanding at end of period 191 753 4,339
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Value at beginning of period $10.001 $9.378(9)
Value at end of period $15.615 $10.001
Number of accumulation units outstanding at end of period 953 24
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $9.878 $9.889(9)
Value at end of period $10.006 $9.878
Number of accumulation units outstanding at end of period 114 67
PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO
Value at beginning of period $26.598 $21.304 $21.005(10)
Value at end of period $38.987 $26.598 $21.304
Number of accumulation units outstanding at end of period 3,143 1,926 2,468
PPI MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $19.405 $15.192 $15.386(10)
Value at end of period $28.843 $19.405 $15.192
Number of accumulation units outstanding at end of period 11,547 13,060 11,491
PPI MFS RESEARCH GROWTH PORTFOLIO
Value at beginning of period $15.414 $12.721 $12.975(10)
Value at end of period $18.834 $15.414 $12.721
Number of accumulation units outstanding at end of period 18,743 21,363 17,743
PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $20.966 $17.870 $17.653(10)
Value at end of period $32.718 $20.966 $17.870
Number of accumulation units outstanding at end of period 5,869 5,411 4,502
PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $18.068 $14.374 $14.090(10)
Value at end of period $21.773 $18.068 $14.374
Number of accumulation units outstanding at end of period 10,244 16,259 14,429
</TABLE>
- -----------------
(1) Funds were first received in this option during April 1997.
(2) Funds were first received in this option during May 1998.
(3) Funds were first received in this option during April 1999.
(4) Funds were first received in this option during October 1998.
(5) Funds were first received in this option during September 1998.
(6) Funds were first received in this option during May 1997.
(7) Funds were first received in this option during January 1998.
(8) Funds were first received in this option during March 1998.
(9) Funds were first received in this option during December 1998.
(10) Funds were first received in this option during November 1997.
59
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE VI
FOR CONTRACTS CONTAINING LIMITS ON FEES
(Selected data for accumulation units outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The condensed financial information presented below for each of the periods in
the three-year period ended December 31, 1999 (as applicable), is derived from
the financial statements of the separate account, which have been audited by
KPMG LLP, independent auditors. The financial statements and the independent
auditors' report thereon for the year ended December 31, 1999 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- -----
<S> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.942 $15.422 $13.943(1)
Value at end of period $18.066 $15.942 $15.422
Number of accumulation units outstanding at end of period 21,776 24,014 23,868
AETNA BALANCED VP, INC
Value at beginning of period $22.015 $19.016 $16.898(1)
Value at end of period $24.762 $22.015 $19.016
Number of accumulation units outstanding at end of period 383,141 452,764 477,504
AETNA BOND VP
Value at beginning of period $14.304 $13.373 $12.747(1)
Value at end of period $14.042 $14.304 $13.373
Number of accumulation units outstanding at end of period 387,135 452,992 489,431
AETNA CROSSROADS VP
Value at beginning of period $15.179 $14.461 $13.178(1)
Value at end of period $16.579 $15.179 $14.461
Number of accumulation units outstanding at end of period 9,939 10,769 10,798
AETNA GROWTH AND INCOME VP
Value at beginning of period $25.005 $22.060 $19.527(1)
Value at end of period $29.069 $25.005 $22.060
Number of accumulation units outstanding at end of period 3,297,663 3,821,349 4,106,796
AETNA LEGACY VP
Value at beginning of period $14.141 $13.343 $12.335(1)
Value at end of period $14.497 $14.141 $13.343
Number of accumulation units outstanding at end of period 0 1,958 2,254
AETNA MONEY MARKET VP
Value at beginning of period $12.425 $11.930 $11.654(1)
Value at end of period $12.894 $12.425 $11.930
Number of accumulation units outstanding at end of period 457,619 505,775 580,412
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $17.400 $15.784 $14.017(1)
Value at end of period $18.272 $17.400 $15.784
Number of accumulation units outstanding at end of period 11,370 13,539 35,342
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $19.155 $13.904 $12.498(1)
Value at end of period $25.999 $19.155 $13.904
Number of accumulation units outstanding at end of period 32,858 24,195 3,029
FIDELITY VIP II CONTRAFUND[RegTM] PORTFOLIO
Value at beginning of period $19.735 $15.374 $13.535(1)
Value at end of period $24.217 $19.735 $15.374
Number of accumulation units outstanding at end of period 13,750 14,618 13,675
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $20.433 $15.410 $13.806(1)
Value at end of period $45.486 $20.433 $15.410
Number of accumulation units outstanding at end of period 34,550 24,373 19,818
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $19.880 $14.990 $13.554(1)
Value at end of period $24.886 $19.880 $14.990
Number of accumulation units outstanding at end of period 12,101 6,712 2,819
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $15.509 $14.630(2)
Value at end of period $15.562 $15.509
Number of accumulation units outstanding at end of period 3,110 5,158
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $20.651 $15.414 $13.985(1)
Value at end of period $29.366 $20.651 $15.414
Number of accumulation units outstanding at end of period 29,284 1,028 750
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $21.320 $16.745 $15.851(1)
Value at end of period $34.626 $21.320 $16.745
Number of accumulation units outstanding at end of period 44,861 45,971 44,433
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $11.030 $13.896 $13.610(1)
Value at end of period $12.428 $11.030 $13.896
Number of accumulation units outstanding at end of period 1,753 1,753 1,753
</TABLE>
60
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
<S> <C> <C> <C>
PPI MFS CAPITAL OPPORTUNITIES PORTFOLIO
Value at beginning of period $26.713 $21.343 $21.038(3)
Value at end of period $39.254 $26.713 $21.343
Number of accumulation units outstanding at end of period 9,451 9,947 8,563
PPI MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $19.489 $15.219 $15.411(3)
Value at end of period $29.040 $19.489 $15.219
Number of accumulation units outstanding at end of period 12,142 11,330 11,848
PPI MFS RESEARCH GROWTH PORTFOLIO
Value at beginning of period $15.481 $12.744 $12.995(3)
Value at end of period $18.963 $15.481 $12.744
Number of accumulation units outstanding at end of period 135,420 148,963 141,582
PPI SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $21.057 $17.903 $17.682(3)
Value at end of period $32.942 $21.057 $17.903
Number of accumulation units outstanding at end of period 4,496 5,245 3,986
PPI T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $18.146 $14.400 $14.112(3)
Value at end of period $21.922 $18.146 $14.400
Number of accumulation units outstanding at end of period 4,491 4,730 3,310
</TABLE>
- -----------------
(1) Funds were first received in this option during June 1997.
(2) Funds were first received in this option during February 1998.
(3) Funds were first received in this option during November 1997.
61
<PAGE>
For Master Applications Only
- --------------------------------------------------------------------------------
I hereby acknowledge receipt of an Account B Group Deferred Variable Prospectus
dated May 1, 2000 for Employer-Sponsored Deferred Compensation Plans, as well
as all current prospectuses pertaining to the variable investment options
available under the Contracts.
- --- Please send an Account B Statement of Additional Information (Form No.
SAI.75996-00) dated May 1, 2000.
- --------------------------------------------------------------------------------
CONTRACT HOLDER' S SIGNATURE
- --------------------------------------------------------------------------------
DATE
PROS.75996-00
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT B
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------
Statement of Additional Information dated May 1, 2000
Group Variable Annuity Contracts for Employer-Sponsored
Deferred Compensation Plans
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus for Variable Annuity Account B (the
"Separate Account") dated May 1, 2000.
A free prospectus is available upon request from the local Aetna Life Insurance
and Annuity Company office or by writing to or calling:
Aetna Life Insurance and Annuity Company
Customer Service
151 Farmington Avenue
Hartford, Connecticut 06156
1-800-262-3862
Read the prospectus before you invest. Terms used in this Statement of
Additional Information shall have the same meaning as in the prospectus.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
General Information and History.......................................... 2
Variable Annuity Account B............................................... 2
Offering and Purchase of Contracts....................................... 3
Performance Data......................................................... 3
General........................................................... 3
Average Annual Total Return Quotations............................ 4
Income Phase Payments.................................................... 9
Sales Material and Advertising........................................... 10
Independent Auditors..................................................... 10
Financial Statements of the Separate Account............................. S-1
Financial Statements of Aetna Life Insurance and Annuity Company......... F-1
</TABLE>
<PAGE>
GENERAL INFORMATION AND HISTORY
Aetna Life Insurance and Annuity Company (the "Company," we, us, our) is a stock
life insurance company which was organized under the insurance laws of the State
of Connecticut in 1976. Through a merger, it succeeded to the business of Aetna
Variable Annuity Life Insurance Company (formerly Participating Annuity Life
Insurance Company organized in 1954). As of December 31, 1999, the Company and
its subsidiary life company had $53 billion invested through their products,
including $39 billion in their separate accounts (of which the Company or its
subsidiary, Aeltus Investment Management, Inc. oversees the management of $24
billion). The Company is ranked based on assets among the top 2% of all life
insurance companies rated by A.M. Best Company as of December 31, 1998. The
Company is an indirect wholly owned subsidiary of Aetna Inc. The Company is
engaged in the business of issuing life insurance policies and annuity
contracts. Our Home Office is located at 151 Farmington Avenue, Hartford,
Connecticut 06156.
In addition to serving as the principal underwriter and the depositor for the
separate account, the Company is a registered investment adviser under the
Investment Advisers Act of 1940, and a registered broker-dealer under the
Securities Exchange Act of 1934. We provide investment advice to several of the
registered management investment companies offered as variable investment
options under the contracts funded by the separate account (see "Variable
Annuity Account B" below).
Other than the mortality and expense risk charge and administrative expense
charge described in the prospectus, all expenses incurred in the operations of
the separate account are borne by the Company. See "Fees" in the prospectus. We
receive reimbursement for certain administrative costs from some advisers of the
funds used as funding options under the contract. These fees generally range up
to 0.425%.
The assets of the separate account are held by the Company. The separate account
has no custodian. However, the funds in whose shares the assets of the separate
account are invested each have custodians, as discussed in their respective
prospectuses.
From this point forward, the term "contract(s)" refers only to those offered
through the prospectus.
VARIABLE ANNUITY ACCOUNT B
Variable Annuity Account B is a separate account established by the Company for
the purpose of funding variable annuity contracts issued by the Company. The
separate account is registered with the Securities and Exchange Commission as a
unit investment trust under the Investment Company Act of 1940, as amended.
Payments to accounts under the contract may be allocated to one or more of the
subaccounts. Each subaccount invests in the shares of only one of the funds
listed below. We may make additions to, deletions from or substitutions of
available investment options as permitted by law and subject to the conditions
of the contract. The availability of the funds is subject to applicable
regulatory authorization. Not all funds are available in all jurisdictions,
under all contracts, or under all plans.
2
<PAGE>
The funds currently available under the contract are as follows:
<TABLE>
<S> <C>
o Aetna Ascent VP o Fidelity Variable Insurance Products Fund (VIP) Growth
o Aetna Balanced VP, Inc. Portfolio
o Aetna Income Shares d/b/a Aetna Bond VP o Fidelity Variable Insurance Products Fund (VIP) Overseas
o Aetna Crossroads VP Portfolio
o Aetna Growth VP o Fidelity Variable Insurance Products Fund (VIP II)
o Aetna Variable Fund d/b/a Aetna Growth and Income VP Contrafund[RegTM] Portfolio
o Aetna High Yield VP* o Janus Aspen Aggressive Growth Portfolio
o Aetna Index Plus Large Cap VP o Janus Aspen Balanced Portfolio
o Aetna Index Plus Mid Cap VP o Janus Aspen Flexible Income Portfolio
o Aetna Index Plus Small Cap VP o Janus Aspen Growth Portfolio
o Aetna International VP o Janus Aspen Worldwide Growth Portfolio
o Aetna Legacy VP o Lexington Natural Resources Trust**
o Aetna Variable Encore Fund d/b/a Aetna Money Market VP o Oppenheimer Global Securities Fund/VA
o Aetna Real Estate Securities VP* o Oppenheimer Strategic Bond Fund/VA
o Aetna Small Company VP o Portfolio Partners, Inc. (PPI) MFS Capital Opportunities
o Aetna Technology VP Portfolio (formerly PPI MFS Value Equity Portfolio)
o Aetna Value Opportunity VP o Portfolio Partners, Inc. (PPI) MFS Emerging Equities Portfolio
o AIM V.I. Capital Appreciation Fund o Portfolio Partners, Inc. (PPI) MFS Research Growth Portfolio
o AIM V.I. Growth Fund o Portfolio Partners, Inc. (PPI) Scudder International Growth
o AIM V.I. Growth and Income Fund Portfolio
o AIM V.I. Value Fund o Portfolio Partners, Inc. (PPI) T. Rowe Price Growth Equity
o Calvert Social Balanced Portfolio Portfolio
o Fidelity Variable Insurance Products Fund (VIP) Equity-
Income Portfolio
</TABLE>
* Effective May 15, 2000, transfers or deposits are not allowed into the
subaccount investing in this fund, except those made pursuant to standing
customer instructions (e.g., payroll deduction allocations, dollar cost
averaging) in effect prior to this date.
** Transfer or deposits are not allowed into the subaccount investing in this
fund, except from accounts established under the contract before May 1,
1998. As soon as all those who have current allocations to the subaccount
under the contract have redirected their allocations to other investment
options, we will close the subaccount to all investments.
Complete descriptions of each of the funds, including their investment
objectives, policies, risks and fees and expenses, are contained in the
prospectuses and statements of additional information for each of the funds.
OFFERING AND PURCHASE OF CONTRACTS
The Company is both the depositor and the principal underwriter for the
securities sold by the prospectus. We offer the contracts through life insurance
agents licensed to sell variable annuities who are registered representatives of
the Company or of other registered broker-dealers who have sales agreements with
the Company. The offering of the contracts is continuous. A description of the
manner in which contracts are purchased may be found in the prospectus under the
sections entitled "Contract Ownership and Rights" and "Your Account Value."
PERFORMANCE DATA
GENERAL
From time to time, we may advertise different types of historical performance
for the subaccounts of the separate account available under the contracts. We
may advertise the "standardized average annual total returns," calculated in a
manner prescribed by the Securities and Exchange Commission (the "standardized
return"), as well as "non-standardized returns," both of which are described
below.
The standardized and non-standardized total return figures are computed
according to a formula in which a hypothetical initial purchase payment of
$1,000 is applied to the various subaccounts under the contract, and then
related to the ending redeemable values over one, five and ten year periods (or
fractional periods thereof). The redeemable value is then divided by the initial
investment and this quotient is taken to the Nth root (N
3
<PAGE>
represents the number of years in the period) and 1 is subtracted from the
result which is then expressed as a percentage, carried to at least the nearest
hundredth of a percent. The standardized figures use the actual returns of the
fund since the date contributions were first received in the corresponding
subaccount of the separate account and then adjust them to reflect the deduction
of all recurring charges under the contracts during each period (e.g., mortality
and expense risk charges, maintenance fees, administrative expense charges, if
any, and early withdrawal charges). These charges will be deducted on a pro rata
basis in the case of fractional periods. The maintenance fee is converted to a
percentage of assets based on the average account size under the contracts
described in the prospectus. The total return figures shown below may be
different from the actual historical total return under your contract because
for periods prior to 1994, the subaccount's investment performance was based on
the performance of the underlying fund plus any cash held by the subaccount.
The non-standardized figures will be calculated in a similar manner, except that
they will not reflect the deduction of any applicable early withdrawal charge,
and in some advertisements will also exclude the effect of the maintenance fee.
The deduction of the early withdrawal charge and the maintenance fee would
decrease the level of performance shown if reflected in these calculations. The
non-standardized figures may also include monthly, quarterly, year-to-date and
three year periods, and may include returns calculated from the fund's inception
date and/or the date contributions were first received in the corresponding
subaccount of the separate account. The non-standardized returns shown in the
tables below reflect the deduction of all charges under the contract except the
early withdrawal charge. The maintenance fee has been deducted for the purposes
of calculating the returns.
Investment results of the subaccounts will fluctuate over time, and any
presentation of the subaccounts' total return quotations for any prior period
should not be considered as a representation of how the subaccounts will perform
in any future period. Additionally, the contract value and/or account value upon
redemption may be more or less than your original cost.
AVERAGE ANNUAL TOTAL RETURN QUOTATIONS - Standardized and Non-Standardized
The tables below show the average annual standardized and non-standardized total
return quotation figures for the periods ended December 31, 1999 for the
subaccounts under installment payment accounts with a $20 annual maintenance
fee. Both sets of returns below reflect a mortality and expense risk charge of
1.25% annually and the 0.25% administrative expense charge applicable under some
contracts. The non-standardized returns do not reflect the deduction of the
early withdrawal charge. We may also advertise returns based on other fee
schedules that apply to a particular contract holder. These fee schedules may
result in higher returns than those shown.
For the subaccounts funded by the Portfolio Partners portfolios, two sets of
performance returns are shown for each subaccount: one showing performance based
solely on the performance of the Portfolio Partners portfolio from November 28,
1997, the date the Portfolio commenced operations; and one quotation based on
(a) performance through November 26, 1997 of the fund it replaced under many
contracts and; (b) after November 26, 1997, based on the performance of the
Portfolio Partners portfolio.
For those subaccounts where results are not available for the full calendar
period indicated, performance for such partial periods is shown in the column
labeled "Since Inception." For standardized performance, the "Since Inception"
column shows the average annual return since the date contributions were first
received in the fund under the separate account. For non-standardized
performance, the "Since Inception" column shows average annual total return
since the fund's inception date.
4
<PAGE>
<TABLE>
<CAPTION>
---------------------------------------------------------------
Date
Contributions
STANDARDIZED First Received
Under the
Separate Account
- ------------------------------------------------------------------------------------------------------------------------------------
Since
SUBACCOUNT 1 Year 5 Year 10 Year Inception*
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP 7.01% 12.46% 08/31/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc.(1) 6.31% 16.01% 11.58%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP(1) (7.11%) 4.64% 6.11%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP 3.14% 10.27% 08/31/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP 26.31% 31.59% 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP(1) 9.88% 20.43% 13.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna High Yield VP 0.18% (4.67%) 05/21/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 16.32% 26.01% 10/31/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP 8.37% 9.68% 05/04/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP 3.67% (5.35%) 05/04/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna International VP 41.62% 20.40% 05/05/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP 0.22% 8.09% 08/31/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2) (1.67%) 2.85% 3.75%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP (10.37%) (13.51%) 05/06/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP 22.45% 16.02% 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP 11.90% 20.70% 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 35.34% 56.56% 10/02/1998
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 26.56% 51.38% 10/02/1998
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund 25.63% 48.32% 10/02/1998
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 21.56% 45.17% 10/02/1998
- ------------------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio 5.02% 15.08% 10.91% 11/30/1992
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio (0.50%) 15.65% 15.64% 12/30/1994
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 28.62% 26.50% 26.48% 12/30/1994
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 33.48% 15.73% 01/31/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund[RegTM] Portfolio 16.28% 21.61% 06/30/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 110.95% 32.83% 31.22% 10/31/1994
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 18.62% 21.57% 01/31/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio (4.92%) 8.11% 7.59% 10/31/1994
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 34.75% 26.64% 24.48% 07/29/1994
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 53.90% 32.18% 04/28/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 6.77% 5.13% 2.39% 05/28/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA 48.32% 25.56% 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA (3.77%) 1.02% 05/30/1997
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Capital Opportunities Portfolio 39.24% 31.17% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Growth/PPI MFS Capital Opportunities(3) 39.24% 24.73% 16.90% 11/30/1992
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Emerging Equities Portfolio 41.20% 31.79% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap/PPI MFS Emerging Equities(3) 41.20% 23.14% 17.35% 09/30/1993
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio 16.08% 16.62% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation/PPI MFS Research
Growth(3) 16.08% 10.35% 9.15% 08/31/1992
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio 48.25% 31.07% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio Class A/PPI Scudder
International Growth(3) 48.25% 18.24% 15.64% 08/31/1992
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio 14.47% 20.16% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Growth/PPI T. Rowe Price Growth Equity(3) 14.47% 22.02% 02/28/1995
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in calculating the standardized and
non-standardized figures. These figures represent historical performance and
should not be considered a projection of future performance.
5
<PAGE>
* Reflects performance from the date contributions were first received in the
fund under the separate account.
(1) These funds have been available through the separate account for more than
ten years.
(2) The current yield for the subaccount for the seven-day period ended
December 31, 1999 (on an annualized basis) was 4.29%. Current yield more
closely reflects current earnings than does total return. The current yield
reflects the deduction of all charges under the contract that are deducted
from the total return quotations shown above except the maximum 5% early
withdrawal charge.
(3) The fund first listed was replaced with the applicable Portfolio Partners
Portfolio after the close of business on November 26, 1997. The performance
shown is based on the performance of the replaced fund until November 26,
1997, and the performance of the applicable Portfolio Partners Portfolio
after that date. The replaced fund may not have been available under all
contracts. The "Date Contributions First Received Under the Separate
Account" refers to the applicable date for the replaced fund. If no date is
shown, contributions were first received in the replaced fund under the
separate account more than ten years ago.
6
<PAGE>
<TABLE>
<CAPTION>
-----------------------------------------------------------------
Fund
NON-STANDARDIZED Inception
Date
- ------------------------------------------------------------------------------------------------------------------------------------
Since
SUBACCOUNT 1 Year 3 Years 5 Years 10 Years Inception**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Ascent VP 12.64% 10.98% 14.33% 07/05/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc.(1) 11.91% 15.86% 17.20% 11.58%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP(1) (2.22%) 3.58% 5.72% 6.11%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP 8.57% 9.47% 12.04% 07/05/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP 32.96% 33.19% 33.22% 12/13/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP(1) 15.67% 18.62% 21.67% 13.80%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna High Yield VP 5.46% 2.43% 12/10/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 22.44% 27.93% 28.56% 09/16/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP 14.08% 19.74% 12/16/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP 9.13% 5.06% 12/19/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna International VP 49.08% 33.42% 12/22/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP 5.50% 7.82% 9.70% 07/05/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2) 3.51% 3.76% 3.91% 3.75%
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP (5.65%) (8.24%) 12/15/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP 28.90% 19.36% 19.76% 12/27/1996
- ------------------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP 17.79% 24.93% 25.32% 12/13/1996
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 42.46% 23.25% 23.73% 20.52% 05/05/1993
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 33.22% 30.07% 27.73% 21.11% 05/05/1993
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund 32.25% 27.26% 26.29% 22.65% 05/02/1994
- ------------------------------------------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 27.96% 26.71% 25.35% 21.25% 05/05/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio(1) 10.55% 14.41% 16.26% 10.39%
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio(1) 4.74% 13.28% 16.84% 12.79%
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio(1) 35.39% 31.29% 27.80% 18.15%
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio(1) 40.50% 19.69% 15.62% 9.77%
- ------------------------------------------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund [RegTM] Portfolio 22.40% 24.21% 25.85% 01/03/1995
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 122.05% 48.27% 34.20% 32.42% 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 24.87% 25.71% 22.82% 18.82% 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 0.09% 5.80% 9.22% 6.88% 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 41.84% 31.85% 27.95% 22.43% 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 62.00% 35.28% 31.61% 27.78% 09/13/1993
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust 12.39% (2.07%) 6.21% 4.43% 10/14/1991
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA 56.12% 28.39% 19.85% 15.05% 11/12/1990
- ------------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA 1.29% 3.21% 6.63% 4.59% 05/03/1993
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Capital Opportunities Portfolio 46.57% 34.42% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger Berman AMT Growth/PPI MFS Capital
Opportunities(3) 46.57% 31.57% 26.01% 14.59%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Emerging Equities Portfolio 48.63% 35.06% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Small Cap/PPI MFS Emerging Equities(3) 48.63% 26.88% 24.41% 18.18%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio 22.19% 19.51% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
American Century VP Capital Appreciation/PPI MFS Research
Growth(3) 22.19% 12.27% 11.49% 9.18%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio 56.05% 34.33% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder International Portfolio Class A/PPI Scudder
International Growth(3) 56.05% 25.26% 19.46% 11.89%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio 20.50% 23.14% 11/28/1997
- ------------------------------------------------------------------------------------------------------------------------------------
Alger American Growth/PPI T. Rowe Price Growth Equity(3) 20.50% 24.15% 23.48% 18.45%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in calculating the standardized and
non-standardized figures. These figures represent historical performance and
should not be considered a projection of future performance.
** Reflects performance from the fund's inception date.
(1) These funds have been in operation for more than ten years.
(2) The current yield for the subaccount for the seven-day period ended
December 31, 1999 (on an annualized basis) was 4.29%. Current yield more
closely reflects current earnings than does total return. The current yield
reflects the deduction of all charges under the contract that are deducted
from the total return quotations shown above. As in the table above, the
maximum 5% early withdrawal charge is not reflected.
(3) The fund first listed was replaced with the applicable Portfolio Partners
Portfolio after the close of business on November 26, 1997. The performance
shown is based on the performance of the replaced fund until November 26,
1997, and the performance of the applicable Portfolio Partners Portfolio
after that date. The replaced fund may not have been available under all
contracts. The "Fund Inception Date" refers to the applicable date for the
replaced fund. If no date is shown, the replaced fund has been in operation
for more than ten years.
8
<PAGE>
INCOME PHASE PAYMENTS
When you begin receiving payments under the contract during the income phase
(see "The Income Phase" in the prospectus), the value of your account is
determined using accumulation unit values as of the tenth valuation before the
first income phase payment is due. Such value (less any applicable premium tax)
is applied to provide payments to you in accordance with the income phase
payment option and investment options elected.
The Annuity option tables found in the contract show, for each option, the
amount of the first income phase payment for each $1,000 of value applied.
Thereafter, variable payments fluctuate as the Annuity Unit value(s) fluctuates
with the investment experience of the selected investment option(s). The first
income phase payment and subsequent payments also vary depending on the assumed
net investment rate selected (3.5% or 5% per annum). Selection of a 5% rate
causes a higher first income phase payment, but income phase payments will
increase thereafter only to the extent that the net investment rate increases by
more than 5% on an annual basis. Income phase payments would decline if the rate
failed to increase by 5%. Use of the 3.5% assumed rate causes a lower first
income phase payment, but subsequent income phase payments would increase more
rapidly or decline more slowly as changes occur in the net investment rate.
When the income phase begins, the annuitant is credited with a fixed number of
Annuity Units (which does not change thereafter) in each of the designated
investment options. This number is calculated by dividing (a) by (b), where (a)
is the amount of the first payment based upon a particular investment option,
and (b) is the then current Annuity Unit value for that investment option. As
noted, Annuity Unit values fluctuate from one valuation to the next (see "Your
Account Value" in the prospectus); such fluctuations reflect changes in the net
investment factor for the appropriate subaccount(s) (with a ten valuation lag
which gives the Company time to process payments) and a mathematical adjustment
which offsets the assumed net investment rate of 3.5% or 5% per annum.
The operation of all these factors can be illustrated by the following
hypothetical example. These procedures will be performed separately for the
investment options selected during the income phase.
EXAMPLE:
- --------
Assume that, at the date income phase payments are to begin, there are 3,000
accumulation units credited under a particular contract or account and that the
value of an accumulation unit for the tenth valuation prior to retirement was
$13.650000. This produces a total value of $40,950.
Assume also that no premium tax is payable and that the Annuity table in the
contract provides, for the income phase payment option elected, a first monthly
variable income phase payment of $6.68 per $1000 of value applied; the
annuitant's first monthly income phase payment would thus be 40.950 multiplied
by $6.68, or $273.55.
Assume then that the value of an Annuity Unit upon the valuation on which the
first payment was due was $13.400000. When this value is divided into the first
monthly income phase payment, the number of Annuity Units is determined to be
20.414. The value of this number of Annuity Units will be paid in each
subsequent month.
If the net investment factor with respect to the appropriate subaccount is
1.0015000 as of the tenth valuation preceding the due date of the second monthly
income phase payment, multiplying this factor by .9999058* (to take into account
the assumed net investment rate of 3.5% per annum built into the number of
Annuity Units determined above) produces a result of 1.0014057. This is then
multiplied by the Annuity Unit value for the prior valuation (assume such value
to be $13.504376) to produce an Annuity Unit value of $13.523359 for the
valuation occurring when the second income phase payment is due.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
take into account such assumed rate would be .9998663.
9
<PAGE>
The second monthly income phase payment is then determined by multiplying the
number of Annuity Units by the current Annuity Unit value, or 20.414 times
$13.523359, which produces a payment of $276.07.
SALES MATERIAL AND ADVERTISING
We may include hypothetical illustrations in our sales literature that explain
the mathematical principles of dollar cost averaging, compounded interest, tax
deferred accumulation, and the mechanics of variable annuity contracts. We may
also discuss the difference between variable annuity contracts and other types
of savings or investment products such as personal savings accounts and
certificates of deposit.
We may distribute sales literature that compares the percentage change in
accumulation unit values for any of the subaccounts to established market
indices such as the Standard & Poor's 500 Stock Index and the Dow Jones
Industrial Average or to the percentage change in values of other management
investment companies that have investment objectives similar to the subaccount
being compared.
We may publish in advertisements and reports, the ratings and other information
assigned to us by one or more independent rating organizations such as A.M. Best
Company, Duff & Phelps, Standard & Poor's Corporation and Moody's Investors
Service, Inc. The purpose of the ratings is to reflect our financial strength
and/or claims-paying ability. We may also quote ranking services such as
Morningstar's Variable Annuity/Life Performance Report and Lipper's Variable
Insurance Products Performance Analysis Service (VIPPAS), which rank variable
annuity or life subaccounts or their underlying funds by performance and/or
investment objective. We may categorize the underlying funds in terms of the
asset classes they represent and use such categories in marketing materials for
the contracts. We may illustrate in advertisements the performance of the
underlying funds, if accompanied by performance which also shows the performance
of such funds reduced by applicable charges under the separate account. We may
also show in advertisements the portfolio holdings of the underlying funds,
updated at various intervals. From time to time, we will quote articles from
newspapers and magazines or other publications or reports such as The Wall
Street Journal, Money magazine, USA Today and The VARDS Report.
We may provide in advertising, sales literature, periodic publications or other
materials information on various topics of interest to current and prospective
contract holders or participants. These topics may include the relationship
between sectors of the economy and the economy as a whole and its effect on
various securities markets, investment strategies and techniques (such as value
investing, market timing, dollar cost averaging, asset allocation, constant
ratio transfer and account rebalancing), the advantages and disadvantages of
investing in tax-deferred and taxable investments, customer profiles and
hypothetical purchase and investment scenarios, financial management and tax and
retirement planning, and investment alternatives to certificates of deposit and
other financial instruments, including comparison between the contracts and the
characteristics of and market for such financial instruments.
INDEPENDENT AUDITORS
KPMG LLP, CityPlace II, Hartford, Connecticut 06103-4103, are the independent
auditors for the separate account and for the Company. The services provided to
the separate account include primarily the examination of the separate account's
financial statements and the review of filings made with the SEC.
10
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT B
Index
<TABLE>
<CAPTION>
Page
<S> <C>
Statement of Assets and Liabilities........................................S-2
Statement of Operations....................................................S-8
Statements of Changes in Net Assets........................................S-8
Condensed Financial Information............................................S-9
Notes to Financial Statements..............................................S-19
Independent Auditors' Report...............................................S-33
</TABLE>
S-1
<PAGE>
Variable Annuity Account B
Statement of Assets and Liabilities - December 31, 1999
ASSETS:
Investments, at net asset value: (Note 1)
<TABLE>
<CAPTION>
Net
Shares Cost Assets
------ ---- ------
<S> <C> <C> <C>
Aetna Ascent VP: 1,339,218 $ 19,497,391 $ 19,981,127
Aetna Balanced VP, Inc.: 13,294,723 200,294,733 206,998,843
Aetna Bond VP: 8,139,100 105,951,065 99,052,842
Aetna Crossroads VP: 1,811,648 24,397,709 24,946,398
Aetna Get Fund, Series C: 557,907 6,337,611 7,124,468
Aetna Get Fund, Series D: 16,585,252 167,045,093 176,632,929
Aetna Get Fund, Series E: 35,440,889 358,288,306 381,698,376
Aetna Get Fund, Series G: 20,429,610 205,920,149 211,855,059
Aetna Get Fund, Series H: 172,261 1,724,516 1,726,955
Aetna Growth and Income VP: 38,230,584 1,242,232,773 1,173,296,609
Aetna Growth VP: 4,099,459 62,421,793 71,002,637
Aetna High Yield VP: 27,918 261,762 245,682
Aetna Index Plus Large Cap VP: 11,455,392 215,316,778 239,074,027
Aetna Index Plus Mid Cap VP: 69,900 908,995 866,762
Aetna Index Plus Small Cap VP: 83,607 815,021 911,313
Aetna International VP: 285,162 4,209,331 4,539,776
Aetna Legacy VP: 2,367,470 29,607,908 29,569,704
Aetna Money Market VP: 16,084,329 214,007,331 215,772,879
Aetna Real Estate Securities VP: 250,934 2,121,243 1,939,720
Aetna Small Company VP: 1,549,015 19,347,626 25,589,722
Aetna Value Opportunity VP: 1,030,379 14,096,136 16,918,826
AIM V.I. Funds:
Capital Appreciation Fund: 280,246 7,859,362 9,971,139
Growth and Income Fund: 743,596 19,743,238 23,490,185
Growth Fund: 587,010 16,219,102 18,931,063
Value Fund: 1,248,557 37,154,670 41,826,668
Alger American Funds:
Balanced Portfolio: 399,088 4,045,034 6,213,801
Income & Growth Portfolio: 1,085,760 10,917,112 19,087,670
Leveraged AllCap Portfolio: 433,195 10,067,916 25,112,341
American Century VP Funds:
Balanced Fund: 443,179 3,338,472 3,452,367
International Fund: 599,923 4,078,203 7,499,031
Calvert Social Balanced Portfolio: 1,193,697 2,580,920 2,589,130
Federated Insurance Series:
American Leaders Fund II: 6,011,859 101,875,749 125,166,912
Equity Income Fund II: 1,866,873 23,409,796 30,392,700
Growth Strategies Fund II: 1,511,581 23,895,134 46,677,628
High Income Bond Fund II: 4,082,647 42,574,388 41,806,306
International Equity Fund II: 1,046,515 13,236,657 28,925,669
Prime Money Fund II: 8,657,471 8,657,471 8,657,471
U.S. Government Securities Fund II: 1,213,486 12,886,100 12,814,411
Utility Fund II: 1,850,767 22,657,976 26,558,505
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio: 7,458,378 173,930,775 191,754,908
Growth Portfolio: 3,804,524 141,323,786 208,982,521
High Income Portfolio: 5,543,291 65,301,314 62,694,624
Overseas Portfolio: 732,104 15,274,074 20,088,940
</TABLE>
S-2
<PAGE>
Variable Annuity Account B
Statement of Assets and Liabilities - December 31, 1999 (continued):
<TABLE>
<CAPTION>
Net
Shares Cost Assets
------ ---- ------
<S> <C> <C> <C>
Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio: 1,152,622 $ 19,622,237 $ 21,519,462
Contrafund Portfolio: 8,061,682 178,179,619 234,998,024
Index 500 Portfolio: 1,018,264 137,567,179 170,467,635
Investment Grade Bond Portfolio: 338,820 4,044,947 4,120,050
Janus Aspen Series:
Aggressive Growth Portfolio: 4,601,525 174,527,385 274,665,000
Balanced Portfolio: 6,637,676 145,141,742 185,323,915
Flexible Income Portfolio: 1,714,747 20,581,641 19,582,411
Growth Portfolio: 6,624,687 166,042,220 222,920,706
Worldwide Growth Portfolio: 10,088,356 298,223,051 481,718,979
Lexington Emerging Markets Fund, Inc.: 200,939 1,994,956 2,574,027
Lexington Natural Resources Trust Fund: 253,314 3,663,108 3,168,963
MFS Funds:
Global Government Series: 163,850 1,695,439 1,643,414
Total Return Series: 2,861,377 48,938,636 50,789,444
Mitchell Hutchins Series Trust:
Growth & Income Portfolio: 49,539 735,854 809,956
Small Cap Portfolio: 11,313 163,053 172,522
Tactical Allocation Portfolio: 446,856 7,328,726 7,364,195
Oppenheimer Funds:
Aggressive Growth Fund/VA: 375,791 22,642,573 30,931,348
Global Securities Fund/VA: 284,758 7,200,987 9,513,748
Main Street Growth & Income Fund/VA: 2,288,522 48,877,782 56,366,293
Strategic Bond Fund/VA: 3,983,514 19,810,756 19,798,066
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio: 2,212,287 118,884,638 183,243,707
PPI MFS Research Growth Portfolio: 6,937,544 76,162,887 102,536,898
PPI MFS Value Equity Portfolio: 1,003,064 37,923,777 54,937,791
PPI Scudder International Growth Portfolio: 1,390,831 31,810,842 35,452,273
PPI T. Rowe Price Growth Equity Portfolio: 1,921,115 85,993,480 126,793,561
-------------- ----------------
NET ASSETS $5,313,588,034 $ 6,173,851,032
============== ================
</TABLE>
S-3
<PAGE>
Variable Annuity Account B
Statement of Assets and Liabilities - December 31, 1999 (continued):
Net assets represented by:
Reserves for annuity contracts in accumulation and payment period:
(Notes 1 and 6)
<TABLE>
<S> <C>
Aetna Ascent VP:
Annuity contracts in accumulation .............................................. $ 19,981,127
Aetna Balanced VP, Inc.:
Annuity contracts in accumulation .............................................. 180,920,898
Annuity contracts in payment period ............................................ 26,077,945
Aetna Bond VP:
Annuity contracts in accumulation .............................................. 93,390,139
Annuity contracts in payment period ............................................ 5,662,703
Aetna Crossroads VP:
Annuity contracts in accumulation .............................................. 23,405,948
Annuity contracts in payment period ............................................ 1,540,450
Aetna Get Fund, Series C:
Annuity contracts in accumulation .............................................. 7,124,468
Aetna Get Fund, Series D:
Annuity contracts in accumulation .............................................. 176,632,929
Aetna Get Fund, Series E:
Annuity contracts in accumulation .............................................. 381,698,376
Aetna Get Fund, Series G:
Annuity contracts in accumulation .............................................. 211,855,059
Aetna Get Fund, Series H:
Annuity contracts in accumulation .............................................. 1,726,955
Aetna Growth and Income VP:
Annuity contracts in accumulation .............................................. 980,638,280
Annuity contracts in payment period ............................................ 192,658,329
Aetna Growth VP:
Annuity contracts in accumulation .............................................. 66,260,594
Annuity contracts in payment period ............................................ 4,742,043
Aetna High Yield VP:
Annuity contracts in accumulation .............................................. 245,682
Aetna Index Plus Large Cap VP:
Annuity contracts in accumulation .............................................. 198,210,089
Annuity contracts in payment period ............................................ 40,863,938
Aetna Index Plus Mid Cap VP:
Annuity contracts in accumulation .............................................. 866,762
Aetna Index Plus Small Cap VP:
Annuity contracts in accumulation .............................................. 911,313
Aetna International VP:
Annuity contracts in accumulation .............................................. 4,434,269
Annuity contracts in payment period ............................................ 105,507
Aetna Legacy VP:
Annuity contracts in accumulation .............................................. 26,597,646
Annuity contracts in payment period ............................................ 2,972,058
Aetna Money Market VP:
Annuity contracts in accumulation .............................................. 214,710,443
Annuity contracts in payment period ............................................ 1,062,436
Aetna Real Estate Securities VP:
Annuity contracts in accumulation .............................................. 1,925,817
Annuity contracts in payment period ............................................ 13,903
</TABLE>
S-4
<PAGE>
Variable Annuity Account B
Statement of Assets and Liabilities - December 31, 1999 (continued):
<TABLE>
<S> <C>
Aetna Small Company VP:
Annuity contracts in accumulation ........... $ 25,125,952
Annuity contracts in payment period ......... 463,770
Aetna Value Opportunity VP:
Annuity contracts in accumulation ........... 16,918,826
AIM V.I. Funds:
Capital Appreciation Fund:
Annuity contracts in accumulation ........... 9,923,942
Annuity contracts in payment period ......... 47,197
Growth and Income Fund:
Annuity contracts in accumulation ........... 789,296
Annuity contracts in payment period ......... 22,700,889
Growth Fund:
Annuity contracts in accumulation ........... 18,608,980
Annuity contracts in payment period ......... 322,083
Value Fund:
Annuity contracts in accumulation ........... 40,884,392
Annuity contracts in payment period ......... 942,276
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation ........... 6,213,801
Income & Growth Portfolio:
Annuity contracts in accumulation ........... 19,087,670
Leveraged AllCap Portfolio:
Annuity contracts in accumulation ........... 25,112,341
American Century VP Funds:
Balanced Fund:
Annuity contracts in accumulation ........... 3,452,367
International Fund:
Annuity contracts in accumulation ........... 7,499,031
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation ........... 2,589,130
Federated Insurance Series:
American Leaders Fund II:
Annuity contracts in accumulation ........... 61,038
Annuity contracts in payment period ......... 125,105,874
Equity Income Fund II:
Annuity contracts in accumulation ........... 30,384,515
Annuity contracts in payment period ......... 8,185
Growth Strategies Fund II:
Annuity contracts in accumulation ........... 46,677,628
High Income Bond Fund II:
Annuity contracts in accumulation ........... 41,788,490
Annuity contracts in payment period ......... 17,816
International Equity Fund II:
Annuity contracts in accumulation ........... 28,925,669
Prime Money Fund II:
Annuity contracts in accumulation ........... 8,657,471
U.S. Government Securities Fund II:
Annuity contracts in accumulation ........... 12,814,411
</TABLE>
S-5
<PAGE>
Variable Annuity Account B
Statement of Assets and Liabilities - December 31, 1999 (continued):
<TABLE>
<S> <C>
Utility Fund II:
Annuity contracts in accumulation ........... $ 26,498,835
Annuity contracts in payment period ......... 59,670
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation ........... 191,754,908
Growth Portfolio:
Annuity contracts in accumulation ........... 208,982,521
High Income Portfolio:
Annuity contracts in accumulation ........... 61,938,947
Annuity contracts in payment period ......... 755,677
Overseas Portfolio:
Annuity contracts in accumulation ........... 20,088,940
Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation ........... 21,519,462
Contrafund Portfolio:
Annuity contracts in accumulation ........... 234,998,024
Index 500 Portfolio:
Annuity contracts in accumulation ........... 170,467,635
Investment Grade Bond Portfolio:
Annuity contracts in accumulation ........... 4,120,050
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation ........... 274,665,000
Balanced Portfolio:
Annuity contracts in accumulation ........... 185,323,915
Flexible Income Portfolio:
Annuity contracts in accumulation ........... 19,582,411
Growth Portfolio:
Annuity contracts in accumulation ........... 9,348,397
Annuity contracts in payment period ......... 213,572,309
Worldwide Growth Portfolio:
Annuity contracts in accumulation ........... 11,305,698
Annuity contracts in payment period ......... 470,413,281
Lexington Emerging Markets Fund, Inc.:
Annuity contracts in accumulation ........... 2,574,027
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation ........... 3,168,963
MFS Funds:
Global Government Series:
Annuity contracts in accumulation ........... 1,643,414
Total Return Series:
Annuity contracts in accumulation ........... 50,789,444
Mitchell Hutchins Series Trust:
Growth & Income Portfolio:
Annuity contracts in accumulation ........... 809,956
Small Cap Portfolio:
Annuity contracts in accumulation ........... 172,522
Tactical Allocation Portfolio:
Annuity contracts in accumulation ........... 7,364,195
</TABLE>
S-6
<PAGE>
Variable Annuity Account B
Statement of Assets and Liabilities - December 31, 1999 (continued):
<TABLE>
<S> <C>
Oppenheimer Funds:
Aggressive Growth Fund/VA:
Annuity contracts in accumulation ........... $ 29,291,524
Annuity contracts in payment period ......... 1,639,824
Global Securities Fund/VA:
Annuity contracts in accumulation ........... 9,513,748
Main Street Growth & Income Fund/VA:
Annuity contracts in accumulation ........... 56,214,303
Annuity contracts in payment period ......... 151,990
Strategic Bond Fund/VA:
Annuity contracts in accumulation ........... 19,569,256
Annuity contracts in payment period ......... 228,810
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation ........... 181,712,440
Annuity contracts in payment period ......... 1,531,267
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation ........... 102,536,898
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation ........... 53,173,898
Annuity contracts in payment period ......... 1,763,893
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation ........... 35,328,550
Annuity contracts in payment period ......... 123,723
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation ........... 723,814
Annuity contracts in payment period ......... 126,069,747
--------------
$6,173,851,032
==============
</TABLE>
See Notes to Financial Statements
S-7
<PAGE>
Variable Annuity Account B
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
-----------------
<S> <C>
INVESTMENT INCOME:
Income: (Notes 1, 3 and 5)
Dividends ................................................... $ 372,453,223
Expenses: (Notes 2 and 5)
Valuation period deductions ................................. (59,498,930)
--------------
Net investment income ........................................ $ 312,954,293
--------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS:
Net realized gain on sales of investments: (Notes 1, 4 and 5)
Proceeds from sales ......................................... $1,971,718,606
Cost of investments sold .................................... 1,728,629,845
--------------
Net realized gain on investments ........................... 243,088,761
--------------
Net unrealized gain on investments: (Note 5)
Beginning of year ........................................... 349,806,583
End of year ................................................. 860,262,998
--------------
Net change in unrealized gain on investments ............... 510,456,415
--------------
Net realized and unrealized gain on investments .............. 753,545,176
--------------
Net increase in net assets resulting from operations ......... $1,066,499,469
==============
</TABLE>
See Notes to Financial Statements
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Year Ended December 31,
1999 1998
---- ----
<S> <C> <C>
FROM OPERATIONS:
Net investment income .................................................. $ 312,954,293 $ 283,508,891
Net realized gain on investments ....................................... 243,088,761 143,410,533
Net change in unrealized gain on investments ........................... 510,456,415 94,282,077
-------------- --------------
Net increase in net assets resulting from operations ................... 1,066,499,469 521,201,501
-------------- --------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ............................ 659,312,376 489,286,251
Transfers from the Company for mortality guarantee adjustments ......... 2,250,831 (906,373)
Transfers from the Company's fixed account options ..................... 818,802,585 212,914,994
Transfer to the Company's other variable annuity accounts .............. 644,115 0
Redemptions by contract holders ........................................ (300,870,502) (167,845,102)
Annuity payments ....................................................... (30,374,265) (22,421,712)
Other .................................................................. 1,018,001 1,896,006
-------------- --------------
Net increase in net assets from unit transactions (Note 6) ............ 1,150,783,141 512,924,064
-------------- --------------
Change in net assets ................................................... 2,217,282,610 1,034,125,565
NET ASSETS:
Beginning of year ...................................................... 3,956,568,422 2,922,442,857
-------------- --------------
End of year ............................................................ $6,173,851,032 $3,956,568,422
============== ==============
</TABLE>
See Notes to Financial Statements
S-8
<PAGE>
Variable Annuity Account B
Condensed Financial Information - Year Ended December 31, 1999
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Value
Per Unit Increase (Decrease) Units
-------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Ascent VP:
Non-Qualified V $15.855 $17.905 12.93% 96,550.7 $ 1,728,713
Non-Qualified V (0.75) 16.082 18.253 13.50% 129,604.8 2,365,645
Non-Qualified VII 15.769 17.779 12.75% 742,494.1 13,200,807
Non-Qualified VIII 14.012 15.822 12.92% 143,277.9 2,266,982
Non-Qualified IX 15.786 17.783 12.65% 1,438.0 25,572
Non-Qualified X 15.942 18.066 13.32% 21,775.7 393,408
- --------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc.:
Non-Qualified V 21.929 24.603 12.19% 2,278,135.6 56,049,439
Non-Qualified V (0.75) 22.244 25.081 12.75% 1,579,287.7 39,610,851
Non-Qualified VI 18.445 20.706 12.26% 37,676.9 780,148
Non-Qualified VII 21.507 24.091 12.01% 2,243,589.9 54,049,730
Non-Qualified VIII 15.212 17.066 12.19% 456,096.7 7,783,834
Non-Qualified IX 21.834 24.436 11.92% 28,079.2 686,140
Non-Qualified X 22.015 24.762 12.48% 383,141.3 9,487,227
Non-Qualified XI 18.517 20.840 12.55% 5,143.3 107,184
Non-Qualified XII 10.548 11.902 12.84% (2) 7,910.4 94,148
Non-Qualified XIII 10.337 11.632 12.53% 417,961.2 4,861,556
Non-Qualified XIV 10.323 11.581 12.19% 403,186.5 4,669,198
Non-Qualified XV 10.316 11.555 12.01% 237,245.60 2,741,443
Annuity contracts in payment period 26,077,945
- --------------------------------------------------------------------------------------------------------------------
Aetna Bond VP:
Non-Qualified V 14.270 13.988 (1.98%) 887,370.7 12,412,832
Non-Qualified V (0.75) 14.475 14.260 (1.49%) 1,654,932.3 23,599,990
Non-Qualified VI 13.041 12.792 (1.91%) 43,965.0 562,381
Non-Qualified VII 13.998 13.700 (2.13%) 1,967,951.2 26,960,637
Non-Qualified VIII 11.910 11.674 (1.98%) 487,813.6 5,694,656
Non-Qualified IX 14.208 13.893 (2.22%) 22,155.4 307,807
Non-Qualified X 14.304 14.042 (1.83%) 387,135.1 5,436,287
Non-Qualified XI 13.072 12.841 (1.77%) 4,285.2 55,026
Non-Qualified XIII 10.319 10.145 (1.69%) 708,744.3 7,190,136
Non-Qualified XIV 10.305 10.101 (1.98%) 806,342.7 8,144,472
Non-Qualified XV 10.298 10.078 (2.14%) 300,240.3 3,025,915
Annuity contracts in payment period 5,662,703
- --------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP:
Non-Qualified V 15.095 16.431 8.85% 115,323.8 1,894,869
Non-Qualified V (0.75) 15.312 16.750 9.39% 124,068.8 2,078,187
Non-Qualified VII 15.013 16.316 8.68% 947,775.8 15,463,446
Non-Qualified VIII 13.588 14.789 8.84% 254,767.3 3,767,710
Non-Qualified IX 15.030 16.319 8.58% 469.8 7,667
Non-Qualified X 15.179 16.579 9.22% 9,938.7 164,777
Non-Qualified XVII 15.521 16.474 6.14% (8) 1,778.00 29,292
Annuity contracts in payment period 1,540,450
- --------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series C:
Non-Qualified V 15.904 19.358 21.72% 51,240.5 991,932
Non-Qualified V (0.75) 16.087 19.679 22.33% 302,695.5 5,956,780
Non-Qualified IX 15.835 19.227 21.42% 9,141.2 175,756
- --------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series D:
Non-Qualified V 10.062 10.726 6.60% 2,241,700.8 24,043,761
Non-Qualified V (0.75) 10.073 10.792 7.14% 1,808,945.0 19,521,878
Non-Qualified VII 10.058 10.704 6.42% 5,471,517.0 58,567,813
Non-Qualified VIII 10.136 10.739 5.95% (3) 2,431,960.4 26,117,416
Non-Qualified IX 10.063 10.693 6.26% (1) 309.5 3,309
Non-Qualified X 10.062 10.726 6.60% 183,152.7 1,964,436
Non-Qualified XII 9.997 10.785 7.88% (2) 3,713.7 40,053
Non-Qualified XIII 10.072 10.769 6.92% 1,700,909.8 18,316,499
</TABLE>
S-9
<PAGE>
Variable Annuity Account B
Condensed Financial Information - Year Ended December 31, 1999 (continued):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Value
Per Unit Increase (Decrease) Units
-------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Get Fund, Series D (continued):
Non-Qualified XIV $ 10.066 $ 10.730 6.60% 1,875,931.5 $ 20,127,863
Non-Qualified XV 10.063 10.710 6.43% 740,420.7 7,929,901
- -----------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series E:
Non-Qualified V 10.001 10.760 7.59% (5) 1,905,050.2 20,498,554
Non-Qualified V (0.75) 10.015 10.789 7.73% (5) 220,007.1 2,373,760
Non-Qualified VII 10.012 10.743 7.30% (5) 4,068,992.1 43,712,319
Non-Qualified VIII 10.012 10.752 7.39% (5) 534,700.9 5,748,947
Non-Qualified X 10.013 10.766 7.52% (5) 146,177.0 1,573,775
Non-Qualified XIII 10.012 10.770 7.57% (5) 10,224,328.7 110,111,245
Non-Qualified XIV 10.012 10.752 7.39% (5) 9,636,860.3 103,612,689
Non-Qualified XV 10.012 10.743 7.30% (5) 8,756,301.1 94,067,087
- -----------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series G:
Non-Qualified V 9.999 10.370 3.71% (8) 278,908.9 2,892,221
Non-Qualified V (0.75) 10.006 10.386 3.80% (8) 176,701.3 1,835,189
Non-Qualified VII 9.998 10.363 3.65% (8) 2,759,663.2 28,599,474
Non-Qualified VIII 10.003 10.368 3.65% (8) 456,778.0 4,735,998
Non-Qualified X 10.071 10.377 3.04% 10) 12,410.4 128,778
Non-Qualified XIII 9.998 10.378 3.80% (8) 5,406,495.6 56,108,725
Non-Qualified XIV 9.998 10.368 3.70% (8) 7,314,314.2 75,836,777
Non-Qualified XV 9.998 10.363 3.65% (8) 4,025,505.7 41,717,897
- -----------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series H:
Non-Qualified V 10.005 10.020 0.15% (11) 2,530.3 25,352
Non-Qualified VII 10.001 10.019 0.18% (11) 25,606.9 256,555
Non-Qualified VIII 10.005 10.020 0.15% (11) 15,022.0 150,515
Non-Qualified XIII 10.001 10.021 0.20% (11) 30,915.2 309,801
Non-Qualified XIV 10.000 10.020 0.20% (11) 60,328.2 604,471
Non-Qualified XV 10.001 10.019 0.18% (11) 37,954.0 380,261
- -----------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP:
Non-Qualified 1964 267.347 310.020 15.96% 958.7 297,208
Non-Qualified V 24.907 28.883 15.96% 7,212,849.3 208,327,406
Non-Qualified V (0.75) 25.265 29.444 16.54% 11,813,415.6 347,835,862
Non-Qualified VI 23.322 27.061 16.03% 1,662,948.1 45,001,830
Non-Qualified VII 24.839 28.758 15.78% 7,621,660.3 219,185,741
Non-Qualified VIII 16.604 19.253 15.95% 1,372,571.6 26,426,472
Non-Qualified IX 24.800 28.686 15.67% 134,360.2 3,854,314
Non-Qualified X 25.005 29.069 16.25% 3,297,663.1 95,859,271
Non-Qualified XI 23.414 27.236 16.32% 41,567.6 1,132,126
Non-Qualified XII 10.246 11.882 15.97% (2) 25,734.1 305,763
Non-Qualified XIII 9.886 11.498 16.31% 1,093,629.5 12,574,135
Non-Qualified XIV 9.872 11.447 15.95% 1,317,641.6 15,083,505
Non-Qualified XV 9.866 11.422 15.77% 407,605.2 4,655,755
Non-Qualified XVII 263.583 285.280 8.23% (8) 346.6 98,892
Annuity contracts in payment period 192,658,329
- -----------------------------------------------------------------------------------------------------------------------
Aetna Growth VP:
Non-Qualified V 17.912 23.875 33.29% 172,425.2 4,116,687
Non-Qualified V (0.75) 18.067 24.203 33.96% 626,397.2 15,160,779
Non-Qualified VII 17.862 23.771 33.08% 947,365.7 22,520,149
Non-Qualified VIII 17.909 23.870 33.28% 367,226.0 8,765,776
Non-Qualified IX 17.834 23.713 32.97% 5,532.0 131,179
Non-Qualified XII 11.536 15.094 30.84% (2) 4,940.4 74,572
Non-Qualified XIII 10.489 14.022 33.68% 453,569.6 6,360,064
Non-Qualified XIV 10.475 13.961 33.28% 536,726.5 7,493,206
Non-Qualified XV 10.468 13.930 33.07% 114,035.50 1,588,550
Non-Qualified XVII 15.198 18.142 19.37% (8) 2,735.70 49,632
Annuity contracts in payment period 4,742,043
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
S-10
<PAGE>
Variable Annuity Account B
Condensed Financial Information - Year Ended December 31, 1999 (continued):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
Value
Per Unit Increase (Decrease) Units
-------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna High Yield VP:
Non-Qualified V $ 9.212 $ 9.739 5.72% 2,827.4 $ 27,537
Non-Qualified V (0.75) 9.244 9.822 6.25% 21,597.9 212,138
Non-Qualified IX 9.677 9.698 0.22% (3) 619.4 6,007
- -----------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP:
Non-Qualified V 18.772 23.044 22.76% 347,853.6 8,015,945
Non-Qualified V (0.75) 18.989 23.427 23.37% 1,552,901.9 36,379,360
Non-Qualified VII 18.704 22.923 22.56% 2,708,364.6 62,083,723
Non-Qualified VIII 18.449 22.646 22.75% 838,357.2 18,985,392
Non-Qualified IX 18.691 22.887 22.45% 31,248.1 715,186
Non-Qualified XII 11.411 13.677 19.86% (2) 18,623.1 254,700
Non-Qualified XIII 10.716 13.193 23.11% 2,135,758.9 28,177,968
Non-Qualified XIV 10.702 13.136 22.74% 2,394,660.9 31,455,670
Non-Qualified XV 10.694 13.107 22.56% 926,392.60 12,142,145
Annuity contracts in payment period 40,863,938
- -----------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP:
Non-Qualified V 10.891 12.455 14.36% 6,906.5 86,024
Non-Qualified V (0.75) 10.928 12.561 14.94% 60,811.0 763,858
Non-Qualified IX 10.872 12.403 14.08% 1,361.0 16,880
- -----------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP:
Non-Qualified V 8.815 9.645 9.42% 15,815.5 152,537
Non-Qualified V (0.75) 8.846 9.727 9.96% 76,971.1 748,670
Non-Qualified IX 8.800 9.604 9.14% 1,041.3 10,001
Non-Qualified XII 8.325 10.485 25.95% (2) 10.0 105
- -----------------------------------------------------------------------------------------------------------------------
Aetna International VP:
Non-Qualified V 9.765 14.594 49.45% 10,655.3 155,502
Non-Qualified V (0.75) 9.798 14.718 50.21% 44,537.5 655,483
Non-Qualified VII 9.754 14.554 49.21% 44,241.2 643,908
Non-Qualified VIII 9.764 14.592 49.45% 33,244.7 485,106
Non-Qualified XIII 9.149 13.715 49.91% 75,017.3 1,028,838
Non-Qualified XIV 9.137 13.655 49.45% 79,291.0 1,082,697
Non-Qualified XV 9.131 13.625 49.22% 28,091.1 382,735
Annuity contracts in payment period 105,507
- -----------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP:
Non-Qualified V 14.064 14.875 5.77% 111,343.3 1,656,206
Non-Qualified V (0.75) 14.266 15.164 6.29% 77,496.0 1,175,149
Non-Qualified VII 13.989 14.772 5.60% 1,203,703.1 17,781,290
Non-Qualified VIII 13.037 13.787 5.75% 430,581.6 5,936,585
Non-Qualified IX 14.003 14.774 5.51% 502.1 7,418
Non-Qualified XII 9.846 10.713 8.81% (2) 3,826.9 40,998
Annuity contracts in payment period 2,972,058
- -----------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP:
Non-Qualified V 12.425 12.894 3.77% 1,034,153.6 13,334,505
Non-Qualified V (0.75) 12.604 13.145 4.29% 2,521,960.2 33,150,869
Non-Qualified VI 12.132 12.597 3.83% 57,059.8 718,807
Non-Qualified VII 12.322 12.766 3.60% 7,902,383.9 100,885,317
Non-Qualified VIII 11.141 11.561 3.77% 1,373,014.2 15,872,994
Non-Qualified IX 12.372 12.806 3.51% 28,273.9 362,086
Non-Qualified X 12.425 12.894 3.77% 457,618.5 5,900,590
Non-Qualified XI 12.132 12.597 3.83% 4,835.1 60,910
Non-Qualified XIII 10.199 10.615 4.08% 2,174,382.7 23,082,032
Non-Qualified XIV 10.186 10.569 3.76% 1,313,322.2 13,880,480
Non-Qualified XV 10.179 10.546 3.61% 707,569.2 7,461,853
Annuity contracts in payment period 1,062,436
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
S-11
<PAGE>
Variable Annuity Account B
Condensed Financial Information - Year Ended December 31, 1999 (continued):
<TABLE>
<CAPTION>
Value
Per Unit Increase (Decrease) Units
-------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Real Estate Securities VP:
Non-Qualified V $ 8.873 $ 8.393 (5.41%) 6,001.7 $ 50,372
Non-Qualified V (0.75) 8.903 8.464 (4.93%) 60,992.9 516,260
Non-Qualified VII 8.863 8.370 (5.56%) 59,453.8 497,647
Non-Qualified VIII 8.872 8.392 (5.41%) 25,152 211,073
Non-Qualified XIII 8.903 8.446 (5.13%) 36,876 311,466
Non-Qualified XIV 8.891 8.409 (5.42%) 34,137 287,073
Non-Qualified XV 8.885 8.391 (5.56%) 6,188 51,926
Annuity contracts in payment period 13,903
- ------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP:
Non-Qualified V 13.633 17.617 29.22% 19,165.4 337,633
Non-Qualified V (0.75) 13.751 17.859 29.87% 177,816.5 3,175,601
Non-Qualified VII 13.595 17.540 29.02% 715,581.7 12,551,330
Non-Qualified VIII 13.631 17.613 29.21% 276,385.7 4,868,001
Non-Qualified IX 13.574 17.497 28.90% 1,732.5 30,314
Non-Qualified XII 8.741 12.352 41.31% (2) 25,983.5 320,941
Non-Qualified XIII 9.357 12.128 29.61% 163,679.4 1,985,026
Non-Qualified XIV 9.345 12.074 29.20% 114,137.8 1,378,154
Non-Qualified XV 9.338 12.048 29.02% 39,753.80 478,952
Annuity contracts in payment period 463,770
- ------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP:
Non-Qualified V 16.030 18.930 18.09% 23,354.3 442,092
Non-Qualified V (0.75) 16.169 19.190 18.68% 93,802.4 1,800,053
Non-Qualified VII 15.985 18.847 17.90% 609,861.9 11,494,317
Non-Qualified VIII 16.028 18.926 18.08% 160,009.9 3,028,321
Non-Qualified IX 15.960 18.801 17.80% 298.5 5,613
Non-Qualified XII 10.626 13.007 22.41% (2) 11,411.6 148,430
- ------------------------------------------------------------------------------------------------------------------------
AIM V.I. Funds:
Capital Appreciation Fund:
Non-Qualified V 10.008 13.753 37.42% (5) 2,630.0 36,171
Non-Qualified V (0.75) 9.979 13.801 38.30% (7) 11,914.5 164,426
Non-Qualified XIII 10.245 14.675 43.24% 190,830.9 2,800,502
Non-Qualified XIV 10.231 14.611 42.81% 317,266.2 4,635,623
Non-Qualified XV 10.224 14.579 42.60% 156,883.8 2,287,220
Annuity contracts in payment period 47,197
- ------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund:
Non-Qualified V 9.568 11.716 22.45% (5) 10,586.7 124,029
Non-Qualified V (0.75) 10.215 11.756 15.09% (6) 36,163.4 425,147
Non-Qualified XIII 10.663 14.179 32.97% 370,289.3 5,250,354
Non-Qualified XIV 10.649 14.117 32.57% 938,411.4 13,247,617
Non-Qualified XV 10.641 14.086 32.37% 259,386.9 3,653,742
Annuity contracts in payment period 789,296
- ------------------------------------------------------------------------------------------------------------------------
Growth Fund:
Non-Qualified V 9.663 12.069 24.90% (5) 1,842.7 22,238
Non-Qualified V (0.75) 9.722 12.111 24.57% (7) 47,998.6 581,287
Non-Qualified XIII 10.779 14.438 33.95% 300,326.8 4,336,151
Non-Qualified XIV 10.764 14.375 33.55% 722,832.0 10,390,712
Non-Qualified XV 10.757 14.343 33.34% 228,577.5 3,278,592
Annuity contracts in payment period 322,083
- ------------------------------------------------------------------------------------------------------------------------
Value Fund:
Non-Qualified V 9.891 11.506 16.33% (4) 6,923.5 79,660
Non-Qualified V (0.75) 9.764 11.546 18.25% (4) 83,636.8 965,645
Non-Qualified XIII 10.616 13.659 28.66% 895,401.3 12,230,007
Non-Qualified XIV 10.601 13.599 28.28% 1,538,846.0 20,926,738
Non-Qualified XV 10.594 13.569 28.08% 492,467.0 6,682,342
Annuity contracts in payment period 942,276
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-12
<PAGE>
Variable Annuity Account B
Condensed Financial Information - Year Ended December 31, 1999 (continued):
<TABLE>
<CAPTION>
Value
Per Unit
--------
Beginning End of
of Year Year
- --------------------------------------------------------------
<S> <C> <C>
Alger American Funds:
Balanced Portfolio:
Non-Qualified VII $20.946 $26.687
- --------------------------------------------------------------
Income & Growth Portfolio:
Non-Qualified VII 22.064 30.991
- --------------------------------------------------------------
Leveraged AllCap Portfolio:
Non-Qualified VII 24.881 43.684
Non-Qualified VIII 18.206 32.013
- --------------------------------------------------------------
American Century VP Funds:
Balanced Fund:
Non-Qualified VII 17.479 18.968
- --------------------------------------------------------------
International Fund:
Non-Qualified VII 16.139 26.105
Non-Qualified VIII 14.599 23.649
- --------------------------------------------------------------
Calvert Social Balanced Portfolio:
Non-Qualified V 20.415 22.626
Non-Qualified V (0.75) 20.708 23.066
Non-Qualified VII 11.437 12.656
Non-Qualified VIII 11.456 12.696
- --------------------------------------------------------------
Federated Insurance Series:
American Leaders Fund II:
Non-Qualified VII 23.528 24.746
Non-Qualified VIII 16.869 17.769
Annuity contracts in payment period
- --------------------------------------------------------------
Equity Income Fund II:
Non-Qualified VII 14.022 16.369
Annuity contracts in payment period
- --------------------------------------------------------------
Growth Strategies Fund II:
Non-Qualified VII 18.269 31.060
- --------------------------------------------------------------
High Income Bond Fund II:
Non-Qualified VII 14.910 15.040
Non-Qualified VIII 12.629 12.759
Annuity contracts in payment period
- --------------------------------------------------------------
International Equity Fund II:
Non-Qualified VII 14.719 26.832
Non-Qualified VIII 13.523 24.690
- --------------------------------------------------------------
Prime Money Fund II:
Non-Qualified VII 11.503 11.868
- ------------------------------------------- ------- -------
U.S. Government Securities Fund II:
Non-Qualified VII 12.614 12.363
- --------------------------------------------------------------
Utility Fund II:
Non-Qualified VII 18.663 18.714
Non-Qualified VIII 15.472 15.537
Annuity contracts in payment period
- --------------------------------------------------------------
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio:
Non-Qualified V 17.400 18.272
Non-Qualified V (0.75) 17.650 18.627
Non-Qualified VII 20.872 21.883
Non-Qualified VIII 14.942 15.689
Non-Qualified IX 17.325 18.147
Non-Qualified X 17.400 18.272
Non-Qualified XII 10.184 10.651
<CAPTION>
Increase (Decrease) Units
in Value of Outstanding Reserves
Accumulation at End at End
Unit of Year of Year
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alger American Funds:
Balanced Portfolio:
Non-Qualified VII 27.41% 232,842.7 $ 6,213,801
- ---------------------------------------------------------------------------------------------------------
Income & Growth Portfolio:
Non-Qualified VII 40.46% 615,919.4 19,087,670
- ---------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
Non-Qualified VII 75.57% 574,744.6 25,106,952
Non-Qualified VIII 75.84% 168.3 5,389
- ---------------------------------------------------------------------------------------------------------
American Century VP Funds:
Balanced Fund:
Non-Qualified VII 8.52% 182,012.0 3,452,367
- ---------------------------------------------------------------------------------------------------------
International Fund:
Non-Qualified VII 61.75% 287,102.7 7,494,706
Non-Qualified VIII 61.99% 182.9 4,325
- ---------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio:
Non-Qualified V 10.83% 8,235.7 186,344
Non-Qualified V (0.75) 11.39% 37,045.8 854,507
Non-Qualified VII 10.66% 63,517.0 803,879
Non-Qualified VIII 10.82% 58,632.1 744,400
- ---------------------------------------------------------------------------------------------------------
Federated Insurance Series:
American Leaders Fund II:
Non-Qualified VII 5.18% 5,048,733.2 124,936,306
Non-Qualified VIII 5.34% 9,542.9 169,568
Annuity contracts in payment period 61,038
- ---------------------------------------------------------------------------------------------------------
Equity Income Fund II:
Non-Qualified VII 16.74% 1,856,257.2 30,384,515
Annuity contracts in payment period 8,185
- ---------------------------------------------------------------------------------------------------------
Growth Strategies Fund II:
Non-Qualified VII 70.01% 1,502,834.6 46,677,628
- ---------------------------------------------------------------------------------------------------------
High Income Bond Fund II:
Non-Qualified VII 0.87% 2,778,202.2 41,784,652
Non-Qualified VIII 1.03% 300.8 3,838
Annuity contracts in payment period 17,816
- ---------------------------------------------------------------------------------------------------------
International Equity Fund II:
Non-Qualified VII 82.29% 1,077,889.2 28,922,440
Non-Qualified VIII 82.58% 130.8 3,229
- ---------------------------------------------------------------------------------------------------------
Prime Money Fund II:
Non-Qualified VII 3.17% 729,506.2 8,657,471
- ---------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II:
Non-Qualified VII (1.99%) 1,036,547.5 12,814,411
- ---------------------------------------------------------------------------------------------------------
Utility Fund II:
Non-Qualified VII 0.27% 1,415,963.0 26,497,792
Non-Qualified VIII 0.42% 67.1 1,043
Annuity contracts in payment period 59,670
- ---------------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio:
Non-Qualified V 5.01% 236,374.1 4,318,918
Non-Qualified V (0.75) 5.54% 519,884.7 9,683,767
Non-Qualified VII 4.84% 6,104,314.1 133,577,684
Non-Qualified VIII 5.00% 992,829.0 15,576,658
Non-Qualified IX 4.74% 8,863.0 160,839
Non-Qualified X 5.01% 11,369.5 207,738
Non-Qualified XII 4.59% (2) 653.9 6,965
</TABLE>
S-13
<PAGE>
Variable Annuity Account B
Condensed Financial Information - Year Ended December 31, 1999 (continued):
<TABLE>
<CAPTION>
Value
Per Unit
--------
Beginning End of
of Year Year
- ------------------------------------------------------------------
<S> <C> <C>
Equity-Income Portfolio (continued):
Non-Qualified XIII $ 9.911 $10.438
Non-Qualified XIV 9.897 10.392
Non-Qualified XV 9.891 10.369
- ------------------------------------------------------------------
Growth Portfolio:
Non-Qualified V 19.155 25.999
Non-Qualified V (0.75) 19.430 26.504
Non-Qualified VII 26.348 35.706
Non-Qualified VIII 17.420 23.643
Non-Qualified IX 19.072 25.822
Non-Qualified X 19.155 25.999
Non-Qualified XII 12.390 16.024
Non-Qualified XIII 10.265 12.649
Non-Qualified XIV 10.231 12.628
Non-Qualified XV 10.793 12.618
Non-Qualified XVII 22.058 26.366
- ------------------------------------------------------------------
High Income Portfolio:
Non-Qualified VII 13.168 14.042
Non-Qualified VIII 11.798 12.601
Non-Qualified XIII 8.949 9.586
Non-Qualified XIV 8.936 9.544
Non-Qualified XV 8.930 9.523
Annuity contracts in payment period
- ------------------------------------------------------------------
Overseas Portfolio:
Non-Qualified V 13.786 19.419
Non-Qualified V (0.75) 13.984 19.796
Non-Qualified VII 15.210 21.391
Non-Qualified VIII 12.879 18.139
Non-Qualified IX 13.727 19.287
- ------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio:
Non-Qualified VII 17.786 19.482
Non-Qualified VIII 14.783 16.218
- ------------------------------------------------------------------
Contrafund Portfolio:
Non-Qualified V 19.735 24.217
Non-Qualified V (0.75) 20.018 24.687
Non-Qualified VII 21.872 26.797
Non-Qualified VIII 17.492 21.463
Non-Qualified IX 19.649 24.052
Non-Qualified X 19.735 24.217
Non-Qualified XII 11.460 13.787
Non-Qualified XIII 10.535 12.966
Non-Qualified XIV 10.521 12.909
Non-Qualified XV 10.514 12.881
Non-Qualified XVII 23.549 27.241
- ------------------------------------------------------------------
Index 500 Portfolio:
Non-Qualified VII 22.727 27.005
Non-Qualified VIII 18.925 22.522
- ------------------------------------------------------------------
Investment Grade Bond Portfolio:
Non-Qualified VII 12.446 12.143
Non-Qualified VIII 11.918 11.834
- ------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Non-Qualified V 20.433 45.486
Non-Qualified V (0.75) 20.726 46.370
Non-Qualified VII 20.410 45.363
<CAPTION>
Increase (Decrease) Units
in Value of Outstanding Reserves
Accumulation at End at End
Unit of Year of Year
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Equity-Income Portfolio (continued):
Non-Qualified XIII 5.32% 735,175.3 $ 7,673,717
Non-Qualified XIV 5.00% 1,507,319.6 15,664,494
Non-Qualified XV 4.83% 471,011.6 4,884,128
- -----------------------------------------------------------------------------------------------------------
Growth Portfolio:
Non-Qualified V 35.73% 474,648.7 12,340,278
Non-Qualified V (0.75) 36.41% 874,557.2 23,179,283
Non-Qualified VII 35.52% 4,177,865.8 149,173,411
Non-Qualified VIII 35.72% 831,556.3 19,660,094
Non-Qualified IX 35.39% 23,653 610,766
Non-Qualified X 35.73% 32,858 854,269
Non-Qualified XII 29.33% (2) 4,299 68,894
Non-Qualified XIII 23.22% (8) 84,394.1 1,067,531
Non-Qualified XIV 23.43% (8) 124,948 1,577,908
Non-Qualified XV 16.91% (9) 35,352 446,070
Non-Qualified XVII 19.53% (8) 152 4,017
- -----------------------------------------------------------------------------------------------------------
High Income Portfolio:
Non-Qualified VII 6.64% 2,739,738.4 38,471,925
Non-Qualified VIII 6.81% 688,515.9 8,675,998
Non-Qualified XIII 7.12% 590,620.8 5,661,907
Non-Qualified XIV 6.80% 712,099.4 6,796,569
Non-Qualified XV 6.64% 244,926.9 2,332,548
Annuity contracts in payment period 755,677
- -----------------------------------------------------------------------------------------------------------
Overseas Portfolio:
Non-Qualified V 40.86% 37,274.5 723,834
Non-Qualified V (0.75) 41.56% 182,516.9 3,613,179
Non-Qualified VII 40.64% 685,323.4 14,659,617
Non-Qualified VIII 40.84% 58,815.1 1,066,865
Non-Qualified IX 40.50% 1,319.3 25,445
- -----------------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio:
Non-Qualified VII 9.54% 951,972.5 18,546,594
Non-Qualified VIII 9.71% 183,310.4 2,972,868
- -----------------------------------------------------------------------------------------------------------
Contrafund Portfolio:
Non-Qualified V 22.71% 449,134.2 10,876,529
Non-Qualified V (0.75) 23.32% 732,242.8 18,077,121
Non-Qualified VII 22.52% 5,373,380.6 143,990,372
Non-Qualified VIII 22.70% 787,797.1 16,908,448
Non-Qualified IX 22.41% 20,988.0 504,802
Non-Qualified X 22.71% 13,750.2 332,984
Non-Qualified XII 20.31% (2) 5,460.5 75,287
Non-Qualified XIII 23.08% 1,126,346.9 14,604,330
Non-Qualified XIV 22.70% 1,682,679.9 21,722,393
Non-Qualified XV 22.51% 604,941.5 7,792,281
Non-Qualified XVII 15.68% (8) 4,165.7 113,477
- -----------------------------------------------------------------------------------------------------------
Index 500 Portfolio:
Non-Qualified VII 18.82% 5,394,050.7 145,664,290
Non-Qualified VIII 19.01% 1,101,288.9 24,803,345
- -----------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
Non-Qualified VII (2.43%) 339,030.3 4,116,714
Non-Qualified VIII (0.70%) (2) 282 3,336
- -----------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Non-Qualified V 122.61% 828,592.3 37,689,170
Non-Qualified V (0.75) 123.73% 1,056,343.2 48,982,313
Non-Qualified VII 122.26% 2,409,624.0 109,306,960
</TABLE>
S-14
<PAGE>
Variable Annuity Account B
Condensed Financial Information - Year Ended December 31, 1999 (continued):
<TABLE>
<CAPTION>
Value
Per Unit Increase (Decrease) Units
-------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aggressive Growth Portfolio (continued):
Non-Qualified VIII $14.162 $31.525 122.60% 532,220.6 $ 16,778,169
Non-Qualified IX 20.345 45.177 122.05% 29,489.6 1,332,245
Non-Qualified X 20.433 45.486 122.61% 34,550.4 1,571,554
Non-Qualified XII 12.588 26.089 107.25% (2) 11,071.3 288,842
Non-Qualified XIII 11.042 24.654 123.27% 1,018,786.6 25,116,929
Non-Qualified XIV 11.027 24.546 122.60% 994,779.9 24,418,006
Non-Qualified XV 11.020 24.492 122.25% 368,329.7 9,021,250
Non-Qualified XVII 32.641 53.698 64.51% (8) 2,971.5 159,562
- ----------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio:
Non-Qualified V 19.880 24.886 25.18% 527,201.1 13,120,149
Non-Qualified V (0.75) 20.165 25.370 25.81% 545,606.2 13,842,073
Non-Qualified VII 22.101 27.623 24.99% 2,773,991.6 76,624,788
Non-Qualified VIII 17.569 21.992 25.18% 807,835.2 17,766,013
Non-Qualified IX 19.794 24.717 24.87% 6,162.6 152,321
Non-Qualified X 19.880 24.886 25.18% 12,100.9 301,148
Non-Qualified XII 12.137 14.479 19.30% (2) 435.6 6,307
Non-Qualified XIII 10.945 13.742 25.56% 1,721,021.8 23,649,433
Non-Qualified XIV 10.930 13.681 25.17% 2,130,089.6 29,142,690
Non-Qualified XV 10.923 13.651 24.97% 778,170.3 10,623,120
Non-Qualified XVII 21.430 24.954 16.44% (8) 3,842.0 95,873
- ----------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio:
Non-Qualified V 15.509 15.562 0.34% 73,596.4 1,145,287
Non-Qualified V (0.75) 15.731 15.864 0.85% 190,660.1 3,024,702
Non-Qualified VII 15.405 15.433 0.18% 783,971.0 12,099,259
Non-Qualified VIII 12.873 12.916 0.33% 249,484.1 3,222,452
Non-Qualified IX 15.442 15.456 0.09% 2,079.7 32,143
Non-Qualified X 15.509 15.562 0.34% 3,109.8 48,393
Non-Qualified XII 10.355 10.404 0.47% (2) 977.9 10,175
- ----------------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Non-Qualified V 20.651 29.366 42.20% 432,037.4 12,687,006
Non-Qualified V (0.75) 20.948 29.936 42.91% 668,408.8 20,009,591
Non-Qualified VII 24.532 34.828 41.97% 2,701,099.3 94,073,291
Non-Qualified VIII 17.461 24.827 42.19% 521,852.0 12,956,249
Non-Qualified IX 20.562 29.166 41.84% 11,840.3 345,332
Non-Qualified X 20.651 29.366 42.20% 29,283.9 859,939
Non-Qualified XII 12.040 16.313 35.49% (2) 4,195.4 68,441
Non-Qualified XIII 10.938 15.599 42.61% 1,611,326.8 25,135,000
Non-Qualified XIV 10.923 15.531 42.19% 2,407,009.9 37,382,714
Non-Qualified XV 10.915 15.497 41.98% 647,595.6 10,035,592
Non-Qualified XVII 25.578 32.068 25.37% (8) 597.3 19,154
Annuity contracts in payment period 9,348,397
- ----------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
Non-Qualified V 21.320 34.626 62.41% 902,510.1 31,250,007
Non-Qualified V (0.75) 21.626 35.298 63.22% 1,601,735.3 56,538,428
Non-Qualified VII 24.039 38.979 62.15% 7,044,821.4 274,600,411
Non-Qualified VIII 17.358 28.189 62.40% 1,226,255.8 34,566,580
Non-Qualified IX 21.228 34.390 62.00% 31,114.7 1,070,046
Non-Qualified X 21.320 34.626 62.41% 44,861.0 1,553,341
Non-Qualified XII 10.532 16.613 57.74% (2) 17,701.2 294,069
Non-Qualified XIII 9.576 15.599 62.90% 1,828,182.5 28,517,271
Non-Qualified XIV 9.563 15.531 62.41% 2,118,679.7 32,904,339
Non-Qualified XV 9.557 15.497 62.15% 583,969.4 9,049,494
Non-Qualified XVII 26.861 38.687 44.03% (8) 1,791 69,295
Annuity contracts in payment period 11,305,698
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-15
<PAGE>
Variable Annuity Account B
Condensed Financial Information - Year Ended December 31, 1999 (continued):
<TABLE>
<CAPTION>
Value
Per Unit Increase (Decrease) Units
-------- in Value of Outstanding Reserves
Beginning End of Accumulation at End at End
of Year Year Unit of Year of Year
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Lexington Emerging Markets Fund, Inc.:
Non-Qualified VII $ 6.090 $13.640 123.97% 188,713.2 $ 2,574,027
- ---------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
Non-Qualified V 11.030 12.428 12.67% 57,915.6 719,794
Non-Qualified V (0.75) 11.189 12.670 13.24% 65,369.7 828,244
Non-Qualified VII 10.932 12.298 12.50% 129,841.3 1,596,776
Non-Qualified IX 10.982 12.344 12.40% 191.3 2,361
Non-Qualified X 11.030 12.428 12.67% 1,753.1 21,788
- ---------------------------------------------------------------------------------------------------------------------------
MFS Funds:
Global Government Series:
Non-Qualified VII 10.860 10.440 (3.87%) 138,331.0 1,444,158
Non-Qualified VIII 10.904 10.498 (3.72%) 18,979.9 199,256
- ---------------------------------------------------------------------------------------------------------------------------
Total Return Series:
Non-Qualified VII 14.432 14.669 1.64% 2,056,862.5 30,172,256
Non-Qualified VIII 14.491 14.751 1.79% 483,032.7 7,125,264
Non-Qualified XIII 10.171 10.385 2.10% 321,447.1 3,338,204
Non-Qualified XIV 10.157 10.339 1.79% 675,245.9 6,981,698
Non-Qualified XV 10.150 10.317 1.65% 307,462.6 3,172,022
- ---------------------------------------------------------------------------------------------------------------------------
Mitchell Hutchins Series Trust:
Growth & Income Portfolio:
Non-Qualified XIII 9.816 10.960 11.65% (4) 10,140.8 111,141
Non-Qualified XIV 10.189 10.937 7.34% (4) 60,270.6 659,166
Non-Qualified XV 10.056 10.925 8.64% (4) 3,629.1 39,649
- ---------------------------------------------------------------------------------------------------------------------------
Small Cap Portfolio:
Non-Qualified XIV 11.067 11.828 6.88% (6) 14,182.0 167,748
Non-Qualified XV 9.764 11.816 21.02% (9) 404.1 4,774
- ---------------------------------------------------------------------------------------------------------------------------
Tactical Allocation Portfolio:
Non-Qualified XIII 9.451 10.651 12.70% (4) 101,507.5 1,081,178
Non-Qualified XIV 9.852 10.629 7.89% (4) 541,486.6 5,755,371
Non-Qualified XV 9.567 10.618 10.99% (5) 49,695.2 527,646
- ---------------------------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund/VA:
Non-Qualified VII 13.520 24.477 81.04% 734,833.6 17,986,178
Non-Qualified VIII 13.556 24.578 81.31% 251,982.6 6,193,324
Non-Qualified XIII 9.362 17.027 81.87% 102,851.7 1,751,223
Non-Qualified XIV 9.350 16.952 81.30% 139,614.8 2,366,791
Non-Qualified XV 9.343 16.915 81.04% 58,764.5 994,008
Annuity contracts in payment period 1,639,824
- ---------------------------------------------------------------------------------------------------------------------------
Global Securities Fund/VA:
Non-Qualified V 10.018 15.681 56.53% 12,402.0 194,472
Non-Qualified V (0.75) 10.053 15.814 57.31% 38,363.3 606,665
Non-Qualified VII 12.982 20.287 56.27% 346,236.2 7,024,157
Non-Qualified VIII 13.016 20.372 56.52% 82,152.5 1,673,576
Non-Qualified IX 10.001 15.615 56.13% 952.8 14,878
- ---------------------------------------------------------------------------------------------------------------------------
Main Street Growth & Income Fund/VA:
Non-Qualified VII 13.199 15.839 20.00% 1,942,405.4 30,766,659
Non-Qualified VIII 13.234 15.905 20.18% 685,331.0 10,900,475
Non-Qualified XIII 9.080 10.946 20.55% 341,457.9 3,737,521
Non-Qualified XIV 9.067 10.898 20.19% 737,210.2 8,034,042
Non-Qualified XV 9.061 10.874 20.01% 255,252.7 2,775,606
Annuity contracts in payment period 151,990
- ---------------------------------------------------------------------------------------------------------------------------
Strategic Bond Fund/VA:
Non-Qualified V 9.895 10.048 1.55% 5,339.8 53,654
Non-Qualified V (0.75) 9.929 10.133 2.05% 3,553.3 36,007
</TABLE>
S-16
<PAGE>
Variable Annuity Account B
Condensed Financial Information - Year Ended December 31, 1999 (continued):
<TABLE>
<CAPTION>
Value
Per Unit
--------
Beginning End of
of Year Year
- ----------------------------------------------------------------
<S> <C> <C>
Strategic Bond Fund/VA (continued):
Non-Qualified VII $ 10.921 $11.072
Non-Qualified VIII 10.950 11.118
Non-Qualified IX 9.878 10.006
Non-Qualified XIII 9.823 10.005
Non-Qualified XIV 9.810 9.961
Non-Qualified XV 9.803 9.939
Annuity contracts in payment period
- ----------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Non-Qualified V 19.489 29.040
Non-Qualified V (0.75) 19.769 29.605
Non-Qualified VII 18.803 27.973
Non-Qualified VIII 12.761 19.012
Non-Qualified IX 19.405 28.843
Non-Qualified X 19.489 29.040
Non-Qualified XII 10.087 16.210
Non-Qualified XIII 10.371 15.499
Non-Qualified XIV 10.357 15.431
Non-Qualified XV 10.350 15.397
Non-Qualified XVII 21.207 28.739
Annuity contracts in payment period
- ----------------------------------------------------------------
PPI MFS Research Growth Portfolio:
Non-Qualified V 15.481 18.963
Non-Qualified V (0.75) 15.703 19.332
Non-Qualified VI 13.080 16.032
Non-Qualified VII 15.331 18.750
Non-Qualified VIII 10.532 12.901
Non-Qualified IX 15.414 18.834
Non-Qualified X 15.481 18.963
Non-Qualified XIII 10.113 12.424
Non-Qualified XIV 10.099 12.370
Non-Qualified XV 10.092 12.343
- ----------------------------------------------------------------
PPI MFS Value Equity Portfolio:
Non-Qualified V 26.713 39.254
Non-Qualified V (0.75) 27.097 40.017
Non-Qualified VII 12.686 18.612
Non-Qualified VIII 12.708 18.672
Non-Qualified IX 26.598 38.987
Non-Qualified X 26.713 39.254
Non-Qualified XII 10.883 15.732
Non-Qualified XIII 10.193 15.023
Non-Qualified XIV 10.180 14.957
Non-Qualified XV 10.173 14.924
Non-Qualified XVII 33.592 43.155
Annuity contracts in payment period
- ----------------------------------------------------------------
PPI Scudder International Growth Portfolio:
Non-Qualified V 21.057 32.942
Non-Qualified V (0.75) 21.359 33.582
Non-Qualified VII 11.640 18.181
Non-Qualified VIII 11.659 18.238
Non-Qualified IX 20.966 32.718
Non-Qualified X 21.057 32.942
Non-Qualified XII 10.107 15.541
Non-Qualified XIII 9.248 14.511
<CAPTION>
Increase (Decrease) Units
in Value of Outstanding Reserves
Accumulation at End at End
Unit of Year of Year
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Strategic Bond Fund/VA (continued):
Non-Qualified VII 1.38% 831,202.9 $ 9,203,371
Non-Qualified VIII 1.53% 307,277.8 3,416,465
Non-Qualified IX 1.30% 114.2 1,143
Non-Qualified XIII 1.85% 247,094.9 2,472,154
Non-Qualified XIV 1.54% 321,796.7 3,205,447
Non-Qualified XV 1.39% 118,823.90 1,181,015
Annuity contracts in payment period 228,810
- ---------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Non-Qualified V 49.01% 485,026.4 14,085,159
Non-Qualified V (0.75) 49.75% 457,664.5 13,548,971
Non-Qualified VII 48.77% 4,571,239.7 127,872,111
Non-Qualified VIII 48.99% 554,655.3 10,545,302
Non-Qualified IX 48.64% 11,546.9 333,043
Non-Qualified X 49.01% 12,141.7 352,595
Non-Qualified XII 60.70% (2) 12,647.9 205,025
Non-Qualified XIII 49.45% 360,243.8 5,583,250
Non-Qualified XIV 48.99% 421,058.9 6,497,276
Non-Qualified XV 48.76% 173,670.9 2,673,998
Non-Qualified XVII 35.52% (8) 546.7 15,710
Annuity contracts in payment period 1,531,267
- ---------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
Non-Qualified V 22.49% 408,869.5 7,753,575
Non-Qualified V (0.75) 23.11% 331,760.0 6,413,686
Non-Qualified VI 22.57% 9,318.3 149,388
Non-Qualified VII 22.30% 3,631,867.0 68,096,121
Non-Qualified VIII 22.49% 576,382.1 7,435,639
Non-Qualified IX 22.19% 18,743.4 353,021
Non-Qualified X 22.49% 135,419.7 2,568,024
Non-Qualified XIII 22.85% 208,889.0 2,595,276
Non-Qualified XIV 22.49% 434,220.7 5,371,244
Non-Qualified XV 22.30% 145,910.2 1,800,924
- ---------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
Non-Qualified V 46.95% 278,561.6 10,934,611
Non-Qualified V (0.75) 47.68% 202,966.2 8,122,064
Non-Qualified VII 46.71% 975,016.1 18,147,137
Non-Qualified VIII 46.93% 289,619.5 5,407,687
Non-Qualified IX 46.58% 3,143.4 122,552
Non-Qualified X 46.95% 9,451.0 370,986
Non-Qualified XII 44.56% (2) 188.4 2,964
Non-Qualified XIII 47.39% 207,410.2 3,115,879
Non-Qualified XIV 46.93% 361,089.0 5,400,856
Non-Qualified XV 46.70% 99,417.2 1,483,731
Non-Qualified XVII 28.47% (8) 1,516.2 65,431
Annuity contracts in payment period 1,763,893
- ---------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
Non-Qualified V 56.44% 316,726.40 10,433,693
Non-Qualified V (0.75) 57.23% 331,361.7 11,127,920
Non-Qualified VII 56.19% 183,802.0 3,341,658
Non-Qualified VIII 56.43% 80,485.4 1,467,904
Non-Qualified IX 56.05% 5,869.2 192,030
Non-Qualified X 56.44% 4,496.1 148,113
Non-Qualified XII 53.76% (2) 229.6 3,568
Non-Qualified XIII 56.91% 292,269.5 4,241,163
</TABLE>
S-17
<PAGE>
Variable Annuity Account B
Condensed Financial Information - Year Ended December 31, 1999 (continued):
<TABLE>
<CAPTION>
Value
Per Unit
--------
Beginning End of
of Year Year
- ----------------------------------------------------------------------------
<S> <C> <C>
PPI Scudder International Growth Portfolio (continued):
Non-Qualified XIV $ 9.236 $14.448
Non-Qualified XV 9.229 14.416
Annuity contracts in payment period
- ----------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
Non-Qualified V 18.146 21.922
Non-Qualified V (0.75) 18.407 22.348
Non-Qualified VII 23.078 27.835
Non-Qualified VIII 16.682 20.151
Non-Qualified IX 18.068 21.773
Non-Qualified X 18.146 21.922
Non-Qualified XII 10.925 13.248
Non-Qualified XVII 21.843 25.309
Annuity contracts in payment period
- ----------------------------------------------------------------------------
Total
============================================================================
<CAPTION>
Increase (Decrease) Units
in Value of Outstanding Reserves
Accumulation at End at End
Unit of Year of Year
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PPI Scudder International Growth Portfolio (continued):
Non-Qualified XIV 56.43% 180,821.9 $ 2,612,466
Non-Qualified XV 56.20% 122,088.7 1,760,035
Annuity contracts in payment period 123,723
- ------------------------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
Non-Qualified V 20.81% 177,799 3,897,694
Non-Qualified V (0.75) 21.41% 314,992 7,039,487
Non-Qualified VII 20.61% 3,902,488.8 108,627,153
Non-Qualified VIII 20.79% 304,101.7 6,127,882
Non-Qualified IX 20.51% 10,243.8 223,037
Non-Qualified X 20.81% 4,490.9 98,450
Non-Qualified XII 21.26% (2) 1,255.7 16,635
Non-Qualified XVII 15.87% (8) 1,557.1 39,409
Annuity contracts in payment period 723,814
- ------------------------------------------------------------------------------------------------------------------------
Total $6,173,851,032
========================================================================================================================
</TABLE>
<TABLE>
<S> <C>
Non-Qualified 1964 Individual contracts issued from December 1, 1964 to March 14, 1967.
Non-Qualified V Certain AetnaPlus contracts issued in connection with Deferred Compensation Plans issued since August
28, 1992, and certain individual non-qualified contracts.
Non-Qualified VI Certain existing contracts that were converted to ACES, an administrative system (previously valued
under Non-Qualified I).
Non-Qualified VII Certain individual and group contracts issued as non-qualified deferred annuity contracts or Individual
Retirement Annuity contracts issued since May 4, 1994.
Non-Qualified VIII Certain individual Retirement Annuity contracts issued since May 1, 1998.
Non-Qualified IX Group AetnaPlus contracts assessing an administrative expense charge effective April 7, 1997 issued in
connection with Deferred Compensation Plans.
Non-Qualified X Group AetnaPlus contracts containing contractual limits on fees, issued in connection with Deferred
Compensation Plans and as individual non-qualified contracts, resulting in reduced daily charges for
certain funding options effective May 29, 1997.
Non-Qualified XI Certain contracts, previously valued under Non-Qualified VI, containing contractual limits limits on
fees, resulting in reduced daily charges for certain funding options effective May 29, 1997.
Non-Qualified XIII Certain individual Retirement Annuity contracts issued since October 1, 1998.
Non-Qualified XIV Certain individual Retirement Annuity contracts issued since September 1, 1998.
Non-Qualified XV Certain individual Retirement Annuity contracts issued since September 1, 1998.
Non-Qualified XVII Group AetnaPlus contracts issued in connection with Deferred Compensation Plans having contract
modifications effective May 29, 1997.
</TABLE>
Notes to Condensed Financial Information:
(1) -- Reflects less than a full year of performance activity. Funds were
first received in this option during January 1999.
(2) -- Reflects less than a full year of performance activity. Funds were
first received in this option during March 1999.
(3) -- Reflects less than a full year of performance activity. Funds were
first received in this option during April 1999.
(4) -- Reflects less than a full year of performance activity. Funds were
first received in this option during May 1999.
(5) -- Reflects less than a full year of performance activity. Funds were
first received in this option during June 1999.
(6) -- Reflects less than a full year of performance activity. Funds were
first received in this option during July 1999.
(7) -- Reflects less than a full year of performance activity. Funds were
first received in this option during August 1999.
(8) -- Reflects less than a full year of performance activity. Funds were
first received in this option during September 1999.
(9) -- Reflects less than a full year of performance activity. Funds were
first received in this option during October 1999.
(10) -- Reflects less than a full year of performance activity. Funds were
first received in this option during November 1999.
(11) -- Reflects less than a full year of performance activity. Funds were
first received in this option during December 1999.
See Notes to Financial Statements
S-18
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1999
1. Summary of Significant Accounting Policies
Variable Annuity Account B (the "Account") is a separate account established
by Aetna Life Insurance and Annuity Company (the "Company") registered under
the Investment Company Act of 1940 as a unit investment trust. The Account
is sold exclusively for use with variable annuity contracts that may be
entitled to tax-deferred treatment under specific sections of the Internal
Revenue Code of 1986, as amended.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported therein. Actual results could
differ from these estimates.
a. Valuation of Investments
Investments in the following Funds are stated at the closing net asset
value per share as determined by each Fund on December 31, 1999:
<TABLE>
<S> <C>
Aetna Ascent VP Fidelity Variable Insurance Products Fund:
Aetna Balanced VP, Inc. o Equity-Income Portfolio
Aetna Bond VP o Growth Portfolio
Aetna Crossroads VP o High Income Portfolio
Aetna Get Fund, Series C o Overseas Portfolio
Aetna Get Fund, Series D Fidelity Variable Insurance Products Fund II:
Aetna Get Fund, Series E o Asset Manager Portfolio
Aetna Get Fund, Series G o Contrafund Portfolio
Aetna Get Fund, Series H o Index 500 Portfolio
Aetna Growth and Income VP o Investment Grade Bond Portfolio
Aetna Growth VP Janus Aspen Series:
Aetna High Yield VP o Aggressive Growth Portfolio
Aetna Index Plus Large Cap VP o Balanced Portfolio
Aetna Index Plus Mid Cap VP o Flexible Income Portfolio
Aetna Index Plus Small Cap VP o Growth Portfolio
Aetna International VP o Worldwide Growth Portfolio
Aetna Legacy VP Lexington Emerging Markets Fund, Inc.
Aetna Money Market VP Lexington Natural Resources Trust Fund
Aetna Real Estate Securities VP MFS Funds:
Aetna Small Company VP o Global Government Series
Aetna Value Opportunity VP o Total Return Series
AIM V.I. Funds: Mitchell Hutchins Series Trust:
o Capital Appreciation Fund o Growth & Income Portfolio
o Growth and Income Fund o Small Cap portfolio
o Growth Fund o Tactical Allocation Portfolio
o Value Fund Oppenheimer Funds:
Alger American Funds: o Aggressive Growth Fund/VA
o Balanced Portfolio o Global Securities Fund/VA
o Income & Growth Portfolio o Main Street Growth & Income Fund/VA
o Leveraged AllCap Portfolio o Strategic Bond Fund/VA
American Century VP Funds: Portfolio Partners, Inc. (PPI):
o Balanced Fund o PPI MFS Emerging Equities Portfolio
o International Fund o PPI MFS Research Growth Portfolio
Calvert Social Balanced Portfolio o PPI MFS Value Equity Portfolio
Federated Insurance Series: o PPI Scudder International Growth Portfolio
o American Leaders Fund II o PPI T. Rowe Price Growth Equity Portfolio
o Equity Income Fund II
o Growth Strategies Fund II
o High Income Bond Fund II
o International Equity Fund II
o Prime Money Fund II
o U.S. Government Securities Fund II
o Utility Fund II
</TABLE>
S-19
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1999 (continued):
b. Other
Investment transactions are accounted for on a trade date basis and dividend
income is recorded on the ex-dividend date. The cost of investments sold is
determined by specific identification.
c. Federal Income Taxes
The operations of the Account form a part of, and are taxed with, the total
operations of the Company which is taxed as a life insurance company under
the Internal Revenue Code of 1986, as amended.
d. Annuity Reserves
Annuity reserves held in the Account are computed for currently payable
contracts according to the Progressive Annuity, a49, 1971 Individual Annuity
Mortality, 1971 Group Annuity Mortality, 83a, and 1983 Group Annuity
Mortality tables using various assumed interest rates not to exceed seven
percent. Mortality experience is monitored by the Company. Charges to
annuity reserves for mortality experience are reimbursed to the Company if
the reserves required are less than originally estimated. If additional
reserves are required, the Company reimburses the Account.
2. Valuation Period Deductions
Deductions by the Account for mortality and expense risk charges are made in
accordance with the terms of the contracts and are paid to the Company.
3. Dividend Income
On an annual basis, the Funds distribute substantially all of their taxable
income and realized capital gains to their shareholders. Distributions to
the Account are automatically reinvested in shares of the Funds. The
Account's proportionate share of each Fund's undistributed net investment
income (distributions in excess of net investment income) and accumulated
net realized gain (loss) on investments is included in net unrealized gain
(loss) in the Statement of Operations.
4. Purchases and Sales of Investments
The cost of purchases and proceeds from sales of investments other than
short-term investments for the year ended December 31, 1999 aggregated
$3,435,456,040 and $1,971,718,606.
S-20
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1999 (continued):
5. Supplemental Information to Statements of Operations
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Year Ended December 31, 1999
Valuation Proceeds Cost of
Period from Investments
Dividends Deductions Sales Sold
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Ascent VP:
Annuity contracts in accumulation $1,340,444 ($270,151) $9,313,006 $8,698,919
- -----------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc.:
Annuity contracts in accumulation 26,401,416 (2,291,480) 33,436,167 27,637,858
- -----------------------------------------------------------------------------------------------------------
Aetna Bond VP:
Annuity contracts in accumulation 6,124,925 (1,115,110) 40,901,359 41,151,754
- -----------------------------------------------------------------------------------------------------------
Aetna Crossroads VP:
Annuity contracts in accumulation 1,502,501 (342,919) 8,948,614 8,113,257
- -----------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series B:
Annuity contracts in accumulation 7,848,121 (128,073) 19,750,183 23,962,269
- -----------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series C:
Annuity contracts in accumulation 1,957,571 (74,044) 3,666,266 2,463,747
- -----------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series D:
Annuity contracts in accumulation 3,756,117 (2,728,466) 32,922,228 32,044,756
- -----------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series E:
Annuity contracts in accumulation 2,481,190 (1,968,291) 9,474,528 9,239,165
- -----------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series G:
Annuity contracts in accumulation 102,974 (208,523) 522,773 511,829
- -----------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series H:
Annuity contracts in accumulation 0 (535) 0 0
- -----------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP:
Annuity contracts in accumulation 207,834,884 (12,198,695) 237,901,365 210,303,160
- -----------------------------------------------------------------------------------------------------------
Aetna Growth VP:
Annuity contracts in accumulation 3,084,013 (580,261) 51,360,082 42,601,164
- -----------------------------------------------------------------------------------------------------------
Aetna High Yield VP:
Annuity contracts in accumulation 23,128 (2,983) 278,712 305,621
- -----------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP:
Annuity contracts in accumulation 9,509,103 (1,876,028) 67,290,981 54,385,900
- -----------------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP:
Annuity contracts in accumulation 158,723 (7,101) 5,181,529 5,178,353
- -----------------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP:
Annuity contracts in accumulation 2,021 (8,247) 1,258,038 1,253,262
- -----------------------------------------------------------------------------------------------------------
Aetna International VP:
Annuity contracts in accumulation 343,759 (29,531) 12,411,249 11,614,440
- -----------------------------------------------------------------------------------------------------------
Aetna Legacy VP:
Annuity contracts in accumulation 1,676,882 (417,080) 10,198,632 9,520,795
- -----------------------------------------------------------------------------------------------------------
Aetna Money Market VP:
Annuity contracts in accumulation 7,203,776 (2,397,398) 588,072,224 585,938,903
- -----------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP:
Annuity contracts in accumulation 98,540 (19,120) 1,488,862 1,583,368
- -----------------------------------------------------------------------------------------------------------
Aetna Small Company VP:
Annuity contracts in accumulation 299,261 (252,577) 9,437,948 8,942,352
- -----------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net Unrealized Net Net
Net Gain (Loss) Change in Increase (Decrease)
Realized ----------- Unrealized in Net Assets
Gain (Loss) Beginning End Gain (Loss) Resulting from
on Investments of Year of Year on Investments Operations
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP:
Annuity contracts in accumulation $614,087 ($204,552) $483,736 $688,288 $2,372,668
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc.:
Annuity contracts in accumulation 5,798,309 13,657,518 6,704,110 (6,953,408) 22,954,837
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP:
Annuity contracts in accumulation (250,395) (271,440) (6,898,223) (6,626,783) (1,867,363)
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP:
Annuity contracts in accumulation 835,357 455,992 548,689 92,697 2,087,636
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series B:
Annuity contracts in accumulation (4,212,086) 3,285,620 0 (3,285,620) 222,342
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series C:
Annuity contracts in accumulation 1,202,519 2,432,614 786,857 (1,645,757) 1,440,289
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series D:
Annuity contracts in accumulation 877,472 (64,824) 9,587,836 9,652,660 11,557,783
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series E:
Annuity contracts in accumulation 235,363 0 23,410,070 23,410,070 24,158,332
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series G:
Annuity contracts in accumulation 10,944 0 5,934,910 5,934,910 5,840,305
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series H:
Annuity contracts in accumulation 0 0 2,439 2,439 1,904
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP:
Annuity contracts in accumulation 27,598,205 (14,386,593) (68,936,164) (54,549,571) 168,684,823
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP:
Annuity contracts in accumulation 8,758,918 4,054,739 8,580,844 4,526,105 15,788,775
- -------------------------------------------------------------------------------------------------------------------------------
Aetna High Yield VP:
Annuity contracts in accumulation (26,909) (38,627) (16,080) 22,547 15,783
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP:
Annuity contracts in accumulation 12,905,081 9,544,413 23,757,249 14,212,836 34,750,992
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP:
Annuity contracts in accumulation 3,176 25,068 (42,233) (67,301) 87,497
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP:
Annuity contracts in accumulation 4,776 8,264 96,292 88,028 86,578
- -------------------------------------------------------------------------------------------------------------------------------
Aetna International VP:
Annuity contracts in accumulation 796,809 (4,447) 330,445 334,892 1,445,929
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP:
Annuity contracts in accumulation 677,837 230,393 (38,204) (268,597) 1,669,042
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP:
Annuity contracts in accumulation 2,133,321 1,434,703 1,765,548 330,845 7,270,544
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP:
Annuity contracts in accumulation (94,506) (78,505) (181,523) (103,018) (118,104)
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP:
Annuity contracts in accumulation 495,596 1,188,423 6,242,096 5,053,673 5,595,953
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-21
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1999 (continued):
5. Supplemental Information to Statements of Operations (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Year Ended December 31, 1999
Valuation Proceeds Cost of
Period from Investments
Dividends Deductions Sales Sold
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Aetna Value Opportunity VP:
Annuity contracts in accumulation $797,048 ($226,028) $7,969,978 $6,860,631
- ------------------------------------------------------------------------------------------------------
Capital Appreciation Fund:
Annuity contracts in accumulation 199,178 (36,849) 1,961,367 1,742,638
- ------------------------------------------------------------------------------------------------------
Growth and Income Fund:
Annuity contracts in accumulation 179,109 (106,709) 716,417 632,280
- ------------------------------------------------------------------------------------------------------
Growth Fund:
Annuity contracts in accumulation 631,309 (62,029) 747,792 656,292
- ------------------------------------------------------------------------------------------------------
Value Fund:
Annuity contracts in accumulation 629,443 (155,450) 2,307,793 2,034,925
- ------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation 454,912 (85,354) 1,556,530 1,053,499
- ------------------------------------------------------------------------------------------------------
Income & Growth Portfolio:
Annuity contracts in accumulation 914,221 (222,145) 2,270,282 1,259,702
- ------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
Annuity contracts in accumulation 1,249,119 (271,946) 3,592,783 1,650,828
- ------------------------------------------------------------------------------------------------------
American Century VP Funds:
Balanced Fund:
Annuity contracts in accumulation 683,536 (56,724) 1,675,116 1,632,360
- ------------------------------------------------------------------------------------------------------
International Fund:
Annuity contracts in accumulation 0 (80,728) 1,365,915 995,445
- ------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation 247,325 (26,165) 406,307 370,404
- ------------------------------------------------------------------------------------------------------
Federated Insurance Series:
American Leaders Fund II:
Annuity contracts in accumulation 13,552,341 (1,896,640) 21,302,731 12,295,752
- ------------------------------------------------------------------------------------------------------
Equity Income Fund II:
Annuity contracts in accumulation 830,081 (412,745) 4,773,203 3,622,910
- ------------------------------------------------------------------------------------------------------
Growth Strategies Fund II:
Annuity contracts in accumulation 0 (459,868) 4,243,118 2,328,173
- ------------------------------------------------------------------------------------------------------
High Income Bond Fund II:
Annuity contracts in accumulation 4,081,257 (651,738) 10,263,690 9,738,521
- ------------------------------------------------------------------------------------------------------
International Equity Fund II:
Annuity contracts in accumulation 503,745 (271,182) 3,123,504 1,926,381
- ------------------------------------------------------------------------------------------------------
Prime Money Fund II:
Annuity contracts in accumulation 411,869 (127,832) 9,317,264 9,315,041
- ------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II:
Annuity contracts in accumulation 733,040 (203,519) 4,193,043 3,940,186
- ------------------------------------------------------------------------------------------------------
Utility Fund II:
Annuity contracts in accumulation 2,100,934 (397,724) 5,009,213 3,572,281
- ------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net Unrealized Net Net
Net Gain (Loss) Change in Increase (Decrease)
Realized ----------- Unrealized in Net Assets
Gain (Loss) Beginning End Gain (Loss) Resulting from
on Investments of Year of Year on Investments Operations
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Value Opportunity VP:
Annuity contracts in accumulation $1,109,347 $1,733,031 $2,822,690 $1,089,659 $2,770,026
- ----------------------------------------------------------------------------------------------------------------------------
Capital Appreciation Fund:
Annuity contracts in accumulation 218,729 19,720 2,111,777 2,092,057 2,473,115
- ----------------------------------------------------------------------------------------------------------------------------
Growth and Income Fund:
Annuity contracts in accumulation 84,137 17,765 3,746,947 3,729,182 3,885,719
- ----------------------------------------------------------------------------------------------------------------------------
Growth Fund:
Annuity contracts in accumulation 91,500 12,342 2,711,961 2,699,619 3,360,399
- ----------------------------------------------------------------------------------------------------------------------------
Value Fund:
Annuity contracts in accumulation 272,868 22,553 4,671,998 4,649,445 5,396,306
- ----------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio: 503,031 1,582,996 2,168,767 585,771 1,458,360
- ----------------------------------------------------------------------------------------------------------------------------
Income & Growth Portfolio:
Annuity contracts in accumulation 1,010,580 4,215,812 8,170,558 3,954,746 5,657,402
- ----------------------------------------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
Annuity contracts in accumulation 1,941,955 6,533,437 15,044,425 8,510,988 11,430,116
- ----------------------------------------------------------------------------------------------------------------------------
American Century VP Funds:
Balanced Fund:
Annuity contracts in accumulation 42,756 487,853 113,895 (373,958) 295,610
- ----------------------------------------------------------------------------------------------------------------------------
International Fund:
Annuity contracts in accumulation 370,470 743,148 3,420,828 2,677,680 2,967,422
- ----------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation 35,903 14,930 8,210 (6,720) 250,343
- ----------------------------------------------------------------------------------------------------------------------------
Federated Insurance Series:
American Leaders Fund II:
Annuity contracts in accumulation 9,006,979 37,231,660 23,291,163 (13,940,497) 6,722,183
- ----------------------------------------------------------------------------------------------------------------------------
Equity Income Fund II:
Annuity contracts in accumulation 1,150,293 3,973,133 6,982,904 3,009,771 4,577,400
- ----------------------------------------------------------------------------------------------------------------------------
Growth Strategies Fund II:
Annuity contracts in accumulation 1,914,945 5,244,563 22,782,494 17,537,931 18,993,008
- ----------------------------------------------------------------------------------------------------------------------------
High Income Bond Fund II:
Annuity contracts in accumulation 525,169 2,714,767 (768,082) (3,482,849) 471,839
- ----------------------------------------------------------------------------------------------------------------------------
International Equity Fund II:
Annuity contracts in accumulation 1,197,123 3,819,534 15,689,012 11,869,478 13,299,164
- ----------------------------------------------------------------------------------------------------------------------------
Prime Money Fund II:
Annuity contracts in accumulation 2,223 2,223 0 (2,223) 284,037
- ----------------------------------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II:
Annuity contracts in accumulation 252,857 1,013,377 (71,689) (1,085,066) (302,688)
- ----------------------------------------------------------------------------------------------------------------------------
Utility Fund II:
Annuity contracts in accumulation 1,436,932 7,053,257 3,900,529 (3,152,728) (12,586)
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-22
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1999 (continued):
5. Supplemental Information to Statements of Operations (continued):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1999
Valuation Proceeds Cost of
Period from Investments
Dividends Deductions Sales Sold
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation $8,367,628 ($2,573,916) $30,786,251 $23,310,042
- ----------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 16,174,596 (2,218,187) 15,856,150 10,078,861
- ----------------------------------------------------------------------------------------------------------------
High Income Portfolio:
Annuity contracts in accumulation 5,027,115 (781,519) 15,051,314 17,531,702
- ----------------------------------------------------------------------------------------------------------------
Overseas Portfolio:
Annuity contracts in accumulation 639,927 (217,131) 17,051,576 15,470,272
- ----------------------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation 1,521,294 (290,423) 3,958,472 3,549,278
- ----------------------------------------------------------------------------------------------------------------
Contrafund Portfolio:
Annuity contracts in accumulation 6,677,923 (2,522,798) 42,148,010 26,560,684
- ----------------------------------------------------------------------------------------------------------------
Index 500 Portfolio:
Annuity contracts in accumulation 2,351,381 (2,155,269) 61,376,663 41,833,912
- ----------------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
Annuity contracts in accumulation 278,742 (67,977) 1,529,299 1,459,169
- ----------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation 4,328,099 (1,464,290) 180,428,933 153,089,375
- ----------------------------------------------------------------------------------------------------------------
Balanced Portfolio:
Annuity contracts in accumulation 3,289,917 (1,574,299) 7,838,806 4,594,554
- ----------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio:
Annuity contracts in accumulation 1,403,262 (265,146) 9,325,969 9,178,770
- ----------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 990,849 (1,633,385) 22,246,086 14,336,557
- ----------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
Annuity contracts in accumulation 538,521 (3,924,479) 85,749,085 54,113,435
- ----------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund, Inc.:
Annuity contracts in accumulation 8,564 (22,933) 463,764 730,052
- ----------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation 20,628 (42,793) 1,388,088 1,704,273
- ----------------------------------------------------------------------------------------------------------------
MFS Funds:
Global Government Series: (1)
Annuity contracts in accumulation 103,104 (25,617) 1,099,699 1,092,429
- ----------------------------------------------------------------------------------------------------------------
Total Return Series:
Annuity contracts in accumulation 2,209,450 (612,684) 5,002,849 3,909,198
- ----------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net Unrealized Net
Net Gain (Loss) Change in
Realized ----------- Unrealized
Gain (Loss) Beginning End Gain (Loss)
on Investments of Year of Year on Investments
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation $7,476,209 $22,859,546 $17,824,133 $(5,035,413)
- --------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 5,777,289 33,940,400 67,658,735 33,718,335
- --------------------------------------------------------------------------------------------------------------------
High Income Portfolio:
Annuity contracts in accumulation (2,480,388) (4,425,686) (2,606,690) 1,818,996
- --------------------------------------------------------------------------------------------------------------------
Overseas Portfolio:
Annuity contracts in accumulation 1,581,304 669,980 4,814,866 4,144,886
- --------------------------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation 409,194 1,633,427 1,897,225 263,798
- --------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio:
Annuity contracts in accumulation 15,587,326 35,201,475 56,818,405 21,616,930
- --------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio:
Annuity contracts in accumulation 19,542,751 25,538,020 32,900,456 7,362,436
- --------------------------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
Annuity contracts in accumulation 70,130 478,048 75,103 (402,945)
- --------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation 27,339,558 8,106,849 100,137,615 92,030,766
- --------------------------------------------------------------------------------------------------------------------
Balanced Portfolio:
Annuity contracts in accumulation 3,244,252 15,241,071 40,182,173 24,941,102
- --------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio:
Annuity contracts in accumulation 147,199 255,193 (999,230) (1,254,423)
- --------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 7,909,529 12,281,148 56,878,486 44,597,338
- --------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
Annuity contracts in accumulation 31,635,650 37,241,442 183,495,928 146,254,486
- --------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund, Inc.:
Annuity contracts in accumulation (266,288) (1,196,659) 579,071 1,775,730
- --------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation (316,185) (1,266,269) (494,145) 772,124
- --------------------------------------------------------------------------------------------------------------------
MFS Funds:
Global Government Series: (1)
Annuity contracts in accumulation 7,270 102,292 (52,025) (154,317)
- --------------------------------------------------------------------------------------------------------------------
Total Return Series:
Annuity contracts in accumulation 1,093,651 3,834,735 1,850,808 (1,983,927)
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------
Year Ended December 31, 1999 Net
Increase (Decrease)
in Net Assets
Resulting from
Operations
- -----------------------------------------------------------------------
<S> <C>
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation $8,234,508
- -----------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 53,452,033
- -----------------------------------------------------------------------
High Income Portfolio:
Annuity contracts in accumulation 3,584,204
- -----------------------------------------------------------------------
Overseas Portfolio:
Annuity contracts in accumulation 6,148,986
- -----------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation 1,903,863
- -----------------------------------------------------------------------
Contrafund Portfolio:
Annuity contracts in accumulation 41,359,381
- -----------------------------------------------------------------------
Index 500 Portfolio:
Annuity contracts in accumulation 27,101,299
- -----------------------------------------------------------------------
Investment Grade Bond Portfolio:
Annuity contracts in accumulation (122,050)
- -----------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation 122,234,133
- -----------------------------------------------------------------------
Balanced Portfolio:
Annuity contracts in accumulation 29,900,972
- -----------------------------------------------------------------------
Flexible Income Portfolio:
Annuity contracts in accumulation 30,892
- -----------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 51,864,331
- -----------------------------------------------------------------------
Worldwide Growth Portfolio:
Annuity contracts in accumulation 174,504,178
- -----------------------------------------------------------------------
Lexington Emerging Markets Fund, Inc.:
Annuity contracts in accumulation 1,495,073
- -----------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation 433,774
- -----------------------------------------------------------------------
MFS Funds:
Global Government Series: (1)
Annuity contracts in accumulation (69,560)
- -----------------------------------------------------------------------
Total Return Series:
Annuity contracts in accumulation 706,490
- -----------------------------------------------------------------------
</TABLE>
S-23
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1999 (continued):
5. Supplemental Information to Statements of Operations (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1999
Valuation Proceeds Cost of
Period from Investments
Dividends Deductions Sales Sold
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mitchell Hutchins Series Trust:
Growth & Income Portfolio:
Annuity contracts in accumulation $3 $(2,950) $134,571 $132,047
- ------------------------------------------------------------------------------------------------------------------------
Small Cap Portfolio:
Annuity contracts in accumulation 5,932 (761) 1,608 1,675
- ------------------------------------------------------------------------------------------------------------------------
Tactical Allocation Portfolio:
Annuity contracts in accumulation 473,308 (12,484) 259,982 250,453
- ------------------------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund/VA: (2)
Annuity contracts in accumulation 0 (228,766) 29,784,999 24,129,999
- ------------------------------------------------------------------------------------------------------------------------
Global Securities Fund/VA: (3)
Annuity contracts in accumulation 280,254 (94,735) 6,574,995 4,790,427
- ------------------------------------------------------------------------------------------------------------------------
Main Street Growth & Income Fund/VA: (4)
Annuity contracts in accumulation 454,029 (588,876) 5,827,992 5,360,308
- ------------------------------------------------------------------------------------------------------------------------
Strategic Bond Fund/VA: (5)
Annuity contracts in accumulation 786,643 (214,526) 4,087,701 4,296,040
- ------------------------------------------------------------------------------------------------------------------------
Portfolio Partners,Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation 1,395,386 (1,803,211) 69,154,424 53,471,073
- ------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation 179,933 (1,192,525) 22,188,694 17,498,425
- ------------------------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation 1,111,624 (447,967) 6,884,756 4,709,438
- ------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation 1,024,592 (243,925) 75,090,895 65,822,845
- ------------------------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation 2,862,703 (1,607,370) 19,816,183 14,545,431
- ------------------------------------------------------------------------------------------------------------------------
Total Variable Annuity Account B $372,453,223 ($ 59,498,930) $1,971,718,606 $1,728,629,845
========================================================================================================================
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net Unrealized Net
Net Gain (Loss) Change in
Realized ----------- Unrealized
Gain (Loss) Beginning End Gain (Loss)
on Investments of Year of Year on Investments
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mitchell Hutchins Series Trust:
Growth & Income Portfolio:
Annuity contracts in accumulation $2,524 $0 $74,102 $74,102
- ----------------------------------------------------------------------------------------------------------------------
Small Cap Portfolio:
Annuity contracts in accumulation (67) 0 9,469 9,469
- ----------------------------------------------------------------------------------------------------------------------
Tactical Allocation Portfolio:
Annuity contracts in accumulation 9,529 0 35,469 35,469
- ----------------------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund/VA: (2)
Annuity contracts in accumulation 5,655,000 1,243,228 8,288,775 7,045,547
- ----------------------------------------------------------------------------------------------------------------------
Global Securities Fund/VA: (3)
Annuity contracts in accumulation 1,784,568 786,005 2,312,761 1,526,756
- ----------------------------------------------------------------------------------------------------------------------
Main Street Growth & Income Fund/VA: (4)
Annuity contracts in accumulation 467,684 (435,824) 7,488,511 7,924,335
- ----------------------------------------------------------------------------------------------------------------------
Strategic Bond Fund/VA: (5)
Annuity contracts in accumulation (208,339) 47,663 (12,690) (60,353)
- ----------------------------------------------------------------------------------------------------------------------
Portfolio Partners,Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation 15,683,351 19,423,983 64,359,069 44,935,086
- ----------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation 4,690,269 11,016,482 26,374,011 15,357,529
- ----------------------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation 2,175,318 3,770,053 17,014,014 13,243,961
- ----------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation 9,268,050 863,502 3,641,431 2,777,929
- ----------------------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation 5,270,752 24,891,619 40,800,081 15,908,462
- ----------------------------------------------------------------------------------------------------------------------
Total Variable Annuity Account B $243,088,761 $349,806,583 $860,262,998 $510,456,415
======================================================================================================================
<CAPTION>
- ----------------------------------------------------------------------
Year Ended December 31, 1999 Net
Increase (Decrease)
in Net Assets
Resulting from
Operations
- ----------------------------------------------------------------------
<S> <C>
Mitchell Hutchins Series Trust:
Growth & Income Portfolio:
Annuity contracts in accumulation $73,679
- ----------------------------------------------------------------------
Small Cap Portfolio:
Annuity contracts in accumulation 14,573
- ----------------------------------------------------------------------
Tactical Allocation Portfolio:
Annuity contracts in accumulation 505,822
- ----------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund/VA: (2)
Annuity contracts in accumulation 12,471,781
- ----------------------------------------------------------------------
Global Securities Fund/VA: (3)
Annuity contracts in accumulation 3,496,843
- ----------------------------------------------------------------------
Main Street Growth & Income Fund/VA: (4)
Annuity contracts in accumulation 8,257,172
- ----------------------------------------------------------------------
Strategic Bond Fund/VA: (5)
Annuity contracts in accumulation 303,425
- ----------------------------------------------------------------------
Portfolio Partners,Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation 60,210,612
- ----------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation 19,035,206
- ----------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation 16,082,936
- ----------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation 12,826,646
- ----------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation 22,434,547
- ----------------------------------------------------------------------
Total Variable Annuity Account B $1,066,499,469
======================================================================
</TABLE>
(1) - Effective May 1, 1999, MFS Worldwide Government Series name changed to
MFS Global Government Series.
(2) - Effective May 1, 1999, Oppenheimer Aggressive Growth Fund/OVAF's name
changed to Oppenheimer Aggressive Growth Fund/VA.
(3) - Effective May 1, 1999, Oppenheimer Global Securities Fund/OVAF's name
changed to Oppenheimer Global Securities Fund/VA.
(4) - Effective May 1, 1999, Oppenheimer Growth and Income Fund/OVAF's name
changed to Oppenheimer Main Street Growth and Income Fund/VA.
(5) - Effective May 1, 1999, Oppenheimer Strategic Bond Fund/OVAF's name
changed to Oppenheimer Strategic Bond Fund/VA.
S-24
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1999 (continued):
6. Supplemental Information to Statements of Changes in Net Assets
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net
Net Change in
Net Realized Unrealized
Investment Gain (Loss) Gain (Loss)
Income on Investments on Investments
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aetna Ascent VP:
Annuity contracts in accumulation $1,070,293 $614,087 $688,288
- ----------------------------------------------------------------------------------------
Aetna Balanced VP, Inc.:
Annuity contracts in accumulation 24,109,936 5,798,309 (6,953,408)
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------
Aetna Bond VP:
Annuity contracts in accumulation 5,009,815 (250,395) (6,626,783)
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------
Aetna Crossroads VP:
Annuity contracts in accumulation 1,159,582 835,357 92,697
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------
Aetna Get Fund, Series B:
Annuity contracts in accumulation 7,720,048 (4,212,086) (3,285,620)
- ----------------------------------------------------------------------------------------
Aetna Get Fund, Series C:
Annuity contracts in accumulation 1,883,527 1,202,519 (1,645,757)
- ----------------------------------------------------------------------------------------
Aetna Get Fund, Series D:
Annuity contracts in accumulation 1,027,651 877,472 9,652,660
- ----------------------------------------------------------------------------------------
Aetna Get Fund, Series E:
Annuity contracts in accumulation 512,899 235,363 23,410,070
- ----------------------------------------------------------------------------------------
Aetna Get Fund, Series G:
Annuity contracts in accumulation (105,549) 10,944 5,934,910
- ----------------------------------------------------------------------------------------
Aetna Get Fund, Series H:
Annuity contracts in accumulation (535) 0 2,439
- ----------------------------------------------------------------------------------------
Aetna Growth and Income VP:
Annuity contracts in accumulation 195,636,189 27,598,205 (54,549,571)
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------
Aetna Growth VP:
Annuity contracts in accumulation 2,503,752 8,758,918 4,526,105
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------
Aetna High Yield VP:
Annuity contracts in accumulation 20,145 (26,909) 22,547
- ----------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP:
Annuity contracts in accumulation 7,633,075 12,905,081 14,212,836
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP:
Annuity contracts in accumulation 151,622 3,176 (67,301)
- ----------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP:
Annuity contracts in accumulation (6,226) 4,776 88,028
- ----------------------------------------------------------------------------------------
Aetna International VP:
Annuity contracts in accumulation 314,228 796,809 334,892
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------
Aetna Legacy VP:
Annuity contracts in accumulation 1,259,802 677,837 (268,597)
Annuity contracts in payment period
- ----------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net
Increase (Decrease) Net Assets
in Net Assets ----------
from Unit Beginning End
Transactions of Year of Year
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aetna Ascent VP:
Annuity contracts in accumulation ($7,289,731) $24,898,190 $19,981,127
- -----------------------------------------------------------------------------------------
Aetna Balanced VP, Inc.:
Annuity contracts in accumulation (10,869,045) 176,154,146 180,920,898
Annuity contracts in payment period 18,758,905 26,077,945
- -----------------------------------------------------------------------------------------
Aetna Bond VP:
Annuity contracts in accumulation 10,606,260 85,100,187 93,390,139
Annuity contracts in payment period 5,213,758 5,662,703
- -----------------------------------------------------------------------------------------
Aetna Crossroads VP:
Annuity contracts in accumulation (6,748,440) 28,289,880 23,405,948
Annuity contracts in payment period 1,317,322 1,540,450
- -----------------------------------------------------------------------------------------
Aetna Get Fund, Series B:
Annuity contracts in accumulation (19,622,110) 19,399,768 0
- -----------------------------------------------------------------------------------------
Aetna Get Fund, Series C:
Annuity contracts in accumulation (3,591,840) 9,276,019 7,124,468
- -----------------------------------------------------------------------------------------
Aetna Get Fund, Series D:
Annuity contracts in accumulation 75,168,020 89,907,126 176,632,929
- -----------------------------------------------------------------------------------------
Aetna Get Fund, Series E:
Annuity contracts in accumulation 357,540,044 0 381,698,376
- -----------------------------------------------------------------------------------------
Aetna Get Fund, Series G:
Annuity contracts in accumulation 206,014,754 0 211,855,059
- -----------------------------------------------------------------------------------------
Aetna Get Fund, Series H:
Annuity contracts in accumulation 1,725,051 0 1,726,955
- -----------------------------------------------------------------------------------------
Aetna Growth and Income VP:
Annuity contracts in accumulation (106,172,195) 955,586,320 980,638,280
Annuity contracts in payment period 155,197,661 192,658,329
- -----------------------------------------------------------------------------------------
Aetna Growth VP:
Annuity contracts in accumulation 25,546,818 28,467,187 66,260,594
Annuity contracts in payment period 1,199,857 4,742,043
- -----------------------------------------------------------------------------------------
Aetna High Yield VP:
Annuity contracts in accumulation (487) 230,386 245,682
- -----------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP:
Annuity contracts in accumulation 117,244,893 85,248,495 198,210,089
Annuity contracts in payment period 1,829,647 40,863,938
- -----------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP:
Annuity contracts in accumulation 403,520 375,745 866,762
- -----------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP:
Annuity contracts in accumulation (145,065) 969,800 911,313
- -----------------------------------------------------------------------------------------
Aetna International VP:
Annuity contracts in accumulation 1,562,914 1,528,847 4,434,269
Annuity contracts in payment period 2,086 105,507
- -----------------------------------------------------------------------------------------
Aetna Legacy VP:
Annuity contracts in accumulation (7,254,086) 32,331,905 26,597,646
Annuity contracts in payment period 2,822,843 2,972,058
- -----------------------------------------------------------------------------------------
</TABLE>
S-25
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1999 (continued):
6. Supplemental Information to Statements of Changes in Net Assets (continued):
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net
Net Change in
Net Realized Unrealized
Investment Gain (Loss) Gain (Loss)
Income on Investments on Investments
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aetna Money Market VP:
Annuity contracts in accumulation $4,806,378 $2,133,321 $330,845
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------
Aetna Real Estate Securities VP:
Annuity contracts in accumulation 79,420 (94,506) (103,018)
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------
Aetna Small Company VP:
Annuity contracts in accumulation 46,684 495,596 5,053,673
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------
Aetna Value Opportunity VP:
Annuity contracts in accumulation 571,020 1,109,347 1,089,659
- ---------------------------------------------------------------------------------------
AIM V.I. Funds:
Capital Appreciation Fund:
Annuity contracts in accumulation 162,329 218,729 2,092,057
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------
Growth and Income Fund:
Annuity contracts in accumulation 72,400 84,137 3,729,182
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------
Growth Fund:
Annuity contracts in accumulation 569,280 91,500 2,699,619
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------
Value Fund:
Annuity contracts in accumulation 473,993 272,868 4,649,445
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation 369,558 503,031 585,771
- ---------------------------------------------------------------------------------------
Income & Growth Portfolio:
Annuity contracts in accumulation 692,076 1,010,580 3,954,746
- ---------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
Annuity contracts in accumulation 977,173 1,941,955 8,510,988
- ---------------------------------------------------------------------------------------
American Century VP Funds:
Balanced Fund:
Annuity contracts in accumulation 626,812 42,756 (373,958)
- ---------------------------------------------------------------------------------------
International Fund:
Annuity contracts in accumulation (80,728) 370,470 2,677,680
- ---------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation 221,160 35,903 (6,720)
- ---------------------------------------------------------------------------------------
Federated Insurance Series:
American Leaders Fund II:
Annuity contracts in accumulation 11,655,701 9,006,979 (13,940,497)
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------
Equity Income Fund II:
Annuity contracts in accumulation 417,336 1,150,293 3,009,771
Annuity contracts in payment period
- ---------------------------------------------------------------------------------------
Growth Strategies Fund II:
Annuity contracts in accumulation (459,868) 1,914,945 17,537,931
- ---------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net
Increase (Decrease) Net Assets
in Net Assets ----------
from Unit Beginning End
Transactions of Year of Year
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aetna Money Market VP:
Annuity contracts in accumulation $58,499,955 $149,772,871 $214,710,443
Annuity contracts in payment period 229,509 1,062,436
- -------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP:
Annuity contracts in accumulation 1,076,287 965,259 1,925,817
Annuity contracts in payment period 16,278 13,903
- -------------------------------------------------------------------------------------------
Aetna Small Company VP:
Annuity contracts in accumulation 1,501,029 18,295,242 25,125,952
Annuity contracts in payment period 197,498 463,770
- -------------------------------------------------------------------------------------------
Aetna Value Opportunity VP:
Annuity contracts in accumulation (4,540,412) 18,689,212 16,918,826
- -------------------------------------------------------------------------------------------
AIM V.I. Funds:
Capital Appreciation Fund:
Annuity contracts in accumulation 7,199,232 298,792 9,923,942
Annuity contracts in payment period 0 47,197
- -------------------------------------------------------------------------------------------
Growth and Income Fund:
Annuity contracts in accumulation 19,382,908 221,558 22,700,889
Annuity contracts in payment period 0 789,296
- -------------------------------------------------------------------------------------------
Growth Fund:
Annuity contracts in accumulation 15,273,804 296,860 18,608,980
Annuity contracts in payment period 0 322,083
- -------------------------------------------------------------------------------------------
Value Fund:
Annuity contracts in accumulation 35,726,392 703,970 40,884,392
Annuity contracts in payment period 0 942,276
- -------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation (1,430,177) 6,185,618 6,213,801
- -------------------------------------------------------------------------------------------
Income & Growth Portfolio:
Annuity contracts in accumulation (2,033,469) 15,463,737 19,087,670
- -------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
Annuity contracts in accumulation (3,289,670) 16,971,895 25,112,341
- -------------------------------------------------------------------------------------------
American Century VP Funds:
Balanced Fund:
Annuity contracts in accumulation (1,575,541) 4,732,298 3,452,367
- -------------------------------------------------------------------------------------------
International Fund:
Annuity contracts in accumulation (1,259,618) 5,791,227 7,499,031
- -------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation 380,705 1,958,082 2,589,130
- -------------------------------------------------------------------------------------------
Federated Insurance Series:
American Leaders Fund II:
Annuity contracts in accumulation (16,005,273) 134,398,144 125,105,874
Annuity contracts in payment period 51,858 61,038
- -------------------------------------------------------------------------------------------
Equity Income Fund II:
Annuity contracts in accumulation (2,848,736) 28,656,460 30,384,515
Annuity contracts in payment period 7,576 8,185
- -------------------------------------------------------------------------------------------
Growth Strategies Fund II:
Annuity contracts in accumulation 234,105 27,450,515 46,677,628
- -------------------------------------------------------------------------------------------
</TABLE>
S-26
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1999 (continued):
6. Supplemental Information to Statements of Changes in Net Assets (continued):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net
Net Change in
Net Realized Unrealized
Investment Gain (Loss) Gain (Loss)
Income on Investments on Investments
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
High Income Bond Fund II:
Annuity contracts in accumulation $3,429,519 $525,169 $(3,482,849)
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------
International Equity Fund II:
Annuity contracts in accumulation 232,563 1,197,123 11,869,478
- -------------------------------------------------------------------------------------------------
Prime Money Fund II:
Annuity contracts in accumulation 284,037 2,223 (2,223)
- -------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II:
Annuity contracts in accumulation 529,521 252,857 (1,085,066)
- -------------------------------------------------------------------------------------------------
Utility Fund II:
Annuity contracts in accumulation 1,703,210 1,436,932 (3,152,728)
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation 5,793,712 7,476,209 (5,035,413)
- -------------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 13,956,409 5,777,289 33,718,335
- -------------------------------------------------------------------------------------------------
High Income Portfolio:
Annuity contracts in accumulation 4,245,596 (2,480,388) 1,818,996
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------
Overseas Portfolio:
Annuity contracts in accumulation 422,796 1,581,304 4,144,886
- -------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation 1,230,871 409,194 263,798
- -------------------------------------------------------------------------------------------------
Contrafund Portfolio:
Annuity contracts in accumulation 4,155,125 15,587,326 21,616,930
- -------------------------------------------------------------------------------------------------
Index 500 Portfolio:
Annuity contracts in accumulation 196,112 19,542,751 7,362,436
- -------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
Annuity contracts in accumulation 210,765 70,130 (402,945)
- -------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation 2,863,809 27,339,558 92,030,766
- -------------------------------------------------------------------------------------------------
Balanced Portfolio:
Annuity contracts in accumulation 1,715,618 3,244,252 24,941,102
- -------------------------------------------------------------------------------------------------
Flexible Income Portfolio:
Annuity contracts in accumulation 1,138,116 147,199 (1,254,423)
- -------------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation (642,536) 7,909,529 44,597,338
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
Annuity contracts in accumulation (3,385,958) 31,635,650 146,254,486
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund, Inc.:
Annuity contracts in accumulation (14,369) (266,288) 1,775,730
- -------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net
Increase (Decrease) Net Assets
in Net Assets ----------
from Unit Beginning End
Transactions of Year of Year
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
High Income Bond Fund II:
Annuity contracts in accumulation $(8,553,264) $49,887,731 $41,788,490
Annuity contracts in payment period 0 17,816
- --------------------------------------------------------------------------------------------------
International Equity Fund II:
Annuity contracts in accumulation (1,894,959) 17,521,464 28,925,669
- --------------------------------------------------------------------------------------------------
Prime Money Fund II:
Annuity contracts in accumulation 306,114 8,067,320 8,657,471
- --------------------------------------------------------------------------------------------------
U.S. Government Securities Fund II:
Annuity contracts in accumulation (2,937,725) 16,054,824 12,814,411
- --------------------------------------------------------------------------------------------------
Utility Fund II:
Annuity contracts in accumulation (3,766,513) 30,329,937 26,498,835
Annuity contracts in payment period 7,667 59,670
- --------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation 7,411,679 176,108,721 191,754,908
- --------------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 17,013,720 138,516,768 208,982,521
- --------------------------------------------------------------------------------------------------
High Income Portfolio:
Annuity contracts in accumulation 9,278,961 49,328,098 61,938,947
Annuity contracts in payment period 503,361 755,677
- --------------------------------------------------------------------------------------------------
Overseas Portfolio:
Annuity contracts in accumulation (3,946,889) 17,886,843 20,088,940
- --------------------------------------------------------------------------------------------------
Fidelity Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation (799,139) 20,414,738 21,519,462
- --------------------------------------------------------------------------------------------------
Contrafund Portfolio:
Annuity contracts in accumulation 30,664,230 162,974,413 234,998,024
- --------------------------------------------------------------------------------------------------
Index 500 Portfolio:
Annuity contracts in accumulation 1,630,498 141,735,838 170,467,635
- --------------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
Annuity contracts in accumulation (1,453,541) 5,695,641 4,120,050
- --------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation 95,062,093 57,368,774 274,665,000
- --------------------------------------------------------------------------------------------------
Balanced Portfolio:
Annuity contracts in accumulation 83,194,454 72,228,489 185,323,915
- --------------------------------------------------------------------------------------------------
Flexible Income Portfolio:
Annuity contracts in accumulation (1,081,920) 20,633,439 19,582,411
- --------------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 101,412,913 68,058,273 213,572,309
Annuity contracts in payment period 1,585,189 9,348,397
- --------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
Annuity contracts in accumulation 59,587,939 243,902,115 470,413,281
Annuity contracts in payment period 3,724,747 11,305,698
- --------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund, Inc.:
Annuity contracts in accumulation (430,469) 1,509,423 2,574,027
- --------------------------------------------------------------------------------------------------
</TABLE>
S-27
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1999 (continued):
6. Supplemental Information to Statements of Changes in Net Assets (continued):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net
Net Change in
Net Realized Unrealized
Investment Gain (Loss) Gain (Loss)
Income on Investments on Investments
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation $(22,165) $(316,185) $772,124
- -----------------------------------------------------------------------------------------------
MFS Funds:
Global Government Series: (1)
Annuity contracts in accumulation 77,487 7,270 (154,317)
- -----------------------------------------------------------------------------------------------
Total Return Series:
Annuity contracts in accumulation 1,596,766 1,093,651 (1,983,927)
- -----------------------------------------------------------------------------------------------
Mitchell Hutchins Series Trust:
Growth & Income Portfolio:
Annuity contracts in accumulation (2,947) 2,524 74,102
- -----------------------------------------------------------------------------------------------
Small Cap Portfolio:
Annuity contracts in accumulation 5,171 (67) 9,469
- -----------------------------------------------------------------------------------------------
Tactical Allocation Portfolio:
Annuity contracts in accumulation 460,824 9,529 35,469
- -----------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund/VA: (2)
Annuity contracts in accumulation (228,766) 5,655,000 7,045,547
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
Global Securities Fund/VA: (3)
Annuity contracts in accumulation 185,519 1,784,568 1,526,756
- -----------------------------------------------------------------------------------------------
Main Street Growth & Income Fund/VA: (4)
Annuity contracts in accumulation (134,847) 467,684 7,924,335
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
Strategic Bond Fund/VA: (5)
Annuity contracts in accumulation 572,117 (208,339) (60,353)
Annuity contracts in payment period 0 0 0
- -----------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation (407,825) 15,683,351 44,935,086
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation (1,012,592) 4,690,269 15,357,529
- -----------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation 663,657 2,175,318 13,243,961
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation 780,667 9,268,050 2,777,929
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation 1,255,333 5,270,752 15,908,462
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
Total Variable Annuity Account B $312,954,293 $243,088,761 $510,456,415
===============================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Year Ended December 31, 1999 Net
Increase (Decrease) Net Assets
in Net Assets ----------
from Unit Beginning End
Transactions of Year of Year
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation $(1,219,704) $3,954,893 $3,168,963
- ------------------------------------------------------------------------------------------------------
MFS Funds:
Global Government Series: (1)
Annuity contracts in accumulation (301,164) 2,014,138 1,643,414
- ------------------------------------------------------------------------------------------------------
Total Return Series:
Annuity contracts in accumulation 11,945,226 38,137,728 50,789,444
- ------------------------------------------------------------------------------------------------------
Mitchell Hutchins Series Trust:
Growth & Income Portfolio:
Annuity contracts in accumulation 736,277 0 809,956
- ------------------------------------------------------------------------------------------------------
Small Cap Portfolio:
Annuity contracts in accumulation 157,949 0 172,522
- ------------------------------------------------------------------------------------------------------
Tactical Allocation Portfolio:
Annuity contracts in accumulation 6,858,373 0 7,364,195
- ------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund/VA: (2)
Annuity contracts in accumulation 6,541,844 11,917,723 29,291,524
Annuity contracts in payment period 0 1,639,824
- ------------------------------------------------------------------------------------------------------
Global Securities Fund/VA: (3)
Annuity contracts in accumulation (1,636,196) 7,653,101 9,513,748
- ------------------------------------------------------------------------------------------------------
Main Street Growth & Income Fund/VA: (4)
Annuity contracts in accumulation 12,915,912 35,193,209 56,214,303
Annuity contracts in payment period 0 151,990
- ------------------------------------------------------------------------------------------------------
Strategic Bond Fund/VA: (5)
Annuity contracts in accumulation 6,368,812 12,897,019 19,569,256
Annuity contracts in payment period 27,229 201,581 228,810
- ------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation (9,039,734) 131,150,274 181,712,440
Annuity contracts in payment period 922,555 1,531,267
- ------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation (5,108,995) 88,610,687 102,536,898
- ------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation 10,888,326 27,062,849 53,173,898
Annuity contracts in payment period 903,680 1,763,893
- ------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation 5,029,371 17,577,310 35,328,550
Annuity contracts in payment period 18,946 123,723
- ------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation (14,489,363) 118,791,854 126,069,747
Annuity contracts in payment period 56,523 723,814
- ------------------------------------------------------------------------------------------------------
Total Variable Annuity Account B $1,150,783,141 $3,956,568,422 $6,173,851,032
======================================================================================================
</TABLE>
(1) - Effective May 1, 1999, MFS Worldwide Government Series name changed to
MFS Global Government Series.
(2) - Effective May 1, 1999, Oppenheimer Aggressive Growth Fund/OVAF's name
changed to Oppenheimer Aggressive Growth Fund/VA.
(3) - Effective May 1, 1999, Oppenheimer Global Securities Fund/OVAF's name
changed to Oppenheimer Global Securities Fund/VA.
(4) - Effective May 1, 1999, Oppenheimer Growth and Income Fund/OVAF's name
changed to Oppenheimer Main Street Growth and Income Fund/VA.
(5) - Effective May 1, 1999, Oppenheimer Strategic Bond Fund/OVAF's name
changed to Oppenheimer Strategic Bond Fund/VA.
S-28
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1998 (continued):
6. Supplemental Information to Statements of Changes in Net Assets (continued):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------
Year Ended December 31, 1998 Net
Net Change in
Net Realized Unrealized
Investment Gain (Loss) Gain (Loss)
Income on Investments on Investments
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aetna Ascent VP: (1)
Annuity contracts in accumulation $878,477 $871,974 ($1,238,982)
- -----------------------------------------------------------------------------------------
Aetna Balanced VP: (2)
Annuity contracts in accumulation 28,982,565 4,413,800 (7,474,240)
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
Aetna Bond VP: (3)
Annuity contracts in accumulation 4,385,261 2,012,976 (1,053,158)
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
Aetna Crossroads VP: (4)
Annuity contracts in accumulation 792,688 438,508 (248,169)
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
Aetna Get Fund, Series B:
Annuity contracts in accumulation 4,701,182 1,466,703 (2,909,123)
- -----------------------------------------------------------------------------------------
Aetna Get Fund, Series C:
Annuity contracts in accumulation 974,026 1,329,280 288,064
- -----------------------------------------------------------------------------------------
Aetna Get Fund, Series D:
Annuity contracts in accumulation 284,442 60 (64,824)
- -----------------------------------------------------------------------------------------
Aetna Growth and Income VP: (5)
Annuity contracts in accumulation 183,021,214 29,084,074 (82,062,430)
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
Aetna Growth VP: (6)
Annuity contracts in accumulation (127,836) (347,867) 4,999,810
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
Aetna High Yield VP: (7)
Annuity contracts in accumulation 21,541 42 (38,627)
- -----------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP: (8)
Annuity contracts in accumulation 3,193,925 3,120,964 8,202,029
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP: (9)
Annuity contracts in accumulation 17,150 (7,168) 25,068
- -----------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP: (10)
Annuity contracts in accumulation 36,190 (33,035) 8,264
- -----------------------------------------------------------------------------------------
Aetna International VP: (11)
Annuity contracts in accumulation 72,618 (50,060) (4,447)
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
Aetna Legacy VP: (12)
Annuity contracts in accumulation 1,112,714 509,928 (325,629)
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
Aetna Money Market VP: (13)
Annuity contracts in accumulation 4,609,417 958,394 4,835
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
Aetna Real Estate Securities VP: (14)
Annuity contracts in accumulation 45,121 (25,500) (78,505)
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
Aetna Small Company VP: (15)
Annuity contracts in accumulation (18,206) (1,755,032) 1,488,099
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------
Year Ended December 31, 1998 Net
Increase (Decrease) Net Assets
in Net Assets ----------
from Unit Beginning End
Transactions of Year of Year
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aetna Ascent VP: (1)
Annuity contracts in accumulation $3,942,985 $20,443,736 $24,898,190
- ------------------------------------------------------------------------------------------
Aetna Balanced VP: (2)
Annuity contracts in accumulation 6,148,805 150,761,384 176,154,146
Annuity contracts in payment period 12,080,737 18,758,905
- ------------------------------------------------------------------------------------------
Aetna Bond VP: (3)
Annuity contracts in accumulation 12,050,394 69,236,488 85,100,187
Annuity contracts in payment period 3,681,984 5,213,758
- ------------------------------------------------------------------------------------------
Aetna Crossroads VP: (4)
Annuity contracts in accumulation 8,303,550 20,250,904 28,289,880
Annuity contracts in payment period 69,721 1,317,322
- ------------------------------------------------------------------------------------------
Aetna Get Fund, Series B:
Annuity contracts in accumulation (4,718,918) 20,859,924 19,399,768
- ------------------------------------------------------------------------------------------
Aetna Get Fund, Series C:
Annuity contracts in accumulation (4,244,458) 10,929,107 9,276,019
- ------------------------------------------------------------------------------------------
Aetna Get Fund, Series D:
Annuity contracts in accumulation 89,687,448 0 89,907,126
- ------------------------------------------------------------------------------------------
Aetna Growth and Income VP: (5)
Annuity contracts in accumulation (42,142,027) 892,006,381 955,586,320
Annuity contracts in payment period 130,876,769 155,197,661
- ------------------------------------------------------------------------------------------
Aetna Growth VP: (6)
Annuity contracts in accumulation 21,924,027 3,210,344 28,467,187
Annuity contracts in payment period 8,566 1,199,857
- ------------------------------------------------------------------------------------------
Aetna High Yield VP: (7)
Annuity contracts in accumulation 247,430 0 230,386
- ------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP: (8)
Annuity contracts in accumulation 44,321,436 28,074,705 85,248,495
Annuity contracts in payment period 165,083 1,829,647
- ------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP: (9)
Annuity contracts in accumulation 340,695 0 375,745
- ------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP: (10)
Annuity contracts in accumulation 958,381 0 969,800
- ------------------------------------------------------------------------------------------
Aetna International VP: (11)
Annuity contracts in accumulation 1,512,822 0 1,528,847
Annuity contracts in payment period 0 2,086
- ------------------------------------------------------------------------------------------
Aetna Legacy VP: (12)
Annuity contracts in accumulation 13,863,127 18,710,015 32,331,905
Annuity contracts in payment period 1,284,593 2,822,843
- ------------------------------------------------------------------------------------------
Aetna Money Market VP: (13)
Annuity contracts in accumulation 19,490,597 124,939,137 149,772,871
Annuity contracts in payment period 0 229,509
- ------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP: (14)
Annuity contracts in accumulation 1,040,421 0 965,259
Annuity contracts in payment period 0 16,278
- ------------------------------------------------------------------------------------------
Aetna Small Company VP: (15)
Annuity contracts in accumulation 12,670,750 6,059,783 18,295,242
Annuity contracts in payment period 47,346 197,498
- ------------------------------------------------------------------------------------------
</TABLE>
S-29
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1998 (continued):
6. Supplemental Information to Statements of Changes in Net Assets (continued):
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Year Ended December 31, 1998 Net
Net Change in
Net Realized Unrealized
Investment Gain (Loss) Gain (Loss)
Income on Investments on Investments
- --------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aetna Value Opportunity VP: (16)
Annuity contracts in accumulation $32,768 $(95,362) $2,278,113
- --------------------------------------------------------------------------------------
AIM V.I. Funds:
Capital Appreciation Fund:
Annuity contracts in accumulation 4,604 2,342 19,720
- --------------------------------------------------------------------------------------
Growth and Income Fund:
Annuity contracts in accumulation 2,446 3,734 17,765
- --------------------------------------------------------------------------------------
Growth Fund:
Annuity contracts in accumulation 9,531 3,714 12,342
- --------------------------------------------------------------------------------------
Value Fund:
Annuity contracts in accumulation 24,489 5,144 22,553
- --------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation 404,757 212,710 891,394
- --------------------------------------------------------------------------------------
Income & Growth Portfolio:
Annuity contracts in accumulation 1,261,633 1,121,965 1,506,757
- --------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
Annuity contracts in accumulation 428,467 1,178,197 4,993,194
- --------------------------------------------------------------------------------------
American Century Investments:
Balanced Fund:
Annuity contracts in accumulation 528,065 61,039 25,474
- --------------------------------------------------------------------------------------
International Fund:
Annuity contracts in accumulation 304,847 243,131 381,327
- --------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation 127,415 119,256 (44,356)
- --------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation 6,762,670 4,643,346 3,051,873
- --------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 9,878,072 5,383,950 19,355,887
- --------------------------------------------------------------------------------------
High Income Portfolio:
Annuity contracts in accumulation 4,018,324 (478,695) (7,148,373)
Annuity contracts in payment period
- --------------------------------------------------------------------------------------
Overseas Portfolio:
Annuity contracts in accumulation 820,880 787,883 209,050
- --------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation 1,361,761 264,591 495,725
- --------------------------------------------------------------------------------------
Contrafund Portfolio:
Annuity contracts in accumulation 4,885,888 11,863,324 16,999,643
- --------------------------------------------------------------------------------------
Index 500 Portfolio:
Annuity contracts in accumulation 1,707,451 8,567,398 14,655,179
- --------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
Annuity contracts in accumulation 254,649 90,675 90,888
- --------------------------------------------------------------------------------------
<CAPTION>
Year Ended December 31, 1998 Net
Increase (Decrease) Net Assets
in Net Assets ----------
from Unit Beginning End
Transactions of Year of Year
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Aetna Value Opportunity VP: (16)
Annuity contracts in accumulation $12,561,099 $3,912,594 $18,689,212
- ------------------------------------------------------------------------------------------
AIM V.I. Funds:
Capital Appreciation Fund:
Annuity contracts in accumulation 272,126 0 298,792
- ------------------------------------------------------------------------------------------
Growth and Income Fund:
Annuity contracts in accumulation 197,613 0 221,558
- ------------------------------------------------------------------------------------------
Growth Fund:
Annuity contracts in accumulation 271,273 0 296,860
- ------------------------------------------------------------------------------------------
Value Fund:
Annuity contracts in accumulation 651,784 0 703,970
- ------------------------------------------------------------------------------------------
Alger American Funds:
Balanced Portfolio:
Annuity contracts in accumulation (979,394) 5,656,151 6,185,618
- ------------------------------------------------------------------------------------------
Income & Growth Portfolio:
Annuity contracts in accumulation (2,575,078) 14,148,460 15,463,737
- ------------------------------------------------------------------------------------------
Leveraged AllCap Portfolio:
Annuity contracts in accumulation (3,907,972) 14,280,009 16,971,895
- ------------------------------------------------------------------------------------------
American Century Investments:
Balanced Fund:
Annuity contracts in accumulation (525,510) 4,643,230 4,732,298
- ------------------------------------------------------------------------------------------
International Fund:
Annuity contracts in accumulation (991,033) 5,852,955 5,791,227
- ------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation 784,430 971,337 1,958,082
- ------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation 22,941,092 138,709,740 176,108,721
- ------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 23,497,310 80,401,549 138,516,768
- ------------------------------------------------------------------------------------------
High Income Portfolio:
Annuity contracts in accumulation 18,153,824 35,217,837 49,328,098
Annuity contracts in payment period 68,542 503,361
- ------------------------------------------------------------------------------------------
Overseas Portfolio:
Annuity contracts in accumulation 3,064,387 13,004,643 17,886,843
- ------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation 6,549,586 11,743,075 20,414,738
- ------------------------------------------------------------------------------------------
Contrafund Portfolio:
Annuity contracts in accumulation 21,398,116 107,827,442 162,974,413
- ------------------------------------------------------------------------------------------
Index 500 Portfolio:
Annuity contracts in accumulation 39,819,038 76,986,772 141,735,838
- ------------------------------------------------------------------------------------------
Investment Grade Bond Portfolio:
Annuity contracts in accumulation (1,318,753) 6,578,182 5,695,641
- ------------------------------------------------------------------------------------------
</TABLE>
S-30
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1998 (continued):
6. Supplemental Information to Statements of Changes in Net Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Year Ended December 31, 1998 Net
Net Change in
Net Realized Unrealized
Investment Gain (Loss) Gain (Loss)
Income on Investments on Investments
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Insurance Management Series:
American Leaders Fund II:
Annuity contracts in accumulation $6,205,550 $4,799,578 $7,120,071
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Equity Income Fund II:
Annuity contracts in accumulation (222,529) 434,027 3,061,727
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Growth Strategies Fund II:
Annuity contracts in accumulation 1,093,875 720,386 1,686,112
- ------------------------------------------------------------------------------------------
High Income Bond Fund II:
Annuity contracts in accumulation 834,077 852,846 (1,048,315)
- ------------------------------------------------------------------------------------------
International Equity Fund II:
Annuity contracts in accumulation (216,708) 474,001 2,881,033
- ------------------------------------------------------------------------------------------
Prime Money Fund II:
Annuity contracts in accumulation 263,248 0 2,223
- ------------------------------------------------------------------------------------------
U.S. Government Securities Fund II:
Annuity contracts in accumulation 31,718 275,671 500,178
- ------------------------------------------------------------------------------------------
Utility Fund II:
Annuity contracts in accumulation 1,351,222 735,614 1,252,242
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation (548,576) 11,062,640 3,512,332
- ------------------------------------------------------------------------------------------
Balanced Portfolio:
Annuity contracts in accumulation 1,620,017 1,490,655 11,778,213
- ------------------------------------------------------------------------------------------
Flexible Income Portfolio:
Annuity contracts in accumulation 842,156 316,618 (112,372)
- ------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 2,610,124 7,033,011 6,516,940
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
Annuity contracts in accumulation 5,363,231 21,545,989 19,031,176
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund:
Annuity contracts in accumulation 133,353 (350,599) (487,111)
- ------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation 278,095 3,027 (1,444,141)
- ------------------------------------------------------------------------------------------
MFS Funds:
Total Return Series:
Annuity contracts in accumulation 372,500 613,337 1,859,586
- ------------------------------------------------------------------------------------------
Worldwide Government Series:
Annuity contracts in accumulation (5,538) (1,135) 108,229
- ------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund:
Annuity contracts in accumulation 39,364 (225,494) 1,109,442
- ------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------
Year Ended December 31, 1998 Net
Increase (Decrease) Net Assets
in Net Assets ----------
from Unit Beginning End
Transactions of Year of Year
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Insurance Management Series:
American Leaders Fund II:
Annuity contracts in accumulation $(524,859) $116,800,911 $134,398,144
Annuity contracts in payment period 48,751 51,858
- ----------------------------------------------------------------------------------------------
Equity Income Fund II:
Annuity contracts in accumulation 5,452,240 19,938,571 28,656,460
Annuity contracts in payment period 0 7,576
- ----------------------------------------------------------------------------------------------
Growth Strategies Fund II:
Annuity contracts in accumulation 1,241,036 22,709,106 27,450,515
- ----------------------------------------------------------------------------------------------
High Income Bond Fund II:
Annuity contracts in accumulation (3,963,730) 53,212,853 49,887,731
- ----------------------------------------------------------------------------------------------
International Equity Fund II:
Annuity contracts in accumulation 437,110 13,946,028 17,521,464
- ----------------------------------------------------------------------------------------------
Prime Money Fund II:
Annuity contracts in accumulation 271,362 7,530,487 8,067,320
- ----------------------------------------------------------------------------------------------
U.S. Government Securities Fund II:
Annuity contracts in accumulation 2,050,473 13,196,784 16,054,824
- ----------------------------------------------------------------------------------------------
Utility Fund II:
Annuity contracts in accumulation 695,668 26,302,858 30,329,937
Annuity contracts in payment period 0 7,667
- ----------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation 4,958,453 38,383,925 57,368,774
- ----------------------------------------------------------------------------------------------
Balanced Portfolio:
Annuity contracts in accumulation 26,193,826 31,145,778 72,228,489
- ----------------------------------------------------------------------------------------------
Flexible Income Portfolio:
Annuity contracts in accumulation 9,052,449 10,534,588 20,633,439
- ----------------------------------------------------------------------------------------------
Growth Portfolio:
Annuity contracts in accumulation 12,764,560 40,072,928 68,058,273
Annuity contracts in payment period 645,899 1,585,189
- ----------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
Annuity contracts in accumulation 39,032,925 160,658,096 243,902,115
Annuity contracts in payment period 1,995,445 3,724,747
- ----------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund:
Annuity contracts in accumulation (619,636) 2,833,416 1,509,423
- ----------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation (1,812,452) 6,930,364 3,954,893
- ----------------------------------------------------------------------------------------------
MFS Funds:
Total Return Series:
Annuity contracts in accumulation 16,318,427 18,973,878 38,137,728
- ----------------------------------------------------------------------------------------------
Worldwide Government Series:
Annuity contracts in accumulation 588,287 1,324,295 2,014,138
- ----------------------------------------------------------------------------------------------
Oppenheimer Funds:
Aggressive Growth Fund:
Annuity contracts in accumulation 7,306,211 3,688,200 11,917,723
- ----------------------------------------------------------------------------------------------
</TABLE>
S-31
<PAGE>
Variable Annuity Account B
Notes to Financial Statements - December 31, 1998 (continued):
6. Supplemental Information to Statements of Changes in Net Assets (continued):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
Year Ended December 31, 1998 Net
Net Change in
Net Realized Unrealized
Investment Gain (Loss) Gain (Loss)
Income on Investments on Investments
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Securities Fund:
Annuity contracts in accumulation $317,658 $(373,983) $786,851
- -----------------------------------------------------------------------------------------------
Growth & Income Fund:
Annuity contracts in accumulation 697,969 126,292 (901,751)
- -----------------------------------------------------------------------------------------------
Strategic Bond Fund:
Annuity contracts in accumulation 37,162 (25,262) 68,836
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation (1,172,488) 8,905,074 20,177,815
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation (1,002,802) 3,344,659 12,179,408
- -----------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation (241,843) 1,430,022 3,549,391
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation (138,109) 2,709,959 668,075
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation (835,041) 1,547,217 23,093,697
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------
Total Variable Annuity Account B $283,508,891 $143,410,533 $94,282,077
===============================================================================================
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998 Net
Increase (Decrease) Net Assets
in Net Assets ----------
from Unit Beginning End
Transactions of Year of Year
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Global Securities Fund:
Annuity contracts in accumulation $4,241,638 $2,680,937 $7,653,101
- ------------------------------------------------------------------------------------------------------
Growth & Income Fund:
Annuity contracts in accumulation 22,581,792 12,688,907 35,193,209
- ------------------------------------------------------------------------------------------------------
Strategic Bond Fund:
Annuity contracts in accumulation 9,925,163 3,092,701 12,897,019
Annuity contracts in payment period 0 201,581
- ------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation 8,869,734 94,796,247 131,150,274
Annuity contracts in payment period 496,447 922,555
- ------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation 8,222,292 65,867,130 88,610,687
- ------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation 7,801,278 15,049,606 27,062,849
Annuity contracts in payment period 378,075 903,680
- ------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation 1,706,168 12,650,163 17,577,310
Annuity contracts in payment period 0 18,946
- ------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation 4,872,246 90,170,258 118,791,854
Annuity contracts in payment period 0 56,523
- ------------------------------------------------------------------------------------------------------
Total Variable Annuity Account B $512,924,064 $2,922,442,857 $3,956,568,422
======================================================================================================
</TABLE>
(1) - Effective May 1, 1998, Aetna Ascent Variable Portfolio's name changed to
Aetna Ascent VP.
(2) - Effective May 1, 1998, Aetna Investment Advisors Fund's name changed to
Aetna Balanced VP.
(3) - Effective May 1, 1998, Aetna Income Shares began doing business under
the name Aetna Bond VP.
(4) - Effective May 1, 1998, Aetna Crossroads Variable Portfolio's name
changed to Aetna Crossroads VP.
(5) - Effective May 1, 1998, Aetna Variable Fund began doing business under
the name Aetna Growth and Income VP.
(6) - Effective May 1, 1998, Aetna Variable Growth Portfolio's name changed to
Aetna Growth VP.
(7) - Effective May 1, 1998, Aetna High Yield Portfolio's name changed to
Aetna High Yield VP.
(8) - Effective May 1, 1998, Aetna Variable Index Plus Portfolio's name
changed to Aetna Index Plus Large Cap VP.
(9) - Effective May 1, 1998, Aetna Index Plus Mid Cap Portfolio's name changed
to Aetna Index Plus Mid Cap VP.
(10) - Effective May 1, 1998, Aetna Index Plus Small Cap Portfolio's name
changed to Aetna Index Plus Small Cap VP.
(11) - Effective May 1, 1998, Aetna International Portfolio's name changed to
Aetna International VP.
(12) - Effective May 1, 1998, Aetna Legacy Variable Portfolio's name changed to
Aetna Legacy VP.
(13) - Effective May 1, 1998, Aetna Variable Encore Fund began doing business
under the name Aetna Money Market VP.
(14) - Effective May 1, 1998, Aetna Real Estate Securities Portfolio's name
changed to Aetna Real Estate Securities VP.
(15) - Effective May 1, 1998, Aetna Variable Small Company Portfolio's name
changed to Aetna Small Company VP.
(16) - Effective May 1, 1998, Aetna Variable Capital Appreciation Portfolio's
name changed to Aetna Value Opportunity VP.
S-32
<PAGE>
Independent Auditors' Report
The Board of Directors of Aetna Life Insurance and
Annuity Company and Contract Owners of Variable Annuity Account B:
We have audited the accompanying statement of assets and liabilities of Aetna
Life Insurance and Annuity Company Variable Annuity Account B (the "Account") as
of December 31, 1999, and the related statement of operations for the year then
ended, statements of changes in net assets for each of the years in the two-year
period then ended and condensed financial information for the year ended
December 31, 1999. These financial statements and condensed financial
information are the responsibility of the Account's management. Our
responsibility is to express an opinion on these financial statements and
condensed financial information based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and condensed
financial information are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. Our procedures included confirmation of securities
owned as of December 31, 1999, by correspondence with the custodian. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and condensed financial information
referred to above present fairly, in all material respects, the financial
position of Aetna Life Insurance and Annuity Company Variable Annuity Account B
as of December 31, 1999, the results of its operations for the year then ended,
changes in its net assets for each of the years in the two-year period then
ended and condensed financial information for the year ended December 31, 1999,
in conformity with generally accepted accounting principles.
/s/ KPMG LLP
Hartford, Connecticut
February 11, 2000
S-33
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
Index to Consolidated Financial Statements
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report........................................................ F-2
Consolidated Financial Statements:
Consolidated Statements of Income for the Years Ended December 31, 1999,
1998 and 1997.................................................................. F-3
Consolidated Balance Sheets as of December 31, 1999 and 1998..................... F-4
Consolidated Statements of Changes in Shareholder's Equity for the Years Ended
December 31, 1999, 1998 and 1997............................................... F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1999, 1998
and 1997....................................................................... F-6
Notes to Consolidated Financial Statements....................................... F-7
</TABLE>
F-1
<PAGE>
Independent Auditors' Report
The Shareholder and Board of Directors
Aetna Life Insurance and Annuity Company:
We have audited the accompanying consolidated balance sheets of Aetna Life
Insurance and Annuity Company and Subsidiaries as of December 31, 1999 and
1998, and the related consolidated statements of income, changes in
shareholder's equity and cash flows for each of the years in the three-year
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 generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statements presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the aforementioned consolidated financial statements present
fairly, in all material respects, the financial position of Aetna Life
Insurance and Annuity Company and Subsidiaries at December 31, 1999 and 1998,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1999, in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
Hartford, Connecticut
February 7, 2000
F-2
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Statements of Income
(millions)
<TABLE>
<CAPTION>
Years Ended December 31,
-----------------------------------------
1999 1998 1997
----------- ------------ ------------
<S> <C> <C> <C>
Revenue:
Premiums $ 107.5 $ 79.4 $ 69.1
Charges assessed against policyholders 388.3 324.3 262.0
Net investment income 886.3 871.8 881.7
Net realized capital (losses) gains (21.5) 10.4 29.7
Other income 129.7 100.2 96.8
-------- -------- --------
Total revenue 1,490.3 1,386.1 1,339.3
-------- -------- --------
Benefits and expenses:
Current and future benefits 746.2 714.4 720.4
Operating expenses:
Salaries and related benefits 153.0 141.0 133.5
Other 214.9 200.8 182.8
Amortization of deferred policy acquisition costs 104.9 91.2 66.3
-------- -------- --------
Total benefits and expenses 1,219.0 1,147.4 1,103.0
-------- -------- --------
Income from continuing operations before income
taxes 271.3 238.7 236.3
Income taxes 90.1 66.6 68.4
-------- -------- --------
Income from continuing operations 181.2 172.1 167.9
Discontinued operations, net of tax:
Income from operations -- 61.8 67.8
Amortization of deferred gain on sale 5.7 -- --
Immediate gain on sale -- 59.0 --
-------- -------- --------
Net income $ 186.9 $ 292.9 $ 235.7
======== ======== ========
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Balance Sheets
(millions, except share data)
<TABLE>
<CAPTION>
December 31, December 31,
1999 1998
------------- --------------
<S> <C> <C>
Assets
Investments:
Debt securities available for sale, at fair value
(amortized cost: $11,657.9 and $11,571.3) $11,410.1 $12,068.2
Equity securities, available for sale:
Nonredeemable preferred stock (cost: $134.7 and $202.6) 130.9 203.3
Investment in affiliated mutual funds (cost: $63.5 and $96.8) 64.1 100.1
Common stock (cost: $6.7 and $1.0) 11.5 2.0
Short-term investments 74.2 48.9
Mortgage loans 6.7 12.7
Policy loans 314.0 292.2
Other investments 13.2 12.7
----------- -----------
Total investments 12,024.7 12,740.1
Cash and cash equivalents 693.3 628.3
Short-term investments under securities loan agreement 232.5 277.3
Accrued investment income 150.7 151.6
Premiums due and other receivables 298.3 61.1
Reinsurance recoverable 3,001.2 2,959.8
Deferred income taxes 150.4 114.3
Deferred policy acquisition costs 1,046.4 893.1
Other assets 96.5 70.4
Separate Accounts assets 38,692.6 29,430.2
----------- -----------
Total assets $56,386.6 $47,326.2
=========== ===========
Liabilities and Shareholder's Equity
Liabilities:
Future policy benefits $ 3,850.4 $ 3,815.9
Unpaid claims and claim expenses 27.3 18.8
Policyholders' funds left with the Company 11,121.7 11,305.6
----------- -----------
Total insurance reserve liabilities 14,999.4 15,140.3
Payables under securities loan agreement 232.5 277.3
Current income taxes 14.7 279.6
Other liabilities 1,063.0 805.5
Separate Accounts liabilities 38,692.6 29,430.2
----------- -----------
Total liabilities 55,002.2 45,932.9
----------- -----------
Shareholder's equity:
Common stock, par value $50 (100,000 shares
authorized; 55,000 shares issued and outstanding) 2.8 2.8
Paid-in capital 431.8 431.8
Accumulated other comprehensive (loss) income (44.8) 104.8
Retained earnings 994.6 853.9
----------- -----------
Total shareholder's equity 1,384.4 1,393.3
----------- -----------
Total liabilities and shareholder's equity $56,386.6 $47,326.2
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Statements of Changes in Shareholder's Equity
(millions)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Shareholder's equity, beginning of year $1,393.3 $1,852.8 $1,618.3
Comprehensive income:
Net income 186.9 292.9 235.7
Other comprehensive income, net of tax:
Unrealized (losses) gains on securities
($(230.2), $18.2 $49.9, pretax)(1) (149.6) 11.9 32.4
---------- ---------- ----------
Total comprehensive income 37.3 304.8 268.1
---------- ---------- ----------
Capital contribution -- 9.3 (5.0)
Other changes 2.8 2.4 5.7
---------- ---------- ----------
Common stock dividends (49.0) (776.0) (34.3)
---------- ---------- ----------
Shareholder's equity, end of year $1,384.4 $1,393.3 $1,852.8
========== ========== ==========
</TABLE>
(1) Net of reclassification adjustments.
See Notes to Consolidated Financial Statements
F-5
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARIES
(A wholly owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Statements of Cash Flows
(millions)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------------
1999 1998 1997
------------- ------------- -------------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $ 186.9 $ 292.9 $ 235.7
Adjustments to reconcile net income to net cash (used for) provided by
operating activities:
Net accretion of discount on investments (26.5) (29.5) (66.8)
Amortization of deferred gain on sale ( 5.7) -- --
Immediate gain on sale -- (59.0) --
Net realized capital losses (gains) 21.5 (11.1) (36.0)
Changes in assets and liabilities:
Decrease (increase) in accrued investment income 0.9 11.4 ( 4.0)
Increase in premiums due and other receivables 23.3 (23.7) (30.0)
(Increase) decrease in policy loans (21.8) 177.4 (70.3)
Increase in deferred policy acquisition costs (153.3) (132.8) (155.8)
Decrease in reinsurance loan to affiliate -- 397.2 231.1
Net increase in universal life account balances 55.7 122.9 157.1
Decrease in other insurance reserve liabilities (28.6) (41.8) (120.3)
Decrease in other liabilities and other assets (53.9) (53.6) (74.0)
(Decrease) increase in income taxes (259.8) 106.4 (25.8)
---------- ---------- ----------
Net cash (used for) provided by operating activities (261.3) 756.7 40.9
---------- ---------- ----------
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale 5,890.1 6,790.2 5,311.4
Equity securities 111.2 150.1 103.1
Mortgage loans 6.1 0.3 0.2
Life Business -- 966.5 --
Investment maturities and collections of:
Debt securities available for sale 1,216.5 1,296.3 1,212.7
Short-term investments 80.6 135.3 108.4
Cost of investment purchases in:
Debt securities available for sale (7,099.7) (6,706.4) (6,734.8)
Equity securities (13.0) (125.7) (113.3)
Short-term investments (106.0) (83.9) (167.1)
Increase in property and equipment 5.7 9.0 10.0
Other, net 3.7 (2,725.9) --
---------- ---------- ----------
Net cash provided by (used for) investing activities 95.2 (294.2) (269.4)
---------- ---------- ----------
Cash Flows from Financing Activities:
Deposits and interest credited for investment contracts 2,040.2 1,571.1 1,621.2
Withdrawals of investment contracts (1,680.8) (1,393.1) (1,256.3)
Capital contribution to Separate Account -- -- (25.0)
Return of capital from Separate Account -- 1.7 12.3
Capital contribution from HOLDCO -- 9.3 (5.0)
Dividends paid to shareholder (255.0) (570.0) (34.3)
Other, net 126.7 (34.3) 26.4
---------- ---------- ----------
Net cash provided by (used for) financing activities 231.1 (415.3) 339.3
---------- ---------- ----------
Net increase in cash and cash equivalents 65.0 47.2 110.8
Cash and cash equivalents, beginning of year 628.3 581.1 470.3
---------- ---------- ----------
Cash and cash equivalents, end of year $ 693.3 $ 628.3 $ 581.1
========== ========== ==========
Supplemental cash flow information:
Income taxes paid, net $ 316.5 $ 60.5 $ 130.3
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-6
<PAGE>
Notes to Consolidated Financial Statements
1. Summary of Significant Accounting Policies
Aetna Life Insurance and Annuity Company ("ALIAC") and its wholly owned
subsidiaries (collectively, the "Company") are providers of financial products
and services and investment management services in the United States. The
Company has two business segments: Financial Products and Investment Management
Services. On October 1, 1998, the Company sold its individual life insurance
business to Lincoln National Corporation ("Lincoln") and accordingly, it is now
classified as Discontinued Operations (refer to note 3).
Financial Products include annuity contracts that offer a variety of funding
and payout options for individual and employer-sponsored retirement plans
qualified under Internal Revenue Code Sections 401, 403, 408 and 457,
nonqualified annuity contracts and mutual funds. Annuity contracts may be
deferred or immediate ("payout annuities"). These products also include
programs offered to qualified plans and nonqualified deferred compensation
plans that package administrative and recordkeeping services along with a menu
of investment options, including mutual funds (both ALIAC and nonaffiliated
mutual funds), variable and fixed investment options. Financial Products also
include investment advisory services and pension plan administrative services.
Investment Management Services provides: investment advisory services to
affiliated and unaffiliated institutional and retail clients on a
fee-for-service basis; underwriting services to the Aetna Series Fund Inc.;
distribution services for other Aetna products; and trustee, administrative,
and other fiduciary services to retirement plans requiring or otherwise
utilizing a trustee or custodian.
Discontinued Operations include universal life, variable universal life,
traditional whole life and term insurance.
Principles of Consolidation
The consolidated financial statements include ALIAC and its wholly owned
subsidiaries, Aetna Insurance Company of America ("AICA") and Aetna Investment
Adviser Holding Company, Inc. ("IA Holdco"). ALIAC is a wholly owned subsidiary
of Aetna Retirement Holdings, Inc. ("HOLDCO"). HOLDCO is a wholly owned
subsidiary of Aetna Retirement Services, Inc. whose ultimate parent is Aetna
Inc. ("Aetna"). On July 1, 1999, HOLDCO contributed IA Holdco to the Company
(refer to note 2).
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles. The contribution of IA Holdco to the
Company was accounted for in a manner similar to that of a pooling-of-interests
and accordingly, the Company's historical consolidated financial statements
have been restated to include the accounts and results of operations of IA
Holdco. Certain reclassifications have been made to 1998 and 1997 financial
information to conform to the 1999 presentation.
F-7
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
New Accounting Standards
Accounting by Insurance and Other Enterprises for Insurance-Related Assesments
As of January 1, 1999, the Company adopted Statement of Position ("SOP") 97-3,
Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments, issued by the American Institute of Certified Public Accountants
("AICPA"). This statement provides guidance for determining when an insurance
or other enterprise should recognize a liability for guaranty-fund and other
insurance-related assessments and guidance for measuring the liability. The
adoption of this standard did not have a material effect on the Company's
financial position or results of operations, as the Company had previously
accounted for guaranty-fund and other insurance-related assessments in a manner
consistent with this standard.
Future Application of Accounting Standards
Deposit Accounting: Accounting for Insurance and Reinsurance Contracts That Do
Not Transfer Insurance Risk
In October 1998, the AICPA issued SOP 98-7, Deposit Accounting: Accounting for
Insurance and Reinsurance Contracts That Do Not Transfer Insurance Risk, which
provides guidance on how to account for all insurance and reinsurance contracts
that do not transfer insurance risk, except for long-duration life and health
insurance contracts. This statement is effective for the Company's financial
statements beginning January 1, 2000. The Company does not expect the adoption
of this standard to have a material effect on its financial position and
results of operations.
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Financial Accounting Standard ("FAS") No. 133, Accounting for Derivative
Instruments and Hedging Activities. This standard requires companies to record
all derivatives on the balance sheet as either assets or liabilities and
measure those instruments at fair value. The manner in which companies are to
record gains or losses resulting from changes in the values of those
derivatives depends on the use of the derivative and whether it qualifies for
hedge accounting. As amended by FAS No. 137, Accounting for Derivative
Instruments and Hedging Activities -- Deferral of the Effective Date of FASB
Statement No. 133, this standard is effective for the Company's financial
statements beginning January 1, 2001, with early adoption permitted. The impact
of FAS No. 133 on the Company's financial statements will vary based on certain
factors including future interpretative guidance from the FASB, the extent of
the Company's hedging activities, the types of hedging instruments used and the
effectiveness of such instruments. The Company is evaluating the impact of
adoption of this standard and currently does not believe that it will have a
material effect on its financial position and results of operations.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the
F-8
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
financial statements and accompanying notes. Actual results could differ from
reported results using those estimates.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, money market instruments and
other debt issues with a maturity of 90 days or less when purchased.
Investments
Debt and equity securities are classified as available for sale and carried at
fair value. Securities are written down (as realized capital losses) for other
than temporary declines in value. Included in available-for-sale securities are
investments that support experience-rated products.
Experience-rated products are products where the customer, not the Company,
assumes investment (including realized capital gains and losses) and other
risks, subject to, among other things, minimum guarantees. As long as minimum
guarantees are not triggered, the effect of experience- rated products'
investment performance does not impact the Company's results of operations.
Realized and unrealized capital gains and losses on investments supporting
these products are reflected in policyholder's funds left with the Company.
Realized capital gains and losses on all other investments are reflected in the
Company's results of operations. Unrealized capital gains and losses on all
other investments are reflected in shareholders' equity, net of related income
taxes. Purchases and sales of debt and equity securities are recorded on the
trade date. Sales of mortgage loans are recorded on the closing date.
Fair values for debt and equity securities are based on quoted market prices or
dealer quotations. Where quoted market prices or dealer quotations are not
available, fair values are measured utilizing quoted market prices for similar
securities or by using discounted cash flow methods. Cost for mortgage-backed
securities is adjusted for unamortized premiums and discounts, which are
amortized using the interest method over the estimated remaining term of the
securities, adjusted for anticipated prepayments. The Company does not accrue
interest on problem debt securities when management believes the collection of
interest is unlikely.
The Company engages in securities lending whereby certain securities from its
portfolio are loaned to other institutions for short periods of time. Initial
collateral, primarily cash, is required at a rate of 102% of the market value
of a loaned domestic security and 105% of the market value of a loaned foreign
security. The collateral is deposited by the borrower with a lending agent, and
retained and invested by the lending agent according to the Company's
guidelines to generate additional income. The market value of the loaned
securities is monitored on a daily basis with additional collateral obtained or
refunded as the market value of the loaned securities fluctuates. At December
31, 1999 and 1998, the Company loaned securities (which are reflected as
invested assets) with a fair value of approximately $232.5 million and $277.3
million, respectively.
The investment in affiliated mutual funds represents an investment in Aetna
managed mutual funds which have been seeded by the Company, and is carried at
fair value.
F-9
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Mortgage loans and policy loans are carried at unpaid principal balances, net
of impairment reserves.
Short-term investments, consisting primarily of money market instruments and
other debt issues purchased with an original maturity of 91 days to one year,
are considered available for sale and are carried at fair value, which
approximates amortized cost.
The Company utilizes futures contracts for other than trading purposes in order
to hedge interest rate risk (i.e. market risk, refer to note 5.)
Futures contracts are carried at fair value and require daily cash settlement.
Changes in the fair value of futures contracts allocable to experience rated
contracts are deducted from capital gains and losses with an offsetting amount
reported in future policy benefits. Changes in the fair value of futures
contracts allocable to non-experienced-rated contracts that qualify as hedges
are deferred and recognized as an adjustment to the hedged asset or liability.
Deferred gains or losses on such futures contracts are amortized over the life
of the acquired asset or liability as a yield adjustment or through net
realized capital gains or losses upon disposal of an asset. Changes in the fair
value of futures contracts that do not qualify as hedges are recorded in net
realized capital gains or losses. Hedge designation requires specific asset or
liability identification, a probability at inception of high correlation with
the position underlying the hedge, and that high correlation be maintained
throughout the hedge period. If a hedging instrument ceases to be highly
correlated with the position underlying the hedge, hedge accounting ceases at
that date and excess gains or losses on the hedging instrument are reflected in
net realized capital gains or losses.
Included in common stock are warrants which represent the right to purchase
specific securities. Upon exercise, the cost of the warrants is added to the
basis of the securities purchased.
On occasion, the Company sells call options written on underlying securities
which are carried at fair value. Changes in fair value of these options are
recorded in net realized capital gains or losses.
Deferred Policy Acquisition Costs
Certain costs of acquiring certain insurance business are deferred. These
costs, all of which vary with and are primarily related to the production of
new and renewal business, consist principally of commissions, certain expenses
of underwriting and issuing contracts, and certain agency expenses. For certain
annuity and pension contracts, such costs are amortized in proportion to
estimated gross profits and adjusted to reflect actual gross profits over the
life of the contracts (up to 20 years for annuity and pension contracts.)
Periodically, modifications may be made to deferred annuity contract features,
such as shortening the surrender charge period or waiving the surrender charge,
changing the mortality and expense fees, etc. Unamortized deferred policy
acquisition costs associated with these modified contracts are not written off,
but rather, continue to be associated with the original block of business to
F-10
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
which these costs were previously recorded. Such costs are amortized based on
revised estimates of expected gross profits based upon the contract after the
modification. Unamortized deferred policy acquisition costs related to deferred
annuity products were approximately $1.0 billion and $893 million as of
December 31, 1999 and 1998, respectively.
Deferred policy acquisition costs are written off to the extent that it is
determined that future policy premiums and investment income or gross profits
are not adequate to cover related expenses.
Insurance Reserve Liabilities
Future policy benefits include reserves for universal life, immediate annuities
with life contingent payouts and traditional life insurance contracts. Reserves
for universal life products are equal to cumulative deposits less withdrawals
and charges plus credited interest thereon. Reserves for traditional life
insurance contracts represent the present value of future benefits to be paid
to or on behalf of policyholders and related expenses less the present value of
future net premiums.
Reserves for immediate annuities with life contingent payouts contracts are
computed on the basis of assumed investment yield, mortality, and expenses,
including a margin for adverse deviations. Such assumptions generally vary by
plan, year of issue and policy duration. Reserve interest rates range from
1.50% to 11.25% for all years presented. Investment yield is based on the
Company's experience. Mortality and withdrawal rate assumptions are based on
relevant Aetna experience and are periodically reviewed against both industry
standards and experience.
Because the sale of the domestic individual life insurance business was
substantially in the form of an indemnity reinsurance agreement, the Company
reported an addition to its reinsurance recoverable approximating the Company's
total individual life reserves at the sale date.
Policyholders' funds left with the Company include reserves for deferred
annuity investment contracts and immediate annuities without life contingent
payouts. Reserves on such contracts are equal to cumulative deposits less
charges and withdrawals plus credited interest thereon (rates range from 1.50%
to 11.25% for all years presented) net of adjustments for investment experience
that the Company is entitled to reflect in future credited interest. These
reserves also include unrealized gains/losses related to FAS No. 115. Reserves
on contracts subject to experience rating reflect the rights of
contractholders, plan participants and the Company.
Unpaid claims for all lines of insurance include benefits for reported losses
and estimates of benefits for losses incurred but not reported.
Revenue Recognition
For certain annuity contracts, charges assessed against policyholders' funds
for the cost of insurance, surrender charges, actuarial margin and other fees
are recorded as revenue in charges assessed against policyholders. Other
amounts received for these contracts are reflected as deposits
F-11
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
and are not recorded as revenue. Related policy benefits are recorded in
relation to the associated premiums or gross profit so that profits are
recognized over the expected lives of the contracts. When annuity payments with
life contingencies begin under contracts that were initially investment
contracts, the accumulated balance in the account is treated as a single
premium for the purchase of an annuity and reflected as an offsetting amount in
both premiums and current and future benefits in the Consolidated Statements of
Income.
Separate Accounts
Separate Accounts assets and liabilities generally represent funds maintained
to meet specific investment objectives of contractholders who bear the
investment risk, subject, in some cases, to minimum guaranteed rates.
Investment income and investment gains and losses generally accrue directly to
such contractholders. The assets of each account are legally segregated and are
not subject to claims that arise out of any other business of the Company.
Separate Accounts assets supporting variable options under universal life and
annuity contracts are invested, as designated by the contractholder or
participant under a contract (who bears the investment risk subject, in limited
cases, to minimum guaranteed rates) in shares of mutual funds which are managed
by the Company, or other selected mutual funds not managed by the Company.
Separate Accounts assets are carried at fair value. At December 31, 1999 and
1998 , unrealized losses of $8.0 million and unrealized gains of $10.0 million,
respectively, after taxes, on assets supporting a guaranteed interest option
are reflected in shareholder's equity. Separate Accounts liabilities are
carried at fair value, except for those relating to the guaranteed interest
option. Reserves relating to the guaranteed interest option are maintained at
fund value and reflect interest credited at rates ranging from 3.70% to 12.00%
in 1999 and 3.00 to 8.10% in 1998.
Separate Accounts assets and liabilities are shown as separate captions in the
Consolidated Balance Sheets. Deposits, investment income and net realized and
unrealized capital gains and losses of the Separate Accounts are not reflected
in the Consolidated Financial Statements (with the exception of realized and
unrealized capital gains and losses on the assets supporting the guaranteed
interest option). The Consolidated Statements of Cash Flows do not reflect
investment activity of the Separate Accounts.
Reinsurance
The Company utilizes indemnity reinsurance agreements to reduce its exposure to
large losses in all aspects of its insurance business. Such reinsurance permits
recovery of a portion of losses from reinsurers, although it does not discharge
the primary liability of the Company as direct insurer of the risks reinsured.
The Company evaluates the financial strength of potential reinsurers and
continually monitors the financial condition of reinsurers. Only those
reinsurance recoverable deemed probable of recovery are reflected as assets on
the Company's Consolidated Balance Sheets. Of the reinsurance recoverable on
the Consolidated Balance Sheets at December 31, 1999 and 1998, $2,989 million
and $2,946 million, respectively, is related to the reinsurance recoverable
from Lincoln arising from the sale of the domestic life insurance business.
(Refer to note 3)
F-12
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Income Taxes
The Company is included in the consolidated federal income tax return of Aetna.
The Company is taxed at regular corporate rates after adjusting income reported
for financial statement purposes for certain items. Deferred income tax
expenses/benefits result from changes during the year in cumulative temporary
differences between the tax basis and book basis of assets and liabilities.
2. Contribution of IA Holdco from HOLDCO
On July 1, 1999, HOLDCO contributed IA Holdco to the Company. The primary
operating subsidiary of IA Holdco is Aeltus Investment Management, Inc.
("Aeltus") which has two wholly-owned operating subsidiaries: Aeltus Capital,
Inc. ("ACI"), a broker dealer, and Aeltus Trust Company ("ATC"), a limited
purpose banking entity. Aeltus is a registered investment advisor under the
Investment Advisers Act of 1940 and provides investment advisory services to
institutional and retail clients on a fee-for-service basis. In addition,
Aeltus, through its ACI subsidiary, provides distribution services for certain
Aetna mutual funds and other Aetna products. Aeltus' ATC subsidiary provides
trustee, administrative, and other fiduciary services to retirement plans
requiring or otherwise utilizing a trustee or custodian.
3. Discontinued Operations-Individual Life Insurance
On October 1, 1998, the Company sold its domestic individual life insurance
business to Lincoln for $1 billion in cash. The transaction was generally in
the form of an indemnity reinsurance arrangement, under which Lincoln
contractually assumed from the Company certain policyholder liabilities and
obligations, although the Company remains directly obligated to policyholders.
Assets related to and supporting the life policies were transferred to Lincoln
and the Company recorded a reinsurance recoverable from Lincoln. The
transaction resulted in an after-tax gain on the sale of approximately $117
million, of which $57.7 million was deferred and was being recognized over
approximately 15 years. The remaining portion of the gain is recognized
immediately in net income and was largely attributed to access to the agency
sales force and brokerage distribution channel. Approximately $5.2 million
(after tax) of the deferred gain was recognized during 1999. During the fourth
quarter of 1999, the Company refined certain accrual and tax estimates which
had been established in connection with the recording of the deferred gain. As
a result, the deferred gain was increased by $12.9 million (after tax) to $65.4
million at December 31, 1999. The remaining deferred gain will be recognized
over approximately 14 years. The unamortized portion of the deferred gain is
presented in other liabilities on the Consolidated Balance Sheets.
The operating results of the domestic individual life insurance business are
presented as Discontinued Operations. All prior year income statement data has
been restated to reflect the presentation as Discontinued Operations. Revenues
for the individual life segment were $652.2 million and $620.4 million for 1998
and 1997. Premiums ceded and reinsurance recoveries made in 1999 totaled $476.5
million and $513.4 million, respectively, and in 1998 totaled $153.4 million
and $70.5 million, respectively.
F-13
<PAGE>
Notes to Consolidated Financial Statements (continued)
4. Investments
Debt securities available for sale as of December 31 were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
1999 (Millions) Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and government agencies
and authorities $ 1,087.2 $ 4.6 $ 22.1 $ 1,069.7
States, municipalities and political subdivisions 0.3 -- -- 0.3
U.S. corporate securities:
Utilities 514.5 5.6 12.7 507.4
Financial 1,869.8 8.2 44.7 1,833.3
Transportation/capital goods 623.4 .9 39.0 585.3
Health care/consumer products 1,138.7 9.3 51.3 1,096.7
Natural resources 424.6 1.3 15.4 410.5
Other corporate securities 214.0 1.0 14.9 200.1
- ----------------------------------------------------------------------------------------------------------------
Total U.S. corporate securities 4,785.0 26.3 178.0 4,633.3
- ----------------------------------------------------------------------------------------------------------------
Foreign securities:
Government, including political subdivisions 364.6 17.1 11.9 369.8
Utilities 196.4 7.3 .4 203.3
Other 748.2 8.9 34.3 722.8
- ----------------------------------------------------------------------------------------------------------------
Total foreign securities 1,309.2 33.3 46.6 1,295.9
- ----------------------------------------------------------------------------------------------------------------
Residential mortgage-backed securities:
Pass-throughs 1,055.9 19.8 17.6 1,058.1
Collateralized mortgage obligations 1,683.1 25.1 37.7 1,670.5
- ----------------------------------------------------------------------------------------------------------------
Total residential mortgage-backed securities 2,739.0 44.9 55.3 2,728.6
- ----------------------------------------------------------------------------------------------------------------
Commercial/Multifamily mortgage-backed
securities 1,031.5 3.4 48.7 986.2
Other asset-backed securities 705.7 0.3 9.9 696.1
- ----------------------------------------------------------------------------------------------------------------
Total debt securities $ 11,657.9 $ 112.8 $ 360.6 $ 11,410.1
================================================================================================================
</TABLE>
F-14
<PAGE>
Notes to Consolidated Financial Statements (continued)
4. Investments (continued)
Debt securities available for sale as of December 31 were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
1998 (Millions) Cost Gains Losses Value
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and government agencies
and authorities $ 718.9 $ 60.4 $ 0.2 $ 779.1
States, municipalities and political subdivisions 0.3 -- -- 0.3
U.S. corporate securities:
Utilities 615.2 29.8 4.1 640.9
Financial 2,260.2 94.6 5.6 2,349.2
Transportation/capital goods 580.8 33.0 1.1 612.7
Healthcare/consumer products 1,328.2 69.8 4.8 1,393.2
Natural resources 254.5 6.9 2.3 259.1
Other corporate securities 261.7 5.8 7.4 260.1
- ----------------------------------------------------------------------------------------------------------------
Total U.S. corporate securities 5,300.6 239.9 25.3 5,515.2
- ----------------------------------------------------------------------------------------------------------------
Foreign securities:
Government, including political subdivisions 507.6 30.4 32.9 505.1
Utilities 147.0 32.4 -- 179.4
Other 511.2 14.9 1.8 524.3
- ----------------------------------------------------------------------------------------------------------------
Total foreign securities 1,165.8 77.7 34.7 1,208.8
- ----------------------------------------------------------------------------------------------------------------
Residential mortgage-backed securities:
Pass-throughs 671.9 38.4 2.9 707.4
Collateralized mortgage obligations 1,879.6 119.7 10.4 1,988.9
- ----------------------------------------------------------------------------------------------------------------
Total residential mortgage-backed securities 2,551.5 158.1 13.3 2,696.3
- ----------------------------------------------------------------------------------------------------------------
Commercial/Multifamily mortgage-backed
securities 1,114.9 30.9 9.8 1,136.0
Other asset-backed securities 719.3 13.8 0.6 732.5
- ----------------------------------------------------------------------------------------------------------------
Total debt securities $ 11,571.3 $ 580.8 $ 83.9 $ 12,068.2
================================================================================================================
</TABLE>
F-15
<PAGE>
Notes to Consolidated Financial Statements (continued)
4. Investments (continued)
At December 31, 1999 and 1998, net unrealized (depreciation) appreciation of
$(247.8) million and $496.9 million, respectively, on available-for-sale debt
securities included $(189.7) million and $355.8 million, respectively, related
to experience-rated contracts, which were not reflected in shareholder's equity
but in insurance reserves.
The amortized cost and fair value of debt securities for the year ended
December 31, 1999 are shown below by contractual maturity. Actual maturities
may differ from contractual maturities because securities may be restructured,
called, or prepaid.
<TABLE>
<CAPTION>
Amortized Fair
(Millions) Cost Value
- -------------------------------------------------------------------------
<S> <C> <C>
Due to mature:
One year or less $ 266.4 $ 266.5
After one year through five years 2,838.4 2,798.7
After five years through ten years 1,718.0 1,674.6
After ten years 2,351.4 2,250.1
Mortgage-backed securities 3,776.5 3,722.3
Other asset-backed securities 707.2 697.9
- -------------------------------------------------------------------------
Total $ 11,657.9 $ 11,410.1
=========================================================================
</TABLE>
At December 31, 1999 and 1998, debt securities carried at fair value of $8.7
million and $8.8 million, respectively, were on deposit as required by
regulatory authorities.
The Company did not have any investments in a single issuer, other than
obligations of the U.S. government, with a carrying value in excess of 10% of
the Company's shareholder's equity at December 31, 1999.
Included in the Company's debt securities were residential collateralized
mortgage obligations ("CMOs") supporting the following:
<TABLE>
<CAPTION>
1999 1998
----------------------------- --------------------------
Amortized Fair Amortized Fair
(Millions) Cost Value Cost Value
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total residential CMOs (1) $ 1,683.1 $ 1,670.5 $ 1,879.6 $ 1,988.9
=====================================================================================================
Percentage of total:
Supporting experience rated products 80.7% 81.7%
Supporting remaining products 19.3% 18.3%
- -----------------------------------------------------------------------------------------------------
100.0% 100.0%
=====================================================================================================
</TABLE>
(1) At December 31, 1999 and 1998, approximately 81% and 66%, respectively, of
the Company's residential CMO holdings were backed by government agencies
such as GNMA, FNMA, FHLMC.
F-16
<PAGE>
Notes to Consolidated Financial Statements (continued)
4. Investments (continued)
There are various categories of CMOs which are subject to different degrees of
risk from changes in interest rates and, for CMO's that are not agency-backed,
defaults. The principal risks inherent in holding CMOs are prepayment and
extension risks related to dramatic decreases and increases in interest rates
resulting in the repayment of principal from the underlying mortgages either
earlier or later than originally anticipated. At December 31, 1999 and 1998,
approximately 1% and 2%, respectively, of the Company's CMO holdings were
invested in types of CMOs which are subject to more prepayment and extension
risk than traditional CMOs (such as interest- or principal-only strips).
Investments in equity securities available for sale as of December 31 were as
follows:
<TABLE>
<CAPTION>
(Millions) 1999 1998
- ----------------------------------------------------
<S> <C> <C>
Amortized Cost $ 204.9 $ 300.4
Gross unrealized gains 12.5 13.1
Gross unrealized losses 10.9 8.1
- ----------------------------------------------------
Fair Value $ 206.5 $ 305.4
====================================================
</TABLE>
5. Financial Instruments
Estimated Fair Value
The carrying values and estimated fair values of certain of the Company's
financial instruments at December 31, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
1999 1998
-------------------------- ----------------------
Carrying Fair Carrying Fair
(Millions) Value Value Value Value
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Mortgage loans $ 6.7 $ 6.8 $ 12.7 $ 12.3
Liabilities:
Investment contract liabilities:
With a fixed maturity 1,055.3 991.0 1,063.9 984.3
Without a fixed maturity 10,066.4 9,452.8 10,241.7 9,686.2
- ------------------------------------------------------------------------------------------
</TABLE>
Fair value estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument, such as
estimates of timing and amount of future cash flows. Such estimates do not
reflect any premium or discount that could result from offering for sale at one
time the Company's entire holdings of a particular financial instrument, nor do
they consider the tax impact of the realization of unrealized gains or losses.
In many cases, the fair value estimates cannot be substantiated by comparison
to independent markets, nor can the disclosed value be realized in immediate
settlement of the instrument. In evaluating the Company's management of
interest rate, price and liquidity risks, the fair values of all assets and
liabilities should be taken into consideration, not only those presented above.
F-17
<PAGE>
Notes to Consolidated Financial Statements (continued)
5. Financial Instruments (continued)
The following valuation methods and assumptions were used by the Company in
estimating the fair value of the above financial instruments:
Mortgage loans: Fair values are estimated by discounting expected mortgage loan
cash flows at market rates which reflect the rates at which similar loans would
be made to similar borrowers. The rates reflect management's assessment of the
credit quality and the remaining duration of the loans.
Investment contract liabilities (included in Policyholders' funds left with the
Company):
With a fixed maturity: Fair value is estimated by discounting cash flows at
interest rates currently being offered by, or available to, the Company for
similar contracts.
Off-Balance-Sheet and Other Financial Instruments
Without a fixed maturity: Fair value is estimated as the amount payable to the
contractholder upon demand. However, the Company has the right under such
contracts to delay payment of withdrawals which may ultimately result in paying
an amount different than that determined to be payable on demand.
Futures Contracts:
Futures contracts are used to manage interest rate risk in the Company's bond
portfolio. Futures contracts represent commitments to either purchase or sell
securities at a specified future date and at a specified price or yield.
Futures contracts trade on organized exchanges and, therefore, have minimal
credit risk. Cash settlements are made daily based on changes in the prices of
the underlying assets. The notional amounts, carrying values and estimated fair
values of the Company's open treasury futures as of December 31, 1998 were
$250.9 million, $.1 million, and $.1 million, respectively. There were no open
treasury futures as of December 31, 1999.
Warrants:
Included in common stocks are warrants which are instruments giving the Company
the right, but not the obligation to buy a security at a given price during a
specified period. The carrying values and estimated fair values of the
Company's warrants to purchase equity securities as of December 31, 1999 were
both $6.5 million. The carrying values and estimated fair values as of December
31, 1998 were both $1.5 million.
Options:
During 1999, the Company earned $0.4 million of investment income for writing
call options on underlying securities. The Company did not write any call
options in 1998. As of December 31, 1999 and 1998, there were no option
contracts outstanding.
F-18
<PAGE>
Notes to Consolidated Financial Statements (continued)
5. Financial Instruments (continued)
Debt Instruments with Derivative Characteristics:
The Company also had investments in certain debt instruments with derivative
characteristics, including those whose market value is at least partially
determined by, among other things, levels of or changes in domestic and/or
foreign interest rates (short- or long-term), exchange rates, prepayment rates,
equity markets or credit ratings/spreads. The amortized cost and fair value of
these securities, included in the debt securities portfolio, as of December 31,
1999 was as follows:
<TABLE>
<CAPTION>
Amortized Fair
(Millions) Cost Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Residential collateralized mortgage obligations $ 1,683.1 $ 1,670.5
Principal-only strips (included above) 9.2 9.7
Interest-only strips (included above) 10.7 14.6
Other structured securities with derivative
characteristics (1) 81.7 67.2
- --------------------------------------------------------------------------------
</TABLE>
(1) Represents non-leveraged instruments whose fair values and credit risk are
based on underlying securities, including fixed income securities and
interest rate swap agreements.
6. Net Investment Income
Sources of net investment income were as follows:
<TABLE>
<CAPTION>
(Millions) 1999 1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities $ 823.3 $ 798.8 $ 814.6
Nonredeemable preferred stock 17.1 18.4 12.9
Investment in affiliated mutual funds 2.4 6.6 3.8
Mortgage loans 1.1 0.6 0.3
Policy loans 7.7 7.2 5.7
Reinsurance loan to affiliate -- 2.3 5.5
Cash equivalents 39.0 46.1 40.2
Other 15.3 13.2 16.1
- --------------------------------------------------------------------------------
Gross investment income 905.9 893.2 899.1
Less: investment expenses (19.6) (21.4) (17.4)
- --------------------------------------------------------------------------------
Net investment income $ 886.3 $ 871.8 $ 881.7
================================================================================
</TABLE>
Net investment income includes amounts allocable to experience rated
contractholders of $659.6 million, $655.6 million and $673.8 million for the
years ended December 31, 1999, 1998 and 1997, respectively. Interest credited
to contractholders is included in current and future benefits.
F-19
<PAGE>
Notes to Consolidated Financial Statements (continued)
7. Dividend Restrictions and Shareholder's Equity
The Company paid $255.0 million, $570.0 million and $34.3 million in cash
dividends to HOLDCO in 1999,1998 and 1997, respectively. Of the $255.0 million
paid in 1999, $206 million was accrued for in 1998. Of the $776.0 million
dividends paid or accrued in 1998, $756.0 million (all of which was approved by
the Insurance Commissioner of the State of Connecticut) was attributable to
proceeds from the sale of the domestic individual life insurance business.
The Department recognizes as net income and shareholder's capital and surplus
those amounts determined in conformity with statutory accounting practices
prescribed or permitted by the Department, which differ in certain respects
from generally accepted accounting principles. Statutory net income was $133.9
million, $148.1 million and $80.5 million for the years ended December 31,
1999, 1998 and 1997, respectively. Statutory capital and surplus was $845.2
million and $773.0 million as of December 31, 1999 and 1998, respectively.
As of December 31, 1999, the Company does not utilize any statutory accounting
practices which are not prescribed by state regulatory authorities that,
individually or in the aggregate, materially affect statutory capital and
surplus.
8. Capital Gains and Losses on Investment Operations
Realized capital gains or losses are the difference between the carrying value
and sale proceeds of specific investments sold.
Net realized capital (losses) gains on investments were as follows:
<TABLE>
<CAPTION>
(Millions) 1999 1998 1997
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities $ (23.6) $ 7.4 $ 21.1
Equity securities 2.1 3.0 8.6
- ----------------------------------------------------------------------------------
Pretax realized capital (losses) gains $ (21.5) $ 10.4 $ 29.7
==================================================================================
After-tax realized capital (losses) gains $ (14.0) $ 7.3 $ 19.2
==================================================================================
</TABLE>
Net realized capital (losses) gains of $(36.7) million, $15.0 million and $83.7
million for 1999, 1998 and 1997, respectively, allocable to experience rated
contracts, were deducted from net realized capital gains and an offsetting
amount was reflected in Policyholders' funds left with the Company. Net
unamortized gains allocable to experienced-rated contractholders were $68.5
million and $118.6 million at December 31, 1999 and 1998, respectively.
F-20
<PAGE>
Notes to Consolidated Financial Statements (continued)
8. Capital Gains and Losses on Investment Operations (continued)
Proceeds from the sale of available-for-sale debt securities and the related
gross gains and losses were as follows:
<TABLE>
<CAPTION>
(Millions) 1999 1998 1997
- ------------------------------------------------------------------
<S> <C> <C> <C>
Proceeds on sales $ 5,890.1 $ 6,790.2 $ 5,311.3
Gross gains 10.5 98.8 23.8
Gross losses 34.1 91.4 2.7
- ------------------------------------------------------------------
</TABLE>
Changes in shareholder's equity related to changes in accumulated other
comprehensive income (unrealized capital gains and losses on securities,
excluding those related to experience-rated contractholders) were as follows:
<TABLE>
<CAPTION>
(Millions) 1999 1998 1997
- -------------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities $ (199.2) $ 18.9 $ 44.3
Equity securities (3.4) (16.1) 5.6
Other (27.6) 15.4 --
- -------------------------------------------------------------------------------------
Subtotal (230.2) 18.2 49.9
(Decrease) increase in deferred income taxes
(Refer to note 9) (80.6) 6.3 17.5
- -------------------------------------------------------------------------------------
Net changes in accumulated other
comprehensive (loss) income $ (149.6) $ 11.9 $ 32.4
=====================================================================================
</TABLE>
Net unrealized capital (losses) gains allocable to experience-rated contracts
of $(189.7) and $355.8 million at December 31, 1999 and December 31, 1998
respectively, are reflected on the Consolidated Balance Sheets in
Policyholders' funds left with the Company and are not included in
shareholder's equity.
F-21
<PAGE>
Notes to Consolidated Financial Statements (continued)
8. Capital Gains and Losses on Investment Operations (continued)
Shareholder's equity included the following accumulated other comprehensive
(loss) income, which is net of amounts allocable to experience-rated
contractholders, at December 31:
<TABLE>
<CAPTION>
(Millions) 1999 1998 1997
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities:
Gross unrealized capital gains $ 18.6 $ 157.3 $ 140.6
Gross unrealized capital losses (76.7) (16.2) (18.4)
- -----------------------------------------------------------------------------------
(58.1) 141.1 122.2
- -----------------------------------------------------------------------------------
Equity securities:
Gross unrealized capital gains 12.5 13.1 21.2
Gross unrealized capital losses (10.9) (8.1) (0.1)
- -----------------------------------------------------------------------------------
1.6 5.0 21.1
- -----------------------------------------------------------------------------------
Other:
Gross unrealized capital gains 1.3 17.1 --
Gross unrealized capital losses (13.7) (1.8) --
- -----------------------------------------------------------------------------------
(12.4) 15.3 --
- -----------------------------------------------------------------------------------
Deferred income taxes (Refer to note 9) (24.1) 56.6 50.4
- -----------------------------------------------------------------------------------
Net accumulated other comprehensive (loss)
income $ (44.8) $ 104.8 $ 92.9
===================================================================================
</TABLE>
Changes in accumulated other comprehensive income related to changes in
unrealized gains (losses) on securities (excluding those related to
experience-rated contractholders) were as follows:
<TABLE>
<CAPTION>
(Millions) 1999 1998 1997
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized holding (losses) gains arising
during the year (1) $ (146.3) $ 38.3 $ 99.2
Less: reclassification adjustment for gains and
other items included in net income (2) 3.3 26.4 66.8
========================================================================================
Net unrealized (losses) gains on securities $ (149.6) $ 11.9 $ 32.4
========================================================================================
</TABLE>
(1) Pretax unrealized holding (losses) gains arising during the year were
$(225.2) million, $58.8 million and $152.7 million for 1999, 1998 and
1997, respectively.
(2) Pretax reclassification adjustments for gains and other items included in
net income were $5.0 million, $40.6 million and $102.8 million for 1999,
1998 and 1997, respectively.
F-22
<PAGE>
Notes to Consolidated Financial Statements (continued)
9. Income Taxes
The Company is included in the consolidated federal income tax return, the
combined New York return, and Illinois unitary state income tax return of
Aetna. Aetna allocates to each member, as permitted under a tax sharing
arrangement, an amount approximating the tax it would have incurred were it not
a member of the consolidated group, and credits the member for the use of its
tax saving attributes in the consolidated federal income tax return.
Income taxes from continuing operations consist of the following:
<TABLE>
<CAPTION>
(Millions) 1999 1998 1997
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Current taxes (benefits):
Federal $ 63.8 $ 257.4 $ 40.0
State 2.5 3.0 3.3
Net realized capital (losses) gains (20.1) 16.8 39.1
- -----------------------------------------------------------------------------
46.2 277.2 82.4
- -----------------------------------------------------------------------------
Deferred taxes (benefits):
Federal 31.3 (196.7) 14.3
Net realized capital gains (losses) 12.6 (13.9) (28.3)
- -----------------------------------------------------------------------------
43.9 (210.6) (14.0)
- -----------------------------------------------------------------------------
Total $ 90.1 $ 66.6 $ 68.4
=============================================================================
</TABLE>
Income taxes were different from the amount computed by applying the federal
income tax rate to income from continuing operations before income taxes for
the following reasons:
<TABLE>
<CAPTION>
(Millions) 1999 1998 1997
- ------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income from continuing operations before
income taxes $ 271.3 $ 238.7 $ 236.3
Tax rate 35% 35% 35%
- ------------------------------------------------------------------------------------
Application of the tax rate 95.0 83.5 82.7
Tax effect of:
State income tax, net of federal benefit 1.6 2.0 2.1
Excludable dividends (6.1) (17.1) (15.6)
Other, net (0.4) (1.8) (0.8)
- ------------------------------------------------------------------------------------
Income taxes $ 90.1 $ 66.6 $ 68.4
=====================================================================================
</TABLE>
F-23
<PAGE>
Notes to Consolidated Financial Statements (continued)
9. Income Taxes (continued)
The tax effects of temporary differences that give rise to deferred tax assets
and deferred tax liabilities at December 31 are presented below:
<TABLE>
<CAPTION>
(Millions) 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Insurance reserves $ 323.1 $ 324.1
Unrealized gains allocable to experience rated contracts -- 124.5
Net unrealized capital losses 90.5 --
Investment losses 1.3 --
Postretirement benefits other than pensions 24.8 27.6
Deferred compensation 42.5 37.3
Sale of individual life 44.9 48.9
Other 20.2 20.4
- ---------------------------------------------------------------------------------------
Total gross assets 547.3 582.8
- ---------------------------------------------------------------------------------------
Deferred tax liabilities:
Deferred policy acquisition costs 324.0 282.9
Market discount 6.5 4.5
Net unrealized capital gains -- 181.1
Unrealized losses allocable to experience rated contracts 66.4 --
- ---------------------------------------------------------------------------------------
Total gross liabilities 396.9 468.5
- ---------------------------------------------------------------------------------------
Net deferred tax asset $ 150.4 $ 114.3
=======================================================================================
</TABLE>
Net unrealized capital gains and losses are presented in shareholder's equity
net of deferred taxes.
Management believes that it is more likely than not that the Company will
realize the benefit of the net deferred tax asset. The Company expects
sufficient taxable income in the future to realize the net deferred tax asset
because of the Company's long-term history of having taxable income, which is
projected to continue.
The "Policyholders' Surplus Account," which arose under prior tax law, is
generally that portion of a life insurance company's statutory income that has
not been subject to taxation. As of December 31, 1983, no further additions
could be made to the Policyholders' Surplus Account for tax return purposes
under the Deficit Reduction Act of 1984. The balance in such account was
approximately $17.2 million at December 31, 1999. This amount would be taxed
only under certain conditions. No income taxes have been provided on this
amount since management believes under current tax law the conditions under
which such taxes would become payable are remote.
The Internal Revenue Service (the "Service") has completed examinations of the
consolidated federal income tax returns of Aetna through 1994. Discussions are
being held with the Service with respect to proposed adjustments. Management
believes there are adequate defenses against, or sufficient reserves to provide
for, any such adjustments. The Service has commenced its examinations for the
years 1995 through 1997.
F-24
<PAGE>
Notes to Consolidated Financial Statements (continued)
10. Benefit Plans
Aetna has noncontributory defined benefit pension plans covering substantially
all employees. Aetna's accrued pension cost has been allocated to its
subsidiaries, including the Company, under an allocation based on eligible
salaries. Data on a separate company basis regarding the proportionate share of
the projected benefit obligation and plan assets is not available. The
accumulated benefit obligation and plan assets are recorded by Aetna. As of the
measurement date (September 30), fair value of plan assets exceed projected
benefit obligations. Allocated pretax charges to operations for the pension
plan (based on the Company's total salary cost as a percentage of Aetna's total
salary cost) were $6.6 million and $3.0 million for the years ended December
31, 1999 and 1997, respectively. There were no charges in 1998 due to favorable
plan asset performance.
Effective January 1, 1999, the Company, in conjunction with Aetna, changed the
formula from the previous final average pay formula to a cash balance formula,
which will credit employees annually with an amount equal to a percentage of
eligible pay based on age and years of service as well as an interest credit
based on individual account balances. The formula also provides for a
transition period until December 1, 2006, which allows certain employees to
receive vested benefits at the higher of the final average pay or cash balance
formula. The changing of this formula did not have a material effect on the
Company's results of operations, liquidity or financial condition.
In addition to providing pension benefits, Aetna currently provides certain
health care and life insurance benefits for retired employees. A comprehensive
medical and dental plan is offered to all full-time employees retiring at age
45 with 10 years of service. The company provides subsidized benefits to
employees whose sum of age and service is at least equal to 65. There is a cap
on the portion of the cost paid by the Company relating to medical and dental
benefits. The costs to the Company associated with the Aetna postretirement
plans for 1999, 1998 and 1997 were $2.1 million, $1.0 million and $2.4 million,
respectively.
The Company, in conjunction with Aetna, has a non-qualified pension plan
covering certain agents. The plan provides pension benefits based on annual
commission earnings. As of the measurement date (September 30), accumulated
benefit obligations exceeded fair value of plan assets.
The Company, in conjunction with Aetna, also provides certain postretirement
health care and life insurance benefits for certain agents. The costs to the
Company associated with the agents' postretirement plans for 1999, 1998 and
1997 were $2.1 million, $1.4 million and $0.6 million, respectively.
Incentive Savings Plan--Substantially all employees are eligible to participate
in a savings plan under which designated contributions, which may be invested
in common stock of Aetna or certain other investments, are matched, up to 5% of
compensation, by Aetna. Pretax charges to operations for the incentive savings
plan were $7.7 million, $5.3 million and $5.0 million in 1999, 1998 and 1997,
respectively.
Stock Plans--Aetna has a stock incentive plan that provides for stock options,
deferred contingent common stock or equivalent cash awards or restricted stock
to employees. Executive, middle
F-25
<PAGE>
Notes to Consolidated Financial Statements (continued)
10. Benefit Plans (continued)
management and non-management employees may be granted options to purchase
common stock of Aetna at or above the market price on the date of grant.
Options generally become 100% vested three years after the grant is made, with
one-third of the options vesting each year. Aetna does not recognize
compensation expense for stock options granted at or above the market price on
the date of grant under its stock incentive plans. In addition, executives may,
from time to time, be granted incentive units which are rights to receive
common stock or an equivalent value in cash. The incentive units may vest
within a range from 0% to 175% at the end of a four year period based on the
attainment of performance goals. The costs to the Company associated with the
Aetna stock plans for 1999, 1998 and 1997, were $0.4 million, $4.2 million and
$2.9 million, respectively.
11. Related Party Transactions
Investment Advisory and Other Fees
The Company serves as investment advisor to the Aetna managed mutual funds and
variable funds (collectively, the Funds). Under the advisory agreements, the
Funds pay the Company a daily fee which, on an annual basis, ranged, depending
on the fund, from 0.25% to 0.95% of their average daily net assets. The Company
is also compensated by the Separate Accounts (variable funds) for bearing
mortality and expense risks pertaining to variable life and annuity contracts.
Under the insurance and annuity contracts, the Separate Accounts pay the
Company a daily fee which, on an annual basis is, depending on the product, up
to 2.15% of their average daily net assets. The amount of compensation and fees
received from the Funds and Separate Accounts, included in charges assessed
against policyholders and other income, amounted to $424.2 million, $349.0
million and $271.2 million in 1999, 1998 and 1997, respectively.
Reinsurance Transactions
Effective December 31, 1988, the Company entered into a modified coinsurance
reinsurance agreement ("MODCO") with Aetna Life Insurance Company ("Aetna
Life"), an affiliate company, in which substantially all of the
non-participating individual life and annuity business written by Aetna Life
prior to 1981 was assumed by the Company. Effective January 1, 1997, this
agreement was amended to transition (based on underlying investment rollover in
Aetna Life) from a modified coinsurance arrangement to a coinsurance agreement.
As a result of this change, reserves were ceded to the Company from Aetna Life
as investment rollover occurred. Effective October 1, 1998, this agreement was
fully transitioned to a coinsurance arrangement and this business along with
the Company's direct individual non-participation life insurance business was
sold to Lincoln. (Refer to note 3).
The operating results of the domestic individual life business are presented as
Discontinued Operations. Premiums of $17.9 million, $336.3 million and $176.7
million and current and future benefits of $8.6 million, $341.1 million and
$183.9 million, were assumed in 1999, 1998 and 1997, respectively. Investment
income of $17.0 million and $37.5 million was generated from a reinsurance loan
to affiliate for the years ended December 31, 1998 and 1997, respectively.
Prior to the sale of the domestic individual life insurance business to Lincoln
on October 1, 1998, the Company's retention limit per individual life was $2.0
million and amounts in excess of this
F-26
<PAGE>
Notes to Consolidated Financial Statements (continued)
11. Related Party Transactions (continued)
limit, up to a maximum of $8.0 million on any new individual life business was
reinsured with Aetna Life on a yearly renewable term basis. Premium amounts
related to this agreement were $2.0 million and $5.9 million for 1998 and 1997,
respectively. This agreement was terminated effective October 1, 1998.
Effective October 1, 1997, the Company entered into a reinsurance agreement
with Aetna Life to assume amounts in excess of $0.2 million for certain of its
participating life insurance, on a yearly renewable term basis. Premium amounts
related to this agreement were $4.4 million in1998. The business assumed under
this agreement was retroceded to Lincoln effective October 1, 1998.
On December 16, 1988, the Company assumed $25.0 million of premium revenue from
Aetna Life for the purchase and administration of a life contingent single
premium variable payout annuity contract. In addition, the Company is also
responsible for administering fixed annuity payments that are made to
annuitants receiving variable payments. Reserves of $115.3 million and $87.8
million were maintained for this contract as of December 31, 1999 and 1998,
respectively.
Capital Transactions
The Company received no capital contributions in 1999. In 1998, the Company
received a capital contribution of $9.3 million in cash from HOLDCO. In 1997,
the Company returned capital of $5.0 million to HOLDCO.
Refer to note 7 for dividends paid to HOLDCO.
Other
Premiums due and other receivables include $10.5 million and $1.6 million due
from affiliates in 1999 and 1998, respectively. Other liabilities include $1.9
million and $2.2 million due to affiliates for 1999 and 1998, respectively.
Aetna transferred to the Company $0.8 million, $1.7 million and $3.8 million
based on its decision not to settle state tax liabilities for the years 1999,
1998 and 1997, respectively, as permitted under the tax sharing arrangement,
which is reported in other changes in retained earnings.
Substantially all of the administrative and support functions of the Company
are provided by Aetna and its affiliates. The financial statements reflect
allocated charges for these services based upon measures appropriate for the
type and nature of service provided.
12. Reinsurance
On October 1, 1998, the Company sold its domestic individual life insurance
business to Lincoln for $1 billion in cash. The transaction is generally in the
form of an indemnity reinsurance arrangement, under which Lincoln contractually
assumed from the Company certain policyholder liabilities and obligations,
although the Company remains directly obligated to policyholders. (Refer to
note 3)
F-27
<PAGE>
Notes to Consolidated Financial Statements (continued)
12. Reinsurance (continued)
Effective January 1, 1998, 90% of the mortality risk on substantially all
individual universal life product business written from June 1, 1991 through
October 31, 1997 was reinsured externally. Beginning November 1, 1997, 90% of
new business written on these products was reinsured externally. Effective
October 1, 1998 this agreement was assigned from the third party reinsurer to
Lincoln.
The following table includes premium amounts ceded/assumed as discussed in note
11.
<TABLE>
<CAPTION>
Ceded to Assumed
Direct Other from Other Net
(Millions) Amount Companies Companies Amount
- ---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1999
----
Premiums:
Discontinued Operations $ 460.1 $ 478.0 $ 17.9 $ --
Accident and Health Insurance 33.4 33.4 -- --
Annuities 111.5 4.9 .9 107.5
- ---------------------------------------------------------------------------------------
Total earned premiums $ 605.0 $ 516.3 $ 18.8 $ 107.5
=======================================================================================
1998
----
Premiums:
Discontinued Operations $ 166.8 $ 165.4 $ 340.6 $ 342.0
Accident and Health Insurance 16.3 16.3 -- --
Annuities 80.8 2.9 1.5 79.4
- ---------------------------------------------------------------------------------------
Total earned premiums $ 263.9 $ 184.6 $ 342.1 $ 421.4
=======================================================================================
1997
----
Premiums:
Discontinued Operations $ 35.7 $ 15.1 $ 177.4 $ 198.0
Accident and Health Insurance 5.6 5.6 -- --
Annuities 67.9 -- 1.2 69.1
- ---------------------------------------------------------------------------------------
Total earned premiums $ 109.2 $ 20.7 $ 178.6 $ 267.1
=======================================================================================
</TABLE>
F-28
<PAGE>
Notes to Consolidated Financial Statements (continued)
13. Segment Information
Summarized financial information for the Company's principal operations was as
follows:
<TABLE>
<CAPTION>
Investment
Year ended December 31, Financial Management Discontinued
1999 (Millions) Products (1) Services (1) Operations (1) Other (1) Total
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue from external
customers $ 551.1 $ 118.3 -- $ (43.9) $ 625.5
Net investment income 881.5 1.5 -- 3.3 886.3
- ---------------------------------------------------------------------------------------------------------
Total revenue excluding net
realized capital losses $ 1,432.6 $ 119.8 -- $ (40.6) $ 1,511.8
=========================================================================================================
Amortization of deferred policy
acquisition costs $ 93.4 $ 11.5 $ 104.9
- ---------------------------------------------------------------------------------------------------------
Income taxes (benefits) $ 87.0 $ 16.5 $ (13.4) $ 90.1
- ---------------------------------------------------------------------------------------------------------
Operating earnings (losses) (2) $ 192.1 $ 28.1 -- $ (7.5) $ 212.7
Other item (3) -- -- (17.5) (17.5)
Net realized capital losses,
net of tax (14.0) -- -- (14.0)
- ---------------------------------------------------------------------------------------------------------
Income (loss) from continuing
operations 178.1 28.1 -- (25.0) 181.2
Discontinued operations,
net of tax:
Amortization of deferred
gain on sale -- $ 5.7 -- 5.7
- ---------------------------------------------------------------------------------------------------------
Net income (loss) $ 178.1 $ 28.1 $ 5.7 $ (25.0) $ 186.9
=========================================================================================================
Segment assets $ 53,324.4 $ 73.2 $ 2,989.0 $ 56,386.6
- ---------------------------------------------------------------------------------------------------------
Expenditures for long-lived
assets (4) -- -- -- $ 5.7 $ 5.7
- ---------------------------------------------------------------------------------------------------------
Balance of long-lived assets -- -- -- $ 16.5 $ 16.5
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Financial Products include: deferred and immediate annuity contracts,
mutual funds, programs offered to qualified plans and nonqualified
deferred compensation plans that package administrative and recordkeeping
services along with a menu of investment options, investment advisory
services and pension plan administrative services. Investment Management
Services include the following services: investment advisory to affiliated
and unaffiliated institutional and retail clients, underwriting,
distribution for Company products and trustee, administrative and other
fiduciary services to retirement plans. (Refer to notes 1 and 2.)
Discontinued operations include life insurance products. (Refer to note
3.) Other includes consolidating adjustments and Year 2000 costs.
(2) Operating earnings is comprised of net income (loss) excluding net
realized capital gains and losses and any other items. While operating
earnings is the measure of profit or loss used by the Company's management
when assessing performance or making operating decisions, it does not
replace operating income or net income as a measure of profitability.
(3) Other item excluded from operating earnings represents after-tax Year 2000
costs of $17.5 million
(4) Expenditures of long-lived assets represents additions to property and
equipment not allocable to business segments.
F-29
<PAGE>
Notes to Consolidated Financial Statements (continued)
13. Segment Information (continued)
<TABLE>
<CAPTION>
Investment
Year ended December 31, Financial Management Discontinued
1998 (Millions) Products (1) Services (1) Operations (1) Other (1) Total
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue from external
customers $ 445.6 $ 96.7 -- $ (38.4) $ 503.9
Net investment income 865.3 1.5 -- 5.0 871.8
- --------------------------------------------------------------------------------------------------------
Total revenue excluding net
realized capital gains $ 1,310.9 $ 98.2 -- $ (33.4) $ 1,375.7
========================================================================================================
Amortization of deferred policy
acquisition costs $ 80.3 -- -- $ 10.9 $ 91.2
- --------------------------------------------------------------------------------------------------------
Income Taxes (benefits) $ 67.7 $ 14.7 -- $ (15.8) $ 66.6
- --------------------------------- ---------- ------- -- ------- ----------
Operating earnings (2) $ 170.3 $ 24.0 -- $ (7.1) $ 187.2
Other item (3) -- -- -- (22.4) (22.4)
Net realized capital gains,
net of tax 7.3 -- -- -- 7.3
- --------------------------------------------------------------------------------------------------------
Income from continuing
operations 177.6 24.0 -- (29.5) 172.1
Discontinued operations,
net of tax:
Income from operations -- -- $ 61.8 -- 61.8
Immediate gain on sale -- -- 59.0 -- 59.0
- --------------------------------------------------------------------------------------------------------
Net income (loss) $ 177.6 $ 24.0 $ 120.8 $ (29.5) $ 292.9
========================================================================================================
Segment assets $ 44,366.4 $ 13.4 $ 2,946.4 $ 47,326.2
- --------------------------------------------------------------------------------------------------------
Expenditures for long-lived
assets (4) -- -- -- $ 9.0 $ 9.0
- --------------------------------------------------------------------------------------------------------
Balance of long-lived assets $ 14.8 $ 14.8
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Financial products include: deferred and immediate annuity contracts,
mutual funds, programs offered to qualified plans and nonqualified
deferred compensation plans that package administrative and recordkeeping
services along with a menu of investment options, investment advisory
services and pension plan administrative services. Investment Management
Services include the following services: investment advisory to affiliated
and unaffiliated institutional and retail clients, underwriting,
distribution for Company products and trustee, administrative and other
fiduciary services to retirement plans. (Refer to notes 1 and 2.)
Discontinued operations include life insurance products. (Refer to note
3.) Other includes consolidating adjustments and Year 2000 costs.
(2) Operating earnings is comprised of net income (loss) excluding net
realized capital gains and losses and any other items. While operating
earnings is the measure of profit or loss used by the Company's management
when assessing performance or making operating decisions, it does not
replace operating income or net income as a measure of profitability.
(3) Other item excluded from operating earnings represents after-tax Year 2000
costs of $22.4 million
(4) Expenditures of long-lived assets represents additions to property and
equipment not allocable to business segments.
F-30
<PAGE>
Notes to Consolidated Financial Statements (continued)
13. Segment Information (continued)
<TABLE>
<CAPTION>
Investment
Year ended December 31, Financial Management Discontinued
1997 (Millions) Products (1) Services (1) Operations (1) Other (1) Total
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Revenue from external
customers $ 371.5 $80.3 -- $(23.9) $ 427.9
Net investment income 876.7 1.4 -- 3.6 881.7
- --------------------------------------------------------------------------------------------------------
Total revenue excluding net
realized capital gains $ 1,248.2 $81.7 -- $(20.3) $ 1,309.6
========================================================================================================
Amortization of deferred policy
acquisition costs $ 57.2 -- -- $ 9.1 $ 66.3
- --------------------------------------------------------------------------------------------------------
Income Taxes (benefits) $ 59.7 $11.9 -- $ (3.2) $ 68.4
- --------------------------------------------------------------------------------------------------------
Operating earnings (2) $ 134.9 $19.7 -- $ (5.9) $ 148.7
Net realized capital gains,
net of tax 19.2 -- -- -- 19.2
- --------------------------------------------------------------------------------------------------------
Income from continuing
operations 154.1 $19.7 -- (5.9) 167.9
Discontinued operations,
net of tax:
Income from operations -- -- $ 67.8 -- 67.8
Deferred gain on sale -- -- -- -- --
- --------------------------------------------------------------------------------------------------------
Net income (loss) $ 154.1 $19.7 $ 67.8 $ (5.9) $ 235.7
========================================================================================================
Segment assets $ 36,379.5 $17.9 $ 3,792.5 -- $ 40,189.9
- --------------------------------------------------------------------------------------------------------
Expenditures for long-lived
assets (3) -- -- -- $ 10.0 $ 10.0
- --------------------------------------------------------------------------------------------------------
Balance of long-lived assets $ 12.7 $ 12.7
- --------------------------------------------------------------------------------------------------------
</TABLE>
(1) Financial products include: deferred and immediate annuity contracts,
mutual funds, programs offered to qualified plans and nonqualified
deferred compensation plans that package administrative and recordkeeping
services along with a menu of investment options, investment advisory
services and pension plan administrative services. Investment Management
Services include the following services: investment advisory to affiliated
and unaffiliated institutional and retail clients, underwriting,
distribution for Company products and trustee, administrative and other
fiduciary services to retirement plans. (Refer to notes 1 and 2.)
Discontinued operations include life insurance products. (Refer to note
3.) Other includes consolidating adjustments and Year 2000 costs.
(2) Operating earnings is comprised of net income (loss) excluding net
realized capital gains and losses and any other items. While operating
earnings is the measure of profit or loss used by the Company's management
when assessing performance or making operating decisions, it does not
replace operating income or net income as a measure of profitability.
(3) Expenditures of long-lived assets represents additions to property and
equipment not allocable to business segments.
F-31
<PAGE>
Notes to Consolidated Financial Statements (continued)
14. Commitments and Contingent Liabilities
Commitments
Through the normal course of investment operations, the Company commits to
either purchase or sell securities or money market instruments at a specified
future date and at a specified price or yield. The inability of counterparties
to honor these commitments may result in either higher or lower replacement
cost. Also, there is likely to be a change in the value of the securities
underlying the commitments. At December 31,1998, the Company had off-balance
sheet commitments to purchase investments of $68.7 million with an estimated
fair value of $68.9 million. At December 31, 1999, there were no off-balance
sheet commitments.
Litigation
The Company is involved in numerous lawsuits arising, for the most part, in the
ordinary course of its business operations. While the ultimate outcome of
litigation against the Company cannot be determined at this time, after
consideration of the defenses available to the Company and any related reserves
established, it is not expected to result in liability for amounts material to
the financial condition of the Company, although it may adversely affect
results of operations in future periods.
F-32
<PAGE>
Form No. SAI.75996-00 ALIAC Ed. May 2000
<PAGE>
VARIABLE ANNUITY ACCOUNT B
PART C - OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) Financial Statements:
(1) Included in Part A:
Condensed Financial Information
(2) Included in Part B:
Financial Statements of Variable Annuity Account B:
- Statement of Assets and Liabilities as of December 31, 1999
- Statement of Operations for the year ended December 31, 1999
- Statements of Changes in Net Assets for the years ended
December 31, 1999 and 1998
- Condensed Financial Information for the year ended
December 31, 1999
- Notes to Financial Statements
- Independent Auditors' Report
Financial Statements of the Depositor:
- Independent Auditors' Report
- Consolidated Statements of Income for the years ended December
31, 1999, 1998 and 1997
- Consolidated Balance Sheets as of December 31, 1999 and 1998
- Consolidated Statements of Changes in Shareholder's Equity for
the years ended December 31, 1999, 1998 and 1997
- Consolidated Statements of Cash Flows for the years ended
December 31, 1999, 1998 and 1997
- Notes to Consolidated Financial Statements
(b) Exhibits
(1) Resolution of the Board of Directors of Aetna Life Insurance and
Annuity Company establishing Variable Annuity Account B(1)
(2) Not applicable
(3.1) Broker-Dealer Agreement(2)
(3.2) Alternative Form of Wholesaling Agreement and Related Selling
Agreement(3)
(4.1) Variable Annuity Contract (G-CDA-HF)(4)
(4.2) Variable Annuity Contract (IA-CDA-IA)(4)
(4.3) Variable Annuity Contract (G-CDA-HD)(5)
(4.4) Variable Annuity Contracts (GID-CDA-HO), (GLID-CDA-HO) and
(GSD-CDA-HO)(6)
(4.5) Variable Annuity Contract Certificate (GDCC-HO) to Contracts
GID-CDA-HO, GLID-CDA-HO and GSD-CDA-HO(7)
(4.6) Variable Annuity Contract (I-CDA-HD)(8)
(4.7) Variable Annuity Contract (ISE-CDA-HO)(7)
(4.8) Endorsement EGATHDF-00 to Contracts G-CDA-HD and G-CDA-HF
(4.9) Endorsement EGATHO-00 to Contracts GLID-CDA-HO and GID-CDA-HO
<PAGE>
(4.10) Endorsement EGAT-GSDHO-00 to Contract GST-CDA-HO
(4.11) Endorsement (EGET-IC(R)) to Contracts G-CDA-HF and G-CDA-HD(3)
(4.12) Endorsements (EIGET-IC(R)) and (EIGF-IC) to Contracts IA-CDA-IA
and I-CDA-HD(9)
(4.13) Endorsement (EFUND97) to Contracts GID-CDA-HO, GLID-CDA-HO,
GSD-CDA-HO and ISE-CDA-HO(4)
(4.14) Endorsement (E98-G-CDA-HF/HD) to Contracts G-CDA-HF and
G-CDA-HD(10)
(4.15) Endorsement (E98-CDA-HO) to Contracts GLID-CDA-HO, GID-CDA-HO and
GSD-CDA-HO(11)
(4.16) Endorsement (EGETE-IC(R)) to Contracts GLID-CDA-HO, GID-CDA-HO
and GSD-CDA-HO(11)
(4.17) Endorsement (EGET(99)) to Contracts G-CDA-HF, IA-CDA-IA,
G-CDA-HD, GID-CDA-HO, GLID-CDA-HO, GSD-CDA-HO, I-CDA-HD, and
ISE-CDA-HO(12)
(4.18) Endorsement EGLID-ME/AC-99 TO Contract GLID-CDA-HO
(5.1) Variable Annuity Contract Application (300-GTD-IA)(13)
(5.2) Variable Annuity Contract Application (710.00.141)(14)
(6.1) Certificate of Incorporation of Aetna Life Insurance and Annuity
Company(15)
(6.2) Amendment of Certificate of Incorporation of Aetna Life Insurance
and Annuity Company(8)
(6.3) By-Laws as amended September 17, 1997 of Aetna Life Insurance and
Annuity Company(16)
(7) Not applicable
(8.1) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and AIM dated June 30, 1998(17)
(8.2) Service Agreement between Aetna Life Insurance and Annuity
Company and AIM effective June 30, 1998(18)
(8.3) Fund Participation Agreement by and among Aetna Life Insurance
and Annuity Company and Aetna Variable Fund, Aetna Variable
Encore Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna
GET Fund on behalf of each of its series, Aetna Generation
Portfolios, Inc. on behalf of each of its series, Aetna Variable
Portfolios, Inc. on behalf of each of its series, and Aeltus
Investment Management, Inc. dated as of May 1, 1998(2)
(8.4) Amendment dated November 9, 1998 to Fund Participation Agreement
by and among Aetna Life Insurance and Annuity Company and Aetna
Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares,
Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its
series, Aetna Generation Portfolios, Inc. on behalf of each of
its series, Aetna Variable Portfolios, Inc. on behalf of each of
its series, and Aeltus Investment Management, Inc. dated as of
May 1, 1998(18)
(8.5) Second Amendment dated December 31, 1999 to Fund Participation
Agreement by and among Aetna Life Insurance and Annuity Company
and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income
Shares, Aetna Balanced VP, Inc.,
<PAGE>
Aetna GET Fund on behalf of each of its series, Aetna Generation
Portfolios, Inc. on behalf of each of its series, Aetna Variable
Portfolios, Inc. on behalf of each of its series, and Aeltus
Investment Management, Inc. dated as of May 1, 1998 and amended
on November 9, 1998(19)
(8.6) Third Amendment dated February 11, 2000 to Fund Participation
Agreement by and among Aetna Life Insurance and Annuity Company
and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income
Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each
of its series, Aetna Generation Portfolios, Inc. on behalf of
each of its series, Aetna Variable Portfolios, Inc. on behalf of
each of its series, and Aeltus Investment Management, Inc. dated
as of May 1, 1998 and amended on November 9, 1998 and December
31, 1999(20)
(8.7) Fourth Amendment dated May 1, 2000 to Fund Participation
Agreement by and among Aetna Life Insurance and Annuity Company
and Aetna Variable Fund, Aetna Variable Encore Fund, Aetna Income
Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each
of its series, Aetna Generation Portfolios, Inc. on behalf of
each of its series, Aetna Variable Portfolios, Inc. on behalf of
each of its series, and Aeltus Investment Management, Inc. dated
as of May 1, 1998 and amended on November 9, 1998, December 31,
1999 and February 11, 2000(20)
(8.8) Service Agreement between Aeltus Investment Management, Inc. and
Aetna Life Insurance and Annuity Company in connection with the
sale of shares of Aetna Variable Fund, Aetna Variable Encore
Fund, Aetna Income Shares, Aetna Balanced VP, Inc., Aetna GET
Fund on behalf of each of its series, Aetna Generation
Portfolios, Inc. on behalf of each of its series, and Aetna
Variable Portfolios, Inc. on behalf of each of its series dated
as of May 1, 1998(2)
(8.9) Amendment dated November 4, 1998 to Service Agreement between
Aeltus Investment Management, Inc. and Aetna Life Insurance and
Annuity Company in connection with the sale of shares of Aetna
Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares,
Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its
series, Aetna Generation Portfolios, Inc. on behalf of each of
its series and Aetna Variable Portfolios, Inc. on behalf of each
of its series dated as of May 1, 1998(18)
(8.10) Second Amendment dated February 11, 2000 to Service Agreement
between Aeltus Investment Management, Inc. and Aetna Life
Insurance and Annuity Company in connection with the sale of
shares of Aetna Variable Fund, Aetna Variable Encore Fund, Aetna
Income Shares, Aetna Balanced VP, Inc., Aetna GET Fund on behalf
of each of its series, Aetna Generation Portfolios, Inc. on
behalf of each of its series and Aetna Variable Portfolios, Inc.
on behalf of each of its series dated as of May 1, 1998 and
November 14, 1998(20)
(8.11) Third Amendment dated May 1, 2000 to Service Agreement between
Aeltus Investment Management, Inc. and Aetna Life Insurance and
Annuity Company in connection with the sale of shares of Aetna
Variable Fund, Aetna Variable Encore Fund, Aetna Income Shares,
Aetna Balanced VP, Inc., Aetna GET Fund on behalf of each of its
series, Aetna Generation Portfolios, Inc. on behalf of each of
its series
<PAGE>
and Aetna Variable Portfolios, Inc. on behalf of each of its
series dated as of May 1, 1998, November 14, 1998 and February
11, 2000(20)
(8.12) Fund Participation Agreement among Calvert Responsibly Invested
Balanced Portfolio, Calvert Asset Management Company, Inc. and
Aetna Life Insurance and Annuity Company dated December 1,
1997(21)
(8.13) Service Agreement between Calvert Asset Management Company, Inc.
and Aetna Life Insurance and Annuity Company Dated December 1,
1997(21)
(8.14) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended
December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996
and March 1, 1996(8)
(8.15) Fifth Amendment dated as of May 1, 1997 to the Fund Participation
Agreement between Aetna Life Insurance and Annuity Company,
Variable Insurance Products Fund and Fidelity Distributors
Corporation dated February 1, 1994 and amended on December 15,
1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1,
1996(22)
(8.16) Sixth Amendment dated November 6, 1997 to the Fund Participation
Agreement between Aetna Life Insurance and Annuity Company,
Variable Insurance Products Fund and Fidelity Distributors
Corporation dated February 1, 1994 and amended on December 15,
1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1,
1996 and May 1, 1997(23)
(8.17) Seventh Amendment dated as of May 1, 1998 to the Fund
Participation Agreement between Aetna Life Insurance and Annuity
Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996, March 1, 1996, May 1, 1997 and November 6, 1997(2)
(8.18) Eighth Amendment dated as of December 1, 1999 to the Fund
Participation Agreement between Aetna Life Insurance and Annuity
Company, Variable Insurance Products Fund and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996, March 1, 1996, May 1, 1997 and November 6, 1997 and May 1,
1998(19)
(8.19) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company, Variable Insurance Products Fund II and Fidelity
Distribution Corporation dated February 1, 1994 and amended
December 15, 1994, February 1, 1995, May 1, 1995, January 1, 1996
and March 1, 1996(8)
(8.20) Fifth Amendment dated as of May 1, 1997 to the Fund Participation
Agreement between Aetna Life Insurance and Annuity Company,
Variable Insurance Products Fund II and Fidelity Distributors
Corporation dated February 1, 1994 and amended on December 15,
1994, February 1, 1995, May 1, 1995, January 1, 1996 and March 1,
1996(21)
(8.21) Sixth Amendment dated as of January 20, 1998 to the Fund
Participation Agreement between Aetna Life Insurance and Annuity
Company, Variable Insurance Products Fund II and Fidelity
Distributors Corporation dated February 1,
<PAGE>
1994 and amended on December 15, 1994, February 1, 1995, May 1,
1995, January 1, 1996, March 1, 1996 and May 1, 1997(24)
(8.22) Seventh Amendment dated as of May 1, 1998 to the Fund
Participation Agreement between Aetna Life Insurance and Annuity
Company, Variable Insurance Products Fund II and Fidelity
Distributors Corporation dated February 1, 1994 and amended on
December 15, 1994, February 1, 1995, May 1, 1995, January 1,
1996, March 1, 1996, May 1, 1997 and January 20, 1998(2)
(8.23) Eight Amendment dated December 1, 1999 to the Fund Participation
Agreement between Aetna Life Insurance and Annuity Company,
Variable Insurance Products Fund II and Fidelity Distributors
Corporation dated February 1, 1994 and amended on December 15,
1994, February 1, 1995, May 1, 1995, January 1, 1996, March 1,
1996, May 1, 1997 and January 20, 1998 and May 1, 1998(19)
(8.24) Service Agreement between Aetna Life Insurance and Annuity
Company and Fidelity Investments Institutional Operations Company
dated as of November 1, 1995(25)
(8.25) Amendment dated January 1, 1997 to Service Agreement between
Aetna Life Insurance and Annuity Company and Fidelity Investments
Institutional Operations Company dated as of November 1, 1995(22)
(8.26) Service Contract between Fidelity Distributors Corporation and
Aetna Life Insurance and Annuity Company dated May 2, 1997(18)
(8.27) Fund Participation Agreement among Janus Aspen Series and Aetna
Life Insurance and Annuity Company and Janus Capital Corporation
dated December 8, 1997(26)
(8.28) Amendment dated October 12, 1998 to Fund Participation Agreement
among Janus Aspen Series and Aetna Life Insurance and Annuity
Company and Janus Capital Corporation dated December 8, 1997(18)
(8.29) Second Amendment dated December 1, 1999 to Fund Participation
Agreement among Janus Aspen Series and Aetna Life Insurance and
Annuity Company and Janus Capital Corporation dated December 8,
1997 and amended on October 12, 1998(19)
(8.30) Service Agreement between Janus Capital Corporation and Aetna
Life Insurance and Annuity Company dated December 8, 1997(26)
(8.31) Fund Participation Agreement between Aetna Life Insurance and
Annuity Company and Lexington Management Corporation regarding
Natural Resources Trust dated December 1, 1988 and amended on
February 11, 1991(3)
(8.32) Fund Participation Agreement dated March 11, 1997 between Aetna
Life Insurance and Annuity Company and Oppenheimer Variable
Annuity Account Funds and Oppenheimer Funds, Inc.(27)
(8.33) First Amendment dated December 1, 1999 to Fund Participation
Agreement between Aetna Life Insurance and Annuity Company and
Oppenheimer Variable Annuity Account Funds and Oppenheimer Funds,
Inc. dated March 11, 1997(19)
(8.34) Service Agreement effective as of March 11, 1997 between
Oppenheimer Funds, Inc. and Aetna Life Insurance and Annuity
Company(27)
(9) Opinion and Consent of Counsel
<PAGE>
(10) Consent of Independent Auditors
(11) Not applicable
(12) Not applicable
(13) Schedule for Computation of Performance Data(28)
(14.1) Powers of Attorney(20)
(14.2) Authorization for Signatures(3)
1. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75986), as filed on April 22, 1996.
2. Incorporated by reference to Registration Statement on Form N-4 (File No.
333-56297), as filed on June 8, 1998.
3. Incorporated by reference to Post-Effective Amendment No. 5 to Registration
Statement on Form N-4 (File No. 33-75986), as filed on April 12, 1996.
4. Incorporated by reference to Post-Effective Amendment No. 14 to Registration
Statement on Form N-4 (File No. 33-75964), as filed on July 29, 1997.
5. Incorporated by reference to Post-Effective Amendment No. 6 to Registration
Statement on Form N-4 (File No. 33-75982), as filed on April 22, 1996.
6. Incorporated by reference to Post-Effective Amendment No. 12 to Registration
Statement on Form N-4 (File No. 33-75982), as filed on February 20, 1997.
7. Incorporated by reference to Post-Effective Amendment No. 21 to Registration
Statement on Form N-4 (File No. 33-75996), as filed on February 16, 2000.
8. Incorporated by reference to Post-Effective Amendment No. 12 to Registration
Statement on Form N-4 (File No. 33-75964), as filed on February 11, 1997.
9. Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-4 (File No. 33-75964), as filed on August 30, 1996.
10. Incorporated by reference to Post-Effective Amendment No. 15 to Registration
Statement on Form N-4 (File No. 33-75982), as filed on April 13, 1998.
11. Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-4 (File No. 33-75986), as filed on August 30, 1996.
12. Incorporated by reference to Post-Effective Amendment No. 17 to Registration
Statement on Form N-4 (File No. 333-01107), as filed on April 7, 1999.
13. Incorporated by reference to Post-Effective Amendment No. 14 to Registration
Statement on Form N-4 (File No. 33-75986), as filed on August 19, 1997.
14. Incorporated by reference to Post-Effective Amendment No. 13 to Registration
Statement on Form N-4 (File No. 33-75996), as filed on August 21, 1997.
15. Incorporated by reference to Post-Effective Amendment No. 1 to Registration
Statement on Form S-1 (File No. 33-60477), as filed on April 15, 1996.
16. Incorporated by reference to Post-Effective Amendment No. 12 to Registration
Statement on Form N-4 (File No. 33-91846), as filed on October 30, 1997.
17. Incorporated by reference to Pre-Effective Amendment No. 1 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on August 4, 1998.
<PAGE>
18. Incorporated by reference to Post-Effective Amendment No. 2 to Registration
Statement on Form N-4 (File No. 333-56297), as filed on December 14, 1998.
19. Incorporated by reference to Post-Effective Amendment No. 19 to Registration
Statement on Form N-4 (File No. 333-01107), as filed on February 16, 2000.
20. Incorporated by reference to Post-Effective Amendment No. 20 to Registration
Statement on Form N-4 (File No. 333-01107), as filed on April 4, 2000.
21. Incorporated by reference to Post-Effective Amendment No. 8 to Registration
Statement on Form N-4 (File No. 333-01107), as filed on February 19, 1998.
22. Incorporated by reference to Post-Effective Amendment No. 30 to Registration
Statement on Form N-4 (File No. 33-34370), as filed on September 29, 1997.
23. Incorporated by Reference to Post-Effective Amendment No. 16 to Registration
Statement on Form N-4 (File No. 33-75964), as filed on February 9, 1998.
24. Incorporated by reference to Post-Effective Amendment No. 7 to Registration
Statement on Form S-6 (File No. 33-75248), as filed on February 24, 1998.
25. Incorporated by reference to Post-Effective Amendment No. 3 to Registration
Statement on Form N-4 (File No. 33-88720), as filed on June 28, 1996.
26. Incorporated by reference to Post-Effective Amendment No. 10 to Registration
Statement on Form N-4 (File No. 33-75992), as filed on December 31, 1997.
27. Incorporated by reference to Post-Effective Amendment No. 27 to Registration
Statement on Form N-4 (File No. 33-34370), as filed on April 16, 1997.
28. Incorporated by reference to Post-Effective Amendment No. 14 to Registration
Statement on Form N-4 (File No. 33-75996), as filed on April 16, 1998.
<PAGE>
Item 25. Directors and Officers of the Depositor
Name and Principal
Business Address* Positions and Offices with Depositor
- ----------------- ------------------------------------
Thomas J. McInerney Director and President
Shaun P. Mathews Director and Senior Vice President
Catherine H. Smith Director, Chief Financial Officer and
Senior Vice President
Deborah Koltenuk Vice President, Corporate Controller, and
Assistant Treasurer
Therese M. Squillacote Vice President and Chief Compliance Officer
Kirk P. Wickman Senior Vice President, General Counsel and
Corporate Secretary
* The principal business address of all directors and officers listed is 151
Farmington Avenue, Hartford, Connecticut 06156.
Item 26. Persons Controlled by or Under Common Control with the Depositor or
Registrant
Incorporated herein by reference to Item 24 of Post-Effective Amendment No.
38 to the Registration Statement on Form N-4 (File No. 33-41694), as filed on
February 23, 2000.
Item 27. Number of Contract Owners
As of February 29, 2000, there were 99,953 individuals holding interests in
variable annuity contracts funded through Variable Annuity Account B.
Item 28. Indemnification
Section 21 of Public Act No. 97-246 of the Connecticut General Assembly (the
"Act") provides that a corporation may provide indemnification of or advance
expenses to a director, officer, employee or agent only as permitted by Sections
33-770 to 33-778, inclusive, of the Connecticut General Statutes, as amended by
Sections 12 to 20, inclusive, of this Act. Reference is hereby made to Section
33-771(e) of the Connecticut General Statutes ("CGS") regarding indemnification
of directors and Section 33-776(d) of CGS regarding indemnification of officers,
employees and agents of Connecticut corporations. These statutes provide in
general that Connecticut corporations incorporated prior to January 1, 1997
shall, except to the extent that their certificate of incorporation expressly
provides otherwise, indemnify their directors, officers, employees and agents
against "liability" (defined as the obligation to pay a judgment, settlement,
penalty, fine, including an excise tax assessed with respect to an employee
benefit plan, or reasonable expenses incurred with respect to a proceeding) when
(1) a determination is made
<PAGE>
pursuant to Section 33-775 that the party seeking indemnification has met the
standard of conduct set forth in Section 33-771 or (2) a court has determined
that indemnification is appropriate pursuant to Section 33-774. Under Section
33-775, the determination of and the authorization for indemnification are made
(a) by the disinterested directors, as defined in Section 33-770(3); (b) by
special counsel; (c) by the shareholders; or (d) in the case of indemnification
of an officer, agent or employee of the corporation, by the general counsel of
the corporation or such other officer(s) as the board of directors may specify.
Also, Section 33-772 provides that a corporation shall indemnify an individual
who was wholly successful on the merits or otherwise against reasonable expenses
incurred by him in connection with a proceeding to which he was a party because
he was a director of the corporation. Pursuant to Section 33-771(d), in the case
of a proceeding by or in the right of the corporation or with respect to conduct
for which the director, officer, agent or employee was adjudged liable on the
basis that he received a financial benefit to which he was not entitled,
indemnification is limited to reasonable expenses incurred in connection with
the proceeding against the corporation to which the individual was named a
party.
The statute does specifically authorize a corporation to procure indemnification
insurance on behalf of an individual who was a director, officer, employer or
agent of the corporation. Consistent with the statute, Aetna Inc. has procured
insurance from Lloyd's of London and several major United States and
international excess insurers for its directors and officers and the directors
and officers of its subsidiaries, including the Depositor.
Item 29. Principal Underwriter
(a) In addition to serving as the principal underwriter and depositor for
the Registrant, Aetna Life Insurance and Annuity Company (Aetna) also
acts as the principal underwriter, only, for Aetna Variable Encore Fund,
Aetna Variable Fund, Aetna Generation Portfolios, Inc., Aetna Income
Shares, Aetna Balanced VP, Inc. (formerly Aetna Investment Advisers
Fund, Inc.), Aetna GET Fund, and Aetna Variable Portfolios, Inc. and as
the principal underwriter and investment adviser for Portfolio Partners,
Inc. (all management investment companies registered under the
Investment Company Act of 1940 (1940 Act)). Additionally, Aetna acts as
the principal underwriter and depositor for Variable Life Account B of
Aetna, Variable Life Account C of Aetna, Variable Annuity Account C of
Aetna and Variable Annuity Account G of Aetna (separate accounts of
Aetna registered as unit investment trusts under the 1940 Act). Aetna is
also the principal underwriter for Variable Annuity Account I of Aetna
Insurance Company of America (AICA) (a separate account of AICA
registered as a unit investment trust under the 1940 Act).
(b) See Item 25 regarding the Depositor.
<PAGE>
(c) Compensation as of December 31, 1998:
<TABLE>
<CAPTION>
(1) (2) (3) (4) (5)
Name of Net Underwriting Compensation on
Principal Discounts and Redemption or Brokerage
Underwriter Commissions Annuitization Commissions Compensation*
- ----------- ----------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Aetna Life $1,170,405 $60,339,195
Insurance and
Annuity
Company
</TABLE>
* Compensation shown in column 5 includes deductions for mortality and expense
risk guarantees and contract charges assessed to cover costs incurred in the
sales and administration of the contracts issued under Variable Annuity
Account B.
Item 30. Location of Accounts and Records
All accounts, books and other documents required to be maintained by Section
31(a) of the 1940 Act and the rules under it relating to the securities
described in and issued under this Registration Statement are located at the
home office of the Depositor as follows:
Aetna Life Insurance and Annuity Company
151 Farmington Avenue
Hartford, Connecticut 06156
Item 31. Management Services
Not applicable
Item 32. Undertakings
Registrant hereby undertakes:
(a) to file a post-effective amendment to this registration statement on
Form N-4 as frequently as is necessary to ensure that the audited
financial statements in the registration statement are never more than
sixteen months old for as long as payments under the variable annuity
contracts may be accepted;
(b) to include as part of any application to purchase a contract offered by
a prospectus which is part of this registration statement on Form N-4, a
space that an applicant can check to request a Statement of Additional
Information; and
(c) to deliver any Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly
upon written or oral request.
<PAGE>
(d) Insofar as indemnification for liability 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
securities being registered, 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 of 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.
(e) Aetna Life Insurance and Annuity Company represents that the fees and
charges deducted under the contracts covered by this registration
statement, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred, and the risks assumed by
the insurance company.
<PAGE>
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, Variable Annuity Account B of Aetna Life Insurance and
Annuity Company, certifies that it meets the requirements of Securities Act Rule
485(b) for effectiveness of this Post-Effective Amendment to its Registration
Statement on Form N-4 (File No. 33-75996) and has caused this Post-Effective
Amendment to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Hartford, State of Connecticut, on the 11th day of
April, 2000.
VARIABLE ANNUITY ACCOUNT B OF AETNA
LIFE INSURANCE AND ANNUITY COMPANY
(Registrant)
By: AETNA LIFE INSURANCE AND ANNUITY COMPANY
(Depositor)
By: Thomas J. McInerney*
----------------------------------------
Thomas J. McInerney
President
As required by the Securities Act of 1933, this Post-Effective Amendment No.
22 to the Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
Thomas J. McInerney* Director and President )
- -------------------------- (principal executive officer) )
Thomas J. McInerney
)
Shaun P. Mathews* Director ) April
- --------------------------
Shaun P. Mathews ) 11, 2000
)
Catherine H. Smith* Director and Chief Financial Officer )
- --------------------------
Catherine H. Smith )
)
Deborah Koltenuk* Vice President, Corporate Controller, )
- -------------------------- and Assistant Treasurer )
Deborah Koltenuk
By: /s/ Julie E. Rockmore
--------------------------------
Julie E. Rockmore
*Attorney-in-Fact
<PAGE>
VARIABLE ANNUITY ACCOUNT B
EXHIBIT INDEX
Exhibit No. Exhibit
99-B.4.8 Endorsement EGATHDF-00 to Contracts
G-CDA-HD and G-CDA-HF
------------
99-B.4.9 Endorsement EGATHO-00 to Contracts
GLID-CDA-HO and GID-CDA-HO
------------
99-B.4.10 Endorsement EGAT-GSDHO-00 to Contract
GST-CDA-HO
------------
99-B.4.18 Endorsement EGLID-ME/AC-99 to Contract
GLID-CDA-HO
------------
99-B.9 Opinion and Consent of Counsel
------------
99-B.10 Consent of Independent Auditors
------------
EX-99-B.4.8
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
(1) Endorsement EDCESWE-IB is deleted and replaced with the following:
Systematic Distribution Options (SDOs)
During the Accumulation Phase, we may offer one or more distribution
options under which we make regularly scheduled automatic partial
distributions of the Individual Account value. To request a SDO, the
Contract Holder, a Participant or beneficiary, as applicable, must
complete a SDO election form and forward it to our Home Office.
Each option is available without discrimination to any class of Contracts.
The availability of any specified option may be subject to terms and
conditions applicable to that option. We may discontinue the availability
of a SDO option for future elections. Payments will, however, continue to
Participants who elected the option before the date it is no longer
available.:
(2) Subsection (e) under Section 3.08 entitled Net Return Factors(s) -
Separate Account is deleted and replaced with the following:
(e) A daily actuarial charge at an annual rate which will not exceed
1.25% during the accumulation phase and which will not exceed 1.25%
during the annuity phase for annuity mortality and expense risks and
profit; and a daily administrative charge which will not exceed .25%
during the accumulation phase on an annual basis and will not exceed
.25% during the annuity phase on an annual basis.
(3) Endorsement ETDA-REA-IO is and replaced with the following:
The Contract Holder may tell Aetna, on behalf of a retired or separated
Participant, to pay all or any portion of a Participant's Participant
Account (minus any premium tax) as a premium for an Annuity under Option
1, 2, or 3 (see 4.06). The first Annuity payment must generally be made no
later than the April 1 of the calendar year following the year in which
the Participant turns age 70 1/2 or retires, whichever occurs later. Aetna
may be told to make the first Annuity payment during any prior month.
When an Annuity Option is elected, the Contract Holder, a Participant, or
beneficiary, as applicable must elect::
(a) A Fixed Annuity for which the underlying investment is our General
Account;
(b) A Variable Annuity for which the underlying investment is one or
more of the available Funds; or
(c) A combination of (a) and (b).
If a Fixed Annuity is chosen, Aetna will add interest daily at an annual
rate no less than 3%. Aetna may add interest daily at any higher rate.
If a Variable Annuity is chosen, an Assumed Annual Net Return Rate of 5%
may be chosen. If not chosen, Aetna will use an Assumed Annual Net Return
Rate of 3.5%. The maximum number of Funds available during the Annuity
phase is [four]. The Funds available during the Annuity phase might not be
the same as those available during the accumulation phase.
EGATHDF-00
<PAGE>
(4) Section 4.02 entitled Terms of Annuity Options is deleted and replaced
with the following:
The first payment must be at least $50 per month or $250 per year. We
reserve the right to increase the minimum first payment amount, if allowed
by state law, based on increases reflected in the Consumer Price
Index-Urban (CPI-U) since July 1, 1983.
To calculate the first payment of a Variable annuity or the guaranteed
payments for a Fixed Annuity, Aetna will use the Annuitant's adjusted age
and, if applicable, the second Annuitant's adjusted age. The Annuitant's
adjusted age and, if applicable, the second Annuitant's adjusted age is
the person's age as of the birthday closest to the day Annuity payments
begin, reduced as follows:
(a) Reduced by one year for payments beginning before January 1, 2000;
(b) Reduced by two years for payments beginning during the period from
January 1, 2000 through December 31, 2009;
(c) Starting on January 1, 2010, reduced by one additional year for
payments beginning in each succeeding decade.
If a Fixed Annuity is elected, we will use the applicable current
settlement option rates if they will provide higher Fixed Annuity
payments.
If a Variable Annuity is elected, the Contract Holder or the Participant
may request that we transfer all or a portion of the amount allocated to a
Fund to any other available Fund. Transfer requests must be expressed as a
percentage of the allocation among the Funds on which the variable payment
is based. The number of transfers allowed each calendar year is twelve. We
reserve the right to allow additional transfers. Transfers are effective
as of the next Valuation Period following our receipt of a transfer
request in Good Order at our Home Office. Transfers into or out of the
Fixed Account are not permitted.
(5) Section 4.03 entitled Death of Annuitant/Beneficiary is deleted and
replaced with the following:
The Contract Holder or a Participant, as applicable, must name a
beneficiary for the Annuity phase. Unless not allowed by the Plan or
restricted by the Contract Holder, or a Participant, as applicable, the
beneficiary may name a beneficiary.
If an Annuitant(s) dies, any remaining guaranteed payments continue to the
beneficiary. Payments are made at least as rapidly as provided by the
option in effect at the death of the Annuitant. Annuity payments to a
beneficiary may not extend beyond (1) the life of the beneficiary, or (2)
any period certain greater than the beneficiary's life expectancy as
determined by the Code.
The beneficiary may also elect a lump-sum payment equal to the present
value of any remaining payments.
The interest rate used to determine the first Annuity payment will be used
to calculate the present value. The present value is determined as of the
next Valuation Period following our receipt of acceptable proof of death
and a written claim for the death benefit.
Unless not allowed by the Plan or restricted by the Contract Holder, or a
Participant, as applicable, if the beneficiary dies while receiving
payments, the present value of any remaining guaranteed payments is paid
in a lump sum to the beneficiary's beneficiary or to the beneficiary's
estate.
(6) Section 4.06 entitled Annuity Options is deleted and replaced with the
following:
The Contract Holder, a Participant, or beneficiary, as applicable, must
elect one of the following:
Option 1 - Payments for a Stated Period of Time - This option provides
payments for a stated period. The number of years in the stated period
must be at least 5 and no more than 30 years and the Annuity may be a
Fixed or Variable Annuity.
2
<PAGE>
If payments for this option are under a Variable Annuity, the present value of
any remaining payments may be surrendered at any time. If a surrender is
requested within five years of the first payment, the lump-sum payment is
treated as a surrender during the accumulation phase and any applicable
surrender fee applies (see Part VI).
If the payments are fixed-only, an annual increase of one, two or three
percent (compounded annually) may be elected at the time the Annuity option
is chosen (if permitted by the Code).
Option 2 - Life Income for One Annuitant - This option provides payments for
the life of the Annuitant. If this option is elected, the Contract Holder, a
Participant, or beneficiary, as applicable, must also choose one of the
following:
(a) Payments cease at the death of the Annuitant; or
(b) Payments are guaranteed for a period of at least five years and no
more than 30 years; or.
(c) Fixed-only cash refund: At the death of the Annuitant, the
beneficiary receives a lump-sum payment in an amount equal to the
amount applied to the Annuity (minus any applicable premium tax),
minus the amount of payments made to the Annuitant.
Under (a) or (b), if the payments are fixed-only, an annual increase of
one, two or three percent (compounded annually) may be elected at the time
the Annuity option is chosen (if permitted by the Code).
Option 3 - Life Income for Two Annuitants - This option provides payments
for the lives of the Annuitant and a second Annuitant. Payments continue
until both Annuitants have died. If this Option is elected, the Contract
Holder, a Participant, or beneficiary, as applicable, must also choose one
of the following:
(a) 100% of the payment amount to continue after the first death; or
(b) 66 2/3% of the payment amount to continue after the first death; or
(c) 50% of the payment amount to continue after the first death; or.
(d) 100% of the payment amount to continue after the first death with
payments guaranteed to the beneficiary after the second death for a
period of at least five years and no more than 30 years; or;
(e) 100% of the payment amount to continue at the death of the specified
second Annuitant and 50% of the payment amount to continue at the
death of the specified Annuitant; or
(f) 100% of the fixed-only payment amount to continue after the first
death with a cash refund to the beneficiary after the second death.
The amount of the cash refund is equal to the amount applied to the
Annuity Option (minus any applicable premium tax) minus the amount of
payments made.
Under (a) or (d), if the payments are fixed-only, an annual increase of
one, two or three percent (compounded annually) may be elected at the time
the Annuity option is chosen (if permitted by the Code).
Other Options - As allowed under applicable state law, we reserve the
right to make other options available.
3
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------------------------------------
5 $17.91 18 $5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
------------------------------------------------------------------------
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------------------------------------
5 $18.12 18 $6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
------------------------------------------------------------------------
4
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------------------------------------
5 $18.74 18 $6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
------------------------------------------------------------------------
5
<PAGE>
OPTION 2
Life Income
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20 Cash
Annuitant Refund
------------------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93 $3.89
51 4.12 4.11 4.09 4.05 3.99 3.94
52 4.19 4.19 4.16 4.11 4.04 4.00
53 4.27 4.26 4.23 4.18 4.10 4.06
54 4.35 4.34 4.31 4.25 4.16 4.12
55 4.44 4.42 4.39 4.32 4.22 4.19
56 4.53 4.51 4.47 4.40 4.29 4.26
57 4.62 4.61 4.56 4.48 4.35 4.33
58 4.72 4.71 4.65 4.56 4.42 4.41
59 4.83 4.81 4.75 4.64 4.49 4.49
60 4.95 4.93 4.86 4.73 4.55 4.57
61 5.07 5.05 4.97 4.83 4.62 4.66
62 5.20 5.17 5.08 4.92 4.69 4.76
63 5.34 5.31 5.20 5.02 4.76 4.85
64 5.49 5.45 5.33 5.12 4.83 4.96
65 5.65 5.61 5.47 5.22 4.89 5.06
66 5.82 5.77 5.61 5.33 4.96 5.18
67 6.01 5.94 5.75 5.44 5.02 5.30
68 6.20 6.13 5.91 5.54 5.08 5.42
69 6.41 6.33 6.07 5.65 5.14 5.56
70 6.64 6.54 6.23 5.76 5.19 5.70
71 6.88 6.76 6.41 5.86 5.24 5.84
72 7.14 7.00 6.59 5.97 5.28 6.00
73 7.43 7.26 6.77 6.06 5.32 6.16
74 7.73 7.53 6.96 6.16 5.35 6.33
75 8.06 7.82 7.14 6.25 5.38 6.51
------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
6
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20
Annuitant
------------------------------------------------------------------------
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
7
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20
Annuitant
------------------------------------------------------------------------
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 5.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89
65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17
70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36
75 9.23 8.93 8.16 7.23 6.38
------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
8
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------- Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option3c Guaranteed Option 3e Option 3f
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.67
55 55 3.88 4.25 4.47 3.87 4.14 3.85
55 60 3.99 4.44 4.71 3.98 4.20 3.94
60 55 3.99 4.44 4.71 3.98 4.42 3.94
60 60 4.24 4.71 4.99 4.23 4.57 4. 17
60 65 4.38 4.97 5.32 4.38 4.65 4.29
65 60 4.38 4.97 5.32 4.38 4.93 4.29
65 65 4.72 5.33 5.70 4.71 5.14 4. 59
65 70 4.93 5.68 6.15 4.91 5.27 4.74
70 65 4.93 5.68 6.15 4.91 5.66 4.74
70 70 5.40 6.21 6.70 5.36 5.96 5.13
70 75 5.69 6.68 7.32 5.62 6.13 5.29
75 70 5.69 6.68 7.32 5.62 6.67 5.29
75 75 6.37 7.45 8.15 6.23 7.12 5.78
75 80 6.78 8.11 8.99 6.54 7.36 5.93
- -------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
9
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------ Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option 3c Guaranteed Option 3e
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.31
55 55 4.16 4.54 4.76 4.15 4.42
55 60 4.27 4.73 5.00 4.26 4.48
60 55 4.27 4.73 5.00 4.26 4.70
60 60 4.51 4.99 5.27 4.50 4.84
60 65 4.66 5.25 5.61 4.65 4.93
65 60 4.66 5.25 5.61 4.65 5.22
65 65 4.99 5.61 5.99 4.98 5.42
65 70 5.19 5.97 6.44 5.17 5.54
70 65 5.19 5.97 6.44 5.17 5.93
70 70 5.67 6.49 6.99 5.62 6.23
70 75 5.95 6.96 7.61 5.87 6.40
75 70 5.95 6.96 7.61 5.87 6.95
75 75 6.64 7.73 8.43 6.48 7.40
75 80 7.04 8.39 9.29 6.79 7.64
- ------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
10
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------ Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option 3c Guaranteed Option 3e
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $5.48 $4.88 $5.23
55 55 5.04 5.44 5.66 5.04 5.32
55 60 5.15 5.63 5.91 5.14 5.38
60 55 5.15 5.63 5.91 5.14 5.59
60 60 5.37 5.87 6.16 5.37 5.72
60 65 5.52 6.14 6.51 5.51 5.80
65 60 5.52 6.14 6.51 5.51 6.10
65 65 5.83 6.49 6.87 5.82 6.29
65 70 6.04 6.84 7.34 6.00 6.41
70 65 6.04 6.84 7.34 6.00 6.81
70 70 6.49 7.35 7.87 6.44 7.08
70 75 6.77 7.84 8.51 6.68 7.25
75 70 6.77 7.84 8.51 6.68 7.81
75 75 7.45 8.60 9.33 7.27 8.25
75 80 7.86 9.28 10.20 7.57 8.49
- ------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
11
<PAGE>
Endorsed and made part of the Contract on the effective date of the Contract.
President
Aetna Life Insurance and Annuity Company
12
EX-99-B.4.9
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
(1) Item 3(b) (v) of endorsement EFUND97 is deleted and replaced with the
following:
(v) a daily actuarial charge at an annual rate which will not exceed
1.25% during the accumulation phase and which will not exceed 1.25%
during the annuity phase for annuity mortality and expense risks and
profit; and a daily administrative charge which will not exceed .25%
during the accumulation phase on an annual basis and will not exceed
.25% during the annuity phase on an annual basis.
(2) Section 2. e) of endorsement EAMAR-HD is deleted in its entirety.
(3) Endorsement EDCESWE-IB is deleted and replaced with the following:
Systematic Distribution Options (SDOs)
During the accumulation phase, we may offer one or more distribution
options under which we make regularly scheduled automatic partial
distributions of the Individual Account value. To request a SDO, the Owner
or beneficiary, as applicable, must complete a SDO election form and
forward it to our Home Office.
Each option is available without discrimination to any class of Contracts.
The availability of any specified option may be subject to terms and
conditions applicable to that option. We may discontinue the availability
of a SDO option for future elections. Payments will, however, continue to
Participants who elected the option before the date it is no longer
available.
(4) Section 1. Choices to be Made under the Contract Section entitled Annuity
Provisions, is deleted and replaced with the following:
The Owner may tell Aetna to pay the Individual Account Reserve (minus any
premium tax) as a premium for an Annuity under Option 1, 2, or 3 (see
below). The first Annuity payment must generally be made no later than the
April 1 of the calendar year following the year in which the Participant
turns age 70 1/2 or retires, whichever occurs later. The Owner may tell
Aetna to make the first Annuity payment on the first day of any prior
month.
When an Annuity Option is elected, Aetna must also be told if payments are
to be made other than monthly and to pay:
(a) A Fixed Annuity for which the underlying investment is our General
Account.
(b) A Variable Annuity for which the underlying investment is one or
more of the available Funds; or
(c) A combination of (a) and (b).
If a Fixed Annuity is chosen, Aetna will add interest daily at an annual
rate no less than 3%. Aetna may add interest daily at any higher rate.
If a Variable Annuity is chosen, an assumed net return rate of 5% per year
may be chosen. If not chosen, Aetna will use an assumed net return rate of
3.5% per year. The maximum number of Funds available during the Annuity
phase is [four]. The Funds available during the Annuity phase might not be
the same as those available during the accumulation phase.
EGATHO-00
<PAGE>
(5) Section 4. Annuity Options under the Contract Section entitled Annuity
Provisions is deleted and replaced with the following:
The Owner or beneficiary, as applicable, must elect one of the following:
Option 1 - Payments for a Stated Period - This option provides payments
for a stated period. The number of years in the stated period must be at
least 5 and no more than 30 years and the Annuity may be a Fixed or
Variable Annuity.
If payments for this option are under a Variable Annuity, the present
value of any remaining payments may be surrendered at any time. If a
surrender is requested within five years of the first payment, the
lump-sum payment is treated as a surrender during the accumulation phase
and any applicable surrender fee applies. (see Surrender Value).
If the payments are fixed-only, an annual increase of one, two or three
percent (compounded annually), may be elected at the time the Annuity
option is chosen (if permitted by the Code).
Option 2 - Life Income for One Annuitant - This option provides payments
for the life of the Annuitant. If this option is elected, the Owner or
beneficiary, as applicable, must also choose one of the following:
(a) Payments cease at the death of the Annuitant; or
(b) Payments are guaranteed for a period of at least five years and no
more than 30 years; or
(c) Fixed-only cash refund: At the death of the Annuitant, the
beneficiary receives a lump-sum payment in an amount equal to the
amount applied to the Annuity (minus any applicable premium tax),
minus the amount of payments made to the Annuitant.
Under (a) or (b), if the payments are fixed-only, an annual increase of
one, two or three percent (compounded annually) may be elected at the time
the Annuity option is chosen (if permitted by the Code).
Option 3 - Life Income for Two Annuitants - This option provides payments
for the lives of the Annuitant and a second Annuitant. Payments continue
until both Annuitants have died. If this Option is elected, the Owner or
beneficiary, as applicable, must also choose one of the following:
(a) 100% of the payment amount to continue after the first death; or
(b) 66 2/3% of the payment amount to continue after the first death; or
(c) 50% of the payment amount to continue after the first death; or
(d) 100% of the payment amount to continue after the first death with
payments guaranteed to the beneficiary after the second death for a
period of at least five years and no more than 30 years; or
(e) 100% of the payment amount to continue at the death of the specified
second Annuitant and 50% of the payment amount to continue at the
death of the specified Annuitant; or
(f) 100% of the fixed-only payment amount to continue after the first
death with a cash refund to the beneficiary after the second death.
The amount of the cash refund is equal to the amount applied to the
Annuity (minus any applicable premium-tax),minus the amount of
payments made.
Under (a) or (d), if the payments are fixed-only, an annual increase of
one, two or three percent (compounded annually) may be elected at the time
the Annuity option is chosen (if permitted by the Code.)
Other Options - As allowed under applicable law, we reserve the right to
make other options available.
2
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------------------------------------
5 $17.91 18 $5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
------------------------------------------------------------------------
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------------------------------------
5 $18.12 18 $6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
------------------------------------------------------------------------
3
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------------------------------------
5 $18.74 18 $6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
------------------------------------------------------------------------
4
<PAGE>
OPTION 2
Life Income
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20 Cash
Annuitant Refund
------------------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93 $3.89
51 4.12 4.11 4.09 4.05 3.99 3.94
52 4.19 4.19 4.16 4.11 4.04 4.00
53 4.27 4.26 4.23 4.18 4.10 4.06
54 4.35 4.34 4.31 4.25 4.16 4.12
55 4.44 4.42 4.39 4.32 4.22 4.19
56 4.53 4.51 4.47 4.40 4.29 4.26
57 4.62 4.61 4.56 4.48 4.35 4.33
58 4.72 4.71 4.65 4.56 4.42 4.41
59 4.83 4.81 4.75 4.64 4.49 4.49
60 4.95 4.93 4.86 4.73 4.55 4.57
61 5.07 5.05 4.97 4.83 4.62 4.66
62 5.20 5.17 5.08 4.92 4.69 4.76
63 5.34 5.31 5.20 5.02 4.76 4.85
64 5.49 5.45 5.33 5.12 4.83 4.96
65 5.65 5.61 5.47 5.22 4.89 5.06
66 5.82 5.77 5.61 5.33 4.96 5.18
67 6.01 5.94 5.75 5.44 5.02 5.30
68 6.20 6.13 5.91 5.54 5.08 5.42
69 6.41 6.33 6.07 5.65 5.14 5.56
70 6.64 6.54 6.23 5.76 5.19 5.70
71 6.88 6.76 6.41 5.86 5.24 5.84
72 7.14 7.00 6.59 5.97 5.28 6.00
73 7.43 7.26 6.77 6.06 5.32 6.16
74 7.73 7.53 6.96 6.16 5.35 6.33
75 8.06 7.82 7.14 6.25 5.38 6.51
------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
5
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20
Annuitant
------------------------------------------------------------------------
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
6
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20
Annuitant
------------------------------------------------------------------------
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 5.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89
65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17
70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36
75 9.23 8.93 8.16 7.23 6.38
------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
7
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------- Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option3c Guaranteed Option 3e Option 3f
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.67
55 55 3.88 4.25 4.47 3.87 4.14 3.85
55 60 3.99 4.44 4.71 3.98 4.20 3.94
60 55 3.99 4.44 4.71 3.98 4.42 3.94
60 60 4.24 4.71 4.99 4.23 4.57 4.17
60 65 4.38 4.97 5.32 4.38 4.65 4.29
65 60 4.38 4.97 5.32 4.38 4.93 4.29
65 65 4.72 5.33 5.70 4.71 5.14 4.59
65 70 4.93 5.68 6.15 4.91 5.27 4.74
70 65 4.93 5.68 6.15 4.91 5.66 4.74
70 70 5.40 6.21 6.70 5.36 5.96 5.13
70 75 5.69 6.68 7.32 5.62 6.13 5. 29
75 70 5.69 6.68 7.32 5.62 6.67 5.29
75 75 6.37 7.45 8.15 6.23 7.12 5.78
75 80 6.78 8.11 8.99 6.54 7.36 5.93
- -------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
8
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------ Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option 3c Guaranteed Option 3e
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.31
55 55 4.16 4.54 4.76 4.15 4.42
55 60 4.27 4.73 5.00 4.26 4.48
60 55 4.27 4.73 5.00 4.26 4.70
60 60 4.51 4.99 5.27 4.50 4.84
60 65 4.66 5.25 5.61 4.65 4.93
65 60 4.66 5.25 5.61 4.65 5.22
65 65 4.99 5.61 5.99 4.98 5.42
65 70 5.19 5.97 6.44 5.17 5.54
70 65 5.19 5.97 6.44 5.17 5.93
70 70 5.67 6.49 6.99 5.62 6.23
70 75 5.95 6.96 7.61 5.87 6.40
75 70 5.95 6.96 7.61 5.87 6.95
75 75 6.64 7.73 8.43 6.48 7.40
75 80 7.04 8.39 9.29 6.79 7.64
- ------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
9
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------ Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option 3c Guaranteed Option 3e
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $5.48 $4.88 $5.23
55 55 5.04 5.44 5.66 5.04 5.32
55 60 5.15 5.63 5.91 5.14 5.38
60 55 5.15 5.63 5.91 5.14 5.59
60 60 5.37 5.87 6.16 5.37 5.72
60 65 5.52 6.14 6.51 5.51 5.80
65 60 5.52 6.14 6.51 5.51 6.10
65 65 5.83 6.49 6.87 5.82 6.29
65 70 6.04 6.84 7.34 6.00 6.41
70 65 6.04 6.84 7.34 6.00 6.81
70 70 6.49 7.35 7.87 6.44 7.08
70 75 6.77 7.84 8.51 6.68 7.25
75 70 6.77 7.84 8.51 6.68 7.81
75 75 7.45 8.60 9.33 7.27 8.25
75 80 7.86 9.28 10.20 7.57 8.49
- ------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
10
<PAGE>
(6) Section 5. Other Terms of Annuity Options under the Contract Section
entitled Annuity Provisions is deleted and replaced with the following:
The first payment must be at least $50 per month or $250 per year. We
reserve the right to increase the minimum first payment amount, if allowed
by state law, based on increases reflected in the Consumer Price
Index-Urban (CPI-U) since July 1, 1983.
To calculate the first payment of a Variable annuity or the guaranteed
payments for a Fixed Annuity, Aetna will use the Annuitant's adjusted age
and, if applicable, the second Annuitant's adjusted age. The Annuitant's
adjusted age and, if applicable, the second Annuitant's adjusted age is
the person's age as of the birthday closest to the day Annuity payments
begin, reduced as follows:
(a) Reduced by one year for payments beginning before January 1, 2000;
(b) Reduced by two years for payments beginning during the period from
January 1, 2000 through December 31, 2009;
(c) Starting on January 1, 2010, reduced by one additional year for
payments beginning in each succeeding decade.
If a Fixed Annuity is elected, we will use the applicable current
settlement option rates if they will provide higher Fixed Annuity
payments.
If a Variable Annuity is elected, the Owner or the Participant may request
that we transfer all or a portion of the amount allocated to a Fund to any
other available Fund. Transfer requests must be expressed as a percentage
of the allocation among the Funds on which the variable payment is based.
The number of transfers allowed each calendar year is twelve. We reserve
the right to allow additional transfers. Transfers are effective as of the
next Valuation Period following our receipt of a transfer request in Good
Order at our Home Office. Transfers out of the General Account are not
permitted.
(7) Section 6. Death of Annuitant/Beneficiary under the Contract Section
entitled Annuity Provisions, is deleted and replaced with the following:
The Owner must name a beneficiary for the Annuity phase. Unless not
allowed by the Plan, or restricted by the Owner, the beneficiary may name
a beneficiary.
If an Annuitant(s) dies, any remaining guaranteed payments continue to the
beneficiary. Payments are made at least as rapidly as provided by the
option in effect at the death of the Annuitant. Annuity payments to a
beneficiary may not extend beyond (1) the life of the beneficiary, or (2)
any period certain greater than the beneficiary's life expectancy as
determined by the Code.
The beneficiary may also elect a lump-sum payment equal to the present
value of any remaining payments.
The interest rate used to determine the first Annuity payment is used to
calculate the present value. The present value is determined as of the
next Valuation Period following our receipt of acceptable proof of death
and a written claim for the death benefit.
Unless not allowed by the Plan or restricted by the Owner, if the
beneficiary dies while receiving payments, the present value of any
remaining guaranteed payments is paid in a lump sum to the beneficiary's
beneficiary or to the beneficiary's estate.
Endorsed and made part of the Contract on the effective date of the Contract.
President
Aetna Life Insurance and Annuity Company
11
EX-99-B.4.10
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
(1) Item 3(b) (v) of endorsement EFUND97 is deleted and replaced with the
following:
(v) a daily actuarial charge at an annual rate which will not exceed
1.25% during the accumulation phase and which will not exceed 1.25%
during the Annuity phase for Annuity mortality and expense risks and
profit; and a daily administrative charge which will not exceed .25%
during the accumulation phase on an annual basis and will not exceed
.25% during the Annuity phase on an annual basis.
(2) Endorsement EDCESWE-IB is deleted and replaced with the following:
Systematic Distribution Options (SDOs)
During the accumulation phase, we may offer one or more distribution
options under which we make regularly scheduled automatic partial
distributions of the Individual Account value. To request a SDO, the Owner
or beneficiary, as applicable, must complete a SDO election form and
forward it to our Home Office.
Each option is available without discrimination to any class of Contracts.
The availability of any specified option may be subject to terms and
conditions applicable to that option. We may discontinue the availability
of a SDO option for future elections. Payments will, however, continue to
Participants who elected the option before the date it is no longer
available.
(3) Section 1. Choices to be Made under the Contract Section entitled Annuity
Provisions, is deleted and replaced with the following:
The Owner may tell Aetna to pay the Individual Account Reserve (minus any
premium tax) as a premium for an Annuity under Option 1, 2, or 3 (see
below). The first Annuity payment must generally be made no later than the
April 1 of the calendar year following the year in which the Participant
turns age 70 1/2 or retires, whichever occurs later. The Owner may tell
Aetna to make the first Annuity payment on the first day of any prior
month.
When an Annuity Option is elected, the Owner or beneficiary, as
applicable, must elect:
(a) A Fixed Annuity for which the underlying investment is our General
Account;
(b) A Variable Annuity for which the underlying investment is or more of
the available Funds; or
(c) A combination of (a) and (b).
If a Fixed Annuity is chosen, Aetna will add interest daily at an annual
rate no less than 3%. Aetna may add interest daily at any higher rate.
If a Variable Annuity is chosen, an assumed net return rate of 5% per year
may be chosen. If not chosen, Aetna will use an assumed net return rate of
3.5% per year. The maximum number of Funds available during the Annuity
phase is [four]. The Funds available during the Annuity phase might not be
the same as those available during the accumulation phase.
(4) Section 4. Annuity Options, under the Contract Section entitled Annuity
Provisions, is deleted and restated as follows:
The Owner or beneficiary, as applicable, must elect one of the following:
Option 1 - Payments for a Stated Period of Time - This option provides
payments for a stated period. The number of years in the stated period
must be at least 5 and no more than 30 years and the Annuity may be a
Fixed or Variable Annuity.
EGAT-GSDHO-00
<PAGE>
If payments for this option are under a Variable Annuity, the present value
of any remaining payments may be surrendered at any time. If a surrender is
requested within five years of the first payment, the lump-sum payment is
treated as a surrender during the Accumulation Phase and any applicable
surrender fee applies. (see Surrender Value).
If the payments are fixed-only, an annual increase of one, two or three
percent (compounded annually), may be elected at the time the Annuity option
is chosen (if permitted by the Code).
Option 2 - Life Income for One Annuitant - This option provides payments for
the life of the Annuitant. If this option is elected, the Owner or
beneficiary, as applicable, must also choose one of the following:
(a) Payments cease at the death of the Annuitant; or
(b) Payments are guaranteed for a period of at least five years and no
more than 30 years; or
(c) Fixed-only cash refund: At the death of the Annuitant, the
beneficiary receives a lump-sum payment in an amount equal to the
amount applied to the Annuity (minus any applicable premium tax),
minus the amount of payments made to the Annuitant.
Under (a) or (b), if the payments are fixed-only, an annual increase of
one, two or three percent (compounded annually) may be elected at the time
the Annuity option is chosen (if permitted by the Code).
Option 3 - Life Income for Two Annuitants - This option provides payments
for the lives of the Annuitant and a second Annuitant. Payments continue
until both Annuitants have died. If this option is elected, the Owner or
Contract or Plan beneficiary, as applicable, must also choose one of the
following:
(a) 100% of the payment amount to continue after the first death; or
(b) 66 2/3% of the payment amount to continue after the first death; or
(c) 50% of the payment amount to continue to the survivor; after the
first death; or
(d) 100% of the payment amount to continue after the first death with
payments guaranteed to the beneficiary after the second death for a
period of at least five years and no more than 30 years; or
(e) 100% of the payment amount to continue at the death of the specified
second Annuitant and 50% of the payment amount to continue at the
death of the specified Annuitant; or
(f) 100% of the fixed-only payment amount to continue after the first
death with a cash refund to the beneficiary after the second death.
The amount of the cash refund is equal to the amount applied to the
Annuity Option (minus any applicable premium tax) minus the amount
of payments made.
Under (a) or (d), if the payments are fixed-only, an annual increase of
one, two or three percent (compounded annually) may be elected at the time
the Annuity option is chosen (if permitted by the Code).
Other Options - As allowed under applicable state law, we reserve the
right to make other options available.
2
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------------------------------------
5 $17.91 18 $5.96
6 15.14 19 5.73
7 13.16 20 5.51
8 11.68 21 5.32
9 10.53 22 5.15
10 9.61 23 4.99
11 8.86 24 4.84
12 8.24 25 4.71
13 7.71 26 4.59
14 7.26 27 4.47
15 6.87 28 4.37
16 6.53 29 4.27
17 6.23 30 4.18
------------------------------------------------------------------------
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------------------------------------
5 $18.12 18 $6.20
6 15.35 19 5.97
7 13.38 20 5.75
8 11.90 21 5.56
9 10.75 22 5.39
10 9.83 23 5.24
11 9.09 24 5.09
12 8.46 25 4.96
13 7.94 26 4.84
14 7.49 27 4.73
15 7.10 28 4.63
16 6.76 29 4.53
17 6.47 30 4.45
------------------------------------------------------------------------
3
<PAGE>
OPTION 1
Payments for a Stated Period of Time
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
------------------------------------------------------------------------
Monthly Monthly
Years Payment Years Payment
------------------------------------------------------------------------
5 $18.74 18 $6.94
6 15.99 19 6.71
7 14.02 20 6.51
8 12.56 21 6.33
9 11.42 22 6.17
10 10.51 23 6.02
11 9.77 24 5.88
12 9.16 25 5.76
13 8.64 26 5.65
14 8.20 27 5.54
15 7.82 28 5.45
16 7.49 29 5.36
17 7.20 30 5.28
------------------------------------------------------------------------
4
<PAGE>
OPTION 2
Life Income
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20 Cash
Annuitant Refund
------------------------------------------------------------------------
50 $4.05 $4.05 $4.03 $3.99 $3.93 $3.89
51 4.12 4.11 4.09 4.05 3.99 3.94
52 4.19 4.19 4.16 4.11 4.04 4.00
53 4.27 4.26 4.23 4.18 4.10 4.06
54 4.35 4.34 4.31 4.25 4.16 4.12
55 4.44 4.42 4.39 4.32 4.22 4.19
56 4.53 4.51 4.47 4.40 4.29 4.26
57 4.62 4.61 4.56 4.48 4.35 4.33
58 4.72 4.71 4.65 4.56 4.42 4.41
59 4.83 4.81 4.75 4.64 4.49 4.49
60 4.95 4.93 4.86 4.73 4.55 4.57
61 5.07 5.05 4.97 4.83 4.62 4.66
62 5.20 5.17 5.08 4.92 4.69 4.76
63 5.34 5.31 5.20 5.02 4.76 4.85
64 5.49 5.45 5.33 5.12 4.83 4.96
65 5.65 5.61 5.47 5.22 4.89 5.06
66 5.82 5.77 5.61 5.33 4.96 5.18
67 6.01 5.94 5.75 5.44 5.02 5.30
68 6.20 6.13 5.91 5.54 5.08 5.42
69 6.41 6.33 6.07 5.65 5.14 5.56
70 6.64 6.54 6.23 5.76 5.19 5.70
71 6.88 6.76 6.41 5.86 5.24 5.84
72 7.14 7.00 6.59 5.97 5.28 6.00
73 7.43 7.26 6.77 6.06 5.32 6.16
74 7.73 7.53 6.96 6.16 5.35 6.33
75 8.06 7.82 7.14 6.25 5.38 6.51
------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
5
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20
Annuitant
------------------------------------------------------------------------
50 $4.34 $4.34 $4.31 $4.27 $4.22
51 4.41 4.40 4.38 4.33 4.27
52 4.48 4.47 4.45 4.40 4.32
53 4.56 4.55 4.52 4.46 4.38
54 4.64 4.63 4.59 4.53 4.44
55 4.72 4.71 4.67 4.60 4.50
56 4.81 4.80 4.75 4.67 4.56
57 4.91 4.89 4.84 4.75 4.62
58 5.01 4.99 4.93 4.83 4.69
59 5.12 5.10 5.03 4.92 4.75
60 5.23 5.21 5.13 5.00 4.82
61 5.36 5.33 5.24 5.09 4.88
62 5.49 5.45 5.35 5.19 4.95
63 5.63 5.59 5.47 5.28 5.02
64 5.78 5.73 5.60 5.38 5.08
65 5.94 5.89 5.73 5.48 5.15
66 6.11 6.05 5.87 5.58 5.21
67 6.29 6.22 6.02 5.69 5.27
68 6.49 6.41 6.17 5.79 5.33
69 6.70 6.60 6.33 5.90 5.38
70 6.92 6.81 6.49 6.00 5.43
71 7.17 7.04 6.66 6.10 5.48
72 7.43 7.27 6.84 6.20 5.52
73 7.71 7.53 7.02 6.30 5.55
74 8.02 7.80 7.20 6.39 5.59
75 8.35 8.08 7.38 6.48 5.62
------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
6
<PAGE>
OPTION 2
Life Income
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
Payments Guaranteed for a Stated Period of Years
------------------------------------------------------------------------
Adjusted
Age of None 5 10 15 20
Annuitant
------------------------------------------------------------------------
50 $5.26 $5.25 $5.22 $5.17 $5.11
51 5.33 5.32 5.28 5.23 5.15
52 5.40 5.38 5.34 5.29 5.20
53 5.47 5.45 5.41 5.35 5.26
54 5.54 5.53 5.48 5.41 5.31
55 5.63 5.61 5.56 5.47 5.36
56 5.71 5.69 5.63 5.54 5.42
57 5.80 5.78 5.72 5.61 5.47
58 5.90 5.88 5.81 5.69 5.53
59 6.01 5.98 5.90 5.77 5.59
60 6.12 6.09 6.00 5.85 5.65
61 6.24 6.21 6.10 5.93 5.71
62 6.37 6.33 6.21 6.02 5.77
63 6.51 6.46 6.33 6.11 5.83
64 6.66 6.60 6.45 6.20 5.89
65 6.82 6.75 6.57 6.30 5.95
66 6.99 6.91 6.71 6.39 6.01
67 7.17 7.08 6.85 6.49 6.06
68 7.36 7.27 6.99 6.59 6.12
69 7.57 7.46 7.15 6.69 6.17
70 7.80 7.67 7.30 6.78 6.21
71 8.05 7.89 7.47 6.88 6.25
72 8.31 8.13 7.64 6.97 6.29
73 8.59 8.38 7.81 7.06 6.33
74 8.90 8.64 7.99 7.15 6.36
75 9.23 8.93 8.16 7.23 6.38
------------------------------------------------------------------------
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
7
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Fixed Annuity with Guaranteed Interest Rate of 3.0%
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Adjusted Ages
- ----------------------- Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option3c Guaranteed Option 3e Option 3f
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
55 50 $3.69 $4.05 $4.27 $3.69 $4.03 $3.67
55 55 3.88 4.25 4.47 3.87 4.14 3.85
55 60 3.99 4.44 4.71 3.98 4.20 3.94
60 55 3.99 4.44 4.71 3.98 4.42 3.94
60 60 4.24 4.71 4.99 4.23 4.57 4.17
60 65 4.38 4.97 5.32 4.38 4.65 4.29
65 60 4.38 4.97 5.32 4.38 4.93 4.29
65 65 4.72 5.33 5.70 4.71 5.14 4.59
65 70 4.93 5.68 6.15 4.91 5.27 4.74
70 65 4.93 5.68 6.15 4.91 5.66 4.74
70 70 5.40 6.21 6.70 5.36 5.96 5.13
70 75 5.69 6.68 7.32 5.62 6.13 5.29
75 70 5.69 6.68 7.32 5.62 6.67 5.29
75 75 6.37 7.45 8.15 6.23 7.12 5.78
75 80 6.78 8.11 8.99 6.54 7.36 5.93
- -------------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
8
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 3.5%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------ Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option 3c Guaranteed Option 3e
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $3.97 $4.35 $4.56 $3.97 $4.31
55 55 4.16 4.54 4.76 4.15 4.42
55 60 4.27 4.73 5.00 4.26 4.48
60 55 4.27 4.73 5.00 4.26 4.70
60 60 4.51 4.99 5.27 4.50 4.84
60 65 4.66 5.25 5.61 4.65 4.93
65 60 4.66 5.25 5.61 4.65 5.22
65 65 4.99 5.61 5.99 4.98 5.42
65 70 5.19 5.97 6.44 5.17 5.54
70 65 5.19 5.97 6.44 5.17 5.93
70 70 5.67 6.49 6.99 5.62 6.23
70 75 5.95 6.96 7.61 5.87 6.40
75 70 5.95 6.96 7.61 5.87 6.95
75 75 6.64 7.73 8.43 6.48 7.40
75 80 7.04 8.39 9.29 6.79 7.64
- ------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
9
<PAGE>
OPTION 3
Life Income for Two Annuitants
Amount of First Monthly Payment for Each $1,000
After Deduction of any Charge for Premium Taxes
Rates for a Variable Annuity with Assumed Net Return Rate of 5.0%
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
Adjusted Ages
- ------------------------ Option 3d
Second 10 Years
Annuitant Annuitant Option 3a Option 3b Option 3c Guaranteed Option 3e
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
55 50 $4.88 $5.26 $5.48 $4.88 $5.23
55 55 5.04 5.44 5.66 5.04 5.32
55 60 5.15 5.63 5.91 5.14 5.38
60 55 5.15 5.63 5.91 5.14 5.59
60 60 5.37 5.87 6.16 5.37 5.72
60 65 5.52 6.14 6.51 5.51 5.80
65 60 5.52 6.14 6.51 5.51 6.10
65 65 5.83 6.49 6.87 5.82 6.29
65 70 6.04 6.84 7.34 6.00 6.41
70 65 6.04 6.84 7.34 6.00 6.81
70 70 6.49 7.35 7.87 6.44 7.08
70 75 6.77 7.84 8.51 6.68 7.25
75 70 6.77 7.84 8.51 6.68 7.81
75 75 7.45 8.60 9.33 7.27 8.25
75 80 7.86 9.28 10.20 7.57 8.49
- ------------------------------------------------------------------------------------
</TABLE>
Rates are based on mortality from 1983 Table a. The rates do not differ by sex.
Rates for ages not shown will be provided on request and will be computed
on a basis consistent with the rates in the above tables.
10
<PAGE>
(5) Section 5. Other Terms of Annuity Options under the Contract Section
entitled Annuity Provisions is deleted and replaced with the following:
The first payment must be at least $50 per month or $250 per year. We
reserve the right to increase the minimum first payment amount, if allowed
by state law, based on increases reflected in the Consumer Price
Index-Urban (CPI-U) since July 1, 1983.
To calculate the first payment of a Variable annuity or the guaranteed
payments for a Fixed Annuity, Aetna will use the Annuitant's adjusted age
and, if applicable, the second Annuitant's adjusted age. The Annuitant's
adjusted age and, if applicable, the second Annuitant's adjusted age is
the person's age as of the birthday closest to the day Annuity payments
begin, reduced as follows:
(a) Reduced by one year for payments beginning before January 1, 2000;
(b) Reduced by two years for payments beginning during the period from
January 1, 2000 through December 31, 2009;
(c) Starting on January 1, 2010, reduced by one additional year for
payments beginning in each succeeding decade.
If a Fixed Annuity is elected, we will use the applicable current
settlement option rates if they will provide higher fixed Annuity
payments.
If a Variable Annuity is elected, the Owner or the Participant may request
that we transfer all or a portion of the amount allocated to a Fund to any
other available Fund. Transfer requests must be expressed as a percentage
of the allocation among the Funds on which the variable payment is based.
The number of transfers allowed each calendar year is twelve. We reserve
the right to allow additional transfers. Transfers are effective as of the
next Valuation Period following our receipt of a transfer request in Good
Order at our Home Office. Transfers out of the General Account are not
permitted.
(6) Section 6. Death of Annuitant/Beneficiary under the Contract Section
entitled Annuity Provisions, is deleted and replaced with the following:
The Owner must name a beneficiary for the Annuity phase. Unless not
allowed by the Plan or restricted by the Owner, the beneficiary may name a
beneficiary.
If an Annuitant(s) dies, any remaining guaranteed payments continue to the
beneficiary. Payments are made at least as rapidly as provided by the
option in effect at the death of the Annuitant. Annuity payments to a
beneficiary may not extend beyond (1) the life of the beneficiary, or (2)
any period certain greater than the beneficiary's life expectancy as
determined by the Code.
The beneficiary may also elect a lump-sum payment equal to the present
value of any remaining payments.
The interest rate used to determine the first Annuity payment will be used
to calculate the present value. The present value is determined as of the
next Valuation Date following our receipt of acceptable proof of death and
a written claim for the death benefit.
Unless not allowed by the Plan or restricted by the Owner, if the
beneficiary dies while receiving payments, the present value of any
remaining guaranteed payments is paid in a lump sum to the beneficiary's
beneficiary or to the beneficiary's estate.
Endorsed and made part of the Contract on the effective date of the Contract.
President
Aetna Life Insurance and Annuity Company
11
EX-99-B.4.18
Aetna Life Insurance and Annuity Company
ENDORSEMENT
The Contract is hereby endorsed as follows:
1. Section 2. b), subparagraph (e) of endorsement EAMAR-HD is amended and
restated as follows:
(e) a daily actuarial charge at an annual rate of [1.25%] during the
accumulation phase and [1.25%] during the annuity phase for annuity
mortality and expense risks and profit; and a daily administrative
charge which will not exceed .25% during the accumulation phase on
an annual basis and will not exceed .25% during the annuity phase on
an annual basis.
2. Section 2. d) of endorsement EAMAR-HD is deleted in its entirety.
3. Section 2. e) of endorsement EAMAR-HD is deleted in its entirety.
4. Under the Section titled Deposit, Reserve, and Surrender Provisions of
contract GLID-CDA-HO:
Investment Increment Factors - Separate Account, delete subsection (c) of
the second paragraph and replace with the following;
(c) a daily actuarial charge at an annual rate of [1.25%] during the
accumulation phase and [1.25%] during the annuity phase for annuity
mortality and expense risks and profit.
Individual Account Reserve, subparagraph (e) is deleted in its entirety.
Endorsed and made part of the Contract on the effective date of the Contract.
/s/ Thomas J. McInerney
President
Aetna Life Insurance and Annuity Company
EGLID-ME/AC-99
[AETNA LETTERHEAD]
[AETNA LOGO]
151 Farmington Avenue
Hartford, CT 06156
Julie E. Rockmore
Counsel
AFS Law, TS31
April 11, 2000 (860) 273-4686
Fax: (860) 273-0385
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549
Re: Aetna Life Insurance and Annuity Company and its Variable Annuity Account B
Post-Effective Amendment No. 22 to Registration Statement on Form N-4
Prospectus Title: Group Variable Annuity Contracts for Employer-Sponsored
Deferred Compensation Plans
File Nos.: 33-75996* and 811-2512
Dear Sir or Madam:
The undersigned serves as counsel to Aetna Life Insurance and Annuity Company, a
Connecticut life insurance company (the "Company"). It is my understanding that
the Company, as depositor, has registered an indefinite amount of securities
(the "Securities") under the Securities Act of 1933 (the "Securities Act") as
provided in Rule 24f-2 under the Investment Company Act of 1940 (the "Investment
Company Act").
In connection with this opinion, I or those for whom I have supervisory
responsibility, have reviewed the N-4 Registration Statement, as amended to the
date hereof, and this Post-Effective Amendment No. 22 (the "Registration
Statement"). I have also examined originals or copies, certified or otherwise
identified to my satisfaction, of such documents, trust records and other
instruments I have deemed necessary or appropriate for the purpose of rendering
this opinion. For purposes of such examination, I have assumed the genuineness
of all signatures on original documents and the conformity to the original of
all copies.
I am admitted to practice law in Connecticut, and do not purport to be an expert
on the laws of any other state. My opinion herein as to any other law is based
upon a limited inquiry thereof which I have deemed appropriate under the
circumstances.
- --------
* Pursuant to Rule 429(a) under the Securities Act of 1933, Registrant has
included a combined prospectus under this Registration Statement which
includes all the information which would currently be required in a
prospectus relating to the securities covered by the following earlier
Registration Statement Nos.: 33-88722, 2-52448; and the individual deferred
compensation contracts covered by Registration Statement No. 33-76000.
<PAGE>
Based upon the foregoing, and, assuming the Securities are sold in accordance
with the provisions of the prospectus, I am of the opinion that the Securities
being registered will be legally issued and will represent binding obligations
of the Company.
I consent to the filing of this opinion as an exhibit to the Registration
Statement.
Sincerely,
/s/ Julie E. Rockmore
Julie E. Rockmore
Counsel
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors Aetna Life Insurance and Annuity Company and Contract
Owners of Variable Annuity Account B:
We consent to the use of our report dated February 7, 2000, relating to the
consolidated financial statements of Aetna Life Insurance and Annuity Company
and our report dated February 11, 2000, relating to the financial statements of
Variable Annuity Account B, which are included in this Post-Effective Amendment
No. 22 to Registration Statement (File No. 33-75996) on Form N-4 and to the
references to our firm under the headings "Condensed Financial Information" in
the prospectus and "Independent Auditors" in the statement of Additional
information.
/s/ KPMG LLP
KPMG LLP
Hartford, Connecticut
April 11, 2000
