[Aetna cover]
Variable Annuity Account C
Build for
Retirement. Manage
For Life.(SM)
1996
Annual
Report
[Aetna Logo]
ANN.VAC-96 Retirement Services(SM)
<PAGE>
As we move forward in our mission to provide the tools to help you achieve your
dreams by becoming your retirement partner, it is an opportune time to reflect
upon our achievements in 1996.
We continue to increase our financial strength. Aetna Life Insurance and Annuity
Company (Aetna) reported operating earnings* of $168 million in 1996, a 13%
increase over last year's operating earnings. During this same period, customer
assets invested through Aetna increased by 20% or $5 billion, to $30 billion as
of December 31, 1996.
Our Aetna funds had another outstanding year. Aeltus Investment Management,
Inc., our affiliate organization which manages these funds, was named one of the
World's Best Money Managers by Nelson's Publications, an organization that
compares investment performance data on over 1,700 investment managers from
around the world.
To broaden our customer service capabilities, we established a second Customer
Service site in Phoenix, Arizona. This endeavor demonstrates our strong
commitment to providing you with professional and dependable customer service at
all times.
We also introduced Internet capabilities to further expand the breadth and
flexibility of our customer service functions. In 1996, we gave many of our
customers the ability to view their account information through the Internet.
During the first quarter of 1997, some customers using Aetna's variable annuity
contracts to fund their retirement plans under internal revenue code sections
403(b), 457, and 401(k), as well as individuals holding non-qualified Aetna
variable annuities or individual retirement annuities, will be able to use the
Internet to perform allocation changes and fund transfers. We remain steadfast
in our efforts to offer all Aetna Retirement Services customers the ability to
do transactions on the Internet.
The Aetna Retirement Services organization, through its subsidiary Aetna
Financial Services, Inc., is in the process of developing financial planning
capabilities to provide customers with the tools to achieve their retirement
dreams. Once this capability is developed, Aetna Financial Services'
professional financial planners, in partnership with other Aetna Retirement
Services representatives, will be able to help customers define their financial
objectives, evaluate their options, and advise them on the steps they can take
to help turn their retirement dreams into tangible goals.
We are also presently working on an initiative to offer new options for
cost-effective electronic delivery of regulatory materials such as prospectuses
on CD-ROM or via the Internet. Enclosed you will find a consent agreement if you
would like to choose a new delivery option for these materials that better suits
your needs. Kindly take a few minutes to fill out the form and return it to us
in the attached postage paid envelope if you are interested.
Please contact us if you have any questions or comments. You are the reason
we're in business.
Thank you for your business and continued trust.
/s/Daniel P. Kearney
- -----------------------
Daniel P. Kearney
President, Aetna Retirement Services, Inc.
- ------------------------
* Operating earnings exclude net realized capital gains and losses; these
earnings have been further adjusted to exclude $40 million of severance
and facilities charges in 1996.
<PAGE>
[Aetna Logo]
Retirement Services(SM)
Consent Agreement
- ----------------------------------------------------------------------------
February, 1997
Dear Valued Customer,
As we move into the 21st Century, technology is rapidly evolving and more
information is being delivered electronically. Replacing paper documents
with electronic document delivery is not only cost effective, it conserves
and protects our finite supply of natural resources.
During 1997, Aetna Life Insurance and Annuity Company ("ALIAC") plans to
offer new options for electronic delivery, on CD-ROM or via the INTERNET, of
securities-related regulatory materials relating to ALIAC variable
annuities, variable life insurance and the underlying investment options
under such products. These options will help us to provide you with
up-to-date information with speed and efficiency. If you would like to take
advantage of electronic delivery of future regulatory material as this
delivery becomes available, please take a few minutes to check the option
you prefer, fill out the form below and return it to us in the enclosed
postage paid envelope. A toll-free number (800-USAETNA) is always available
to request paper documents and you can change your options by writing to us
(151 Farmington Ave., Hartford, CT. 06156-8972).
Aetna will keep you informed of our progress on this exciting initiative by
announcing its availability in our regular communications. Until then, you
can expect to continue to receive paper copy materials.
We thank you for giving us this opportunity to serve you better.
- --------------------------------------------------------------------------------
Consent Agreement
- --------------------------------------------------------------------------------
When and to the extent that ALIAC makes available such delivery, I will
accept future regulatory materials (Annual Financial Reports and Semi-annual
Financial Reports, as well as prospectuses and supplements for ALIAC's
variable annuity and variable life insurance separate accounts and their
underlying funding options) on:
[ ] Internet via http://www.aetna.com (There may be potential costs to you
associated with such delivery, depending on your access carrier.)
[ ] CD ROM until INTERNET access is available
[ ] CD ROM only
- --------------------------------------------------------------------------------
This consent will be in effect until revoked in writing, which may be done
at any time.
- --------------------------------------------------------------------------------
Last Name First Name Middle Initial
- --------------------------------------------------------------------------------
Number and Street Address
- --------------------------------------------------------------------------------
City State Zip Code
- --------------------------------------------------------------------------------
Signature Date
- --------------------------------------------------------------------------------
Social Security Number/Tax ID Number
- --------------------------------------------------------------------------------
82949 (2-97)
<PAGE>
Variable Annuity Account C
Statement of Assets and Liabilities - December 31, 1996:
<TABLE>
<S> <C>
ASSETS:
Investments, at net asset value: (Note 1)
Aetna Variable Fund; 151,485,109 shares (cost $4,579,080,272) ............................. $4,906,825,216
Aetna Income Shares; 28,507,123 shares (cost $369,163,545)................................ 359,849,312
Aetna Variable Encore Fund; 18,592,739 shares (cost $246,054,502) ......................... 245,304,466
Aetna Investment Advisers Fund, Inc.; 53,928,968 shares (cost $718,075,860) ............... 815,295,428
Aetna GET Fund, Series B; 4,575,463 shares (cost $47,775,458) ............................. 65,062,153
Aetna GET Fund, Series C; 19,458,746 shares (cost $196,074,278) ........................... 199,058,163
Aetna Ascent Variable Portfolio; 1,716,448 shares (cost $19,943,767) ...................... 21,660,591
Aetna Crossroads Variable Portfolio; 1,232,084 shares (cost $13,920,592) .................. 14,758,921
Aetna Legacy Variable Portfolio; 805,622 shares (cost $8,954,520) ......................... 9,067,002
Aetna Variable Index Plus Portfolio; 976,838 shares (cost $10,573,112) .................... 10,653,437
Alger American Funds:
Growth Portfolio; 3,054,826 shares (cost $98,141,364) ................................... 104,872,172
Small Capitalization Portfolio; 7,916,675 shares (cost $284,506,629) .................... 323,871,170
Calvert Responsibly Invested Balanced Fund; 22,541,903 shares (cost $37,025,408) .......... 39,989,335
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio; 5,062,740 shares (cost $95,793,557) ............................ 106,469,428
Growth Portfolio; 2,583,239 shares (cost $75,185,783) ................................... 80,442,047
Overseas Portfolio; 448,481 shares (cost $7,799,758) .................................... 8,449,388
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio; 1,010,226 shares (cost $14,600,538) ............................ 17,103,129
Contrafund Portfolio; 7,179,138 shares (cost $103,725,028) .............................. 118,886,521
Index 500 Portfolio; 238,202 shares (cost $18,926,038) .................................. 21,230,903
Franklin Government Securities Trust; 1,774,843 shares (cost $22,950,984) .................. 23,356,943
Janus Aspen Series:
Aggressive Growth Portfolio; 9,477,882 shares (cost $155,207,650) ....................... 172,876,567
Balanced Portfolio; 1,034,616 shares (cost $14,529,701) ................................. 15,281,267
Flexible Income Portfolio; 748,885 shares (cost $8,276,798) ............................. 8,417,464
Growth Portfolio; 2,630,613 shares (cost $38,608,238) ................................... 40,800,809
Short-Term Bond Portfolio; 169,569 shares (cost $1,697,074) ............................. 1,690,606
Worldwide Growth Portfolio; 8,868,224 shares (cost $155,687,884) ........................ 172,398,274
Lexington Emerging Markets Fund; 480,702 shares (cost $4,742,490) ......................... 4,845,481
Lexington Natural Resources Trust Fund; 1,668,604 shares (cost $19,847,176) ............... 23,844,347
Neuberger and Berman Advisers Management Trust -
Growth Portfolio; 3,688,195 shares (cost $85,622,163) ................................... 95,081,684
Scudder Variable Life Investment Fund -
International Portfolio; 14,454,018 shares (cost $162,216,238) .......................... 191,515,746
TCI Portfolios Inc. - Growth Fund; 33,812,929 shares (cost $338,104,873) .................... 346,244,393
--------------
NET ASSETS (cost $7,952,811,278)............................................................ $8,565,202,363
==============
Net assets represented by:
Reserves for annuity contracts in accumulation and payment period: (Notes 1 and 5)
Aetna Variable Fund:
Annuity contracts in accumulation.......................................................... $4,694,078,344
Annuity contracts in payment period........................................................ 212,746,872
Aetna Income Shares:
Annuity contracts in accumulation.......................................................... 354,233,289
Annuity contracts in payment period........................................................ 5,616,023
Aetna Variable Encore Fund:
Annuity contracts in accumulation.......................................................... 245,304,466
Aetna Investment Advisers Fund, Inc.:
Annuity contracts in accumulation.......................................................... 800,532,626
Annuity contracts in payment period........................................................ 14,762,802
</TABLE>
<PAGE>
Variable Annuity Account C
Statement of Assets and Liabilities - December 31, 1996 (continued):
<TABLE>
<S> <C>
Aetna GET Fund, Series B:
Annuity contracts in accumulation......................................................... $65,062,153
Aetna GET Fund, Series C:
Annuity contracts in accumulation......................................................... 199,058,163
Aetna Ascent Variable Portfolio:
Annuity contracts in accumulation......................................................... 21,660,591
Aetna Crossroads Variable Portfolio:
Annuity contracts in accumulation......................................................... 14,758,921
Aetna Legacy Variable Portfolio:
Annuity contracts in accumulation......................................................... 9,067,002
Aetna Variable Index Plus Portfolio:
Annuity contracts in accumulation......................................................... 10,653,437
Alger American Funds:
Growth Portfolio:
Annuity contracts in accumulation......................................................... 104,872,172
Small Capitalization Portfolio:
Annuity contracts in accumulation......................................................... 323,871,170
Calvert Responsibly Invested Balanced Fund:
Annuity contracts in accumulation......................................................... 39,989,335
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation......................................................... 106,469,428
Growth Portfolio:
Annuity contracts in accumulation......................................................... 80,442,047
Overseas Portfolio:
Annuity contracts in accumulation......................................................... 8,449,388
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation......................................................... 17,103,129
Contrafund Portfolio:
Annuity contracts in accumulation......................................................... 118,886,521
Index 500 Portfolio:
Annuity contracts in accumulation......................................................... 21,230,903
Franklin Government Securities Trust Fund:
Annuity contracts in accumulation......................................................... 23,356,943
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation......................................................... 172,876,567
Balanced Portfolio:
Annuity contracts in accumulation......................................................... 15,281,267
Flexible Income Portfolio:
Annuity contracts in accumulation......................................................... 8,417,464
Growth Portfolio:
Annuity contracts in accumulation......................................................... 40,800,809
Short-Term Bond Portfolio:
Annuity contracts in accumulation......................................................... 1,690,606
Worldwide Growth Portfolio:
Annuity contracts in accumulation......................................................... 172,398,274
Lexington Emerging Markets Fund:
Annuity contracts in accumulation......................................................... 4,845,481
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation......................................................... 23,844,347
Neuberger and Berman Advisers Management Trust -
Growth Portfolio:
Annuity contracts in accumulation......................................................... 95,081,684
Scudder Variable Life Investment Fund - International Portfolio:
Annuity contracts in accumulation......................................................... 191,515,746
</TABLE>
<PAGE>
Variable Annuity Account C
Statement of Assets and Liabilities - December 31, 1996 (continued):
<TABLE>
<S> <C>
TCI Portfolios, Inc. - Growth Fund:
Annuity contracts in accumulation......................................................... $346,244,393
--------------
$8,565,202,363
==============
</TABLE>
See Notes to Financial Statements
<PAGE>
Variable Annuity Account C
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
Year Ended December 31,
1996 1995
---- ----
<S> <C> <C>
INVESTMENT INCOME:
Income: (Notes 1, 3 and 5)
Dividends ..................................................... $712,854,599 $730,430,612
Expenses: (Notes 2 and 5)
Valuation Period Deductions ................................... (93,446,331) (71,090,542)
-------------- --------------
Net investment income ............................................ 619,408,268 659,340,070
-------------- --------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1, 4 and 5)
Proceeds from sales ............................................ 2,060,808,031 570,154,582
Cost of investments sold ....................................... 1,547,239,509 409,480,615
-------------- --------------
Net realized gain ............................................ 513,568,522 160,673,967
Net unrealized gain on investments: (Note 5)
Beginning of year .............................................. 594,083,184 73,479,233
End of year .................................................... 612,391,085 594,083,184
-------------- --------------
Net change in unrealized gain ................................ 18,307,901 520,603,951
-------------- --------------
Net realized and unrealized gain on investments .................. 531,876,423 681,277,918
-------------- --------------
Net increase in net assets resulting from operations ............. 1,151,284,691 1,340,617,988
-------------- --------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ...................... 951,293,520 771,594,245
Sales and administrative charges deducted by the Company ......... (61,783) (98,694)
-------------- --------------
Net variable annuity contract purchase payments............... 951,231,737 771,495,551
Transfer from the Company for mortality guarantee adjustments .... 3,247,064 3,678,430
Transfers (to) from the Company's fixed account options .......... 187,508,331 (44,377,350)
Redemptions by contract holders .................................. (339,383,183) (287,945,984)
Annuity Payments ................................................. (20,948,181) (14,807,537)
Other ............................................................ 144,245 1,144,770
-------------- --------------
Net increase in net assets from unit transactions (Note 5) ... 781,800,013 429,187,880
-------------- --------------
Change in net assets ............................................. 1,933,084,704 1,769,805,868
NET ASSETS:
Beginning of year ................................................ 6,632,117,659 4,862,311,791
-------------- --------------
End of year ...................................................... $8,565,202,363 $6,632,117,659
============== ==============
</TABLE>
<PAGE>
See Notes to Financial Statements
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1996
<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>
Aetna Variable Fund:
Qualified I $180.879 $222.444 22.98% 340,229.2 $75,681,866
Qualified III 137.869 169.448 22.91% 2,071,139.3 350,949,416
Qualified V 14.113 17.318 22.71% 157,725.6 2,731,425
Qualified VI 14.077 17.302 22.91% 185,328,132.0 3,206,520,652
Qualified VII 13.247 16.291 22.98% 10,529,848.9 171,542,842
Qualified VIII 13.074 16.068 22.90% 29,003.1 466,015
Qualified IX 12.935 15.938 23.21% 22,481.3 358,306
Qualified X (1.15) 14.108 17.357 23.03% 405,331.1 7,035,329
Qualified X (1.25) 14.077 17.302 22.91% 29,130,769.2 504,016,373
Qualified XI 13.757 17.352 26.13% (1) 4,796,195.6 83,223,874
Qualified XII (0.95) 10.000 11.469 14.69% (3) 2,876,728.1 32,993,459
Qualified XII (1.00) 10.000 11.465 14.65% (3) 13,125.4 150,488
Qualified XII (1.50) 10.000 11.429 14.29% (3) 4.5 51
Qualified XIII 15.453 17.333 12.17% (3) 7,250,286.3 125,670,640
Qualified XIV 159.634 169.532 6.20% (6) 473,314.6 80,242,003
Qualified XV 17.367 17.304 (0.36%) (7) 3,033,655.2 52,495,605
Annuity contracts in payment period 212,746,872
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares:
Qualified I $47.405 $48.524 2.36% 43,326.6 2,102,384
Qualified III 46.913 47.992 2.30% 835,724.0 40,107,816
Qualified V 12.283 12.546 2.14% 27,006.7 338,820
Qualified VI 12.098 12.377 2.30% 20,036,622.4 247,987,224
Qualified VII 11.176 11.440 2.36% 199,797.5 2,285,691
Qualified VIII 11.143 11.398 2.29% 1,790.9 20,413
Qualified IX 11.203 11.489 2.56% 2,562.8 29,445
Qualified X (1.15) 12.125 12.416 2.40% 92,017.2 1,142,499
Qualified X (1.25) 12.098 12.377 2.30% 3,717,900.2 46,015,328
Qualified XI 12.024 12.413 3.24% (1) 354,730.5 4,403,141
Qualified XII (0.95) 10.000 10.503 5.03% (3) 161,764.9 1,699,077
Qualified XII (1.00) 10.000 10.500 5.00% (3) 679.2 7,131
Qualified XIII 11.862 12.399 4.53% (3) 493,485.3 6,118,783
Qualified XV 12.406 12.379 (0.22%) (7) 159,593.9 1,975,537
Annuity contracts in payment period 5,616,023
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund:
Qualified I $38.485 $40.069 4.12% 93,726.6 3,755,559
Qualified III 37.988 39.528 4.05% 597,655.5 23,624,105
Qualified V 11.003 11.431 3.89% 37,702.8 430,985
Qualified VI 11.026 11.473 4.05% 13,898,826.0 159,463,302
Qualified VII 10.936 11.386 4.12% 398,430.1 4,536,503
Qualified VIII 10.620 11.050 4.05% 1,478.8 16,340
Qualified IX 10.857 11.326 4.32% 3,235.8 36,647
Qualified X (1.15) 11.051 11.510 4.16% 173,307.6 1,994,805
Qualified X (1.25) 11.026 11.473 4.05% 3,510,587.5 40,277,492
Qualified XI 11.038 11.506 4.24% (1) 228,697.5 2,631,499
Qualified XII (0.95) 10.000 10.277 2.77% (3) 39,811.2 409,153
Qualified XII (1.00) 10.000 10.274 2.74% (3) 1,550.9 15,934
Qualified XII (1.15) 10.000 10.264 2.64% (3) 9,856.2 101,166
Qualified XIII 11.193 11.494 2.69% (3) 351,831.5 4,043,926
Qualified XIV 39.239 39.548 0.79% (6) 48,268.5 1,908,910
Qualified XV 11.448 11.475 0.24% (7) 179,361.1 2,058,140
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.:
Qualified I $18.024 $20.511 13.80% 280,546.8 5,754,427
Qualified III 17.954 20.419 13.73% 2,716,640.6 55,471,707
Qualified V 13.693 15.548 13.55% 21,914.6 340,726
Qualified VI 13.673 15.551 13.73% 36,147,028.2 562,115,349
Qualified VII 13.135 14.948 13.80% 339,499.7 5,074,736
Qualified VIII 12.695 14.437 13.72% 2,238.8 32,322
Qualified IX 12.613 14.381 14.02% 3,325.4 47,823
Qualified X (1.15) 13.703 15.600 13.85% 172,587.9 2,692,415
Qualified X (1.25) 13.673 15.551 13.73% 7,803,571.8 121,351,816
Qualified XI 13.417 15.596 16.24% (1) 768,177.6 11,980,457
Qualified XII (0.95) 10.000 10.902 9.02% (3) 702,222.4 7,655,330
Qualified XIII 14.564 15.579 6.97% (3) 1,528,051.1 23,805,480
Qualified XV 15.634 15.553 (0.52%) (7) 270,688.1 4,210,038
Annuity contracts in payment period 14,762,802
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series B:
Qualified III $12.850 $15.634 21.67% 62,048.5 970,067
Qualified VI 12.850 15.634 21.67% 3,161,253.4 49,423,071
Qualified X (1.25) 12.850 15.634 21.67% 338,910.2 5,298,526
Qualified XI 12.570 15.679 24.73% (1) 372,528.4 5,841,008
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1996 (continued):
- ---------------------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series B (continued):
Qualified XIII $14.062 $15.662 11.38% (3) 112,858.9 $1,767,633
Qualified XV 15.787 15.636 (0.96%) (7) 112,676.7 1,761,848
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series C:
Qualified III $10.000 $10.241 2.41% (5) 911,111.2 9,330,582
Qualified V 10.090 10.236 1.45% (7) 2,613.0 26,747
Qualified VI 10.000 10.241 2.41% (5) 16,632,603.9 170,332,501
Qualified XI 10.000 10.250 2.50% (5) 1,072,351.1 10,991,358
Qualified XII (1.20) 10.102 10.250 1.47% (7) 41,933.2 429,806
Qualified XII (1.25) 10.100 10.248 1.47% (7) 29,160.5 298,846
Qualified XIII 10.000 10.250 2.50% (5) 614,761.2 6,301,164
Qualified XV 10.094 10.242 1.47% (7) 131,527.8 1,347,159
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio:
Qualified I $10.000 $11.678 16.78% (2) 347.4 4,056
Qualified V 10.666 12.996 21.84% 2,057.5 26,739
Qualified VI 10.673 13.025 22.04% 1,314,996.8 17,127,954
Qualified VIII 10.673 13.024 22.03% 45.9 598
Qualified X (1.15) 10.982 13.415 22.16% 28,981.6 388,796
Qualified X (1.25) 10.976 13.395 22.04% 201,475.3 2,698,772
Qualified XI 10.567 13.063 23.62% (1) 22,887.7 298,979
Qualified XII (0.95) 10.000 11.472 14.72% (3) 20,237.2 232,156
Qualified XII (1.00) 10.000 11.468 14.68% (3) 12.9 148
Qualified XIII 11.593 13.049 12.56% (3) 35,180.0 459,052
Qualified XV 12.850 13.027 1.38% (7) 32,497.2 423,341
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio:
Qualified V $10.605 $12.422 17.14% 1,087.9 13,513
Qualified VI 10.612 12.450 17.32% 918,336.1 11,433,270
Qualified VIII 10.611 12.449 17.31% 196.4 2,445
Qualified X (1.15) 10.868 12.763 17.44% 15,073.8 192,391
Qualified X (1.25) 10.862 12.744 17.32% 165,859.6 2,113,738
Qualified XI 10.505 12.486 18.86% (1) 35,150.8 438,897
Qualified XII (0.95) 10.000 11.146 11.46% (3) 7,882.3 87,854
Qualified XIII 11.330 12.473 10.09% (3) 28,829.3 359,575
Qualified XV 12.330 12.452 0.99% (7) 9,415.4 117,238
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio:
Qualified V $11.049 $11.903 7.73% (4) 13.4 159
Qualified VI 10.580 11.930 12.76% 513,590.1 6,127,339
Qualified X (1.15) 10.631 12.000 12.88% 19,863.6 238,363
Qualified X (1.25) 10.626 11.982 12.76% 188,302.5 2,256,312
Qualified XI 10.476 11.965 14.21% (1) 13,860.6 165,843
Qualified XII (0.95) 10.000 10.905 9.05% (3) 61.1 666
Qualified XIII 11.057 11.953 8.10% (3) 15,755.0 188,314
Qualified XV 11.858 11.932 0.62% (7) 7,543.1 90,006
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio:
Qualified V $10.000 $10.919 9.19% (4) 4.6 50
Qualified VI 10.000 10.924 9.24% (4) 879,588.0 9,608,426
Qualified X (1.25) 10.000 10.924 9.24% (4) 13,142.1 143,561
Qualified XI 10.000 10.934 9.34% (4) 27,436.2 299,975
Qualified XII (0.95) 10.000 10.934 9.34% (4) 2,696.5 29,482
Qualified XIII 10.000 10.934 9.34% (4) 28,473.1 311,312
Qualified XV 11.038 10.925 (1.02%) (7) 23,855.6 260,631
- ---------------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Growth Portfolio:
Qualified III $11.715 $13.113 11.93% 1,023,907.5 13,426,326
Qualified V 10.365 11.583 11.75% 20,853.3 241,552
Qualified VI 10.157 11.370 11.93% 6,708,795.1 76,275,887
Qualified VIII 10.371 11.608 11.93% 1,053.0 12,224
Qualified X (1.15) 11.385 12.756 12.05% 53,888.3 687,407
Qualified X (1.25) 11.379 12.736 11.93% 699,452.2 8,908,517
Qualified XI 9.661 11.403 18.03% (1) 135,798.3 1,548,448
Qualified XII (0.95) 10.000 10.495 4.95% (3) 93,755.3 983,936
Qualified XII (1.00) 10.000 10.491 4.91% (3) 19,500.3 204,585
Qualified XIII 11.075 11.390 2.84% (3) 159,999.3 1,822,416
Qualified XV 11.587 11.371 (1.86%) (7) 66,912.3 760,874
- ---------------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio:
Qualified III $13.558 $13.949 2.88% 2,373,178.3 33,102,627
Qualified V 13.463 13.829 2.72% 80,690.8 1,115,839
Qualified VI 13.450 13.838 2.88% 17,587,705.0 243,370,431
Qualified VIII 14.093 14.498 2.87% 7,712.5 111,814
Qualified X (1.15) 13.481 13.883 2.98% 116,124.3 1,612,172
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1996 (continued):
- ---------------------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio (continued):
Qualified X (1.25) $13.450 $13.838 2.88% 1,597,970.4 $22,111,967
Qualified XI 12.417 13.878 11.77% (1) 540,557.4 7,501,704
Qualified XII (0.95) 10.000 9.187 (8.13%) (3) 248,596.5 2,283,841
Qualified XII (1.00) 10.000 9.184 (8.16%) (3) 970.9 8,916
Qualified XII (1.15) 10.000 9.175 (8.25%) (3) 73.8 677
Qualified XIII 15.575 13.863 (10.99%) (3) 639,523.6 8,865,494
Qualified XV 14.112 13.840 (1.93%) (7) 273,540.7 3,785,688
- ---------------------------------------------------------------------------------------------------------------------------------
Calvert Responsibly Invested Balanced Portfolio:
Qualified III $17.951 $19.965 11.22% 898,278.5 17,933,802
Qualified V 13.870 15.400 11.04% 18,956.6 291,939
Qualified VI 13.527 15.044 11.22% 1,313,324.3 19,757,692
Qualified VIII 12.291 13.668 11.21% 4,767.8 65,165
Qualified XI 13.195 15.088 14.35% (1) 57,557.4 868,409
Qualified XII (0.95) 10.000 10.924 9.24% (3) 19,808.2 216,391
Qualified XIII 14.024 15.071 7.47% (3) 35,511.0 535,196
Qualified XV 15.267 15.046 (1.45%) (7) 21,317.0 320,741
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio:
Qualified III $11.617 $13.110 12.86% 1,454,755.0 19,071,987
Qualified V 11.047 12.447 12.68% 14,151.0 176,141
Qualified VI 11.092 12.518 12.86% 5,007,706.3 62,685,632
Qualified VIII 11.054 12.474 12.85% 1,116.3 13,925
Qualified X (1.15) 13.902 15.705 12.97% 194,798.0 3,059,323
Qualified X (1.25) 13.880 15.664 12.86% 1,166,494.5 18,272,465
Qualified XI 10.845 12.554 15.76% (1) 116,432.4 1,461,712
Qualified XII (0.95) 10.000 10.819 8.19% (3) 27,639.4 299,028
Qualified XII (1.15) 10.000 10.805 8.05% (3) 4,215.4 45,547
Qualified XIII 11.800 12.541 6.28% (3) 82,568.3 1,035,449
Qualified XV 12.634 12.520 (0.90%) (7) 27,813.8 348,219
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Qualified I $10.000 $10.770 7.70% (2) 448.8 4,834
Qualified V 10.183 11.516 13.09% 13,492.8 155,387
Qualified VI 10.066 11.402 13.27% 5,171,098.4 58,960,842
Qualified VIII 10.190 11.541 13.26% 1,106.7 12,772
Qualified X (1.15) 14.023 15.900 13.39% 87,970.8 1,398,715
Qualified X (1.25) 14.000 15.858 13.27% 994,616.4 15,772,879
Qualified XI 9.569 11.435 19.50% (1) 112,748.3 1,289,288
Qualified XII (0.95) 10.000 10.362 3.62% (3) 54,133.4 560,917
Qualified XII (1.00) 10.000 10.358 3.58% (3) 21.3 221
Qualified XII (1.15) 10.000 10.348 3.48% (3) 4,472.0 46,278
Qualified XIII 11.351 11.423 0.63% (3) 135,703.6 1,550,097
Qualified XV 11.711 11.404 (2.62%) (7) 60,490.7 689,817
- ---------------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio:
Qualified V $9.954 $11.111 11.62% 776.0 8,623
Qualified VI 9.961 11.137 11.80% 487,708.9 5,431,386
Qualified X (1.15) 10.278 11.503 11.92% 35,293.4 405,985
Qualified X (1.25) 10.262 11.473 11.80% 182,532.6 2,094,212
Qualified XI 10.079 11.169 10.81% (1) 10,847.9 121,159
Qualified XII (0.95) 10.000 10.664 6.64% (3) 3,820.2 40,738
Qualified XIII 10.544 11.157 5.81% (3) 29,108.2 324,751
Qualified XV 11.050 11.138 0.80% (7) 2,023.2 22,534
- ---------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio:
Qualified III $10.912 $12.349 13.17% 1,384,926.5 17,103,129
- ---------------------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio:
Qualified III $11.763 $14.092 19.79% 1,522,168.8 21,449,932
Qualified V 10.461 12.511 19.60% 15,205.7 190,245
Qualified VI 10.397 12.455 19.79% 6,812,870.4 84,853,504
Qualified VIII 10.467 12.538 19.78% 1,004.8 12,599
Qualified X (1.15) 11.689 14.016 19.91% 13,300.1 186,420
Qualified X (1.25) 11.681 13.994 19.79% 500,033.7 6,997,312
Qualified XI 10.076 12.491 23.97% (1) 92,020.6 1,149,430
Qualified XII (0.95) 10.000 11.243 12.43% (3) 95,199.1 1,070,296
Qualified XII (1.00) 10.000 11.239 12.39% (3) 20,020.2 225,010
Qualified XII (1.15) 10.000 11.228 12.28% (3) 4,168.9 46,810
Qualified XIII 11.294 12.477 10.47% (3) 175,463.0 2,189,328
Qualified XV 12.434 12.457 0.18% (7) 41,394.1 515,635
- ---------------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio:
Qualified III $11.740 $14.240 21.29% 1,490,937.2 21,230,903
- ---------------------------------------------------------------------------------------------------------------------------------
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1996 (continued):
- ---------------------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------------
Franklin Government Securities Trust Fund:
Qualified III $16.495 $16.952 2.77% 767,910.1 $13,017,606
Qualified V 11.946 12.258 2.60% 21,263.1 260,634
Qualified VI 11.762 12.088 2.77% 763,005.9 9,223,208
Qualified VIII 11.090 11.396 2.76% 6,397.6 72,906
Qualified XI 11.739 12.123 3.27% (1) 36,973.9 448,238
Qualified XII (0.95) 10.000 10.525 5.25% (3) 1,553.5 16,350
Qualified XIII 11.557 12.110 4.78% (3) 10,783.6 130,588
Qualified XV 12.161 12.090 (0.58%) (7) 15,501.8 187,413
- ---------------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Qualified III $15.323 $16.334 6.60% 1,893,717.6 30,932,665
Qualified V 13.296 14.151 6.43% 34,853.1 493,208
Qualified VI 13.322 14.202 6.60% 8,835,470.4 125,478,408
Qualified VIII 13.321 14.199 6.59% 2,751.6 39,071
Qualified X (1.15) 12.869 13.733 6.71% 24,366.3 334,613
Qualified X (1.25) 12.861 13.710 6.60% 495,556.7 6,793,944
Qualified XI 12.817 14.243 11.13% (1) 226,503.6 3,226,074
Qualified XII (0.95) 10.000 9.510 (4.90%) (3) 125,231.8 1,190,962
Qualified XII (1.00) 10.000 9.507 (4.93%) (3) 17,055.0 162,142
Qualified XII (1.15) 10.000 9.498 (5.02%) (3) 4,931.6 46,840
Qualified XII (1.50) 10.000 9.477 (5.23%) (3) 9.0 85
Qualified XIII 15.184 14.227 (6.30%) (3) 171,746.5 2,443,514
Qualified XV 14.453 14.204 (1.72%) (7) 122,153.6 1,735,041
- ---------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio:
Qualified III $10.853 $12.453 14.73% 230.6 2,871
Qualified V 10.843 12.421 14.55% 2,589.6 32,166
Qualified VI 10.850 12.449 14.73% 996,509.8 12,405,647
Qualified VIII 12.091 12.448 2.95% (6) 319.0 3,971
Qualified X (1.15) 11.265 12.938 14.85% 15,487.6 200,374
Qualified X (1.25) 11.259 12.917 14.73% 127,631.2 1,648,675
Qualified XI 10.604 12.485 17.74% (1) 29,441.7 367,586
Qualified XII (0.95) 10.000 11.105 11.05% (3) 9,188.4 102,034
Qualified XII (1.15) 10.000 11.090 10.90% (3) 13.4 149
Qualified XIII 11.445 12.472 8.97% (3) 29,197.9 364,145
Qualified XV 12.458 12.451 (0.06%) (7) 12,340.4 153,649
- ---------------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio:
Qualified III $12.124 $13.074 7.83% 3,761.0 49,170
Qualified V 12.054 12.976 7.66% 2,551.5 33,109
Qualified VI 12.077 13.022 7.83% 619,287.2 8,064,626
Qualified VIII 12.153 13.020 7.13% (1) 45.0 586
Qualified XI 12.028 13.060 8.58% (1) 6,607.1 86,291
Qualified XII (0.95) 10.000 10.902 9.02% (3) 1,402.3 15,288
Qualified XIII 12.019 13.046 8.54% (3) 9,053.5 118,112
Qualified XV 13.022 13.024 0.02% (7) 3,860.6 50,282
- ---------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Qualified III $11.859 $13.872 16.98% 663,944.9 9,210,217
Qualified V 10.872 12.698 16.79% 7,502.5 95,263
Qualified VI 10.870 12.716 16.98% 2,018,526.7 25,666,973
Qualified VIII 11.778 12.725 8.04% (2) 388.2 4,940
Qualified X (1.15) 11.633 13.621 17.09% 6,308.4 85,925
Qualified X (1.25) 11.626 13.599 16.98% 250,918.2 3,412,332
Qualified XI 10.607 12.753 20.23% (1) 51,761.4 660,093
Qualified XII (0.95) 10.000 10.891 8.91% (3) 39,841.1 433,900
Qualified XIII 11.985 12.739 6.29% (3) 67,000.9 853,507
Qualified XV 12.782 12.718 (0.50% (7) 29,695.8 377,659
- ---------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Portfolio:
Qualified III $10.393 $10.671 2.68% 54,214.9 578,552
Qualified V 10.316 10.576 2.52% 812.2 8,590
Qualified VI 10.323 10.600 2.68% 91,328.2 968,057
Qualified X (1.25) 10.285 10.561 2.68% 11,033.9 116,528
Qualified XI 10.318 10.631 3.03% (1) 977.5 10,392
Qualified XII (0.95) 10.000 10.366 3.66% (3) 95.8 993
Qualified XII (1.15) 10.000 10.353 3.53% (3) 5.1 52
Qualified XIII 10.263 10.619 3.47% (3) 700.8 7,442
- ---------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio:
Qualified III $12.158 $15.493 27.43% 2,090,907.7 32,394,307
Qualified V 10.952 13.934 27.22% 21,175.8 295,059
Qualified VI 10.877 13.860 27.43% 8,715,824.6 120,799,255
Qualified VIII 10.846 13.819 27.42% 784.6 10,843
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1996 (continued):
- ---------------------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio (continued):
Qualified X (1.15) $12.223 $15.592 27.56% 33,350.3 $519,982
Qualified X (1.25) 12.216 15.566 27.43% 526,645.9 8,198,020
Qualified XI 10.929 13.900 27.18% (1) 212,494.0 2,953,658
Qualified XII (0.95) 10.000 11.370 13.70% (3) 151,935.1 1,727,476
Qualified XII (1.00) 10.000 11.366 13.66% (3) 36,304.9 412,649
Qualified XII (1.15) 10.000 11.355 13.55% (3) 8.9 101
Qualified XIII 12.592 13.885 10.27% (3) 241,822.7 3,357,675
Qualified XV 13.734 13.862 0.93% (7) 124,749.2 1,729,249
- ---------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund:
Qualified III $8.323 $8.832 6.12% 548,617.6 4,845,481
- ---------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
Qualified III $10.862 $13.611 25.31% 587,247.8 7,993,303
Qualified V 12.095 15.132 25.11% 11,144.6 168,639
Qualified VI 11.720 14.686 25.31% 966,481.5 14,197,280
Qualified XI 11.673 14.729 26.18% (1) 42,174.4 621,183
Qualified XII (0.95) 10.000 11.383 13.83% (3) 5,295.0 60,274
Qualified XIII 13.130 14.713 12.06% (3) 43,664.8 642,436
Qualified XV 14.468 14.688 1.52% (7) 10,976.8 161,232
- ---------------------------------------------------------------------------------------------------------------------------------
Neuberger and Berman Advisers Management Trust -
Growth Portfolio:
Qualified III $17.430 $18.786 7.78% 2,169,361.8 40,753,874
Qualified V 14.359 15.451 7.60% 47,408.1 732,491
Qualified VI 14.345 15.461 7.78% 3,130,549.1 48,400,302
Qualified VIII 12.334 13.293 7.77% 7,680.0 102,087
Qualified XI 13.884 15.506 11.68% (1) 194,333.3 3,013,245
Qualified XII (0.95) 10.000 9.970 (0.30%) (3) 31,317.3 312,236
Qualified XIII 15.781 15.489 (1.85%) (3) 84,563.7 1,309,781
Qualified XV 15.862 15.463 (2.52%) (7) 29,597.7 457,668
- ---------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund -
International Portfolio:
Qualified III $14.515 $16.453 13.35% 3,684,698.1 60,623,767
Qualified V 13.799 15.616 13.17% 48,672.3 760,083
Qualified VI 13.923 15.781 13.35% 6,905,883.5 108,983,488
Qualified VIII 11.733 13.298 13.34% 16,249.0 216,074
Qualified X (1.15) 13.952 15.830 13.46% 38,898.0 615,774
Qualified X (1.25) 13.923 15.781 13.35% 510,035.2 8,048,993
Qualified XI 14.058 15.827 12.58% (1) 313,047.1 4,954,615
Qualified XII (0.95) 10.000 10.672 6.72% (3) 171,731.7 1,832,746
Qualified XII (1.15) 10.000 10.658 6.58% (3) 63.3 674
Qualified XIII 14.944 15.810 5.79% (3) 273,974.1 4,331,487
Qualified XV 15.661 15.784 0.79% (7) 72,736.7 1,148,045
- ---------------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - Growth Fund:
Qualified I $10.000 $9.428 (5.72%) (2) 91,885.2 866,299
Qualified III 13.224 12.480 (5.63%) 741,391.7 9,252,329
Qualified III * 14.464 13.650 (5.63%) 1,566,275.9 21,380,247
Qualified V 15.176 14.299 (5.78%) 37,548.5 536,917
Qualified VI 15.253 14.395 (5.63%) 18,038,613.6 259,664,020
Qualified VII 12.840 12.125 (5.57%) 60,320.7 731,396
Qualified VIII 12.868 12.143 (5.63%) 10,837.2 131,595
Qualified IX 12.581 11.903 (5.39%) 1,441.6 17,160
Qualified X (1.15) 15.285 14.440 (5.53%) 4,845.8 69,973
Qualified X (1.25) 15.253 14.395 (5.63%) 2,179,700.3 31,376,565
Qualified XI 14.146 14.437 2.06% (1) 574,067.7 8,287,660
Qualified XII (0.95) 10.000 9.079 (9.21%) (3) 389,787.7 3,538,902
Qualified XIII 16.604 14.421 (13.15%) (3) 501,071.5 7,225,971
Qualified XV 14.898 14.397 (3.36%) (7) 219,862.0 3,165,359
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Applies only to participants of the Opportunity Plus program and Multiple
Options Portfolio
Qualified I Individual contracts issued prior to May 1, 1975 in
connection with "Qualified Corporate Retirement Plans"
established pursuant to Section 401 of the Internal Revenue
Code ("Code"); Tax-Deferred Annuity Plans" established by the
public school systems and tax-exempt organizations pursuant to
Section 403(b) of the Code, and certain Individual Retirement
Annuity Plans established by or on behalf of individuals
pursuant to section 408(b) of the Code; Individual contracts
issued prior to November 1, 1975 in connection with "H.R. 10
Plans" established by persons entitled to the benefits of the
Self-Employed Individuals Tax Retirement Act of 1962, as
amended; allocated group contracts issued
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1996 (continued):
prior to May 1, 1975 in connection with Qualified Corporate
Retirement Plans; and group contracts issued prior to October
1, 1978 in connection with Tax-Deferred Annuity Plans.
Qualified III Individual contracts issued in connection with
Tax-Deferred Annuity Plans and Individual Retirement Annuity
Plans since May 1, 1975, H.R. 10 Plans since November 1, 1975;
group contracts issued since October 1, 1978 in connection
with Tax-Deferred Annuity Plans and group contracts issued
since May 1, 1979 in connection with "Deferred Compensation
Plans" adopted by state and local governments and H.R. 10
Plans.
Qualified V Group AetnaPlus contracts issued since August 28, 1992 in
connection with Optional Retirement Plans" established
pursuant to Section 403(b) or 401(a) of the Internal Revenue
Code.
Qualified VI Group AetnaPlus contracts issued in connection with
Tax-Deferred Annuity Plans and Retirement Plus Plans since
August 28, 1992.
Qualified VII Certain existing contracts that were converted to ACES, an
administrative system (previously valued under Qualified I).
Qualified VIII Group AetnaPlus" contracts issued in connection with
Tax-Deferred Annuity Plans and "deferred Compensation Plans"
adopted by state and local governments since June 30, 1993.
Qualified IX Certain large group contracts (Jumbo) that were converted
to ACES, an administrative system (previously valued under
Qualified VI).
Qualified X Individual Retirement Annuity and Simplified Employee Pension
Plans issued or converted to ACES, an administrative system.
Qualified XI Certain large group contracts issued in connection with
"Deferred Compensation Plans" adopted by state and local
governments since January 1996.
Qualified XII Group "Deferred Compensation Plan" contracts shown separately
by applicable daily charge.
Qualified XIII Certain existing contracts issued in connection with
Tax-Deferred Annuity Plans and Retirement Plus Plans issued
through product exchange (previously valued under Qualified
VI).
Qualified XIV Certain existing contracts issued in connection with
Tax-Deferred Annuity Plans that were converted to ACES, an
administrative system (previously valued under Qualified III).
Qualified XV Certain existing contracts issued in connection with
Tax-Deferred Annuity Plans (previously valued under Qualified
VI).
Notes to Condensed Financial Information:
(1) - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established during January 1996 when the fund
became available under the contract, when funds were first received in
this option or when the applicable daily asset charge was first utilized.
(2) - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established during April 1996 when the fund
became available under the contract, when funds were first received in
this option or when the applicable daily asset charge was first utilized.
(3) - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established during May 1996 when the fund
became available under the contract, when funds were first received in
this option or when the applicable daily asset charge was first utilized.
(4) - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established during August 1996 when the fund
became available under the contract, when funds were first received in
this option or when the applicable daily asset charge was first utilized.
(5) - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established during September 1996 when the
fund became available under the contract, when funds were first received
in this option or when the applicable daily asset charge was first
utilized.
(6) - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established during October 1996 when the fund
became available under the contract, when funds were first received in
this option or when the applicable daily asset charge was first utilized.
(7) - Reflects less than a full year of performance activity. The initial
Accumulation Unit Value was established during December 1996 when the fund
became available under the contract, when funds were first received in
this option or when the applicable daily asset charge was first utilized.
See Notes to Financial Statements
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1996
1. Summary of Significant Accounting Policies
Variable Annuity Account C ("Account") is a separate account established by
Aetna Life Insurance and Annuity Company and is 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 are qualified
under 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. Although actual results
could differ from these estimates, any such differences are expected to be
immaterial to the net assets of the Account.
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, 1996:
Aetna Variable Fund
Aetna Income Shares
Aetna Variable Encore Fund
Aetna Investment Advisers Fund, Inc.
Aetna GET Fund, Series B
Aetna GET Fund, Series C
Aetna Ascent Variable Portfolio
Aetna Crossroads Variable Portfolio
Aetna Legacy Variable Portfolio
Aetna Variable Index Plus Portfolio
Alger American Funds:
[bullet] Growth Portfolio
[bullet] Small Capitalization Portfolio
Calvert Responsibly Invested Balanced Portfolio
Fidelity Investments Variable Insurance Products Fund:
[bullet] Equity-Income Portfolio
[bullet] Growth Portfolio
[bullet] Overseas Portfolio
Fidelity Investments Variable Insurance Products Fund II:
[bullet] Asset Manager Portfolio
[bullet] Contrafund Portfolio
[bullet] Index 500 Portfolio
Franklin Government Securities Trust
Janus Aspen Series:
[bullet] Aggressive Growth Portfolio
[bullet] Balanced Portfolio
[bullet] Flexible Income Portfolio
[bullet] Growth Portfolio
[bullet] Short-Term Bond Portfolio
[bullet] Worldwide Growth Portfolio
Lexington Fund Emerging Markets Fund
Lexington Natural Resources Trust Fund
Neuberger & Berman Advisers Management Trust -
Growth Portfolio
Scudder Variable Life Investment Fund -
International Portfolio
TCI Portfolios, Inc. - Growth Fund
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 Aetna Life Insurance and Annuity Company ("Company") which is
taxed as a life insurance company under the Internal Revenue Code of 1986,
as amended.
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1996 (continued):
d. Annuity Reserves
Annuity reserves held in the Separate Accounts 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 Statements of Operations and Changes in Net Assets.
4. Purchases and Sales of Investments
The cost of purchases and proceeds from sales of investments other than
short-term investments for the years ended December 31, 1996 and December
31, 1995 aggregated $3,462,016,312 and $2,060,808,031; $1,658,682,532 and
$570,154,582, respectively.
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1996 (continued):
5. Supplemental Information to Statements of Operations and Changes in
Net Assets - Year Ended December 31, 1996
<TABLE>
<CAPTION>
Net Unrealized
Valuation Proceeds Cost of Net Gain (Loss)
Period from Investments Realized Beginning
Dividends Deductions Sales Sold Gain (Loss) of Year
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Variable Fund: $515,238,366 ($54,321,686) $1,237,963,630 $841,837,896 $396,125,734 $267,567,573
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares: 23,144,319 (4,611,478) 155,474,786 153,469,788 2,004,998 3,230,862
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund: 14,058,252 (2,878,790) 175,207,017 167,163,639 8,043,378 9,204,418
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 72,699,670 (9,562,496) 223,353,174 160,905,519 62,447,655 122,622,603
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series B: 5,304,368 (1,100,778) 25,117,816 18,596,857 6,520,959 13,423,804
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series C: 969,084 (280,865) 229,569 224,240 5,329 0
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 963,171 (137,931) 514,612 443,710 70,902 105,405
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 797,511 (106,179) 755,620 679,118 76,502 68,967
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 595,666 (63,355) 1,206,903 1,119,490 87,413 36,214
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 57,328 (16,537) 356,603 338,531 18,072 0
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Growth Portfolio: 2,138,198 (966,404) 3,326,813 3,149,890 176,923 (285,937)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio: 1,173,212 (3,731,877) 24,333,106 17,577,100 6,756,006 38,038,924
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Calvert Responsibly Invested Balanced Fund: 3,000,539 (425,159) 1,793,014 1,429,393 363,621 2,175,908
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 2,269,871 (994,896) 3,851,613 3,166,678 684,935 2,759,687
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 2,304,888 (707,334) 623,639 453,561 170,078 505,388
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio: 115,737 (82,498) 2,280,928 2,065,136 215,792 163,196
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 955,910 (196,386) 2,016,939 1,797,456 219,483 1,530,985
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 357,388 (910,633) 1,299,964 1,078,898 221,066 285,166
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 219,199 (139,391) 1,105,697 943,071 162,626 223,865
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Franklin Government Securities Trust: 1,223,061 (290,354) 5,788,894 5,646,267 142,627 831,241
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1996 (continued):
5. Supplemental Information to Statements of Operations and Changes in
Net Assets - Year Ended December 31, 1996
<TABLE>
<CAPTION>
Net
Net Unrealized Net Increase(Decrease)
Gain (Loss) Change in In Net Assets Net Assets
End Unrealized from Unit Beginning End
of Year Gain (Loss) Transactions of Year of Year
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Variable Fund: $327,744,944 $60,177,371 $39,664,335
Annuity contracts in accumulation $3,805,891,355 $4,694,078,344
Annuity contracts in payment period 144,049,741 212,746,872
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares: (9,314,233) (12,545,095) (34,151,027)
Annuity contracts in accumulation 380,937,626 354,233,289
Annuity contracts in payment period 5,069,969 5,616,023
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund: (750,036) (9,954,454) 5,744,394
Annuity contracts in accumulation 230,291,686 245,304,466
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 97,219,569 (25,403,034) (7,904,062)
Annuity contracts in accumulation 713,304,833 800,532,626
Annuity contracts in payment period 9,712,862 14,762,802
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series B: 17,286,695 3,862,891 (22,661,545)
Annuity contracts in accumulation 73,136,258 65,062,153
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series C: 2,983,885 2,983,885 195,380,730
Annuity contracts in accumulation 0 199,058,163
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 1,716,824 1,611,419 14,244,294
Annuity contracts in accumulation 4,908,736 21,660,591
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 838,329 769,362 9,552,968
Annuity contracts in accumulation 3,668,757 14,758,921
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 112,482 76,268 6,451,330
Annuity contracts in accumulation 1,919,680 9,067,002
- -----------------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 80,325 80,325 10,514,249
Annuity contracts in accumulation 0 10,653,437
- -----------------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Growth Portfolio: 6,730,808 7,016,745 58,052,710
Annuity contracts in accumulation 38,454,000 104,872,172
- -----------------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio: 39,364,541 1,325,617 77,101,765
Annuity contracts in accumulation 241,246,447 323,871,170
- -----------------------------------------------------------------------------------------------------------------------------------
Calvert Responsibly Invested Balanced Fund: 2,963,927 788,019 7,573,554
Annuity contracts in accumulation 28,688,761 39,989,335
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 10,675,870 7,916,183 58,569,396
Annuity contracts in accumulation 38,023,939 106,469,428
- -----------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 5,256,264 4,750,876 46,205,811
Annuity contracts in accumulation 27,717,728 80,442,047
- -----------------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio: 649,630 486,434 3,994,936
Annuity contracts in accumulation 3,718,987 8,449,388
- -----------------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 2,502,591 971,606 782,358
Annuity contracts in accumulation 14,370,158 17,103,129
- -----------------------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 15,161,493 14,876,327 73,985,256
Annuity contracts in accumulation 30,357,117 118,886,521
- -----------------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 2,304,865 2,081,000 15,496,325
Annuity contracts in accumulation 3,411,144 21,230,903
- -----------------------------------------------------------------------------------------------------------------------------------
Franklin Government Securities Trust: 405,959 (425,282) 664,776
Annuity contracts in accumulation 22,042,115 23,356,943
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1996 (continued):
5. Supplemental Information to Statements of Operations and Changes in
Net Assets - Year Ended December 31, 1996
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Janus Aspen Series:
Aggressive Growth Portfolio: $1,589,459 ($1,739,222) $4,803,682 $3,702,615 $1,101,067
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 238,807 (87,725) 1,671,701 1,511,274 160,427
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 499,929 (72,736) 1,541,843 1,429,353 112,490
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 630,364 (245,877) 1,130,979 963,703 167,276
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Portfolio: 61,378 (14,453) 726,351 729,002 (2,651)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 1,725,690 (1,035,043) 1,942,344 1,492,553 449,791
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 0 (55,554) 905,228 870,164 35,064
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 80,144 (231,100) 7,649,108 6,026,027 1,623,081
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger and Berman Advisers Management Trust -
Growth Portfolio: 8,437,018 (1,199,983) 15,336,623 13,853,081 1,483,542
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund -
International Portfolio: 4,063,525 (2,264,627) 26,981,873 22,523,390 4,458,483
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - Growth Fund: 47,942,547 (4,974,984) 131,517,962 112,052,109 19,465,853
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------------------
Total Variable Annuity Account C $712,854,599 ($93,446,331) $2,060,808,031 $1,547,239,509 $513,568,522
====================================================================================================================================
</TABLE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
Net Net
Unrealized Net Increase (Decrease)
Gain (Loss) Change in In Net Assets Net Assets
Beginning End Unrealized from Unit Beginning End
of Year of Year Gain (Loss) Transactions of Year of Year
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Janus Aspen Series:
Aggressive Growth Portfolio: $13,091,398 $17,668,916 $4,577,518 $79,952,029
Annuity contracts in accumulation $87,395,716 $172,876,567
- ------------------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 60,530 751,567 691,037 12,773,551
Annuity contracts in accumulation 1,505,170 15,281,267
- ------------------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 167,581 140,666 (26,915) 4,046,573
Annuity contracts in accumulation 3,858,123 8,417,464
- ------------------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 145,978 2,192,571 2,046,593 33,135,966
Annuity contracts in accumulation 5,066,487 40,800,809
- ------------------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Portfolio: (354) (6,468) (6,114) 1,108,236
Annuity contracts in accumulation 544,210 1,690,606
- ------------------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 786,497 16,710,390 15,923,893 139,287,080
Annuity contracts in accumulation 16,046,863 172,398,274
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: (46,118) 102,991 149,109 1,627,816
Annuity contracts in accumulation 3,089,046 4,845,481
- ------------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 1,277,740 3,997,171 2,719,431 5,442,307
Annuity contracts in accumulation 14,210,484 23,844,347
- ------------------------------------------------------------------------------------------------------------------------------------
Neuberger and Berman Advisers Management Trust -
Growth Portfolio: 11,656,721 9,459,521 (2,197,200) (937,272)
Annuity contracts in accumulation 89,495,579 95,081,684
- ------------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund -
International Portfolio: 12,783,439 29,299,509 16,516,070 4,017,712
Annuity contracts in accumulation 164,724,583 191,515,746
- ------------------------------------------------------------------------------------------------------------------------------------
TCI Portfolios, Inc. - Growth Fund: 91,671,503 8,139,519 (83,531,984) (57,916,538)
Annuity contracts in accumulation 425,259,499 346,244,393
- ------------------------------------------------------------------------------------------------------------------------------------
Total Variable Annuity Account C $594,083,184 $612,391,085 $18,307,901 $781,800,013 $6,632,117,659 $8,565,202,363
===================================================================================================================================
</TABLE>
<PAGE>
Independent Auditors' Report
The Board of Directors of Aetna Life Insurance and Annuity Company and Contract
Owners of Variable Annuity Account C:
We have audited the accompanying statement of assets and liabilities of Aetna
Life Insurance and Annuity Company Variable Annuity Account C (the "Account") as
of December 31, 1996, and the related statements of operations and 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, 1996. 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, 1996, 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 C
as of December 31, 1996, the results of its operations and the 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, 1996 in conformity with
generally accepted accounting principles.
KPMG Peat Marwick LLP
Hartford, Connecticut
February 14, 1997
<PAGE>
[Aetna Back Cover]
[Aetna Logo]
Retirement Services(SM)
Insurance products offered by Aetna Life Insurance and Annuity Company and
subsidiaries. Mutual funds and variable annuities are available through local
representatives of Aetna Investment Services, Inc., 151 Farmington Avenue,
Hartford, Connecticut 06156.
Visit our home page an the Internet
http://www.aetna.com
These reports are authorized for distribution to other persons only when
preceded or accompanied by an effective prospectus or disclosure booklet for
that product which gives sales expense and other pertinent information.
Printed on recycled paper
ANN.VAC-96
