Prospectus - May 3, 1999
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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
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
Aetna Small Company VP
Aetna Value Opportunity VP
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 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*
Oppenheimer Global Securities Fund/VA
Oppenheimer Strategic Bond Fund/VA
Portfolio Partners MFS Emerging Equities Portfolio
Portfolio Partners MFS Research Growth Portfolio
Portfolio Partners MFS Value Equity Portfolio
Portfolio Partners Scudder International Growth Portfolio
Portfolio Partners T. Rowe Price Growth Equity Portfolio
The Contracts. The contracts described in this prospectus are group or
individual 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 and to 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).
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Why reading this Prospectus is Important. Before you participate in the
contract through your retirement plan, you should read this prospectus. It
provides facts about the contract and its investment options. Plan sponsors
(generally your employer or a trust) 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 3
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Contract Design. The contracts are designed to:
>Help you save for retirement while receiving beneficial tax treatment
>Offer a variety of investment options to help meet long-term financial goals
>Provide a benefit to a beneficiary in the event of death
>Provide future income payments over a lifetime or for a specified period
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 C (the separate account), a
separate account of the Company. Each subaccount invests in one of the mutual
funds (funds) listed on this page. Earnings on amounts invested in a subaccount
will vary depending on the performance and fees of its underlying fund. You do
not invest directly in or hold shares of the funds.
The funds in which the subaccounts invest have various risks. For information
about risks of investing in the funds see "Investment Options" in this
prospectus and each fund prospectus. Retain the fund prospectuses for future
reference.
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.
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* 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 (except loan
repayments that we automatically deposit into the subaccount according to
our loan repayment procedures).
<PAGE>
Prospectus - May 3, 1999 (continued)
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Getting Additional Information. You may obtain the May 3, 1999, Statement of
Additional Information (SAI) by indicating your request on your enrollment
materials or calling the Company at 1-800-525-4225. 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, http://www.sec.gov and may also be
obtained, free of charge, by contacting the SEC Public Reference Room at
202-942-8090. The SAI table of contents is listed on page 46 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
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 from that contained in this prospectus.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
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Contract Overview ............................... 4
Who's Who
The Contract and Your Retirement Plan
Contract Rights
Contract Facts
Contract Phases: Accumulation Phase, Income Phase
Questions: Contacting the Company
Sending Requests in Good Order
- ------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
Fee Table ................................... 6
Condensed Financial Information ............. 10
Investment Options .......................... 10
Transfers ................................... 12
Contract Purchase and Participation ......... 13
Contract Ownership and Rights ............... 14
Right to Cancel ............................. 15
Fees ........................................ 16
Your Account Value .......................... 22
Withdrawals ................................. 24
Loans ....................................... 26
Systematic Distribution Options ............. 26
Death Benefit ............................... 27
Income Phase ................................ 29
Taxation .................................... 33
Other Topics ................................ 40
</TABLE>
The Company - Variable Annuity Account C - Performance Reporting - Voting
Rights - Contract Distribution - Contract Modification - Legal Matters and
Proceedings - Payment Delay or Suspension - Transfer of Ownership; Assignment -
Account Termination - Year 2000 Readiness
<TABLE>
<S> <C>
Contents of the Statement of Additional Information ..................... 46
Appendix I - Guaranteed Accumulation Account ............................ 47
Appendix II - Fixed Account ............................................. 49
Appendix III - Fixed Plus Account ....................................... 51
Appendix IV - Employee Appointment of Employee as Agent ................. 55
Appendix V - Fund Descriptions .......................................... 56
Appendix VI - Condensed Financial Information Table of Contents ......... 59
</TABLE>
3
<PAGE>
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.
Plan Type: We refer to the retirement plan by the Tax Code section under which
it qualifies. For example: a "457 plan" is a plan that qualifies for tax
treatment under code section 457. To learn which code section applies to your
plan, contact your plan sponsor, your Aetna representative or the Company.
Contract Rights: Rights under the contract and who may exercise those rights,
may vary by plan type. Also, while the contract may reserve certain rights for
the contract holder, the contract holder may permit you to exercise those
rights through the plan.
Contract Overview
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The following is a summary. Please read each section of this prospectus for
additional information.
Who's Who
You (the participant)*: The individual who participates in the contract through
a retirement plan.
Plan Sponsor: The sponsor of your retirement plan. Generally, your employer or
a trust.
Contract Holder*: The person 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."
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* Certain contracts are purchased by and issued directly to persons
participating in certain plans. The words "you" and "participant" apply to
these individuals, except that these individuals have all rights under the
contract. The word "contract holder" also applies to these individuals,
except that these individuals have no responsibilities to other participants
or beneficiaries.
Contract Facts
Free look/Right to Cancel: Contract holders may cancel the contract no later
than 10 days after they receive the contract. Participants in 403(b) plans or
in some plans under 401(a)/401(k) or 403(a) may cancel their participation in
the contract no later than 10 days after they receive evidence of participation
in the contract. See "Right to Cancel."
Death Benefit: A beneficiary may receive a benefit in the event of your death
prior to the income phase. Death benefits during the income phase depend on the
payment option selected. See "Death Benefit" and "Income Phase."
Withdrawals: During the accumulation phase, you may, under some plans, withdraw
all or part of your account value. Amounts withdrawn may be subject to an early
withdrawal charge, other deductions, tax withholding and taxation. See
"Withdrawals" and "Taxation."
Systematic Distribution Options: These allow 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."
Taxation: The Tax Code has certain rules that apply to amounts accumulated and
distributed under the contract. Tax penalties may apply if rules are not
followed. See "Taxation."
4
<PAGE>
Contract Phases
I. The Accumulation Phase (accumulating retirement benefits)
<TABLE>
<S> <C>
+--------------+
| Payments to |
STEP 1: You or the contract | Your Account |
holder provide Aetna Life +--------------+
Insurance and Annuity Step 1 [arrow down]
Company with your completed +------------------------------------------+
enrollment materials. | Aetna Life Insurance and Annuity Company |
According to the plan, we set +------------------------------------------+
up one or more accounts for you. a. [arrow down] Step 2 b. [arrow down]
We may set up account(s) for +--------+ +----------------------------+
employer contributions and/or | Fixed | | Variable Annuity |
for contributions from your |Interest| | Account C |
salary. |Options | | |
| | | Variable Investment Options|
STEP 2: The contract holder, +--------+ +----------------------------+
or you if permitted by your The Subaccounts
plan, directs us to invest your +--------+---------+---------+
account dollars in any of the: | A | B | Etc. |
(a) Fixed Interest Options +--------+---------+---------+
(b) Variable Investment Step 2(b)[arrow down]
Options. (The variable investment +--------+---------+---------+
options are the subaccounts of | Mutual | Mutual | Etc. |
Variable Annuity Account B. Each | Fund A | Fund B | |
one invests in a specific mutual +--------+---------+---------+
fund.)
STEP 2(b), continued: The subaccount(s)
selected purchases shares of its
corresponding fund.
</TABLE>
II. The Income Phase The contract offers several payment options (see "Income
Phase.") In general, you may:
> Receive payments over a lifetime or for a specified period
> Receive payments monthly, quarterly, semi-annually or annually
> Select an option that provides a death benefit to beneficiaries
> Select fixed payments or payments that vary based on the performance of the
variable investment options you select.
Questions? Contact your local representative or write or call the Home Office:
Aetna Retirement Services
Annuity Services
151 Farmington Avenue
Hartford, CT 06156-1277
1-800-525-5225
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.
5
<PAGE>
In This Section:
>Maximum Transaction Fees
>Maximum Fees deducted from investments in the Subaccounts
>Fund Fees
>Examples of Fee Deductions
See "Fees" for:
>Early Withdrawal Charge Schedules
>How, When and Why Fees are Deducted
>Reduction, Waiver and/or Elimination of Certain Fees
>Premium and Other Taxes
See "Income Phase" for:
>Fees during the income phase
Fee Table
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The tables and examples in this section show the fees your account may incur
while accumulating dollars under the contract (the Accumulation Phase). See
"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
Transaction Fees
Maximum Early Withdrawal Charge*........................ 5% of amount withdrawn
This is a deferred sales charge. It is a percentage of the amount withdrawn.
The percentage will be determined by the applicable early withdrawal charge
schedule in the "Fees" section. In certain cases this charge may not apply to a
portion or all of your withdrawal. The early withdrawal charge reduces over
time.
Maximum Annual Maintenance Fee*........................................$20.00
Fees Deducted From the Subaccounts
Maximum Amounts*
(Daily deductions equal to the given percentage on an annual basis)
Mortality and Expense Risk Charge.......................................1.25%
Administrative Expense Charge.......................................... 0.25%
-----
Total Separate Account Expenses........................................ 1.50%
=====
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*These fees may be waived, reduced or eliminated in certain circumstances. See
"Fees."
6
<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 the 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, 1998.
<TABLE>
<CAPTION>
Total Fund Net Fund
Annual Annual
Expenses Expenses
Investment Without Total After
Advisory Other Waivers or Waivers and Waivers or
Fees(1) Expenses Reductions Reductions Reductions
------------ ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75%
Aetna Balanced VP, Inc.(3) 0.50% 0.09% 0.59% -- 0.59%
Aetna Bond VP(3) 0.40% 0.10% 0.50% -- 0.50%
Aetna Crossroads VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75%
Aetna Growth VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75%
Aetna Growth and Income VP(3) 0.50% 0.08% 0.58% -- 0.58%
Aetna High Yield VP(2)(3) 0.65% 0.40% 1.05% 0.25% 0.80%
Aetna Index Plus Large Cap VP(2)(3) 0.35% 0.10% 0.45% 0.00% 0.45%
Aetna Index Plus Mid Cap VP(2)(3) 0.40% 0.51% 0.91% 0.31% 0.60%
Aetna Index Plus Small Cap VP(2)(3) 0.40% 0.61% 1.01% 0.41% 0.60%
Aetna International VP(2)(3) 0.85% 1.22% 2.07% 0.92% 1.15%
Aetna Legacy VP(2)(3) 0.60% 0.16% 0.76% 0.00% 0.76%
Aetna Money Market VP(3) 0.25% 0.09% 0.34% -- 0.34%
Aetna Real Estate Securities VP(2)(3) 0.75% 0.73% 1.48% 0.53% 0.95%
Aetna Small Company VP(2)(3) 0.75% 0.14% 0.89% 0.00% 0.89%
Aetna Value Opportunity VP(2)(3) 0.60% 0.14% 0.74% 0.00% 0.74%
AIM V. I. Capital Appreciation Fund(4) 0.62% 0.05% 0.67% -- 0.67%
AIM V. I. Growth Fund(4) 0.64% 0.08% 0.72% -- 0.72%
AIM V. I. Growth and Income Fund(4) 0.61% 0.04% 0.65% -- 0.65%
AIM V. I. Value Fund(4) 0.61% 0.05% 0.66% -- 0.66%
Calvert Social Balanced Portfolio(5) 0.70% 0.18% 0.88% 0.02% 0.86%
Fidelity VIP Equity-Income Portfolio(6) 0.49% 0.09% 0.58% 0.01% 0.57%
Fidelity VIP Growth Portfolio(6) 0.59% 0.09% 0.68% 0.02% 0.66%
Fidelity VIP Overseas Portfolio(6) 0.74% 0.17% 0.91% 0.02% 0.89%
Fidelity VIP II Contrafund Portfolio(6) 0.59% 0.11% 0.70% 0.04% 0.66%
Janus Aspen Aggressive Growth Portfolio(7) 0.72% 0.03% 0.75% 0.00% 0.75%
Janus Aspen Balanced Portfolio(7) 0.72% 0.02% 0.74% 0.00% 0.74%
Janus Aspen Flexible Income Portfolio(7) 0.65% 0.08% 0.73% 0.00% 0.73%
Janus Aspen Growth Portfolio(7) 0.72% 0.03% 0.75% 0.07% 0.68%
Janus Aspen Worldwide Growth Portfolio(7) 0.67% 0.07% 0.74% 0.02% 0.72%
Lexington Natural Resources Trust(8) 1.00% 0.29% 1.29% 0.00% 2.50%
Oppenheimer Global Securities Fund/VA(4) 0.68% 0.06% 0.74% -- 0.74%
Oppenheimer Strategic Bond Fund/VA(4) 0.74% 0.06% 0.80% -- 0.80%
Portfolio Partners MFS Emerging Equities Portfolio (9) 0.68% 0.13% 0.81% 0.00% 0.83%
Portfolio Partners MFS Research Growth Portfolio (9) 0.70% 0.15% 0.85% -- 0.85%
Portfolio Partners MFS Value Equity Portfolio(9) 0.65% 0.25% 0.90% -- 0.90%
Portfolio Partners Scudder International Growth
Portfolio(9) 0.80% 0.20% 1.00% -- 1.00%
Portfolio Partners T. Rowe Price Growth Equity Portfolio(9) 0.60% 0.15% 0.75% -- 0.75%
</TABLE>
7
<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 management 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, 1999
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 portfolio's Total Fund Annual Expenses do not
exceed the percentage reflected under Net fund Annual Expenses After
Waivers or Reductions.
(3) Prior to May 1, 1998, the portfolio's investment adviser provided
administrative services to the portfolio and assumed the portfolio's
ordinary recurring direct costs under an administrative services agreement.
After that date, the portfolio's investment adviser provided administrative
services but no longer assumed all of the porfolio's ordinary recurring
direct costs under an administrative services agreement. The administrative
fee is 0.075% on the first $5 billion in assets and 0.050% on all assets
over $5 billion. The "Other Expenses" shown are not based on actual figures
for the year ended December 31, 1998, but reflect the fee payable under the
new administrative services agreement and estimates the portfolio's
ordinary recurring direct costs.
(4) Fee waiver/expense reimbursement obligations do not apply to these
porfolios.
(5) The figures above are based on expenses for fiscal year 1998, and have been
restated to reflect the elimination of a performance adjustment. The
restatement includes an addition of 0.01% to the portfolio management fee.
Other Expenses reflect an indirect fee of 0.02% relating to an expense
offset arrangement with the portfolio's custodian. Amount shown under Total
Waivers and Reductions reflect a voluntary reduction of fees paid
indirectly.
(6) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds, or the investment adviser
on behalf of certain funds, have entered into arrangements with their
custodian whereby credits realized as a result of uninvested cash balances
were used to reduce custodian expenses. These credits are included under
Total Waivers and Reductions.
(7) All expenses are stated both with and without contractual waivers and fee
reductions by Janus Capital. Fee reductions for the Aggressive Growth,
Balanced, Growth and Worldwide Growth Portfolios reduce the Management fee
to the level of the corresponding Janus retail fund. Other waivers, if
applicable, are first applied against the Management Fee and then against
Other Expenses. Janus Capital has agreed to continue other waivers and fee
reduction until at least the next annual renewal of the advisory agreement.
(8) For 1998, the fund's investment adviser voluntarily agreed to limit the
total expenses of the fund (excluding interest, taxes, brokerage
commissions, and extraordinary expense, but including management fees and
operating expenses) to an annual rate of 2.50% of the fund's average daily
net assets. This voluntary agreement will remain in effect through December
31, 1999.
(9) The investment adviser has agreed to reimburse the portfolios for expenses
and/or waive its fees, so that, through at least April 30, 2000, 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. For the Porfolio
Partners MFS Emerging Equities Portfolio, the Total Fund Annual Expenses
Without Waivers or Reductions for 1998 were less than the percentage
reflected under the Net Fund Annual Expenses After Waivers or Reductions
column. Nevertheless, the investment adviser will waive fees and/or
reimburse expenses if that portfolio's Total Fund Annual Expenses Without
Waivers or Reductions for 1999 exceed the percentage reflected under the
Net Fund Annual Expenses After Waivers or Reductions column.
8
<PAGE>
Hypothetical Examples
Account Fees Incurred Over Time. The following hypothetical examples show the
fees paid over time if $1,000 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% on an annual basis, administrative expense charge
of 0.25% on an annual basis, and a maintenance fee of $20.00 (converted to a
percentage of assets equal to 0.050%). The total annual fund expenses used are
those shown in the column "Total Annual Expenses Without Waivers or Reductions"
in the Fund Expense Table.
- -------------------------------------------
> 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.
- -------------------------------------------
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
--------------------------------------- --------------------------------------
If you leave your entire account
If you withdraw your entire account value invested or if you select an income
value at the end of the periods shown, phase payment option at the end of the
you would pay the following fees, periods shown, you would pay the
including any applicable early following fees (no early withdrawal
withdrawal charge assessed:* 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 $75 $126 $180 $264 $23 $72 $123 $264
Aetna Balanced VP, Inc. $73 $121 $173 $247 $22 $67 $115 $247
Aetna Bond VP $72 $119 $168 $238 $21 $64 $110 $238
Aetna Crossroads VP $75 $126 $180 $264 $23 $72 $123 $264
Aetna Growth VP $75 $126 $180 $264 $23 $72 $123 $264
Aetna Growth and Income VP $73 $121 $172 $246 $22 $67 $114 $246
Aetna High Yield VP $78 $135 $194 $293 $26 $81 $138 $293
Aetna Index Plus Large Cap VP $72 $117 $166 $233 $20 $63 $108 $233
Aetna Index Plus Mid Cap VP $76 $131 $188 $280 $25 $77 $131 $280
Aetna Index Plus Small Cap VP $77 $133 $192 $290 $26 $80 $136 $290
Aetna International VP $87 $163 $241 $388 $36 $111 $187 $388
Aetna Legacy VP $75 $126 $181 $265 $23 $72 $124 $265
Aetna Money Market VP $71 $114 $160 $221 $19 $59 $102 $221
Aetna Real Estate Securities VP $82 $147 $214 $335 $31 $94 $159 $335
Aetna Small Company VP $76 $130 $187 $278 $25 $76 $130 $278
Aetna Value Opportunity VP $75 $126 $180 $263 $23 $72 $123 $263
AIM V.I. Capital Appreciation Fund $74 $124 $176 $255 $23 $69 $119 $255
AIM V.I. Growth Fund $74 $125 $179 $261 $23 $71 $122 $261
AIM V.I. Growth and Income Fund $74 $123 $175 $253 $22 $69 $118 $253
AIM V.I. Value Fund $74 $123 $176 $254 $22 $69 $118 $254
Calvert Social Balanced Portfolio $76 $130 $186 $277 $25 $76 $130 $277
Fidelity VIP Equity-Income Portfolio $73 $121 $172 $246 $22 $67 $114 $246
Fidelity VIP Growth Portfolio $74 $124 $177 $256 $23 $70 $119 $256
Fidelity VIP II Contrafund Portfolio $74 $125 $178 $258 $23 $70 $120 $258
Fidelity VIP Overseas Portfolio $76 $131 $188 $280 $25 $77 $131 $280
Janus Aspen Aggressive Growth Portfolio $75 $126 $180 $264 $23 $72 $123 $264
Janus Aspen Balanced Portfolio $75 $126 $180 $263 $23 $72 $123 $263
Janus Aspen Flexible Income Portfolio $74 $125 $179 $262 $23 $71 $122 $262
Janus Aspen Growth Portfolio $75 $126 $180 $264 $23 $72 $123 $264
Janus Aspen Worldwide Growth Portfolio $75 $126 $180 $263 $23 $72 $123 $263
Lexington Natural Resources Trust $80 $141 $206 $317 $29 $88 $150 $317
Oppenheimer Global Securities Fund/VA $75 $126 $180 $263 $23 $72 $123 $263
Oppenheimer Strategic Bond Fund/VA $75 $127 $183 $269 $24 $73 $126 $269
Portfolio Partners MFS Emerging Equities
Portfolio $75 $128 $183 $270 $24 $74 $126 $270
Portfolio Partners MFS Research Growth
Portfolio $76 $129 $185 $274 $24 $75 $128 $274
Portfolio Partners MFS Value Equity Portfolio $76 $130 $187 $279 $25 $76 $131 $279
Portfolio Partners Scudder International
Growth Portfolio $77 $133 $192 $289 $26 $79 $136 $289
Portfolio Partners T. Rowe Price Growth
Equity Portfolio $75 $126 $180 $264 $23 $72 $123 $264
</TABLE>
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* This example reflects deduction of an early withdrawal charge calculated
using Early Withdrawal Charge Schedule I (based on completed purchase
payment periods.) Schedule I is listed in "Fees." Under that schedule, if
only one $1,000 payment was made as described above, fewer than 5 purchase
payments 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.
** Example B will not apply if during the income phase a nonlifetime payment
option is elected with variable payments and a lump sum payment is
requested within a certain number of years as specified in the contract. In
that case, the lump sum payment is treated as a withdrawal during the
accumulation phase and may be subject to an early withdrawal charge. (Refer
to Example A.)
9
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
Understanding Condensed Financial Information. In Appendix VI, we provide
condensed financial information about the Variable Annuity Account C (the
separate account) subaccounts available under the contracts. These tables show
the values 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 C (the separate account), a
separate account of the Company. Earnings on amounts invested in a subaccount
will vary depending on the performance and fees of its underlying mutual fund.
You do not invest directly in or hold shares of the funds.
>Fund Descriptions. We provide brief descriptions of the funds in Appendix V.
Please refer to the fund prospectuses for additional information. Fund
prospectuses may be obtained, free of charge, by calling the Company at the
telephone number listed on the cover of this prospectus, by contacting the
SEC's website, or by contacting the SEC 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 prospectuses, fixed interest
option appendices and the Guaranteed Accumulation Account prospectus.
- --------------------------------------------------------------------------------
Limits on Option Availability. Some funds and fixed interest options may not be
available through certain contracts and plans, or in some states. We may add,
withdraw or substitute funds, subject to the conditions in the contract and in
compliance with regulatory requirements.
10
<PAGE>
Limits on Number of Options Selected. Generally, the contract holder, or you if
permitted by the plan, may select no more than 18 investment options at one
time during the accumulation phase of your account. If you have an outstanding
loan (403(b) and some 401 or 403(a) plans only), you may currently make a total
of 18 cumulative selections over the life of the account. Each subaccount, the
Fixed Account, Fixed Plus Account, and each classification of the Guaranteed
Accumulation Account selected counts toward these limits. If you have a loan on
the account, each option counts toward the limit, even after the full value is
transferred to other options.
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 payments 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, are 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 in order to identify any conflicts
which may arise and to determine what action, if any, should be taken to
address such conflicts.
11
<PAGE>
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 among investment options. Transfers from fixed
interest options are restricted as outlined in Appendices I, II and III.
Transfers may be requested in writing, by telephone or, where available,
electronically. Transfers must be made in accordance with the terms of the
contract.
Value of Transferred Dollars. The value of amounts transferred in or out of
subaccounts will be based on the subaccount unit values next determined after
we receive your request in good order at our Home Office.
Telephone Transfers: Security Measures. To prevent fraudulent use of telephone
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 transactions. We are not liable for losses resulting
from following telephone 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. Certain contracts allow you to 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."
12
<PAGE>
Contract Purchase and Participation
- --------------------------------------------------------------------------------
Contracts Available for Purchase. The contracts available for purchase are
group or individual deferred annuity contracts that the Company offers in
connection with plans established by eligible organizations under Tax Code
sections 401(a), 401(k), 403(a), 403(b), 414(h) and 457.
ERISA Notification. Some plans under Sections 401, 403(a) and 403(b) are
subject to Title I of the Employee Retirement Income Security Act of 1974
(ERISA) as amended. The contract holder must notify the Company whether Title I
of ERISA applies to the plan.
Purchasing the Contract.
1. The contract holder submits the required forms and application to the
Company
2. We approve the forms and issue a contract to the contract holder
Participating in the Contract.
1. We provide you with enrollment materials for completion and return to us
(occasionally enrollment is conducted by someone unaffiliated with us who
is assisting the contract holder)
2. If your enrollment materials are complete and in good order, we establish
one or more accounts for you. Under certain plans we establish an employee
account for contributions from your salary and an employer account for
employer contributions.
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 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 payments for
longer periods with the permission of the contract holder. If we agree to do
this, we will deposit the 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 payments.
13
<PAGE>
Methods of Payment. The contract may allow one or more of the following payment
methods:
>Lump sum payments--A one-time payment to your account in the form of a
transfer from a previous plan
>Installment payments--More than one payment made over time to your account
The plan and the contract may have certain rules or restrictions that apply to
use of these two methods. For example, we may require that installment payments
meet certain minimums. Under some contracts, we will place the different types
of payments in distinct accounts, where each account will have its own early
withdrawal charge schedule. (See "Fees--Early Withdrawal Charge Schedules")
Allocation of 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
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. (See "Investment Options"
and "Transfers.")
Transfer Credits The Company provides a transfer credit in some cases on
transferred assets, as defined by the Company, subject to certain conditions
and state approvals. 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.")
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?
>Under 457 Plans. The Tax Code requires that 457 plan assets of governmental
employers be held in trust for the exclusive benefit of you and your
beneficiaries. An annuity contract satisfies the trust requirement of the Tax
Code.
>Under 403(b) Plans. Under the contract we may establish one or more accounts
for you. Generally we establish an employee account to receive salary
reduction and rollover amounts and an employer account to receive employer
contributions. You have the right to the value of your employee account and
any employer account to the extent you are vested as interpreted by the
contract holder.
14
<PAGE>
Under 401(a)/401(k) or 403(a) Plans. Under the contract, we may establish one
or more accounts for you. Generally, we establish an employee account to
receive salary reduction and rollover amounts and an employer account to
receive employer contributions. You have the right to the value of your
employee account and any employer account to the extent that you are vested
under the plan as interpreted by the contract holder.
Who Holds Rights under the Contract?
>Under all contracts, except those issued through a voluntary 403(b) plan, the
contract holder holds all rights under the contract. The contract holder may
permit you to exercise some of those rights. For example, the contract holder
may allow you to choose investment options.
>If you participate in the contract through a voluntary 403(b) plan, you hold
all rights under the contract.
Right to Cancel
- --------------------------------------------------------------------------------
When and How to Cancel. If the contract holder chooses to cancel a contract, we
must receive the contract and a written notice of cancellation within 10 days
(or a longer period if required by state law) after the contract holder's
receipt of the contract.
If you wish to cancel participation in the contract and are allowed to do so
under the contract and the plan, you must send the document evidencing your
participation and a written notice of cancellation to the Company within 10
days after you receive confirmation of your participation in the contract.
Refunds. We will produce a refund not later than seven days after we receive
the required documents and written notice in good order at our Home Office. The
refund will equal amounts contributed to the contract or account(s), as
applicable, plus any earnings or less any losses attributable to the investment
options in which amounts were invested. In certain states, we are required to
refund contributions. When a refund of contributions is not required, the
investor bears any investment risk.
15
<PAGE>
Types of Fees
There are three types of fees which you may incur under the contract:
>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 I and II
>Account Year--a 12-month period measured from the date we establish your
account, or measured from any anniversary of that date.
>Contract Year--a 12-month period measured from the date we establish the
contract, or measured from any anniversary of that date.
>Purchase Payment Period (for installment payments under some contracts)-- 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 payments are made. If only
11 payments are made, the payment period is not completed until the twelfth
payment is made. At any given time, the number of payment periods completed can
not 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" section 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. Our remaining
sales and administrative expenses are covered by our general assets which are
attributable in part to the mortality and expense risk charge described below.
Amount: The charge is a percentage of the amount that you withdraw from the
subaccounts, the Fixed Account and the Guaranteed Accumulation Account. We do
not deduct an early withdrawal charge from amounts that you withdraw from the
Fixed Plus Account. The percentage is determined by the early withdrawal charge
schedule that applies to your account. Some of these schedules are listed
below. The charge will never be more than 8.5% of your total payments to the
account.
Early Withdrawal Charge Schedules. You may determine which schedule applies to
you by consulting your certificate, or the contract (held by the contract
holder).
Schedule I. This is the maximum early withdrawal charge schedule under the
contracts. It grades down to zero over a 10-year period, as shown below. Some
contracts have schedules that grade down to zero over fewer than 10 years.
Each contract will specify whether a schedule is based on one of the following:
1) The number of years since the account was established; 2) the number of
years since the contract was established; 3) the number of completed purchase
payment periods.
Unless the contract provides otherwise, the same schedule applies to
installment payments (ongoing contributions) and to single payments (rollovers,
exchanges or other one-time contributions).
Schedule I
<TABLE>
<S> <C>
- ---------------------------------------------------------------------
Payment Periods, Contract Years or
Account Years Completed (depending
on the contract) Early Withdrawal Charge
- ------------------------------------------ ------------------------
Fewer than 5 5%
5 or more but fewer than 7 4%
7 or more but fewer than 9 3%
9 or more but fewer than 10 2%
more than 10 0%
- ---------------------------------------------------------------------
</TABLE>
16
<PAGE>
Schedule II. For contracts where we establish distinct accounts for installment
payments and single payments (defined above), Schedule I applies to installment
payment accounts and Schedule II applies to single payment accounts. As shown
below, Schedule II grades down to zero over a nine-year period as account years
are completed.
Schedule II
<TABLE>
<S> <C>
- ---------------------------------------------------------------------
Account Years Completed Early Withdrawal Charge
- --------------------------------------- ------------------------
Fewer than 5 5%
5 or more but fewer than 6 4%
6 or more but fewer than 7 3%
7 or more but fewer than 8 2%
8 or more but fewer than 9 1%
9 or more 0%
- ---------------------------------------------------------------------
</TABLE>
Early Withdrawal Charge Waivers under all Contracts. These apply to all
contracts. Also read the following two subsections regarding additional
waivers, reduction or elimination of the charge.
This charge is waived for portions of a withdrawal that are:
>Used to provide income payments during the income phase;
>Paid because of your death before income payments begin;
>Paid where your account value is $3,500 or less and no part of the account has
been taken as a withdrawal, used to provide income payments or taken as a loan
within the prior 12 months;
>Taken because of the election of a systematic distribution option (see
"Systematic Distribution Options");
>Taken on or after the tenth anniversary of the effective date of the account;
or
>Taken under accounts with an early withdrawal charge schedule based on
completed payment periods, when you are at least age 591/2 and have completed
at least nine payment periods.
Early Withdrawal Charge Waivers under Certain Contracts. To find out which
waivers apply to the contract issued in connection with your plan, consult the
certificate or the contract (held by the contract holder).
This charge is waived for portions of a withdrawal that are:
>Taken after you have separated from service with your employer. Under certain
contracts, the employer must provide documentation of separation to the
Company;
>Used to purchase an Aetna single premium immediate annuity or other contracts
allowed by the Company, under the condition that you do not cancel the new
contract and obtain a refund during the cancellation period. If you cancel the
new contract, we will reinstate the account under the old contract. The amount
returned to the account from the new contract may then be withdrawn, subject
to any early withdrawal charge that would have applied at the time the new
contract was established;
>Depending on the plan, due to financial hardship or hardship resulting from an
unforeseeable emergency as defined by the Tax Code;
>From contracts used with plans under section 401(a)/401(k), section 403(a) or
section 403(b) of the Tax Code, that is not more than 10% of your
17
<PAGE>
account value and is the first partial withdrawal in a calendar year. To
qualify for this waiver you must be between the ages of 59-1/2 and 70-1/2 and
cannot have elected the systematic withdrawal option. Any outstanding loans
are not included in the account value when determining the 10% amount. This
waiver does not apply to full withdrawals or to a withdrawal due to a loan
default;
>Withdrawn due to the transfer of your account value to another of the
retirement products the Company offers under the contract holder's plan,
subject to various conditions agreed to by the contract holder and the
Company; or
>When we terminate an account under the circumstances described in "Other
Topics--Account Termination."
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
>Our assessment of financial risk to the Company relating to withdrawals
>Whether the contract results from the exchange of another contract issued by
the Company to the same plan sponsor
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.
18
<PAGE>
Reduction for Certain New York Contracts. For master 403(b) plan contracts
issued after July 29, 1993 in New York, in addition to waivers or reductions
that we grant, the state of New York requires a reduced early withdrawal charge
schedule for withdrawals from the Guaranteed Accumulation Account. The schedule
grades down over a seven-year period as account years are completed, as shown
in the table below.
<TABLE>
<S> <C>
- ---------------------------------------------------------------------
Completed Account Years Early Withdrawal Charge
- --------------------------------------- ------------------------
Fewer than 3 5%
3 or more but fewer than 4 4%
4 or more but fewer than 5 3%
5 or more but fewer than 6 2%
6 or more but fewer than 7 1%
7 or more 0%
- ---------------------------------------------------------------------
</TABLE>
Maintenance Fee
Maximum Amount: $20.00
When/How: For those plans that have a maintenance fee, each year during the
accumulation phase we deduct this fee 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.
We do not deduct this fee from a single payment account. Under some plans we
deduct the maintenance fee from both employer and employee accounts. Under some
installment plans, your employer elects whether the fee is deducted from the
employee account, employer account, or a portion from each. The Company may
send a bill to your employer at or prior to such deduction.
Purpose: This fee helps defray the administrative expenses we incur in
establishing and maintaining your account.
Reduction or elimination: When a 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 to which a contract is issued;
>The expected level of assets under the plan. Under some contracts, we may
aggregate accounts under different contracts issued by the Company to the same
contract holder;
>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;
>The number of eligible participants and the program's participation rate.
Due to factors on which the maintenance fee is based, it is possible that it
may increase or decrease from year to year as the characteristics of the group
changes.
We will not unfairly discriminate against any group if we reduce or eliminate
the maintenance fee. We will make any reduction according to our own rules in
effect at the time we approve the application for a contract. We reserve the
right to change these rules from time to time.
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<PAGE>
II. Fees Deducted from the Subaccounts
Mortality and Expense Risk Charge
Maximum Amount: 1.25% annually of your account value invested in the
subaccounts.
When/How: This fee is deducted daily from the subaccounts. We do not deduct
this from any fixed interest option.
Purpose: The 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 payments based on annuity rates specified in the contracts and our
funding of the death benefits 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. Any reduction will reflect differences in
expenses for administration based on such factors as:
>The expected level of assets under the plan. Under some contracts, we may
aggregate accounts under different contracts issued by the Company to the same
contract holder.
>The size of the prospective group, projected annual number of eligible
participants and the program's participation rate.
>The plan design. For example, the plan may favor stability of invested assets
and limit the conditions for withdrawals, loans and available investment
options, which in turn lowers administrative expenses.
>The frequency, consistency and method of submitting payments and loan
repayments.
>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.
>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
contract application is approved. We reserve the right to change these rules
from time to time. Under some contracts we will reassess and increase or
decrease this fee each year on the anniversary of the date the contract was
established.
20
<PAGE>
Administrative Expense Charge
Maximum Amount: 0.25% annually of your account value invested in the
subaccounts.
When/How: For all participants who became covered under a contract on or after
November 5, 1984, we reserve the right to charge an administrative expense
charge of up to 0.25% annually. We are currently deducting this charge under
the contracts issued to some plans. If charged, this fee is deducted daily from
the subaccounts. We do not deduct this from any fixed interest option. This fee
may be assessed during the accumulation phase and/
or the income phase. 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 to you during the entire income phase.
Purpose: This fee helps defray our administrative expenses that cannot be
covered by the mortality and expense charge described above. The fee is not
intended to exceed our average expected cost of administering the contracts. We
do not expect to make a profit from this fee.
Reduction: Under some contracts, if we charge the administrative expense
charge, we may reduce it from the maximum when the plan meets certain criteria
and we agree to the reduction with the contract holder, in writing. The level
of the fee may be reassessed and increased or decreased at each contract
anniversary as the characteristics of the group change.
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 fund's investment advisor and operating
expenses.
IV. 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 on the
jurisdiction.
When/How: We reserve the right to deduct premium taxes from your account value
or from payments to the 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.")
21
<PAGE>
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)
>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 C 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 expense 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
federal income tax liability offset by foreign tax credits to the extent
allowed);
>Divided by the total value of the subaccount's units at the preceding
valuation;
>Minus a daily deduction for the mortality and expense risk charge and the
administrative expense charge (if any). See "Fees."
The net investment rate may be either positive or negative.
22
<PAGE>
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.
<TABLE>
<S> <C>
+-------------------+
|$5,000 contribution|
+-------------------+
Step 1: An Investor Step 1 [arrow down]
contributes $5000 +----------------------------------------+
|Aetna Life Insurance and Annuity Company|
+----------------------------------------+
Step 2: Step 2 [arrow down]
+----------------------------------------+
A. He directs us to invest | Variable Annuity Account C |
$3,000 in Fund A. His +---------------+-----------------+------+
dollars purchase 300 | Subaccount A | Subaccount B | Etc. |
accumulation units of | 300 | 80 | |
Subaccount A ($3,000 | accumulation | accumulation | |
divided by the current | units | units | |
$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 Step 3 [arrow down]
then purchases shares of the +------+ +------+
applicable funds at the |Fund A| |Fund B|
current market value (NAV). +------+ +------+
</TABLE>
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.
23
<PAGE>
Payments to Your Account. If all or a portion of initial 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, as described in "Contract Purchase and Participation." Subsequent
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.
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")
>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."
Withdrawals
- --------------------------------------------------------------------------------
Making a Withdrawal. Subject to limitations on withdrawals from the fixed
interest options and other restrictions (see "Withdrawal Restrictions" below),
the contract holder, or you if permitted by the plan, may withdraw all or a
portion of your account value 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
o 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 the Fixed Account, minus any applicable early withdrawal
charge, plus the amount available for withdrawal from the Fixed Plus
Account.
o 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 adjustments 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 options. If this is not specified, we will withdraw dollars
proportionally from each investment option in which you have an account value.
>Properly complete a disbursement form and submit it to the 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, we will send your payment not later
than seven calendar days following our receipt of your disbursement form in
good order.
24
<PAGE>
Reinvestment Privilege (not applicable to contracts under 457 plans). Some
contracts allow one-time use of a reinvestment privilege. Within 30 days after
a full withdrawal, if allowed by law and the contract, you may elect to
reinvest all or a portion of the proceeds. We must receive reinvested amounts
within 60 days of the withdrawal. We will credit the account for the amount
reinvested based on the subaccount values next computed following our receipt
of your request and the amount to be reinvested. We will credit the amount
reinvested proportionally for maintenance fees and early withdrawal charges
imposed at the time of withdrawal. We will deduct from the amounts reinvested
any maintenance fee which fell due after the withdrawal and before the
reinvestment. We will reinvest in the same investment options and proportions
in place at the time of withdrawal. Special rules apply to reinvestments of
amounts withdrawn from the Guaranteed Accumulation Account (see Appendix I).
Seek competent advice regarding the tax consequences associated with
reinvestment.
Withdrawal Restrictions. Some plans may have other limits on withdrawals, other
than or in addition to those listed below.
>Section 403(b)(11) of the Tax Code generally prohibits withdrawal under 403(b)
contracts prior to your death, disability, attainment of age 591/2, separation
from service or financial hardship, of the following:
(1) Salary reduction contributions made after December 31, 1988 and;
(2) Earnings on those contributions and earnings on amounts held before 1989
and credited after December 31, 1988.
>401(k) plans generally prohibit withdrawal of salary reduction contributions
and associated earnings prior to your death, disability, attainment of age
59-1/2, separation from service, or financial hardship. Income attributable to
salary reduction contributions and credited on or after January 1, 1989 may
not be distributed in the case of hardship.
>The contract may require that the contract holder certify that you are
eligible for the distribution.
>If you are married and covered by an ERISA plan, the contract holder must
provide certification that Retirement Equity Act requirements have been met.
>Participants in Ball State University Alternate Pension Plan--The portion of
your account value attributable to employer contributions and applicable
earnings may not be withdrawn unless your employment is terminated with Ball
State University, or you have died, retired or separated from service. The
contract holder may withdraw the employer account value, and you may transfer
employer account values pursuant to an IRS Revenue Ruling 90-24 transfer,
without regard to this restriction. No early withdrawal charge will apply to
the first 20% of the employer account value transferred via a 90-24 transfer
in a calendar year. This waiver does not apply to a 90-24 transfer of the full
employer account value.
>Participants in Texas Optional Retirement Program--You may not receive any
distribution before retirement, except upon becoming totally disabled or
terminating employment with Texas public institutions of higher learning.
Conditions under which you may exercise the right to withdraw and the right to
advance the date on which an income phase payment option is to begin are
limited. These restrictions are imposed by reason of the Texas Attorney
General's interpretation of Texas law.
25
<PAGE>
Loans
- --------------------------------------------------------------------------------
Availability. For certain 403(b) plans and some 401(a)/401(k) and 403(a) plans,
if allowed by the contract and the plan, you may take out a loan from your
account value during the accumulation phase. Some contracts restrict loans from
your employer account. Loans are only allowed from amounts allocated to certain
subaccounts and fixed interest options. Additional restrictions may apply under
the Tax Code or due to our administrative practices.
Requests. If you are eligible to obtain a loan, you may request one by properly
completing the loan request form and submitting it to our Home Office. Read the
terms of the loan agreement before submitting any request.
Features of a Systematic Distribution Option (SDO)
If available under your plan, an SDO allows you to receive regular payments
from your account without moving into the income phase. By remaining in the
accumulation phase, you retain certain rights and investment flexibility not
available during the income phase. Because the account remains in the
accumulation phase, all accumulation phase charges continue to apply.
Systematic Distribution Options
- --------------------------------------------------------------------------------
Availability of Systematic Distribution Options (SDOs) 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 SDOs are available, check with the
contract holder or the Company. The Company reserves the right to discontinue
the availability of one or all of the SDOs at any time, and/or to change the
terms for future elections.
SDOs currently available under the contract include the following:
>SWO--Systematic Withdrawal Option. SWO is a series of partial withdrawals from
your account based on a payment method you select. It is designed for those
who want a periodic income while retaining accumulation phase investment
flexibility for amounts accumulated under the account. (This option may not be
available if you have an outstanding loan.)
>ECO--Estate Conservation Option. Also allows you to maintain the account in
the accumulation phase and provides periodic payments designed to meet the Tax
Code's minimum distribution requirement.
Under ECO, the Company calculates the minimum distribution amount required
by law at age 70-1/2 (for certain plans, 70-1/2 or retirement, if later) and
pays you that amount once a year.
For certain contracts issued in the state of New York, no market value
adjustment is imposed on ECO withdrawals from the Guaranteed Accumulation
Account.
>Other SDOs may be available from time to time. Additional information relating
to any of the SDOs may be obtained from your local representative or from the
Company's Home Office.
Electing an SDO. The contract holder, or you if permitted by the plan, makes
the election of an SDO. For some contracts, the contract holder must provide
the Company with certification that the distribution is in accordance with
terms of the plan.
Terminating an SDO. Once you elect an SDO, except for accounts that are part of
457 plan contracts, you may revoke it at any time through a written request to
our Home Office. Once revoked, an option may not be elected again, nor may any
other SDO be elected, unless the Tax Code permits it.
26
<PAGE>
Tax Consequences. Withdrawals received through these options may have tax
consequences. See "Taxation."
During the Income Phase
This section provides information about the accumulation phase. For death
benefit information applicable to the income phase (see "Income Phase").
Death Benefit
- --------------------------------------------------------------------------------
The contract provides a death benefit in the event of your death, which is
payable to the beneficiary named under the contract (contract beneficiary).
>Under contracts issued in connection with most types of plans except voluntary
403(b) plans, the contract holder must be named as the contract beneficiary,
but may direct that we make any payments to the beneficiary you name under the
plan (plan beneficiary).
>Under contracts issued in connection with voluntary 403(b) plans, you may
generally designate your own contract beneficiary, who will normally be your
plan beneficiary as well.
During the Accumulation Phase
Payment Process
1. Following your death, the contract beneficiary (on behalf of the plan
beneficiary if applicable), 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 distributions will be made.
Benefit Payment Options. The following payment options are available, if
allowed by the Tax Code:
>Lump-sum payment
>Payment under an available income phase payment option (see "Income
Phase--Payment Options")
If the contract beneficiary or plan beneficiary is your spouse, payment
under an available systematic distribution option (not available under all
plans)
The following options are also available under some contracts, however, the Tax
Code limits how long the death benefit proceeds may be left in these options:
>Leaving the account value invested in the contract
>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 currently credited on such deposits.
The balance on deposit can be withdrawn at any time or paid in accordance with
any of the available income phase payment options (see "Income Phase--Payment
Options").
27
<PAGE>
Death Benefit Calculation. For most contracts the death benefit will be based on
your account value. 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.
The death benefit is calculated as of the next time we value your account
following the date on which we receive proof of death and payment request in
good order. In addition to this amount, some states require we pay interest
calculated from date of death at a rate specified by state law.
Some contracts provide a guaranteed death benefit if the contract beneficiary
(on behalf of the plan beneficiary, if applicable) elects a lump-sum
distribution or an income phase payment option within six months of your death.
For those contracts, the guaranteed death benefit is the greater of :
(a) Your account value on the day that notice of death and request for payment
are received in good order at our Home Office, plus any positive aggregate
market value adjustment that applies to amounts allocated to the GAA
(b) The sum of payments (minus any applicable premium tax) made to your
account, minus withdrawals made from your account and any outstanding loan
amount.
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.
28
<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
Income Phase
- --------------------------------------------------------------------------------
During the income phase you receive payments from your accumulated account
value.
Initiating 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
>Payment option (see the payment options table in this section)
>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)
>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 payments. Once a payment option is
selected, it may not be changed; however, certain options allow you to withdraw
a lump sum.
What Affects Payment Amounts? Some of the factors that may affect payment
amounts include: your age, your account value, the payment option selected,
number of guaranteed payments (if any) selected, and whether you select
variable or fixed payments.
Fixed Payments. Amounts funding fixed payments will be held in the Company's
general account. Fixed payments will remain the same over time.
Variable Payments. Amounts funding your income phase payments will be held in
the subaccount(s) selected, or a combination of subaccounts and fixed interest
options. Some contracts restrict the subaccounts available, the number of
investment options to be selected and how many transfers, if any, are allowed
among options. For variable payments, an assumed net investment rate must be
selected.
Payments from the Fixed Plus Account. Under some contracts, 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. For variable payments, an assumed net investment
rate must be selected. If you select a 5% rate, your first payment will be
higher, but subsequent payments will increase only if the investment
performance of the subaccounts you 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 you select a 3-1/2% rate, your first payment will be lower and subsequent
payments will increase more rapidly or decline more slowly depending on the
investment performance of the subaccounts you selected. For more information
about selecting an assumed net investment rate, request a copy of the Statement
of Additional Information by calling the Company. (see "Contract
Overview--Questions").
29
<PAGE>
Selecting an Increasing Payment. Under certain payment options, if you select
fixed payments, some contracts will allow you to elect an increase of one, two,
or three percent, compounded annually. The higher your percentage, the lower
your initial payment will be, while future payments will increase each year at
a greater rate. Generally, this feature is not available with cash refund
payment options and nonlifetime options.
Fees Deducted
>If variable payments are elected, we make a daily deduction for mortality and
expense risks from any amounts held in the subaccounts. The maximum mortality
and expense risk charge during the income phase is 1.25% on an annual basis.
Under some contracts, we may reduce this fee based on certain factors. (See
"Fees--Mortality and Expense Risk Charge.")
>We may also deduct a daily administrative charge from amounts held in the
subaccounts. 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. 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.
Required Minimum Payment Amounts. The initial payment or the annual payment
total must meet the minimums stated in the contract. If your account value is
too low to meet these minimum payment amounts, you will receive one lump sum
payment.
Death Benefit During the Income Phase. The death benefits that may be available
to a beneficiary are outlined in the 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 and the payment request
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.")
30
<PAGE>
Payment Options
The following tables list the payment options and accompanying death benefits
which may be available under the contracts. Some contracts restrict the options
and the terms available. Refer to your certificate or check with your contract
holder for details. We may offer additional 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.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Lifetime Payment Options
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Length of Payments: For as long as the annuitant lives. It is possible that only one payment will
Life Income be made should the annuitant die prior to the second payment's due date.
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 your
Life Income-- choice of 5-30 years or as otherwise specified in the contract.
Guaranteed Pay- Death Benefit--Payment to the Beneficiary: If the annuitant dies before we have made all the
ments guaranteed payments, we will pay the beneficiary a lump-sum (unless otherwise requested) 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:
Life Income--Two (a) When you select this option you choose for 100%, 662/3% or 50% of the payment to continue
Lives after the first death; or
(b) 100% of the payment to continue on the second annuitant's death, and 50% of the payment
to continue on the annuitant's death.
Death Benefit--None: All payments end after the death of both annuitants.
- -----------------------------------------------------------------------------------------------------------------------------------
Length of Payments: For as long as either annuitant lives, with payments guaranteed from 5 to
30 years, or as otherwise specified in the contract.
Life Income--Two Continuing Payments: 100% of the payment to continue after the first death.
Lives--Guaranteed Death Benefit--Payment to the Beneficiary: If both annuitants die before the guaranteed pay-
Payments ments have all been paid, we will pay the beneficiary a lump-sum (unless otherwise requested)
equal to the present value of the remaining guaranteed payments.
- -----------------------------------------------------------------------------------------------------------------------------------
Life Income--Cash Length of Payments: For as long as the annuitant lives.
Refund Option Death Benefit--Payment to the Beneficiary: Following the annuitant's death, we will pay a lump
(limited sum payment equal to the amount originally applied to the payment option (less any premium
availability-- tax) and less the total amount of fixed payments paid.
fixed payment
only)
- -----------------------------------------------------------------------------------------------------------------------------------
Life Income--Two Length of Payments: For as long as either annuitant lives.
Lives--Cash Continuing Payment: 100% of the payment to continue after the first death.
Refund Option Death Benefit--Payment to the Beneficiary: When both annuitants die, we will pay a lump sum
(limited payment equal to the amount applied to the payment option (less any premium tax) and less
availability--fixed the total amount of fixed payments paid.
payment only)
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Table continued [arrow right]
31
<PAGE>
Payment options continued
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Nonlifetime Payment Options (1)
<S> <C>
- -----------------------------------------------------------------------------------------------------------------------------------
Length of Payments: Payments will continue for the number of years you choose, based on what is
available under the contract. Under some contracts, 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
Nonlifetime-- years. In certain cases a lump sum 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 pay the beneficiary a lump sum (unless otherwise requested) equal
to the present value of the remaining guaranteed payments, and we will not impose any early
withdrawal charge.
- -----------------------------------------------------------------------------------------------------------------------------------
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 sum. A lump sum elected before three or five
years of payments have been completed as specified by the contract 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 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 the Home Office.
Calculation of Lump Sum Payments: If a lump sum payment is available to a beneficiary or to you in the 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 3-1/2% or 5% assumed net investment rate for variable
payments).
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For contracts issued to the State of Montana and Board of Trustees,
University of Illinois the Nonlifetime option is available only with fixed
payments.
32
<PAGE>
In This Section
I. Introduction
II. Your Retirement Plan
III. Withdrawals and other Distributions
o Taxation of Distributions
o 10% Penalty Tax
o Withholding
IV. Minimum Distribution Requirements
o 50% Excise Tax
V. Rules Specific to Certain Plans
o Code Section 457 Plans
o Code Section 403(b) Plans
o Code Section 401(a), 401(k) and 403(a) Plans
o 415(m) Arrangements
o Bona Fide Severance Pay Plans
VI. Taxation of the Company
When consulting a tax advisor, be certain that he or she has expertise in the
Tax Code sections applicable to your tax concerns.
Taxation
- --------------------------------------------------------------------------------
I. 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.
- --------------------------------------------------------------------------------
II. 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 retirement plans that qualify
under code sections 401(a), 401(k), 403(a), 403(b) or 457. A code section 457
plan may be either a 457(b) (eligible) plan or a 457 (f) (ineligible) plan. The
contract may also be used with code section 415(m) arrangements.
The Contract and Retirement Plans. 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.
III. 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,
rollovers and any death benefit.
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.
33
<PAGE>
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.
401(a), 401(k), 403(a) or 403(b) Plans. All distributions from these plans are
taxed as received unless:
>The distribution is rolled over to another plan of the same type or to a
traditional individual retirement annuity/account (IRA) in accordance with the
Tax Code, or
>You made after-tax contributions to the plan. In this case, depending on the
type of distribution, a portion may be excluded from gross income according to
rules detailed in the Tax Code.
Taxation of Death Benefits
In general, payments received by your beneficiaries after your death are taxed
in the same manner as if you had received those payments.
10% Penalty Tax
The Tax Code imposes a 10% penalty tax on the taxable portion of any
distribution from a 401(a), 401(k) or 403(b) plan, unless one or more of the
following have occurred:
(a) You have attained age 59-1/2;
(b) You have become permanently disabled;
(c) You have died;
(d) You have separated from service with the plan sponsor at or after age 55;
(e) The distribution amount is rolled over into another plan of the same type
or to an IRA in accordance with the terms of the Tax Code; or
(f) The distribution amount is made in substantially equal periodic payments
(at least annually) over your life or life expectancy or the joint lives
or joint life expectancies of you and your beneficiary. Also, you must
have separated from service with the plan sponsor.
In addition, the penalty tax does not apply for the amount of a distribution
equal to unreimbursed medical expenses incurred by you that qualify for
deduction as specified in the Tax Code. The Tax Code may impose other penalty
taxes in other circumstances.
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.
401(a), 401(k), 403(a) or 403(b) Plans. Generally, under these plans you or a
beneficiary may elect not to have tax withheld from distributions. However,
certain distributions from these plans are subject to a mandatory 20% federal
income tax withholding.
457 Plans. All distributions from a 457 plan, except death benefits, 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.
34
<PAGE>
IV. 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 do not
apply to 457(f) 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
>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 1st
of the calendar year following the calendar year in which you attain age
70-1/2, or
>Under 403(b) plans, if you had amounts under the contract as of December 31,
1986. In this case, distribution of these amounts generally must begin by the
end of the calendar year in which you attain age 75 or retire, if later.
However, if you take any distributions in excess of the minimum required
amount, then special rules require that some or all of the December 31, 1986
balance be distributed earlier.
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 (457(b) Plan Only). 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 Benefits. The following applies to all plans
except 457(f) 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:
>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.
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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, 1999, your entire balance must be
distributed to the beneficiary by December 31, 2004. However, if the
distribution begins by 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
>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
>December 31 of the calendar year in which you would have attained age 70-1/2.
V. Rules Specific to Certain Plans
457 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. The plan may either be 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.
457(b) Plan. A 457(b) plan is subject to restrictions on contributions and
distributions.
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.
The Contract. We make this contract available to plans subject to code section
457 only if a governmental employer sponsors the plan.
Trust Requirement. 457(b) plans maintained by state or local governments, their
political subdivisions, agencies, instrumentalities and certain affiliates are
required to hold all assets and income of the plan in trust for the exclusive
benefit of plan participants and their beneficiaries. For purposes of meeting
this requirement, custodial accounts and annuity contracts are treated as
trusts.
Contributions Excluded from Gross Income. 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).
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Restrictions on Distributions. 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.
403(b) Plans
Under code section 403(b), contributions made by public school systems or
nonprofit healthcare organizations and other Section 501(c)(3) tax exempt
organizations to purchase annuity contracts for their employees are generally
excludable from the gross income of the employee. Adverse tax consequences to
the plan and/or to you may result if your beneficial interest in the contract
is assigned or transferred to any person except to an alternate payee under a
qualified domestic relations order in accordance with code section 414(p) or to
the Company as collateral for a loan.
Exclusions from Gross Income. In order to be excludable from gross income,
total annual contributions made by you and your employer cannot exceed the
lesser of the following limits set by the Tax Code.
>The first limit, under code section 415, is generally the lesser of 25% of
your compensation or $30,000. Compensation means your compensation from the
employer sponsoring the plan and, for years beginning after December 31, 1997,
includes any elective deferrals under code section 402(g) and any amounts not
includible in gross income under code section 125 or 457.
>The second limit, which is the exclusion allowance under code section 403(b),
is usually calculated according to a formula that takes into account your
length of employment, any pretax contributions you and your employer have
already made under the plan, and any pretax contributions to certain other
retirement plans.
These two limits apply to your contributions as well as to any contributions
made by your employer on your behalf.
>An additional limit specifically limits your salary reduction contributions to
generally no more than $10,000 annually (subject to indexing). Your own limit
may be higher or lower, depending on certain conditions.
Payments to your account(s) will be excluded from your gross income only if the
plan meets certain nondiscrimination requirements.
Restrictions on Distributions. Code section 403(b)(11) restricts the
distribution under Section 403(b) contracts of:
>salary reduction contributions made after December 31, 1988;
>earnings on those contributions; and
>earnings during such period on amounts held as of December 31, 1988.
Distribution of those amounts may only occur upon your death, attainment of age
59-1/2, separation from service, disability, or financial hardship. Income
attributable to salary reduction contributions and credited on or after January
1, 1989 may not be distributed in the case of hardship.
Transfers from 403(b)(7) Custodial Accounts. If, pursuant to Revenue Ruling
90-24, the Company agrees to accept, under any of the contracts, amounts
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transferred from a code section 403(b)(7) custodial account, such amounts will
be subject to the withdrawal restrictions set forth in code section
403(b)(7)(A)(ii).
Taxation of Gains Prior to Distribution. Generally no amounts accumulated under
the contract will be taxable prior to the time of actual distribution.
However, the IRS has stated in published rulings that a variable contract
owner, including participants under code section 403(b) plans, will be
considered the owner of separate account assets if the contract owner possesses
incidents of investment control over the assets. In these circumstances, income
and gains from the separate account assets would be currently includible in the
variable contract owner's gross income.
The Treasury announced that it will issue guidance regarding the extent to
which owners could direct their investments among subaccounts without being
treated as owners of the underlying assets of the separate account. It is
possible that the Treasury's position, when announced, may adversely affect the
tax treatment of existing contracts. The Company therefore reserves the right
to modify the contract as necessary to attempt to prevent the owner from being
considered the federal tax owner of a pro rata share of the assets of the
separate account.
401(a), 401(k) and 403(a) Plans
Code sections 401(a), 401(k) and 403(a) permit certain employers to establish
various types of retirement plans for employees, and permit self-employed
individuals to establish various types of retirement plans for themselves and
for their employees. These retirement plans may permit the purchase of the
contracts to accumulate retirement savings under the plans.
Assignment or Transfer of Contracts. Adverse tax consequences to the plan
and/or to you may result if your beneficial interest in the contract is
assigned or transferred to persons other than: a plan participant as a means to
provide benefit payments; an alternate payee under a qualified domestic
relations order in accordance with code section 414(p); or to the Company as
collateral for a loan.
Exclusion From Gross Income. The Tax Code imposes a maximum limit on annual
payments to your account(s) that may be excluded from gross income. The
employer must calculate this limit under the plan in accordance with code
section 415. This limit is generally the lesser of 25% of your compensation or
$30,000. Compensation means your compensation from the employer sponsoring the
plan and, for years beginning after December 31, 1997, includes any elective
deferrals under code section 402(g) and any amounts not includible in gross
income under code sections 125 or 457. The limit applies to your contributions
as well as any contributions made by your employer on your behalf. There is an
additional limit that specifically limits your salary reduction contributions
under a 401(k) plan to generally no more than $10,000 annually (subject to
indexing). Your own limits may be higher or lower, depending on certain
conditions. In addition, payments to your account(s) will be excluded from your
gross income only if the plan meets certain nondiscrimination requirements.
Restrictions on Distributions. Code section 401(k) restricts distribution from
your 401(k) employee account, and possibly all or a portion of your 401(k)
employer account if such amounts are included in determining compliance with
certain nondiscrimination requirements under the Tax Code.
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Subject to the terms of the 401(k) plan, distribution of these restricted
amounts may only occur upon: retirement, death, attainment of age 59-1/2,
disability, separation from service, financial hardship, termination of the
plan in certain circumstances, or, generally, if your employer is a corporation
and disposes of substantially all of its assets or disposes of a subsidiary. In
addition, income attributable to salary reduction contributions and credited on
or after January 1, 1989, may not be distributed in the case of hardship.
Code Section 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
"Contributions Excluded from Taxable Income" 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 generally not taxable until paid or made available to you.
However, 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.
VI. Taxation of the Company
We are taxed as a life insurance company under the Tax Code. Variable Annuity
Separate Account C 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.
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Other Topics
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The Company
Aetna Life Insurance and Annuity Company (the Company, we) 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 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 C
We established Variable Annuity Account C (the "separate account") in 1976 as a
segregated asset account to fund our variable annuity contracts. The separate
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
>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.
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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 separate account. Generally, under contracts
issued in connection with section 403(b), 401 or 403(a) plans, you have a fully
vested interest in the value of your employee account, and in your employer
account to the extent of your vested percentage in the plan. Therefore, under
such plans you generally have the right to instruct the contract holder how to
direct us to vote shares attributable to your account. Under contracts issued
in connection with section 457 plans, the contract holder retains 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 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, whole and fractional, any person is entitled to direct
will be determined as of the record date set by any fund in which that person
invests through the subaccounts.
>During the accumulation phase the number of votes is equal to the portion of
your 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
under 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."
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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 a maximum
of 7% 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 names 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.
>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, and under some contracts, to
discontinue accepting payments to existing accounts. Certain changes will
require the approval of appropriate state or federal regulatory authorities.
In addition, under some contracts we reserve the right, without contract holder
consent, to change the tables for determining the amount of income payments or
the income payment options available. Such a change would only apply to income
payments attributable to contributions accepted after the date of change.
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Legal Matters and Proceedings
We are aware of no material legal proceedings pending which involve the
separate account or the Company 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.
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), or when trading on the Exchange
is restricted;
(b) when an emergency exists as determined by the SEC so that disposal of
securities held in the subaccounts is not reasonably practicable or it is
not reasonably practicable for us fairly to determine the value of the
subaccount's assets;
(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.
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.
Account Termination
Under some contracts, where allowed by state law, we reserve the right to
terminate an individual account if the account value is less than $3,500 and
this value is not due to negative investment performance. We will notify you or
the contract holder 90 days prior to terminating the account. If we exercise
this right we will not deduct an early withdrawal charge.
Year 2000 Readiness
As a healthcare and financial services enterprise, Aetna Inc. (referred to
collectively with its affiliates and subsidiaries as "Aetna"), is dependent on
computer systems and applications to conduct its business. Aetna has developed
and is currently executing a comprehensive risk-based plan designed to make its
mission-critical information technology (IT) systems and embedded systems Year
2000 ready. The plan for IT systems covers five stages including (i)
assessment, (ii) remediation, (iii) testing, (iv) implementation and (v) Year
2000 approval. At year end 1997, Aetna, including the Company, had
substantially completed the assessment stage. The remediation of mission-
critical IT systems was completed year end 1998. Testing of all
mission-critical IT systems is underway with Year 2000 approval targeted for
completion by mid-1999. The costs of these efforts will not affect the separate
account.
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The Company, its affiliates and the mutual funds that serve as investment
options for the separate account also have relationships with investment
advisers, broker dealers, transfer agents, custodians or other securities
industry participants or other service providers that are not affiliated with
Aetna. Aetna, including the Company, has initiated communication with its
critical external relationships to determine the extent to which Aetna may be
vulnerable to such parties' failure to resolve their own Year 2000 issues.
Aetna and the Company have assessed and are prioritizing responses in an
attempt to mitigate risks with respect to the failure of these parties to be
Year 2000 ready. There can be no assurance that failure of third parties to
complete adequate preparations in a timely manner, and any resulting systems
interruptions or other consequences, would not have an adverse effect, directly
or indirectly, on the separate account, including, without limitation, its
operation or the valuation of its assets and units.
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OREGON EDUCATION ASSOCIATION CHOICE PERSONAL BENEFIT TRUST ("OEA TRUST")
AND THE COMPANY'S AGREEMENT
Under past and current agreements, the OEA Trust exclusively endorses our tax
deferred variable annuity and other related investment products for sale to its
members. Under the current agreement the OEA Trust agrees to:
>facilitate Oregon Education Association ("OEA") members' access to the
variable annuity and other related investment products;
>assist us by providing services such as office space and secretarial/clerical
support.
The OEA Trust will provide an employee who:
>is a registered representative of one of our affiliates;
>advertises the Company in OEA's newsletter;
>facilitates and coordinates meetings and workshops where registered
representatives of the Company's affiliate present the annuity to OEA members;
and
>acts as a liaison between the Company and OEA members.
In return the Company agrees to:
>compensate OEA Trust to help it defray the costs incurred in providing the
administrative and other support;
>reimburse OEA Trust for out-of-pocket travel and meeting expenses of an OEA
Trust employee who is also a registered representative of the Company's
affiliate.
During 1998, the Company paid OEA Trust $200,000 as reimbursement for the costs
and services described above. Effective January 1, 1999, the Company will pay
the OEA Trust $25,000 each month as reimbursement for the costs and services
described above.
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Contents of the Statement of Additional Information
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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 C
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 the Company
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Appendix I
Guaranteed Accumulation Account
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The Guaranteed Accumulation Account (GAA) is a fixed interest option that may
be available during the accumulation phase. This appendix is only a summary of
certain facts about the 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 that 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 on 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.
Under some contracts issued in New York, if you have elected ECO as described in
"Systematic Distribution Options," no MVA applies to amounts withdrawn from GAA.
Guaranteed Terms. The guaranteed term is the period of time account dollars must
be left in GAA in order to earn the 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.
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In general we offer the following guaranteed terms:
>short-term--three years or less
>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
>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. 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.
Loans. You cannot take a loan from your account value in GAA. However, we
include your account value in GAA when determining the amount of your account
value we may distribute as a loan.
Reinvesting amounts withdrawn from GAA. If amounts are withdrawn from GAA and
then reinvested in GAA, we will apply the reinvested amount to the current
deposit period. The guaranteed annual interest rate, and guaranteed terms
available on the date of reinvestment will apply. Amounts will be reinvested
proportionately in the same way as they were allocated before withdrawal.
Your account value will not be credited for any negative MVA that was deducted
at the time of withdrawal.
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Appendix II
Fixed Account
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The Fixed Account is an investment option available during the accumulation
phase under some contracts. Under some contracts, this option is available to
installment purchase plans only. This option is not available in the state of
New York under some contracts.
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Additional information about this option may be found in the contract.
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Amounts allocated to the Fixed Account are held in the Company's general
account which supports insurance and annuity obligations.
General Disclosure. Interests in the Fixed Account have not been registered
with the SEC in reliance on exemptions under the Securities Act of 1933, as
amended. Disclosure in this prospectus regarding 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. 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 interest rates reflects 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, some contracts allow us to
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, some contracts provide
that we may pay withdrawals in equal payments with interest, over a period not
to exceed 60 months when:
(a) The Fixed Account withdrawal value 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 within the past 12 calendar months exceeds 20% of the
amount in the Fixed Account on the day before the 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 each calendar year or each
12-month period, depending on the contract. We determine the amount available
for transfer based on your Fixed Account value either (1) on the January 1st
preceding the transfer request or (2) as of the date we receive the transfer
request in good order at our Home Office. The 10% limit does not apply to
amounts being transferred into the Fixed Plus Account (if available under the
contract).
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<PAGE>
By notifying the Home Office at least 30 days before income payments begin you,
or the contract holder on your behalf, may elect to have amounts transferred to
one or more of the funds available during the income phase to provide variable
payments.
Contract Loans. If available under your plan, contract loans may be made from
account values held in Fixed Account.
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<PAGE>
Appendix III
Fixed Plus Account
- --------------------------------------------------------------------------------
The Fixed Plus Account is an investment option available during the
accumulation phase under some contracts.
Amounts allocated to the Fixed Plus 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 Plus Account have not been
registered with the SEC in reliance on exemptions under the Securities Act of
1933, as amended. Disclosure in this prospectus regarding 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.
Certain Restrictions. This option is not available in the state of New York
under some contracts. We reserve the right to limit investment in or transfers
to the Fixed Plus Account. Under most contracts, you may not elect certain
withdrawal options including, under most contracts, the systematic distribution
option, if you have requested a Fixed Plus Account transfer or withdrawal in
the prior 12-month period. For some contracts, under certain emergency
conditions, we may defer payment of a withdrawal from the Fixed Plus Account
for a period of up to six months or as provided by federal law.
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. Under
some contracts, 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.
Our determination of interest rates reflects 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.
Requests for Partial Withdrawals. The contract holder or you, if permitted by
the plan, may take up to 20% of the Fixed Plus Account value as a partial
withdrawal in each twelve (12) month period, or under some contracts, in each
calendar year. We determine the amount eligible for partial withdrawal as of
the date we receive a request for partial withdrawal in good order at our Home
Office or as of the January 1st preceding the partial withdrawal request,
depending on the terms of the contract. The amount allowed for partial
withdrawal is reduced by any Fixed Plus Account withdrawals, transfers, loans
or amounts applied to income phase payment options made in the prior 12 months
(or, under some contracts, the prior calendar year). Under most contracts, in
calculating the 20% limit, we reserve the right to include payments made due to
the election of a systematic distribution option.
Waiver of Partial Withdrawal Limits. We generally waive the 20% limit if the
partial withdrawal is due to the election of an income phase payment option
(under some contracts, the waiver does not apply to the election of a
nonlifetime payment option with variable payments). We also waive the 20% limit
for withdrawals due to your death. Under most contracts, the waiver upon death
may only be exercised once, must occur within six months after your date of
death and must be made proportionally from all subaccounts and fixed interest
options in which the account was invested.
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<PAGE>
Also, under some contracts the 20% limit is waived if the withdrawal is due to
hardship from an unforeseeable emergency, or an unforeseeable emergency as
defined by the Tax Code, and the following requirements are satisfied:
>The hardship is certified (required under most contracts);
>The partial withdrawal is taken proportionally from each investment option in
which the your account invests;
>The amount is paid directly to you; and
>The amount paid for all withdrawals due to hardship during the previous
12-month period does not exceed 10% of the average value of your account(s)
and all other accounts under the relevant contracts during that same period.
Under some contracts, the percentage limit is also waived if the partial
withdrawal is due to separation from service and the following conditions are
met:
>The employer certifies you have separated from service;
>The amount withdrawn is paid directly to you; and
>The amount paid for all partial and full withdrawals due to separation from
service during the previous 12-month period does not exceed 20% of the
average value of your account(s) and all other accounts under the relevant
contracts providing this waiver during that same period.
Additionally, we may allow other waivers of the percentage limit on partial
withdrawals to participants in certain plans. You can determine what additional
waivers, if any, apply to you by referring to the contract or certificate.
Requests for Full Withdrawals. 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 the request is received,
reduced by any Fixed Plus Account withdrawals, transfers, amounts used to fund
income phase payments, or loans made during the prior 12 months (or, under
some contracts, during the prior calendar year);
>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.
Under some contracts, there is a different method of calculating the amount
available each year. The full withdrawal will be paid in installments of 20% of
your account value held in the Fixed Plus Account, reduced by any Fixed Plus
Account withdrawals, transfers, amounts used to fund income phase payments, or
loans made during the prior 12 months in each of four consecutive 12-month
periods. Under this provision, the remaining Fixed Plus Account balance in the
account may be withdrawn any time after the end of the fourth 12-month period.
Once we receive a request for a full withdrawal, no further withdrawals, loans
or transfers will be permitted from the Fixed Plus Account. A full withdrawal
from the Fixed Plus Account may be canceled at any time before the end of the
five-payment period.
Waiver of Full Withdrawal Provisions. We will waive the Fixed Plus Account
five-installment payout for full withdrawals made due to one or more of the
following:
(a) Due to the election of an income phase payment option (under some contracts
this waiver does not apply to the election of a nonlifetime payment option
with variable payments)
(b) Due to your death during the accumulation phase. Some contracts require
that we be notified of your death, or that the withdrawal be taken, within
six months of the death
(c) When the Fixed Plus Account value is $3,500 or less ($2,000 or less under
some contracts). Most contracts also require that no withdrawals,
transfers, loans or elections of income phase payment options have been
made from the account within the prior 12 months (or, under some
contracts, within the prior calendar year).
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<PAGE>
Additionally, under certain contracts, we will waive the five-payment full
withdrawal provision due to one or more of the following:
1. Due to hardship from an unforeseeable emergency, as defined by the Tax Code,
if all of the following conditions are met:
>The hardship is certified by the employer, and, under some contracts;
>The amount is paid directly to you; and
>The amount paid for all withdrawals due to hardship during the previous
12-month period does not exceed 10% of the average value of your account(s)
and all other accounts under the relevant contract during that same period.
2. Due to your separation from service with the employer, provided that all the
following apply*:
>The employer certifies that you have separated from service;
>The amount withdrawn is paid directly to you (under some contracts it must be
paid directly to you only if you withdraw the amounts more than one year after
separation); and
>Under most contracts, if the amount paid for all partial and full withdrawals
due to separation from service during the previous 12-month period does not
exceed 20% of the average value of all your account(s) and all other accounts
under the relevant contract during that same period.
3. If you are at least age 59-1/2 and have completed nine payment periods
4. If we terminate your account based on our right to do so for accounts below
a certain value (usually $3,500).
5. Additionally, we may allow other waivers of the five installment payout for
full withdrawals to participants in certain plans. You can determine what
additional waivers, if any, apply to you by referring to the contract or
certificate.
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. The contract holder or you, if allowed by the plan, may transfer 20%
of your account value held in the Fixed Plus Account in each 12-month period or
during each calendar year, depending on the terms of the contract. We determine
the amount eligible for transfer on the day we receive a transfer request in
good order at our Home Office, or under some contracts, as of the January 1st
preceding the transfer request. We will reduce amounts allowed for transfer by
any Fixed Plus Account withdrawals, transfers, loans or amounts applied to
income phase payment options during the prior 12 months (or, under some
contracts, during the prior calendar year). Under most contracts, in
calculating the percentage limit on transfers, we reserve the right to include
payments made due to the election of any of the systematic distribution
options. We will waive the percentage limit on transfers when the value in the
Fixed Plus Account is $1,000 or less ($2,000 or less under some contracts).
Under some contracts, if you transfer 20% of your account value held in the
Fixed Plus Account in each of four consecutive 12-month periods, you may
transfer the remaining balance in the succeeding 12-month period provided you
do not allocate any amount to or transfer any other amount from the Fixed Plus
Account during the five-year period. The 20% amount available to transfer under
this provision will be reduced by any amount transferred, taken as a loan or
applied to income phase payment options within the 12-month period preceding
the first 20% transfer. Also, we may reduce it for payments we made from your
Fixed Plus Account value under any systematic distribution option.
- -----------------
* Instead of the provisions under number 2 above, some contracts waive the
five-payment full withdrawal provision for separation from service if all of
the following apply:
>The hardship is certified by the employer;
>We receive the withdrawal request within 60 days of the date of separation;
and
>You pay a 3% charge based on the entire Fixed Plus Account value.
If you instead choose to have your payout in five annual installments as
described above, then we will not assess the charge.
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<PAGE>
Income Phase. Amounts accumulating under the Fixed Plus Account can be
transferred to subaccounts to fund variable payments during the income phase.
Availability of subaccounts may vary during the income phase. Some contracts do
not permit Fixed Plus Account values to fund nonlifetime income options with
variable payments.
Contract Loans. If permitted under the plan, loans may be made from account
values held in the Fixed Plus Account. See the loan agreement for a description
of the amount available and possible consequences upon loan default if Fixed
Plus Account values are used for a loan.
Transfer Credits. The Company provides a transfer credit in certain
circumstances. See "Contract Purchase and Participation--Transfer Credits." The
transfer credit is a specified percentage of the assets transferred to the
Company under a contract that remain in the accounts for the period of time
specified by the Company, plus the interest that would have been credited had
that amount been deposited in the Fixed Plus Account on the first business day
of the calendar month following its calculation. We apply the transfer credit to
the current value held in the Fixed Plus Account.
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<PAGE>
Appendix IV
Employee Appointment of Employer as Agent
Under an Annuity Contract
- --------------------------------------------------------------------------------
For Plans under Section 403(b), 401 or 403(a) of the Code (except voluntary
Section 403(b) Plans)
- --------------------------------------------------------------------------------
My employer has adopted a plan under Internal Revenue Code Sections 403(b),
401(a)/401(k) or 403(a) ("Plan") and has purchased an Aetna Life Insurance and
Annuity Company ("Company") group variable annuity contract ("Contract") as the
funding vehicle. Contributions under this Plan will be made by me through
salary reduction to an Employee Account, and by my employer to an Employer
Account.
By electing to participate in my employer's Plan, I voluntarily appoint my
employer, who is the Contract Holder, as my agent for the purposes of all
transactions under the Contract in accordance with the terms of the Plan. The
Company is not a party to the Plan and does not interpret the Plan provisions.
As a Participant in the Plan, I understand and agree to the following terms and
conditions:
>I own the value of my Employee Account subject to the restrictions of Sections
403(b), 401(a)/401(k) or 403(a) and the terms of the Plan. Subject to the terms
of the vesting schedule in the Plan and the restrictions of Sections 403(b),
401(a)/401(k) or 403(a), I have ownership in the value of my Employer Account.
>I understand that the Company will process transactions only with my
employer's written direction to the Company. I agree to be bound by my
employer's interpretation of the Plan provisions and its written direction to
the Company.
>My employer may permit me to make investment selections under the Employee
Account and/or the Employer Account directly with the Company under the terms
of the Contract. Without my employer's written permission, I will be unable to
make any investment selections under the Contract.
>On my behalf, my employer may request a loan in accordance with the terms of
the Contract and the provisions of the Plan. The Company will make payment of
the loan amount directly to me. I will be responsible for making repayments
directly to the Company in a timely manner.
>In the event of my death, my employer is the named Beneficiary under the terms
of the Contract. I have the right to name a personal Beneficiary as determined
under the terms of the Plan and file that Beneficiary election with my
employer. It is my employer's responsibility to direct the Company to properly
pay any death benefits.
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<PAGE>
Appendix V
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. Shares of the
funds are not bank deposits and are not guaranteed, endorsed or insured by any
financial institution, 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 designed 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 designed 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 designed 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 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 U.S. 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
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<PAGE>
portfolio of equity securities issued by real estate companies, the
majority of which are real estate investment trusts (REITs).(1)
>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 Value Opportunity VP seeks growth of
capital primarily through investment in a diversified portfolio of common
stocks and securities convertible into common stocks.(1)(a)
>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 advisor to be
undervalued relative to the investment advisor'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, nondiversified
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)
>Fidelity Variable Insurance Products Fund (VIP)--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 (VIP)--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 (VIP)--Overseas Portfolio seeks
long-term growth of capital by investing in foreign securities, primarily in
common stocks.(4)
>Fidelity Variable Insurance Products Fund II (VIP II)--Contrafund 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)
>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, 1998, they ranged from approximately
$142 million to $73 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
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<PAGE>
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 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.
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 (except loan repayments that we
automatically deposit into the subaccount according to our loan repayment
procedures).(6)
>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.--MFS Emerging Equities Portfolio seeks long-term
growth of capital.(8)(a)
>Portfolio Partners, Inc.--MFS Research Growth Portfolio seeks long-term growth
of capital and future income.(8)(a)
>Portfolio Partners, Inc.--MFS Value Equity Portfolio seeks capital
appreciation.(8)(a)
>Portfolio Partners, Inc.--Scudder International Growth Portfolio seeks
long-term growth of capital.(8)(b)
>Portfolio Partners, Inc.--T. Rowe Price Growth Equity Portfolio seeks
long-term capital growth, and, secondarily, increasing dividend income.(8)(c)
Investment Advisers for each of the Funds:
(1) Aeltus Investment Management, Inc.
(a) Bradley, Foster & Sargent, Inc.
(subadviser)
(2) AIM Advisors, Inc.
(3) Calvert Asset Management Company, Inc.
(4) Fidelity Management & Research Company (adviser)
(5) Janus Capital Corporation
(6) Lexington Management Corporation
(adviser); Market Systems Research Advisors, Inc. (subadviser)
(7) OppenheimerFunds, Inc.
(8) Aetna Life Insurance and Annuity Company (adviser);
(a) Massachusetts Financial Services Company (subadviser)
(b) Scudder Kemper Investments, Inc. (subadviser)
(c) T. Rowe Price Associates, Inc. (subadviser)
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Appendix VI
Condensed Financial Information
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Table I--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
0.40%, 0.45%, and 0.50% .................................... 60
Table II--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
0.75%, 0.80%, and 0.85% .................................... 63
Table III--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
0.90% and 0.95% ............................................ 66
Table IV--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
1.00% and 1.05% ............................................ 69
Table V--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
1.10% and 1.15% ............................................ 73
Table VI--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
1.20% and Those Issued Since 1996 with Total Separate
Account Charges of 1.25% ................................... 77
Table VII--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
1.30% and 1.40% ............................................ 80
Table VIII--For Contracts Issued Since 1996 Under 403(b),
401(a) and 401(k) Plans with Total Separate Account Charges
of 1.50% ................................................... 83
Table IX--For Contracts Issued Under 403(b) Plans and
Deferred Compensation Plans with Total Separate Account
Charges of 1.25% ........................................... 86
Table X--For Multiple Option Contracts Issued to
San Bernardino County and Macomb County with Total
Separate Account Charges of 1.25% .......................... 90
Table XI--For Contracts Issued Under 403(b) Plans and
Deferred Compensation Plans with Total Separate Account
Charges of 1.50% (including a 0.25% Administrative Expense
Charge Beginning April 7, 1997) ............................ 93
Table XII--For Contracts Containing Limits on Fees Issued
Under 403(b) Plans and Deferred Compensation Plans ......... 96
Table XIII--For Deferred Compensation Contracts with
Total Separate Account Charges of 0.95% Effective
On January 15, 1996 ........................................ 98
Table XIV--For Deferred Compensation Contracts with
Total Separate Account Charges of 0.95% Effective
On May 25, 1996 ............................................ 102
Table XV--For Deferred Compensation Contracts with
Total Separate Account Charges of 0.95% Effective
On or After December 16, 1996 .............................. 106
</TABLE>
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Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE I
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.40%, 0.45%, AND 0.50%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for the period ended
December 31, 1998 (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, 1998 are included in the Statement of
Additional Information.
<TABLE>
<CAPTION>
0.40% Total Charges 0.45% Total Charges 0.50% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.239(1) $9.146(2) $10.475(3)
Value at end of period $14.086 $9.519 $9.848
Number of accumulation units outstanding at end
of period 86,321 779 2,670
AETNA BALANCED VP, INC.
Value at beginning of period $14.244(1) $10.369(4)
Value at end of period $15.331 $11.077
Number of accumulation units outstanding at end
of period 653,272 310,846
AETNA BOND VP
Value at beginning of period $11.893(1) $10.118(4)
Value at end of period $12.079 $10.662
Number of accumulation units outstanding at end
of period 190,084 88,895
AETNA CROSSROADS VP
Value at beginning of period $12.991(1) $9.531(2) $10.298(4)
Value at end of period $13.628 $9.800 $10.086
Number of accumulation units outstanding at end
of period 51,878 731 1,127
AETNA GROWTH VP
Value at beginning of period $15.200(1) $10.444(2) $10.479(4)
Value at end of period $18.018 $11.470 $12.397
Number of accumulation units outstanding at end
of period 21,805 291 19,997
AETNA GROWTH AND INCOME VP
Value at beginning of period $15.108(1) $9.561(2) $10.580(4)
Value at end of period $16.747 $10.152 $10.665
Number of accumulation units outstanding at end
of period 2,888,622 1,119 719,561
AETNA HIGH YIELD VP
Value at beginning of period $9.125(1) $9.961(3)
Value at end of period $9.238 $9.260
Number of accumulation units outstanding at end
of period 1,146 834
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $16.874(1) $10.639(2) $10.708(4)
Value at end of period $18.916 $11.307 $12.019
Number of accumulation units outstanding at end
of period 87,238 859 13,477
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $9.480(1) $10.050(3)
Value at end of period $10.921 $10.947
Number of accumulation units outstanding at end
of period 1,187 2,662
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $8.071(1) $9.328(5)
Value at end of period $8.840 $8.861
Number of accumulation units outstanding at end
of period 3,928 17
AETNA INTERNATIONAL VP
Value at beginning of period $9.231(2) $8.967(1)
Value at end of period $9.567 $9.815
Number of accumulation units outstanding at end
of period 61 562
AETNA LEGACY VP
Value at beginning of period $12.598(1) $10.115(5)
Value at end of period $13.111 $10.293
Number of accumulation units outstanding at end
of period 19,291 165
</TABLE>
60
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.40% Total Charges 0.45% Total Charges 0.50% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
AETNA MONEY MARKET VP
Value at beginning of period $11.148(1) $10.050(4)
Value at end of period $11.225 $10.399
Number of accumulation units outstanding at end
of period 107,285 34,355
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $8.679(1) $9.655(5)
Value at end of period $8.898 $8.919
Number of accumulation units outstanding at end
of period 1,099 649
AETNA SMALL COMPANY VP
Value at beginning of period $12.820(1) $8.583(2) $10.719(4)
Value at end of period $13.714 $9.176 $9.312
Number of accumulation units outstanding at end
of period 15,614 318 7,541
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $13.986(1) $10.508(4)
Value at end of period $16.125 $11.369
Number of accumulation units outstanding at end
of period 11,799 993
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $13.635(1) $10.217(2) $10.377(4)
Value at end of period $14.976 $10.714 $10.966
Number of accumulation units outstanding at end
of period 38,218 553 50,868
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $14.267(1) $9.516(2) $10.522(4)
Value at end of period $15.192 $9.968 $10.363
Number of accumulation units outstanding at end
of period 54,320 519 6,791
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $15.510(1) $10.651(4)
Value at end of period $17.525 $12.779
Number of accumulation units outstanding at end
of period 128,518 18,614
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $12.178(1) $10.774(4)
Value at end of period $13.170 $10.183
Number of accumulation units outstanding at end
of period 10,817 251
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $15.219(1) $10.553(2) $10.673(4)
Value at end of period $17.813 $11.475 $11.985
Number of accumulation units outstanding at end
of period 197,022 1,754 8,618
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $11.663(1) $10.570(4)
Value at end of period $14.125 $12.541
Number of accumulation units outstanding at end
of period 198,264 134,432
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $15.614(1) $10.945(2) $10.615(4)
Value at end of period $17.878 $11.816 $12.415
Number of accumulation units outstanding at end
of period 39,424 612 30,062
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $12.743(1) $10.457(2) $10.186(4)
Value at end of period $13.053 $10.446 $10.640
Number of accumulation units outstanding at end
of period 21,374 82 13,364
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $14.790(1) $10.286(4)
Value at end of period $17.807 $12.391
Number of accumulation units outstanding at end
of period 73,901 7,785
JANUS ASPEN WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $15.344(1) $9.630(2) $10.980(4)
Value at end of period $17.582 $10.235 $11.485
Number of accumulation units outstanding at end
of period 383,490 1,186 37,288
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $9.754(1)
Value at end of period $9.626
Number of accumulation units outstanding at end
of period 12,237
</TABLE>
61
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.40% Total Charges 0.45% Total Charges 0.50% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Value at beginning of period $9.004(1) $10.131(6)
Value at end of period $10.047 $10.070
Number of accumulation units outstanding at end
of period 1,564 180
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $9.695(1) $9.975(2) $9.995(3)
Value at end of period $9.923 $9.953 $9.946
Number of accumulation units outstanding at end
of period 1,513 575 14
PORTFOLIO PARTNERS MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period $10.705(1) $10.094(2) $9.990(4)
Value at end of period $12.776 $11.002 $10.841
Number of accumulation units outstanding at end
of period 339,956 371 178,398
PORTFOLIO PARTNERS MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period $9.362(1) $9.862(2) $10.490(4)
Value at end of period $10.641 $10.577 $11.127
Number of accumulation units outstanding at end
of period 331,958 473 79,769
PORTFOLIO PARTNERS MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $14.188(1) $9.984(2) $10.726(4)
Value at end of period $15.676 $10.673 $11.320
Number of accumulation units outstanding at end
of period 36,644 192 71,605
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $12.570(1) $10.711(4)
Value at end of period $13.602 $10.797
Number of accumulation units outstanding at end
of period 168,912 113,511
PORTFOLIO PARTNERS T. ROWE PRICE
GROWTH PORTFOLIO
Value at beginning of period $15.042(1) $10.302(2) $10.256(4)
Value at end of period $16.863 $11.057 $11.551
Number of accumulation units outstanding at end
of period 169,615 817 4,869
</TABLE>
- -----------------
(1) Funds were first received in this option during November 1998.
(2) Funds were first received in this option during December 1998.
(3) Funds were first received in this option during May 1998.
(4) Funds were first received in this option during April 1998.
(5) Funds were first received in this option during June 1998.
(6) Funds were first received in this option during July 1998.
62
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE II
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) and 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.75%, 0.80%, AND 0.85%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for the period ended
December 31, 1998 (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, 1998 are included in the Statement of
Additional Information.
<TABLE>
<CAPTION>
0.75% Total Charges 0.80% Total Charges 0.85% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $9.913(1) $10.604(2) $13.699(3)
Value at end of period $9.502 $10.101 $14.113
Number of accumulation units outstanding at end
of period 43,142 255,775 70,991
AETNA BALANCED VP, INC.
Value at beginning of period $10.002(1) $10.646(2) $13.327(3)
Value at end of period $10.648 $11.358 $15.360
Number of accumulation units outstanding at end
of period 183,347 3,962,527 1,379,122
AETNA BOND VP
Value at beginning of period $10.058(1) $10.157(2) $11.381(3)
Value at end of period $10.502 $10.650 $12.102
Number of accumulation units outstanding at end
of period 51,916 771,660 654,765
AETNA CROSSROADS VP
Value at beginning of period $9.936(1) $10.524(2) $13.063(3)
Value at end of period $9.782 $10.312 $13.654
Number of accumulation units outstanding at end
of period 62,144 213,970 102,916
AETNA GROWTH VP
Value at beginning of period $9.925(1) $11.326(2) $13.357(3)
Value at end of period $11.449 $13.030 $18.036
Number of accumulation units outstanding at end
of period 18,200 303,987 24,240
AETNA GROWTH AND INCOME VP
Value at beginning of period $9.935(1) $10.925(2) $14.694(3)
Value at end of period $10.133 $11.108 $16.779
Number of accumulation units outstanding at end
of period 773,713 15,809,881 5,795,667
AETNA HIGH YIELD VP
Value at beginning of period $10.145(4) $9.939(1) $9.899(5)
Value at end of period $9.284 $9.241 $9.238
Number of accumulation units outstanding at end
of period 0 15,411 644
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $10.015(1) $11.117(2) $14.692(3)
Value at end of period $11.286 $12.587 $18.945
Number of accumulation units outstanding at end
of period 48,831 1,974,900 459,428
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $9.822(1) $9.576(1) $9.028(5)
Value at end of period $11.183 $10.925 $10.921
Number of accumulation units outstanding at end
of period 1,623 80,312 5,681
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $9.642(1) $9.269(1) $8.464(5)
Value at end of period $9.201 $8.843 $8.840
Number of accumulation units outstanding at end
of period 1,481 90,819 6,564
AETNA INTERNATIONAL VP
Value at beginning of period $9.600(5) $10.043(1) $9.580(5)
Value at end of period $9.550 $9.795 $9.792
Number of accumulation units outstanding at end
of period 7 45,801 8,719
AETNA LEGACY VP
Value at beginning of period $9.977(1) $10.359(2) $12.497(3)
Value at end of period $10.054 $10.423 $13.136
Number of accumulation units outstanding at end
of period 21,150 418,989 61,043
</TABLE>
63
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.75% Total Charges 0.80% Total Charges 0.85% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
AETNA MONEY MARKET VP
Value at beginning of period $10.022(1) $10.136(2) $10.799(3)
Value at end of period $10.283 $10.414 $11.246
Number of accumulation units outstanding at end
of period 26,810 1,574,454 396,669
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $9.792(1) $10.041(4) $10.041(4)
Value at end of period $8.944 $8.900 8.897
Number of accumulation units outstanding at end
of period 9 27,225 398
AETNA SMALL COMPANY VP
Value at beginning of period $9.812(1) $10.578(2) $13.558(3)
Value at end of period $9.159 $9.764 $13.728
Number of accumulation units outstanding at end
of period 13,043 1,165,745 25,298
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $9.921(1) $10.972(2) $13.404(3)
Value at end of period $10.620 $11.692 $16.141
Number of accumulation units outstanding at end
of period 14.488 350,826 15,014
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $10.081(1) $10.492(2) $13.124(3)
Value at end of period $10.694 $11.254 $15.005
Number of accumulation units outstanding at end
of period 9,543 91,333 132,605
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $9.914(1) $10.873(2) $13.708(3)
Value at end of period $9.950 $10.850 $15.220
Number of accumulation units outstanding at end
of period 67,227 846,660 306,099
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $9.956(1) $10.887(2) $12.857(3)
Value at end of period $12.150 $13.307 $17.558
Number of accumulation units outstanding at end
of period 63,727 981,477 399,820
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $9.912(1) $11.184(2) $12.182(3)
Value at end of period $9.427 $10.530 $13.195
Number of accumulation units outstanding at end
of period 4,502 47,503 13,937
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $9.912(1) $10.937(2) $13.824(3)
Value at end of period $11.454 $12.589 $17.847
Number of accumulation units outstanding at end
of period 78,075 2,102,805 217,720
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $9.887(1) $10.647(2) $10.427(3)
Value at end of period $12.109 $13.056 $14.152
Number of accumulation units outstanding at end
of period 117,103 1,605,726 320,159
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $9.856(1) $10.741(2) $13.744(3)
Value at end of period $11.794 $12.741 $17.912
Number of accumulation units outstanding at end
of period 26,592 425,125 47,668
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $10.062(1) $10.210(2) $12.306(3)
Value at end of period $10.427 $10.643 $13.078
Number of accumulation units outstanding at end
of period 6,947 367,677 25,566
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $9.810(1) $10.918(2) $13.512(3)
Value at end of period $11.666 $12.836 $17.841
Number of accumulation units outstanding at end
of period 41,104 434,913 446,603
JANUS ASPEN WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $9.953(1) $11.798(2) $14.300(3)
Value at end of period $10.217 $12.009 $17.615
Number of accumulation units outstanding at end
of period 167,606 4,480,348 710,851
</TABLE>
64
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.75% Total Charges 0.80% Total Charges 0.85% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $9.791(1) $10.922(2) $11.047(3)
Value at end of period $7.696 $8.415 $9.645
Number of accumulation units outstanding at end
of period 13,175 140,250 14,190
OPPENHEIMER GLOBAL SECURITIES
FUND/VA
Value at beginning of period $9.713(1) $10.001(4) $9.275(5)
Value at end of period $10.027 $10.050 $10.046
Number of accumulation units outstanding at end
of period 535 2,686 7,592
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $10.029(4) $10.025(1) $9.935(5)
Value at end of period $9.935 $9.926 $9.922
Number of accumulation units outstanding at end
of period 925 18,786 2,776
PORTFOLIO PARTNERS MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period $9.828(1) $10.687(2) $10.399(3)
Value at end of period $10.982 $11.846 $12.800
Number of accumulation units outstanding at end
of period 139,547 3,491,454 706,142
PORTFOLIO PARTNERS MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period $9.917(1) $11.019(2) $8.861(3)
Value at end of period $10.558 $11.682 $10.661
Number of accumulation units outstanding at end
of period 46,475 750,388 616,205
PORTFOLIO PARTNERS MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $9.963(1) $11.274(2) $12.661(3)
Value at end of period $10.653 $12.055 $15.706
Number of accumulation units outstanding at end
of period 49,316 376,471 382,755
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $10.009(1) $11.338(2) $11.868(3)
Value at end of period $9.781 $11.041 $13.628
Number of accumulation units outstanding at end
of period 34,688 850,743 434,054
PORTFOLIO PARTNERS T. ROWE PRICE
GROWTH PORTFOLIO
Value at beginning of period $9.961(1) $10.967(2) $13.562(3)
Value at end of period $11.036 $12.153 $16.895
Number of accumulation units outstanding at end
of period 42,865 1,058,534 129,123
</TABLE>
- -----------------
(1) Funds were first received in this option during June 1998.
(2) Funds were first received in this option during May 1998.
(3) Funds were first received in this option during January 1998.
(4) Funds were first received in this option during July 1998.
(5) Funds were first received in this option during August 1998.
65
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE III
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.90% AND 0.95%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for each of the periods
ended December 31, 1998, 1997 and 1996 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
0.90% Total
Charges 0.95% Total Charges
--------------- -------------------------------------------------------
1998 1998 1997 1996
--------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $9.227(1) $13.624 $11.472 $10.000(2)
Value at end of period $9.953 $14.076 $13.624 $11.472
Number of accumulation units
outstanding at end of period 212 75,369 119,471 20,237
AETNA BALANCED VP, INC.
Value at beginning of period $10.451(3) $13.226 $10.902 $10.000(2)
Value at end of period $11.157 $15.320 $13.226 $10.902
Number of accumulation units
outstanding at end of period 1,648 468,468 986,711 702,222
AETNA BOND VP
Value at beginning of period $10.070(4) $11.268 $10.503 $10.000(2)
Value at end of period $10.654 $12.070 $11.268 $10.503
Number of accumulation units
outstanding at end of period 383 187,653 251,156 161,765
AETNA CROSSROADS VP
Value at beginning of period $12.980 $11.146 $10.000(2)
Value at end of period $13.618 $12.980 $11.146
Number of accumulation units
outstanding at end of period 105,586 117,725 7,882
AETNA GROWTH VP
Value at beginning of period $10.958(3) $13.202 $12.787(5)
Value at end of period $12.681 $18.005 $13.202
Number of accumulation units
outstanding at end of period 628 25,778 1,880
AETNA GROWTH AND INCOME VP
Value at beginning of period $10.562(4) $14.756 $11.469 $10.000(2)
Value at end of period $10.804 $16.736 $14.756 $11.469
Number of accumulation units
outstanding at end of period 8,243 2,224,467 3,760,076 2,876,728
AETNA HIGH YIELD VP
Value at beginning of period $10.078(6)
Value at end of period $9.231
Number of accumulation units
outstanding at end of period 799
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $10.648(4) $14.500 $10.934 $10.000(7)
Value at end of period $12.206 $18.902 $14.500 $10.934
Number of accumulation units
outstanding at end of period 2,384 108,387 62,360 2,697
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $10.108(8)
Value at end of period $10.913
Number of accumulation units
outstanding at end of period 564
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $9.582(6) $9.366(9)
Value at end of period $8.837 $8.834
Number of accumulation units
outstanding at end of period 62 2,625
AETNA INTERNATIONAL VP
Value at beginning of period $10.103(8)
Value at end of period $9.785
Number of accumulation units
outstanding at end of period 1,247
AETNA LEGACY VP
Value at beginning of period $10.390(8) $12.369 $10.905 $10.000(2)
Value at end of period $10.351 $13.102 $12.369 $10.905
Number of accumulation units
outstanding at end of period 37 55,494 47,726 61
</TABLE>
66
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.90% Total
Charges 0.95% Total Charges
---------------- --------------------------------------------------------
1998 1998 1997 1996
---------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
AETNA MONEY MARKET VP
Value at beginning of period $10.297(1) $10.738 $10.277 $10.000(2)
Value at end of period $10.381 $11.217 $10.738 $10.277
Number of accumulation units
outstanding at end of period 1,235 127,186 147,123 39,811
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $10.053(8)
Value at end of period $8.891
Number of accumulation units
outstanding at end of period 15,245
AETNA SMALL COMPANY VP
Value at beginning of period $10.939(3) $13.684 $13.119(10)
Value at end of period $9.513 $13.704 $13.684
Number of accumulation units
outstanding at end of period 2,604 44,944 2,124
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $10.515(4) $13.290 $12.912(10)
Value at end of period $11.462 $16.113 $13.290
Number of accumulation units
outstanding at end of period 3,526 29,112 587
CALVERT SOCIAL BALANCED
PORTFOLIO
Value at beginning of period $12.994 $10.924 $10.000(2)
Value at end of period $14.965 $12.994 $10.924
Number of accumulation units
outstanding at end of period 95,020 93,905 19,808
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Value at beginning of period $9.265(11) $13.729 $10.819 $10.000(2)
Value at end of period $10.671 $15.180 $13.729 $10.819
Number of accumulation units
outstanding at end of period 20 147,150 125,669 27,639
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $10.757(3) $12.674 $10.362 $10.000(2)
Value at end of period $12.978 $17.512 $12.674 $10.362
Number of accumulation units
outstanding at end of period 1,343 165,194 150,612 54,133
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $11.783 $10.664 $10.000(2)
Value at end of period $13.160 $11.783 $10.664
Number of accumulation units
outstanding at end of period 9,217 20,273 3,820
FIDELITY VIP II CONTRAFUND
PORTFOLIO
Value at beginning of period $10.737(4) $13.825 $11.243 $10.000(2)
Value at end of period $12.293 $17.800 $13.825 $11.243
Number of accumulation units
outstanding at end of period 1,038 254,734 266,396 95,199
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $10.787(3) $10.613 $9.510 $10.000(2)
Value at end of period $12.830 $14.114 $10.613 $9.510
Number of accumulation units
outstanding at end of period 353 375,663 416,100 125,232
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $10.570(3) $13.431 $11.105 $10.000(2)
Value at end of period $12.490 $17.865 $13.431 $11.105
Number of accumulation units
outstanding at end of period 479 81,983 42,699 9,188
JANUS ASPEN FLEXIBLE INCOME
PORTFOLIO
Value at beginning of period $10.232(3) $12.069 $10.902 $10.000(7)
Value at end of period $10.638 $13.043 $12.069 $10.902
Number of accumulation units
outstanding at end of period 393 36,740 29,665 1,402
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.569(9) $13.242 $10.891 $10.000(2)
Value at end of period $12.464 $17.794 $13.242 $10.891
Number of accumulation units
outstanding at end of period 128 53,448 92,666 39,841
</TABLE>
67
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.90% Total
Charges 0.95% Total Charges
---------------- --------------------------------------------------------
1998 1998 1997 1996
---------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.606(4) $13.757 $11.370 $10.000(2)
Value at end of period $11.745 $17.569 $13.757 $11.370
Number of accumulation units
outstanding at end of period 5,140 427,855 555,448 151,935
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $12.082 $11.383 $10.000(2)
Value at end of period $9.619 $12.082 $11.383
Number of accumulation units
outstanding at end of period 51,077 85,577 5,295
OPPENHEIMER GLOBAL SECURITIES
FUND/VA
Value at beginning of period $10.182(6)
Value at end of period $10.039
Number of accumulation units
outstanding at end of period 144
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $10.037(6)
Value at end of period $9.915
Number of accumulation units
outstanding at end of period 614
PORTFOLIO PARTNERS MFS
EMERGING EQUITIES PORTFOLIO
Value at beginning of period $10.233(9) $9.940 $10.062(12)
Value at end of period $11.462 $12.767 $9.940
Number of accumulation units
outstanding at end of period 236 626,638 795,375
PORTFOLIO PARTNERS MFS
RESEARCH GROWTH PORTFOLIO
Value at beginning of period $10.954(3) $8.727 $8.897(12)
Value at end of period $11.375 $10.633 $8.727
Number of accumulation units
outstanding at end of period 828 237,867 484,407
PORTFOLIO PARTNERS MFS
VALUE EQUITY PORTFOLIO
Value at beginning of period $11.183(3) $12.478 $12.296(12)
Value at end of period $11.654 $15.664 $12.478
Number of accumulation units
outstanding at end of period 957 103,317 96,338
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $10.020(1) $11.522 $11.376(12)
Value at end of period $11.029 $13.592 $11.522
Number of accumulation units
outstanding at end of period 10 234,075 351,150
PORTFOLIO PARTNERS T. ROWE
PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $10.840(3) $13.332 $13.062(12)
Value at end of period $11.792 $16.851 $13.332
Number of accumulation units
outstanding at end of period 169 197,938 238,562
</TABLE>
- -----------------
(1) Funds were first received in this option during October 1998.
(2) 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.
(3) Funds were first received in this option during April 1998.
(4) Funds were first received in this option during March 1998.
(5) Funds were first received in this option during August 1997.
(6) Funds were first received in this option during July 1998.
(7) 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.
(8) Funds were first received in this option during May 1998.
(9) Funds were first received in this option during June 1998.
(10) Funds were first received in this option during December 1997.
(11) Funds were first received in this option during September 1998.
(12) Funds were first received in this option during November 1997.
68
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE IV
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.00% AND 1.05%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for each of the periods
ended December 31, 1998, 1997 and 1996 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1.00% Total Charges 1.05% Total Charges
---------------------------------------------------- ----------------------------------
1998 1997 1996 1998 1997
------------------ ---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.613 $11.468 $10.000(1) $13.602 $11.629(2)
Value at end of period $14.057 $13.613 $11.468 $14.039 $13.602
Number of accumulation units
outstanding at end of period 520,438 14,463 13 55,886 24,508
AETNA BALANCED VP, INC.
Value at beginning of period $13.215 $13.054(3) $13.204 $12.677(3)
Value at end of period $15.300 $13.215 $15.279 $13.204
Number of accumulation units
outstanding at end of period 2,019,116 57,737 61,615 4,205
AETNA BOND VP
Value at beginning of period $11.258 $10.500 $10.000(1) $11.249 $10.587(2)
Value at end of period $12.054 $11.258 $10.500 $12.038 $11.249
Number of accumulation units
outstanding at end of period 802,876 64,958 679 50,220 11,619
AETNA CROSSROADS VP
Value at beginning of period $12.970 $12.945(4) $12.959 $11.292(2)
Value at end of period $13.600 $12.970 $13.582 $12.959
Number of accumulation units
outstanding at end of period 168,964 2,786 38,257 12,847
AETNA GROWTH VP
Value at beginning of period $12.674(5) $13.192 $13.184(6)
Value at end of period $17.989 $17.974 $13.192
Number of accumulation units
outstanding at end of period 194,081 23,219 31
AETNA GROWTH AND
INCOME VP
Value at beginning of period $14.744 $11.465 $10.000(1) $14.732 $12.312(2)
Value at end of period $16.713 $14.744 $11.465 $16.691 $14.732
Number of accumulation units
outstanding at end of period 9,871,041 362,675 13,125 326,490 44,425
AETNA HIGH YIELD VP
Value at beginning of period $9.149(7) $9.995(8)
Value at end of period $9.228 $9.225
Number of accumulation units
outstanding at end of period 9,211 110
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.491 $14.289(9) $14.481 $14.043(3)
Value at end of period $18.880 $14.491 $18.859 $14.481
Number of accumulation units
Outstanding at end of period 648,540 29 51,170 1,083
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $7.996(7) $9.624(10)
Value at end of period $10.909 $10.906
Number of accumulation units
outstanding at end of period 24,016 168
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $9.580(10) $9.530(10)
Value at end of period $8.831 $8.827
Number of accumulation units
outstanding at end of period 27,047 330
AETNA INTERNATIONAL VP
Value at beginning of period $10.061(11) $8.935(12)
Value at end of period $9.781 $9.778
Number of accumulation units
outstanding at end of period 14,898 182
</TABLE>
69
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.00% Total Charges 1.05% Total Charges
------------------------------------------------------ --------------------------------
1998 1997 1996 1998 1997
------------------ ------------------ ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $12.358 $12.242(2) $12.348 $11.009(2)
Value at end of period $13.084 $12.358 $13.067 $12.348
Number of accumulation units
outstanding at end of period 190,406 64 62,453 6,221
AETNA MONEY MARKET VP
Value at beginning of period $10.729 $10.274 $10.000(1) $10.720 $10.322(2)
Value at end of period $11.202 $10.729 $10.274 $11.187 $10.720
Number of accumulation units
outstanding at end of period 1,039,909 65,496 1,551 43,461 1,863
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $9.214(7) $9.899(8)
Value at end of period $8.888 $8.885
Number of accumulation units
outstanding at end of period 6,500 131
AETNA SMALL COMPANY VP
Value at beginning of period $14.234(13) $13.674 $12.485(3)
Value at end of period $13.692 $13.680 $13.674
Number of accumulation units
outstanding at end of period 404,068 5,235 125
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $12.765(5) $13.281 $12.796(6)
Value at end of period $16.099 $16.085 $13.281
Number of accumulation units
outstanding at end of period 98,683 3,648 17
CALVERT SOCIAL BALANCED
PORTFOLIO
Value at beginning of period $12.983 $12.982(14) $12.972 $12.278(3)
Value at end of period $14.945 $12.983 $14.926 $12.972
Number of accumulation units
outstanding at end of period 108,344 25,620 25,822 766
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Value at beginning of period $13.718 $13.438(14) $13.706 $11.435(2)
Value at end of period $15.160 $13.718 $15.140 $13.706
Number of accumulation units
outstanding at end of period 409,327 29,808 81,062 34,010
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $12.663 $10.358 $10.000(1) $12.653 $10.988(2)
Value at end of period $17.489 $12.663 $10.358 $17.466 $12.653
Number of accumulation units
outstanding at end of period 581,798 61,043 21 65,095 22,425
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $11.774 $11.818(9) $11.764 $10.798(2)
Value at end of period $13.143 $11.774 $13.126 $11.764
Number of accumulation units
outstanding at end of period 44,183 1,294 9,113 3,858
FIDELITY VIP II CONTRAFUND
PORTFOLIO
Value at beginning of period $13.814 $11.239 $10.000(1) $13.802 $12.865(3)
Value at end of period $17.776 $13.814 $11.239 $17.753 $13.802
Number of accumulation units
outstanding at end of period 1,138,180 139,417 20,020 90,950 9,650
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.604 $9.507 $10.000(1) $10.596 $8.894(2)
Value at end of period $14.096 $10.604 $9.507 $14.077 $10.596
Number of accumulation units
outstanding at end of period 997,760 106,350 17,055 114,249 38,785
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $13.420 $13.490(14) $13.409 $11.587(2)
Value at end of period $17.841 $13.420 $17.818 $13.409
Number of accumulation units
outstanding at end of period 184,550 5,846 37,434 14,527
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $12.059 $10.857(15) $12.049 $11.571(3)
Value at end of period $13.026 $12.059 $13.009 $12.049
Number of accumulation units
outstanding at end of period 414,151 12,527 13,507 700
</TABLE>
70
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.00% Total Charges 1.05% Total Charges
----------------------------------------------------- ----------------------------------
1998 1997 1996 1998 1997
----------------- ------------------ ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $13.231 $10.929(15) $13.220 $13.078(3)
Value at end of period $17.770 $13.231 $17.747 $13.220
Number of accumulation units
outstanding at end of period 220,151 17,098 45,804 7,726
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $13.746 $11.366 $10.000(1) $13.735 $12.089(2)
Value at end of period $17.545 $13.746 $11.366 $17.522 $13.735
Number of accumulation units
outstanding at end of period 2,151,202 207,630 36,305 202,768 59,673
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $12.072 $13.838(14) $12.062 $12.407(3)
Value at end of period $9.606 $12.072 $9.594 $12.062
Number of accumulation units
outstanding at end of period 75,695 12,963 2,961 791
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $9.484(12) $9.801(8)
Value at end of period $10.036 $10.032
Number of accumulation units
outstanding at end of period 5,395 180
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $9.991(11) $9.582(16)
Value at end of period $9.912 $9.908
Number of accumulation units
outstanding at end of period 7,329 5
PORTFOLIO PARTNERS MFS
EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $9.932 $10.054(9) $9.923 $10.046(9)
Value at end of period $12.750 $9.932 $12.733 $9.923
Number of accumulation units
outstanding at end of period 2,223,125 180,890 102,952 26,577
PORTFOLIO PARTNERS MFS
RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $8.720 $8.890(9) $8.713 $8.883(9)
Value at end of period $10.619 $8.720 $10.605 $8.713
Number of accumulation units
outstanding at end of period 741,693 55,616 40,974 1,465
PORTFOLIO PARTNERS MFS
VALUE EQUITY PORTFOLIO
Value at beginning of period $12.467 $12.287(9) $12.457 $12.277(9)
Value at end of period $15.644 $12.467 $15.623 $12.457
Number of accumulation units
outstanding at end of period 291,492 68,968 25,784 1,514
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $11.512 $11.367(9) $11.503 $11.358(9)
Value at end of period $13.574 $11.512 $13.556 $11.503
Number of accumulation units
outstanding at end of period 715,389 80,978 29,581 8,780
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $13.321 $13.052(9) $13.310 $13.042(9)
Value at end of period $16.829 $13.321 $16.806 $13.310
Number of accumulation units
outstanding at end of period 767,053 65,906 51,412 18,429
</TABLE>
- -----------------
(1) 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.
(2) Funds were first received in this option during February 1997.
(3) Funds were first received in this option during July 1997.
(4) Funds were first received in this option during September 1997.
(5) Funds were first received in this option during January 1998.
(6) Funds were first received in this option during August 1997.
(7) Funds were first received in this option during September 1998.
71
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(8) Funds were first received in this option during June 1998.
(9) Funds were first received in this option during November 1997.
(10) Funds were first received in this option during July 1998.
(11) Funds were first received in this option during May 1998.
(12) Funds were first received in this option during August 1998.
(13) Funds were first received in this option during February 1998.
(14) Funds were first received in this option during October 1997.
(15) Funds were first received in this option during January 1997.
(16) Funds were first received in this option during October 1998.
72
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE V
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.10% AND 1.15%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for each of the periods
ended December 31, 1998, 1997 and 1996 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1.10% Total Charges 1.15% Total Charges
---------------------------------- ------------------------------------------
1998 1997 1998 1997 1996
--------------- ---------------- --------------- ---------------- -----
<S> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.590 $13.275(1) $13.579 $11.525(2)
Value at end of period $14.020 $13.590 $14.002 $13.579
Number of accumulation units
outstanding at end of period 9,573 42 26,911 6,392
AETNA BALANCED VP, INC.
Value at beginning of period $13.194 $12.915(1) $13.183 $11.130(2)
Value at end of period $15.259 $13.194 $15.239 $13.183
Number of accumulation units
outstanding at end of period 10,484 294 275,681 250,060
AETNA BOND VP
Value at beginning of period $11.240 $11.219(3) $11.231 $10.476(2)
Value at end of period $12.022 $11.240 $12.006 $11.231
Number of accumulation units
outstanding at end of period 2,532 6 106,179 89,517
AETNA CROSSROADS VP
Value at beginning of period $12.949 $12.904(1) $12.938 $11.182(2)
Value at end of period $13.564 $12.949 $13.546 $12.938
Number of accumulation units
outstanding at end of period 14,611 14 24,882 7,129
AETNA GROWTH VP
Value at beginning of period $13.188 $13.325(1) $13.183 $13.348(4)
Value at end of period $17.958 $13.188 $17.943 $13.183
Number of accumulation units
outstanding at end of period 1,761 37 14,989 118
AETNA GROWTH AND
INCOME VP
Value at beginning of period $14.720 $14.520(1) $14.708 $11.805(2)
Value at end of period $16.669 $14.720 $16.647 $14.708
Number of accumulation units
outstanding at end of period 33,836 570 581,226 508,938
AETNA HIGH YIELD VP
Value at beginning of period $9.096(5) $9.959(6)
Value at end of period $9.222 $9.218
Number of accumulation units
outstanding at end of period 10 1,725
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.472 $14.078(1) $14.463 $11.663(2)
Value at end of period $18.837 $14.472 $18.815 $14.463
Number of accumulation units
outstanding at end of period 10,488 215 26,210 5,517
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $9.772(7) $9.105(8)
Value at end of period $10.902 $10.898
Number of accumulation units
outstanding at end of period 3 96
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $9.569(9)
Value at end of period $8.821
Number of accumulation units
outstanding at end of period 1,234
AETNA INTERNATIONAL VP
Value at beginning of period $9.763(8)
Value at end of period $9.771
Number of accumulation units
outstanding at end of period 167
</TABLE>
73
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.10% Total Charges 1.15% Total Charges
----------------------------------- ----------------------------------------------------
1998 1997 1998 1997 1996
------------------ ---------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $12.338 $12.223(2) $12.328 $10.927(2)
Value at end of period $13.050 $12.338 $13.033 $12.328
Number of accumulation units
outstanding at end of period 3,369 851 23,052 21,027
AETNA MONEY MARKET VP
Value at beginning of period $10.711 $10.663(1) $10.702 $10.264 $10.000(10)
Value at end of period $11.172 $10.711 $11.158 $10.702 $10.264
Number of accumulation units
outstanding at end of period 6,784 145 76,594 44,265 9,856
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $9.159(5) $10.034(9)
Value at end of period $8.882 $8.879
Number of accumulation units
outstanding at end of period 16 2,845
AETNA SMALL COMPANY VP
Value at beginning of period $13.669 $13.331(1) $13.664 $13.709(4)
Value at end of period $13.668 $13.669 $13.657 $13.664
Number of accumulation units
outstanding at end of period 6,323 650 9,141 119
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $13.276 $12.952(1) $13.271 $13.244(4)
Value at end of period $16.071 $13.276 $16.057 $13.271
Number of accumulation units
outstanding at end of period 1,219 46 4,025 47
CALVERT SOCIAL BALANCED
PORTFOLIO
Value at beginning of period $13.068(11) $12.951 $11.071(2)
Value at end of period $14.906 $14.886 $12.951
Number of accumulation units
outstanding at end of period 1,048 48,553 37,416
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Value at beginning of period $13.695 $13.343(1) $13.684 $10.805 $10.000(10)
Value at end of period $15.120 $13.695 $15.100 $13.684 $10.805
Number of accumulation units
outstanding at end of period 4,490 589 62,313 40,977 4,215
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $12.643 $12.740(1) $12.632 $10.348 $10.000(10)
Value at end of period $17.443 $12.643 $17.420 $12.632 $10.348
Number of accumulation units
outstanding at end of period 13,478 416 70,232 43,953 4,472
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $11.754 $11.651(3) $11.745 $10.662(1)
Value at end of period $13.108 $11.754 $13.091 $11.745
Number of accumulation units
outstanding at end of period 1,860 5 9,778 6,203
FIDELITY VIP II CONTRAFUND
PORTFOLIO
Value at beginning of period $13.791 $13.502(1) $13.780 $11.228 $10.000(10)
Value at end of period $17.729 $13.791 $17.706 $13.780 $11.228
Number of accumulation units
outstanding at end of period 5,768 110 85,591 56,042 4,169
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.587 $10.337(1) $10.578 $9.498 $10.000(10)
Value at end of period $14.059 $10.587 $14.040 $10.578 $9.498
Number of accumulation units
outstanding at end of period 3,032 269 103,123 77,340 4,932
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $13.398 $13.138(1) $13.387 $11.090 $10.000(10)
Value at end of period $17.794 $13.398 $17.771 $13.387 $11.090
Number of accumulation units
outstanding at end of period 4,709 256 36,442 15,461 13
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $12.039 $11.872(1) $12.029 $10.882(2)
Value at end of period $12.992 $12.039 $12.975 $12.029
Number of accumulation units
outstanding at end of period 2,780 12 8,869 4,140
</TABLE>
74
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.10% Total Charges 1.15% Total Charges
----------------------------------- ---------------------------------------------------
1998 1997 1998 1997 1996
------------------ ---------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $13.209 $12.995(1) $13.198 $11.138(2)
Value at end of period $17.723 $13.209 $17.700 $13.198
Number of accumulation units
outstanding at end of period 2,555 498 39,188 22,179
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $13.724 $13.565(1) $13.712 $11.355 $10.000(10)
Value at end of period $17.499 $13.724 $17.476 $13.712 $11.355
Number of accumulation units
outstanding at end of period 14,918 971 130,326 77,286 9
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $8.980(8) $12.042 $11.865(2)
Value at end of period $9.581 $9.568 $12.042
Number of accumulation units
outstanding at end of period 31 12,059 12,454
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.160(9) $9.974(9)
Value at end of period $10.029 $10.025
Number of accumulation units
outstanding at end of period 27 295
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $9.720(5) $10.052(9)
Value at end of period $9.905 $9.902
Number of accumulation units
outstanding at end of period 22 689
PORTFOLIO PARTNERS MFS
EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $9.915 $10.039(1) $9.907 $10.031(1)
Value at end of period $12.716 $9.915 $12.699 $9.907
Number of accumulation units
outstanding at end of period 6,017 16 196,772 165,668
PORTFOLIO PARTNERS MFS
RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $10.008(12) $8.698 $8.869(1)
Value at end of period $10.591 $10.577 $8.698
Number of accumulation units
outstanding at end of period 121 135,559 122,863
PORTFOLIO PARTNERS MFS
VALUE EQUITY PORTFOLIO
Value at beginning of period $14.846(13) $12.437 $12.258(1)
Value at end of period $15.602 $15.582 $12.437
Number of accumulation units
outstanding at end of period 1,488 75,920 79,382
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $11.633(11) $11.484 $11.341(1)
Value at end of period $13.538 $13.520 $11.484
Number of accumulation units
outstanding at end of period 3,300 88,163 77,528
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.258(14) $13.288 $13.021(1)
Value at end of period $16.784 $16.762 $13.288
Number of accumulation units
outstanding at end of period 2,769 60,127 42,110
</TABLE>
- -----------------
(1) Funds were first received in this option during November 1997.
(2) Funds were first received in this option during January 1997.
(3) Funds were first received in this option during December 1997.
(4) Funds were first received in this option during September 1997.
(5) Funds were first received in this option during September 1998.
(6) Funds were first received in this option during June 1998.
(7) Funds were first received in this option during December 1998.
(8) Funds were first received in this option during August 1998.
75
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(9) Funds were first received in this option during July 1998.
(10) 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.
(11) Funds were first received in this option during January 1998.
(12) Funds were first received in this option during May 1998.
(13) Funds were first received in this option during April 1998.
(14) Funds were first received in this option during February 1998.
76
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE VI
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.20%
AND THOSE ISSUED SINCE 1996 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 two-year period ended December 31, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
Issued Since 1996 with 1.25% Total
1.20% Total Charges Charges
----------------------------------- -----------------------------------
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.587(1) $13.557 $12.564(2)
Value at end of period $13.983 $13.965 $13.557
Number of accumulation units
outstanding at end of period 90,247 1,249 253
AETNA BALANCED VP, INC.
Value at beginning of period $13.676(3) $13.161 $11.921(2)
Value at end of period $15.219 $15.199 $13.161
Number of accumulation units
outstanding at end of period 33,673 1,535 133
AETNA BOND VP
Value at beginning of period $11.283(3) $11.217(1)
Value at end of period $11.990 $11.975
Number of accumulation units
outstanding at end of period 23,608 1,197
AETNA CROSSROADS VP
Value at beginning of period $12.915(1) $12.917 $12.024(2)
Value at end of period $13.528 $13.510 $12.917
Number of accumulation units
outstanding at end of period 499,874 8,075 93
AETNA GROWTH VP
Value at beginning of period $14.173(3) $12.876(1)
Value at end of period $17.927 $17.912
Number of accumulation units
outstanding at end of period 7,333 5,419
AETNA GROWTH AND INCOME VP
Value at beginning of period $14.696 $13.746(4) $14.684 $12.851(5)
Value at end of period $16.625 $14.696 $16.603 $14.684
Number of accumulation units
outstanding at end of period 224,761 25 35,133 1,646
AETNA HIGH YIELD VP
Value at beginning of period $9.935(6)
Value at end of period $9.215
Number of accumulation units
outstanding at end of period 132
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.453 $13.642(4) $14.444 $14.070(7)
Value at end of period $18.794 $14.453 $18.772 $14.444
Number of accumulation units
outstanding at end of period 28,911 24 594 10
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $9.662(6)
Value at end of period $10.894
Number of accumulation units
outstanding at end of period 452
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $9.244(6)
Value at end of period $8.818
Number of accumulation units
outstanding at end of period 989
AETNA INTERNATIONAL VP
Value at beginning of period $9.973(6)
Value at end of period $9.768
Number of accumulation units
outstanding at end of period 123
AETNA LEGACY VP
Value at beginning of period $12.606(3) $12.308 $12.362(8)
Value at end of period $13.015 $12.998 $12.308
Number of accumulation units
outstanding at end of period 61,973 5,866 2
</TABLE>
77
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Issued Since 1996 with 1.25% Total
1.20% Total Charges Charges
----------------------------------- -----------------------------------
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
AETNA MONEY MARKET VP
Value at beginning of period $10.761(3) $10.746(3)
Value at end of period $11.143 $11.128
Number of accumulation units
outstanding at end of period 15,147 6,649
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $9.633(6)
Value at end of period $8.876
Number of accumulation units
outstanding at end of period 372
AETNA SMALL COMPANY VP
Value at beginning of period $14.380(3) $13.203(1)
Value at end of period $13.645 $13.633
Number of accumulation units
outstanding at end of period 24,930 7,548
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $14.033(3) $12.844(1)
Value at end of period $16.044 $16.030
Number of accumulation units
outstanding at end of period 12,115 1,234
CALVERT SOCIAL BALANCED
PORTFOLIO
Value at beginning of period $13.354(3) $12.930 $12.790(9)
Value at end of period $14.867 $14.847 $12.930
Number of accumulation units
outstanding at end of period 2,926 51 6
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Value at beginning of period $14.168(3) $13.661 $13.299(9)
Value at end of period $15.080 $15.061 $13.661
Number of accumulation units
outstanding at end of period 13,584 8,741 6
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $13.438(3) $12.612 $11.704(2)
Value at end of period $17.397 $17.374 $12.612
Number of accumulation units
outstanding at end of period 58,305 9,906 214
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $12.430(3) $11.726 $12.512(7)
Value at end of period $13.074 $13.056 $11.726
Number of accumulation units
outstanding at end of period 5,797 688 22
FIDELITY VIP II CONTRAFUND
PORTFOLIO
Value at beginning of period $13.768 $12.889(2) $13.757 $11.902(5)
Value at end of period $17.683 $13.768 $17.659 $13.757
Number of accumulation units
outstanding at end of period 29,528 27 11,737 390
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $10.956(3) $10.561 $9.646(2)
Value at end of period $14.022 $14.003 $10.561
Number of accumulation units
outstanding at end of period 43,050 4,812 262
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $14.246(3) $13.370(1)
Value at end of period $17.747 $17.724
Number of accumulation units
outstanding at end of period 21,105 798
JANUS ASPEN FLEXIBLE INCOME
PORTFOLIO
Value at beginning of period $12.212(3) $12.112(1)
Value at end of period $12.958 $12.940
Number of accumulation units
outstanding at end of period 13,990 126
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $14.218(3) $13.177 $13.270(7)
Value at end of period $17.677 $17.653 $13.177
Number of accumulation units
outstanding at end of period 19,754 5,365 32
</TABLE>
78
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Issued Since 1996 with 1.25% Total
1.20% Total Charges Charges
----------------------------------- -------------------------------------
1998 1997 1998 1997
---------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
JANUS ASPEN WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $13.701 $13.856(2) $13.690 $13.125(2)
Value at end of period $17.453 $13.701 $17.430 $13.690
Number of accumulation units
outstanding at end of period 46,824 27 10,441 273
LEXINGTON NATURAL RESOURCES
TRUST
Value at beginning of period $11.980(6) $12.022 $11.717(2)
Value at end of period $9.556 $9.543 $12.022
Number of accumulation units
outstanding at end of period 2,826 53 35
OPPENHEIMER STRATEGIC BOND
FUND/VA
Value at beginning of period $9.905(10)
Value at end of period $9.898
Number of accumulation units
outstanding at end of period 57
PORTFOLIO PARTNERS MFS
EMERGING EQUITIES PORTFOLIO
Value at beginning of period $11.093(3) $9.891 $10.015(9)
Value at end of period $12.683 $12.666 $9.891
Number of accumulation units
outstanding at end of period 88,261 21,617 99
PORTFOLIO PARTNERS MFS
RESEARCH GROWTH PORTFOLIO
Value at beginning of period $9.310(3) $8.597(1)
Value at end of period $10.563 $10.549
Number of accumulation units
outstanding at end of period 49,879 3,244
PORTFOLIO PARTNERS MFS VALUE
EQUITY PORTFOLIO
Value at beginning of period $13.387(3) $12.394(1)
Value at end of period $15.561 $15.541
Number of accumulation units
outstanding at end of period 19,782 1,060
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH
PORTFOLIO
Value at beginning of period $12.274(3) $11.465 $11.323(9)
Value at end of period $13.502 $13.485 $11.465
Number of accumulation units
outstanding at end of period 13,604 2,493 189
PORTFOLIO PARTNERS T. ROWE
PRICE GROWTH EQUITY
PORTFOLIO
Value at beginning of period $14.232(3) $13.156((1)
Value at end of period $16.740 $16.718
Number of accumulation units
outstanding at end of period 45,971 1,239
</TABLE>
- -----------------
(1) Funds were first received in this option during January 1998.
(2) Funds were first received in this option during June 1997.
(3) Funds were first received in this option during February 1998.
(4) Funds were first received in this option during July 1997.
(5) Funds were first received in this option during May 1997.
(6) Funds were first received in this option during June 1998.
(7) Funds were first received in this option during September 1997.
(8) Funds were first received in this option during October 1997.
(9) Funds were first received in this option during November 1997.
(10) Funds were first received in this option during December 1998.
79
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE VII
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS SINCE 1996
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.30% AND 1.40%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for each of the periods
ended December 31, 1998 and 1997 (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, 1998 are included in the
Statement of Additional Information.
<TABLE>
<CAPTION>
1.30% Total Charges 1.40% Total Charges
---------------------------------- --------------------
1998 1997 1998
--------------- ---------------- --------------------
<S> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.546 $11.759(1) $14.731(2)
Value at end of period $13.946 $13.546 $13.910
Number of accumulation units outstanding at end
of period 1,424 855 136
AETNA BALANCED VP, INC.
Value at beginning of period $13.150 $11.717(3) $14.278(2)
Value at end of period $15.179 $13.150 $15.139
Number of accumulation units outstanding at end
of period 8 459 533
AETNA BOND VP
Value at beginning of period $11.203 $10.974(1) $11.423(2)
Value at end of period $11.959 $11.203 $11.927
Number of accumulation units outstanding at end
of period 59,443 279 189
AETNA CROSSROADS VP
Value at beginning of period $12.906 $11.380(1) $13.846(2)
Value at end of period $13.492 $12.906 $13.457
Number of accumulation units outstanding at end
of period 521 641 501
AETNA GROWTH VP
Value at beginning of period $15.724(2)
Value at end of period $17.865
Number of accumulation units outstanding at end
of period 211
AETNA GROWTH AND INCOME VP
Value at beginning of period $14.672 $12.519(1) $16.562(4)
Value at end of period $16.581 $14.672 $16.537
Number of accumulation units outstanding at end
of period 2,880 3,082 934
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.435 $11.470(5) $16.556(2)
Value at end of period $18.751 $14.435 $18.708
Number of accumulation units outstanding at end
of period 12,423 8,665 173
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $9.805(6)
Value at end of period $10.887
Number of accumulation units outstanding at end
of period 41
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $8.198(6)
Value at end of period $8.812
Number of accumulation units outstanding at end
of period 49
AETNA LEGACY VP
Value at beginning of period $12.298 $11.401(3)
Value at end of period $12.981 $12.298
Number of accumulation units outstanding at end
of period 30,755 74
AETNA MONEY MARKET VP
Value at beginning of period $10.676 $10.358(5) $10.821(2)
Value at end of period $11.114 $10.676 $11.084
Number of accumulation units outstanding at end
of period 13,000 8,302 161
AETNA SMALL COMPANY VP
Value at beginning of period $11.872(7)
Value at end of period $13.598
Number of accumulation units outstanding at end
of period 72
</TABLE>
80
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.30% Total Charges 1.40% Total Charges
------------------------------------- --------------------
1998 1997 1998
---------------- ------------------ --------------------
<S> <C> <C> <C>
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $15.827(8) $15.181(2)
Value at end of period $16.016 $15.988
Number of accumulation units outstanding at end
of period 88 39
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $12.919 $11.742(3)
Value at end of period $14.827 $12.919
Number of accumulation units outstanding at end
of period 13 44
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $13.650 $10.942(5) $15.124(2)
Value at end of period $15.041 $13.650 $15.001
Number of accumulation units outstanding at end
of period 3,612 7,817 2,077
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $12.601 $10.724(1) $14.386(2)
Value at end of period $17.351 $12.601 $17.305
Number of accumulation units outstanding at end
of period 2,636 2,031 4,116
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $11.716 $11.785(1) $13.828(2)
Value at end of period $13.039 $11.716 $13.005
Number of accumulation units outstanding at end
of period 408 348 113
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $13.746 $11.031(5) $15.738(4)
Value at end of period $17.636 $13.746 $17.590
Number of accumulation units outstanding at end
of period 10,681 7,728 1,990
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $10.552 $8.944(1) $11.943(4)
Value at end of period $13.985 $10.552 $13.948
Number of accumulation units outstanding at end
of period 3,586 2,527 1,441
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $13.354 $12.113(3) $15.102(2)
Value at end of period $17.701 $13.354 $17.654
Number of accumulation units outstanding at end
of period 668 369 564
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $12.225(9) $12.375(2)
Value at end of period $12.923 $12.889
Number of accumulation units outstanding at end
of period 8,960 30
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $13.166 $10.962(5) $15.123(2)
Value at end of period $17.630 $13.166 $17.584
Number of accumulation units outstanding at end
of period 911 637 2,368
JANUS ASPEN WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $13.679 $11.961(5) $16.231(4)
Value at end of period $17.407 $13.679 $17.361
Number of accumulation units outstanding at end
of period 6,473 2,018 649
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $12.012 $10.678(5)
Value at end of period $9.340 $12.012
Number of accumulation units outstanding at end
of period 0 5
OPPENHEIMER GLOBAL SECURITIES
FUND/VA
Value at beginning of period $9.965(8) $10.041(10)
Value at end of period $10.015 $10.008
Number of accumulation units outstanding at end
of period 139 14
PORTFOLIO PARTNERS MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period $9.883 $10.007(11) $11.707(2)
Value at end of period $12.649 $9.883 $12.616
Number of accumulation units outstanding at end
of period 5,462 3,595 928
</TABLE>
81
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.30% Total Charges 1.40% Total Charges
----------------------------- --------------------
1998 1997 1998
--------- ----------------- --------------------
<S> <C> <C> <C>
PORTFOLIO PARTNERS MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period $8.677 $8.848(11) $9.977(2)
Value at end of period $10.535 $8.677 $10.507
Number of accumulation units outstanding at end
of period 5,146 1,788 220
PORTFOLIO PARTNERS MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $12.406 $12.230(11) $14.631(2)
Value at end of period $15.520 $12.406 $15.479
Number of accumulation units outstanding at end
of period 1,074 237 46
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $11.456 $11.314(11) $13.542(2)
Value at end of period $13.467 $11.456 $13.431
Number of accumulation units outstanding at end
of period 313 200 125
PORTFOLIO PARTNERS T. ROWE PRICE
GROWTH PORTFOLIO
Value at beginning of period $13.256 $12.991(11) $15.190(2)
Value at end of period $16.696 $13.256 $16.652
Number of accumulation units outstanding at end
of period 2,748 1,649 1,525
</TABLE>
- -----------------
(1) Funds were first received in this option during May 1997.
(2) Funds were first received in this option during May 1998.
(3) Funds were first received in this option during June 1997.
(4) Funds were first received in this option during April 1998.
(5) Funds were first received in this option during April 1997.
(6) Funds were first received in this option during November 1998.
(7) Funds were first received in this option during September 1998.
(8) Funds were first received in this option during December 1998.
(9) Funds were first received in this option during March 1998.
(10) Funds were first received in this option during July 1998.
(11) Funds were first received in this option during November 1997.
82
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE VIII
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS SINCE 1996
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.50%
(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, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.502 $11.422(1)
Value at end of period $13.873 $13.502
Number of accumulation units outstanding at end
of period 14,280 9,985
AETNA BALANCED VP, INC
Value at beginning of period $13.107 $11.009(1)
Value at end of period $15.099 $13.107
Number of accumulation units outstanding at end
of period 9,091 7,997
AETNA BOND VP
Value at beginning of period $11.166 $10.442(1)
Value at end of period $11.896 $11.166
Number of accumulation units outstanding at end
of period 27,680 2,940
AETNA CROSSROADS VP
Value at beginning of period $12.864 $11.093(1)
Value at end of period $13.421 $12.864
Number of accumulation units outstanding at end
of period 22,768 30,806
AETNA GROWTH VP
Value at beginning of period $13.027(2)
Value at end of period $17.834
Number of accumulation units outstanding at end
of period 3,470
AETNA GROWTH AND INCOME VP
Value at beginning of period $14.624 $11.429 $10.000(3)
Value at end of period $16.493 $14.624 $11.429
Number of accumulation units outstanding at end
of period 47,950 40,309 5
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.397 $11.374(1)
Value at end of period $18.665 $14.397
Number of accumulation units outstanding at end
of period 16,814 3,156
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $9.216(4)
Value at end of period $10.872
Number of accumulation units outstanding at end
of period 45
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $7.150(4)
Value at end of period $8.800
Number of accumulation units outstanding at end
of period 78
AETNA LEGACY VP
Value at beginning of period $12.257 $10.835(5)
Value at end of period $12.913 $12.257
Number of accumulation units outstanding at end
of period 14,097 14,983
AETNA MONEY MARKET VP
Value at beginning of period $10.641 $10.249(1)
Value at end of period $11.055 $10.641
Number of accumulation units outstanding at end
of period 13,218 13,868
AETNA SMALL COMPANY VP
Value at beginning of period $13.629 $13.952(6)
Value at end of period $13.574 $13.629
Number of accumulation units outstanding at end
of period 3,581 47
</TABLE>
83
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
--------------- ---------------- ----------------
<S> <C> <C> <C>
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $13.237 $12.103(7)
Value at end of period $15.960 $13.237
Number of accumulation units outstanding at end
of period 2,432 795
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $12.877 $10.955(1)
Value at end of period $14.749 $12.877
Number of accumulation units outstanding at end
of period 1,709 1,007
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $13.606 $10.905(1)
Value at end of period $14.961 $13.606
Number of accumulation units outstanding at end
of period 9,414 9,207
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $12.560 $10.537(1)
Value at end of period $17.259 $12.560
Number of accumulation units outstanding at end
of period 12,956 2,793
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $11.678 $10.566(1)
Value at end of period $12.971 $11.678
Number of accumulation units outstanding at end
of period 468 107
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $13.701 $11.436(1)
Value at end of period $17.543 $13.701
Number of accumulation units outstanding at end
of period 11,751 8,704
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $10.518 $9.477 $10.000(3)
Value at end of period $13.911 $10.518 $9.477
Number of accumulation units outstanding at end
of period 13,650 12,648 9
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $13.310 $11.136(1)
Value at end of period $17.607 $13.310
Number of accumulation units outstanding at end
of period 20,319 2,801
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $11.960 $10.955(5)
Value at end of period $12.855 $11.960
Number of accumulation units outstanding at end
of period 248 118
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $13.123 $11.002(1)
Value at end of period $17.537 $13.123
Number of accumulation units outstanding at end
of period 8,842 5,724
JANUS ASPEN WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $13.634 $11.483(1)
Value at end of period $17.315 $13.634
Number of accumulation units outstanding at end
of period 23,085 16,828
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $11.973 $11.712(1)
Value at end of period $9.480 $11.973
Number of accumulation units outstanding at end
of period 318 627
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $9.973(8)
Value at end of period $9.878
Number of accumulation units outstanding at end
of period 3
PORTFOLIO PARTNERS MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period $9.850 $9.976(9)
Value at end of period $12.582 $9.850
Number of accumulation units outstanding at end
of period 5,349 2,413
</TABLE>
84
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------------- -----
<S> <C> <C> <C>
PORTFOLIO PARTNERS MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period $8.649 $8.821(9)
Value at end of period $10.479 $8.649
Number of accumulation units outstanding at end
of period 1,814 442
PORTFOLIO PARTNERS MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $12.365 $12.192(9)
Value at end of period $15.438 $12.365
Number of accumulation units outstanding at end
of period 1,256 80
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $11.418 $11.279(9)
Value at end of period $13.396 $11.418
Number of accumulation units outstanding at end
of period 3,208 2,665
PORTFOLIO PARTNERS T. ROWE PRICE
GROWTH PORTFOLIO
Value at beginning of period $13.212 $12.951(9)
Value at end of period $16.608 $13.212
Number of accumulation units outstanding at end
of period 5,824 3,802
</TABLE>
- -----------------
(1) Funds were first received in this option during January 1997.
(2) Funds were first received in this option during January 1998.
(3) 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) Funds were first received in this option during August 1998.
(5) Funds were first received in this option during April 1997.
(6) Funds were first received in this option during September 1997.
(7) Funds were first received in this option during July 1997.
(8) Funds were first received in this option during May 1998.
(9) Funds were first received in this option during November 1997.
85
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE IX
FOR CONTRACTS ISSUED UNDER 403(b) PLANS AND DEFERRED COMPENSATION PLANS
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, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996 1995
----------------- ------------------ ----------------- -------------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.422 $13.025 $10.673 $10.000(1)
Value at end of period $15.886 $15.422 $13.025 $10.673
Number of accumulation units
outstanding at end of period 3,508,677 3,543,367 1,314,997 393,053
AETNA BALANCED VP
Value at beginning of period $18.811 $15.551 $13.673 $10.868
Value at end of period $21.723 $18.811 $15.551 $13.673
Number of accumulation units
outstanding at end of period 25,990,902 34,194,804 36,147,028 38,152,395
AETNA BOND VP
Value at beginning of period $13.238 $12.377 $12.098 $10.360
Value at end of period $14.137 $13.238 $12.377 $12.098
Number of accumulation units
outstanding at end of period 15,101,998 18,047,780 20,036,622 21,379,976
AETNA CROSSROADS VP
Value at beginning of period $14.456 $12.450 $10.612 $10.000(1)
Value at end of period $15.120 $14.456 $12.450 $10.612
Number of accumulation units
outstanding at end of period 2,863,812 2,469,082 918,336 294,673
AETNA GROWTH VP
Value at beginning of period $13.173 $11.635(5)
Value at end of period $17.912 $13.173
Number of accumulation units
outstanding at end of period 2,395,680 41,928
AETNA GROWTH AND
INCOME VP
Value at beginning of period $22.194 $17.302 $14.077 $10.778
Value at end of period $25.094 $22.194 $17.302 $14.077
Number of accumulation units
outstanding at end of period 134,233,828 177,627,474 185,328,132 188,964,022
AETNA HIGH YIELD VP
Value at beginning of period $9.969(7)
Value at end of period $9.212
Number of accumulation units
outstanding at end of period 91,056
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.444 $10.924 $10.000(8)
Value at end of period $18.772 $14.444 $10.924
Number of accumulation units
outstanding at end of period 7,100,483 4,796,644 879,588
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $10.107(7)
Value at end of period $10.891
Number of accumulation units
outstanding at end of period 146,921
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $9.996(7)
Value at end of period $8.815
Number of accumulation units
outstanding at end of period 253,184
AETNA INTERNATIONAL VP
Value at beginning of period $10.182(7)
Value at end of period $9.765
Number of accumulation units
outstanding at end of period 97,660
<CAPTION>
1994 1993 1992 1991 1990 1989
--------------- -------------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA BALANCED VP
Value at beginning of period $11.057 $10.189 $12.736(2) $10.896 $10.437 $10.000(3)
Value at end of period $10.868 $11.057 $10.189 $12.736 $10.896 $10.437
Number of accumulation units
outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986
AETNA BOND VP
Value at beginning of period $10.905 $10.068 $36.789(4) $31.192 $28.943 $25.574
Value at end of period $10.360 $10.905 $10.068 $36.789 $31.192 $28.943
Number of accumulation units
outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834
AETNA CROSSROADS VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
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 $11.020 $10.454 $97.165(6) $77.845 $76.311 $59.871
Value at end of period $10.778 $11.020 $10.454 $97.165 $77.845 $76.311
Number of accumulation units
outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820
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>
86
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------------- ------------------ -------------- -------------------
<S> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $13.491 $11.930 $10.580 $10.000(1)
Value at end of period $14.248 $13.491 $11.930 $10.580
Number of accumulation units
outstanding at end of period 11,971,281 1,624,842 513,590 143,637
AETNA MONEY MARKET VP
Value at beginning of period $11.951 $11.473 $11.026 $10.528
Value at end of period $12.447 $11.951 $11.473 $11.026
Number of accumulation units
outstanding at end of period 10,102,496 12,191,085 13,898,826 12,999,680
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $10.126(7)
Value at end of period $8.873
Number of accumulation units
outstanding at end of period 90,949
AETNA SMALL COMPANY
VP
Value at beginning of period $13.654 $12.299(10)
Value at end of period $13.633 $13.654
Number of accumulation units
outstanding at end of period 1,696,714 253,548
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $13.261 $12.913(11)
Value at end of period $16.030 $13.261
Number of accumulation units
outstanding at end of period 1,079,291 100,928
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $17.840 $15.044 $13.527 $10.554
Value at end of period $20.485 $17.840 $15.044 $13.527
Number of accumulation units
outstanding at end of period 1,306,652 1,499,989 1,313,324 966,098
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $15.837 $12.518 $11.092 $10.000(2)
Value at end of period $17.459 $15.837 $12.518 $11.092
Number of accumulation units
outstanding at end of period 6,281,077 7,111,490 5,007,706 1,660,304
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $13.904 $11.402 $10.066 $10.000(1)
Value at end of period $19.155 $13.904 $11.402 $10.066
Number of accumulation units
outstanding at end of period 7,144,438 6,586,698 5,171,098 1,833,794
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $12.269 $11.137 $9.961 $10.000(1)
Value at end of period $13.662 $12.269 $11.137 $9.961
Number of accumulation units
outstanding at end of period 651,566 718,565 487,709 196,090
FIDELITY VIP II
CONTRAFUND PORTFOLIO
Value at beginning of period $15.270 $12.455 $10.397 $10.000(1)
Value at end of period $19.601 $15.270 $12.455 $10.397
Number of accumulation units
outstanding at end of period 9,575,608 11,399,666 6,812,870 2,116,732
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $15.801 $14.202 $13.322 $10.581
Value at end of period $20.951 $15.801 $14.202 $13.322
Number of accumulation units
outstanding at end of period 7,536,062 9,271,525 8,835,470 4,887,060
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.012 $12.449 $10.850 $10.000(1)
Value at end of period $19.908 $15.012 $12.449 $10.850
Number of accumulation units
outstanding at end of period 3,192,160 1,911,789 996,510 93,304
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.373 $13.022 $12.077 $9.873
Value at end of period $15.487 $14.373 $13.022 $12.077
Number of accumulation units
outstanding at end of period 1,213,451 934,053 619,287 315,361
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ------------- ------------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA MONEY MARKET VP
Value at beginning of period $10.241 $10.048 $33.812(9) $32.138 $30.012 $27.783
Value at end of period $10.528 $10.241 $10.048 $33.812 $32.138 $30.012
Number of accumulation units
outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033
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
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $11.036 $10.278 $10.000(12)
Value at end of period $10.554 $11.036 $10.278
Number of accumulation units
outstanding at end of period 521,141 144,168 2,556
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP II
CONTRAFUND PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $10.581
Number of accumulation units
outstanding at end of period 753,862
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $9.873
Number of accumulation units
outstanding at end of period 28,543
</TABLE>
87
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
----------------- --------------------- -------------
<S> <C> <C> <C>
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $15.414 $12.716 $10.870
Value at end of period $20.651 $15.414 $12.716
Number of accumulation units
outstanding at end of period 2,995,268 3,100,436 2,018,527
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $16.720 $13.860 $10.877
Value at end of period $21.288 $16.720 $13.860
Number of accumulation units
outstanding at end of period 14,519,620 17,194,687 8,715,825
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $15.541 $14.686 $11.720
Value at end of period $12.336 $15.541 $14.686
Number of accumulation units
outstanding at end of period 755,984 1,786,409 966,482
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.079(7)
Value at end of period $10.018
Number of accumulation units
outstanding at end of period 39,441
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $10.015(7)
Value at end of period $9.895
Number of accumulation units
outstanding at end of period 71,074
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $14.927 $15.114(14)
Value at end of period $19.114 $14.927
Number of accumulation units
outstanding at end of period 11,377,408 16,549,322
PORTFOLIO PARTNERS
MFS RESEARCH
PORTFOLIO
Value at beginning of period $13.795 $14.067(14)
Value at end of period $16.758 $13.795
Number of accumulation units
outstanding at end of period 8,758,123 11,539,850
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $19.291 $19.016(14)
Value at end of period $24.145 $19.291
Number of accumulation units
outstanding at end of period 2,186,996 2,879,845
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $16.986 $16.776(14)
Value at end of period $19.978 $16.986
Number of accumulation units
outstanding at end of period 4,030,904 6,242,299
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.400 $14.112(14)
Value at end of period $18.146 $14.400
Number of accumulation units
outstanding at end of period 6,541,819 8,296,964
<CAPTION>
1995 1994 1993 1992 1991 1990 1989
---------------- ---------- ---------- ------------------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
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 259,196
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.877
Number of accumulation units
outstanding at end of period 1,036,040
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $10.154 $10.877 $9.832 $10.000(12)
Value at end of period $11.720 $10.154 $10.877 $9.832
Number of accumulation units
outstanding at end of period 711,892 703,676 135,614 561
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
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS RESEARCH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</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 August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $13.118. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(3) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
88
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(4) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $38.521. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(5) Funds were first received in this option during June 1997.
(6) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $97.817. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(7) Funds were first received in this option during May 1998.
(8) The initial accumulation unit value was established at $10.000 during
August 1996, when the portfolio became available under the contract.
(9) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $34.397. On the
date of conversion, additional units were issued so that account value
were not changed as a result of the conversion.
(10) Funds were first received in this option during July 1997.
(11) Funds were first received in this option during August 1997.
(12) The initial accumulation unit value was established at $10.000 on August
21, 1992, the date on which the fund/portfolio became available under the
contract.
(13) The initial accumulation unit value was established at $10.000 during
October 1994, when the funds were first received in this option.
(14) Funds were first received in this option during November 1997.
89
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE X
FOR MULTIPLE OPTION CONTRACTS ISSUED TO
SAN BERNARDINO COUNTY AND MACOMB COUNTY
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, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996 1995
----------------- ----------------- ------------- -------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.422 $13.291(1)
Value at end of period $15.886 $15.422
Number of accumulation units
outstanding at end of period 21,430 380
AETNA BALANCED VP, INC
Value at beginning of period $24.700 $20.419 $17.954 $14.270
Value at end of period $28.524 $24.700 $20.419 $17.954
Number of accumulation units
outstanding at end of period 2,294,877 2,160,305 2,716,641 9,193,181
AETNA BOND VP
Value at beginning of period $51.330 $47.992 $46.913 $40.173
Value at end of period $54.819 $51.330 $47.992 $46.913
Number of accumulation units
outstanding at end of period 994,987 959,336 835,724 2,377,622
AETNA CROSSROADS VP
Value at beginning of period $14.456 $12.577(1)
Value at end of period $15.120 $14.456
Number of accumulation units
outstanding at end of period 31,468 873
AETNA GROWTH VP
Value at beginning of period $11.392(3)
Value at end of period $13.597
Number of accumulation units
outstanding at end of period 17
AETNA GROWTH AND
INCOME VP
Value at beginning of period $217.359 $169.448 $137.869 $105.558
Value at end of period $245.765 $217.359 $169.448 $137.869
Number of accumulation units
outstanding at end of period 1,747,097 1,826,355 2,071,139 6,364,000
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.444 $14.493(14)
Value at end of period $18.772 $14.444
Number of accumulation units
outstanding at end of period 1,302,825 17,771
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $9.928(4)
Value at end of period $11.338
Number of accumulation units
outstanding at end of period 35,201
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $10.193(4)
Value at end of period $9.157
Number of accumulation units
outstanding at end of period 81,388
AETNA LEGACY VP
Value at beginning of period $13.491 $12.296(5)
Value at end of period $14.248 $13.491
Number of accumulation units
outstanding at end of period 95,526 2,279
AETNA MONEY MARKET VP
Value at beginning of period $41.174 $39.528 $37.988 $36.271
Value at end of period $42.883 $41.174 $39.528 $37.988
Number of accumulation units
outstanding at end of period 564,537 455,502 597,656 1,836,260
<CAPTION>
1994 1993 1992 1991 1990 1989
-------------- -------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA BALANCED VP, INC
Value at beginning of period $14.519 $13.379 $12.736 $10.896 $10.437 $10.000(2)
Value at end of period $14.270 $14.519 $13.379 $12.736 $10.896 $10.437
Number of accumulation units
outstanding at end of period 21,990,186 30,784,750 34,802,433 22,898,099 17,078,985 9,535,986
AETNA BOND VP
Value at beginning of period $42.283 $39.038 $36.789 $31.192 $28.943 $25.574
Value at end of period $40.173 $42.283 $39.038 $36.789 $31.192 $28.943
Number of accumulation units
outstanding at end of period 5,108,720 8,210,666 8,507,292 7,844,412 6,984,793 6,202,834
AETNA CROSSROADS VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
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 $107.925 $102.383 $97.165 $77.845 $76.311 $59.871
Value at end of period $105.558 $107.925 $102.383 $97.165 $77.845 $76.311
Number of accumulation units
outstanding at end of period 13,966,072 21,148,863 24,201,565 20,948,226 18,362,906 17,142,820
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 LEGACY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA MONEY MARKET VP
Value at beginning of period $35.282 $34.619 $33.812 $32.138 $30.012 $27.783
Value at end of period $36.271 $35.282 $34.619 $33.812 $32.138 $30.012
Number of accumulation units
outstanding at end of period 3,679,802 5,086,515 7,534,662 8,430,082 10,220,110 8,286,033
</TABLE>
90
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
------------------ ---------------- ------------- -----------------
<S> <C> <C> <C> <C>
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $11.472(4)
Value at end of period $12.088
Number of accumulation units
outstanding at end of period 33,957
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $23.675 $19.965 $17.951 $13.990
Value at end of period $27.186 $23.675 $19.965 $17.951
Number of accumulation units
outstanding at end of period 917,567 929,282 898,279 856,361
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $16.587 $13.110 $11.617 $10.000(7)
Value at end of period $18.285 $16.587 $13.110 $11.617
Number of accumulation units
outstanding at end of period 2,533,673 2,139,178 1,454,755 628,582
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $14.087 $11.843(8)
Value at end of period $19.406 $14.087
Number of accumulation units
outstanding at end of period 72 29
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $11.400 $10.197 $10.000(9)
Value at end of period $12.560 $11.400 $10.197
Number of accumulation units
outstanding at end of period 0 1,302
FIDELITY VIP II
CONTRAFUND PORTFOLIO
Value at beginning of period $17.276 $14.092 $11.763 $10.000(7)
Value at end of period $22.177 $17.276 $14.092 $11.763
Number of accumulation units
outstanding at end of period 3,333,320 2,706,862 1,522,169 525,476
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $18.174 $16.334 $15.323 $12.169
Value at end of period $24.098 $18.174 $16.334 $15.323
Number of accumulation units
outstanding at end of period 2,142,130 1,939,607 1,893,718 1,280,953
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.016 $12.453 $10.853 $10.000(9)
Value at end of period $19.914 $15.016 $12.453 $10.853
Number of accumulation units
outstanding at end of period 3,698 7,873 231 161
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.430 $13.074 $12.124 $9.911
Value at end of period $15.548 $14.430 $13.074 $12.124
Number of accumulation units
outstanding at end of period 8,967 5,211 3,761 3,345
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $16.816 $13.872 $11.859 $10.000(9)
Value at end of period $22.529 $16.816 $13.872 $11.859
Number of accumulation units
outstanding at end of period 1,354,047 1,109,942 663,945 109,717
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $18.690 $15.493 $12.158 $10.000(9)
Value at end of period $23.797 $18.690 $15.493 $12.158
Number of accumulation units
outstanding at end of period 4,687,167 3,873,511 2,090,908 314,653
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $14.403 $13.611 $10.862 $9.412
Value at end of period $11.433 $14.403 $13.611 $10.862
Number of accumulation units
outstanding at end of period 534,962 650,486 587,248 530,562
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.077(12)
Value at end of period $10.303
Number of accumulation units
outstanding at end of period 20,548
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ---------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA VALUE
OPPORTUNITY VP
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 $14.640 $13.726 $12.913 $11.233 $10.568 $10.000(6)
Value at end of period $13.990 $14.640 $13.726 $12.913 $11.233 $10.568
Number of accumulation units
outstanding at end of period 743,464 705,415 503,006 355,851 148,576 20,710
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP II
CONTRAFUND PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $12.169
Number of accumulation units
outstanding at end of period 393,553
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $10.000(11)
Value at end of period $9.911
Number of accumulation units
outstanding at end of period 1,555
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $10.071 $9.193 $9.018 $9.608 $11.441 $10.000(6)
Value at end of period $9.412 $10.071 $9.193 $9.018 $9.608 $11.441
Number of accumulation units
outstanding at end of period 533,016 341,771 198,338 144,139 75,052 11,481
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</TABLE>
91
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---------------- ------------------- ------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $10.055(4)
Value at end of period $9.935
Number of accumulation units
outstanding at end of period 100,555
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $15.046 $15.236(13)
Value at end of period $19.268 $15.046
Number of accumulation units
outstanding at end of period 3,101,880 2,707,904
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $11.960 $12.195(13)
Value at end of period $14.528 $11.960
Number of accumulation units
outstanding at end of period 1,379,653 232,418
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $23.440 $23.106(13)
Value at end of period $29.339 $23.440
Number of accumulation units
outstanding at end of period 2,244,308 2,018,219
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $17.709 $17.490(13)
Value at end of period $20.829 $17.709
Number of accumulation units
outstanding at end of period 2,962,631 3,237,710
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $16.608 $16.276(13)
Value at end of period $20.929 $16.608
Number of accumulation units
outstanding at end of period 1,564,888 1,317,058
</TABLE>
- -----------------
(1) Funds were first received in this option during February 1997.
(2) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
(3) Funds were first received in this option during September 1998.
(4) Funds were first received in this option during May 1998.
(5) Funds were first received in this option during February 1997.
(6) The initial accumulation unit value was established at $10.000 on May 31,
1989, the date on which the fund/portfolio became available under the
contract.
(7) The initial accumulation unit value was established at $10.000 during May
1995, when the fund became available under the contract.
(8) Funds were first received in this option during January 1997.
(9) The initial accumulation unit value was established at $10.000 during July
1995, when the fund became available under the contract.
(10) The initial accumulation unit value was established at $10.000 during June
1994, when funds were first received in this option.
(11) The initial accumulation unit value was established at $10.000 during
November 1994, when funds were first received in this option.
(12) Funds were first received in this option during June 1998.
(13) Funds were first received in this option during November 1997.
(14) Funds were first received in this option during December 1997.
92
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE XI
FOR CONTRACTS ISSUED UNDER 403(b) PLANS AND DEFERRED COMPENSATION PLANS
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 two-year period ended December 31, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997
--------------- -----------------
<S> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.394 $13.020(1)
Value at end of period $15.818 $15.394
Number of accumulation units outstanding at end of period 38,620 29,840
AETNA BALANCED VP
Value at beginning of period $18.776 $15.674(1)
Value at end of period $21.629 $18.776
Number of accumulation units outstanding at end of period 385,862 478,117
AETNA BOND VP
Value at beginning of period $13.213 $12.302(1)
Value at end of period $14.076 $13.213
Number of accumulation units outstanding at end of period 199,388 215,650
AETNA CROSSROADS VP
Value at beginning of period $14.430 $12.449(1)
Value at end of period $15.055 $14.430
Number of accumulation units outstanding at end of period 32,997 26,483
AETNA GROWTH VP(10)
Value at beginning of period $13.149 $12.739(2)
Value at end of period $17.834 $13.149
Number of accumulation units outstanding at end of period 36,839 3,326
AETNA GROWTH AND INCOME VP
Value at beginning of period $22.153 $17.861(1)
Value at end of period $24.986 $22.153
Number of accumulation units outstanding at end of period 1,587,351 1,699,982
AETNA HIGH YIELD VP
Value at beginning of period $9.616(3)
Value at end of period $9.196
Number of accumulation units outstanding at end of period 65
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.418 $11.345(1)
Value at end of period $18.691 $14.418
Number of accumulation units outstanding at end of period 68,841 27,945
AETNA INDEX PLUS MID CAP VP
Value at beginning of periodd
Value at end of period $9.946(4)
Value at end of period $10.872
Number of accumulation units outstanding at end of period 203
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $9.775(5)
Value at end of period $8.800
Number of accumulation units outstanding at end of period 598
AETNA INTERNATIONAL VP
Value at beginning of period $9.737(6)
Value at end of period $9.748
Number of accumulation units outstanding at end of period 1,095
AETNA LEGACY VP
Value at beginning of period $13.467 $11.873(1)
Value at end of period $14.187 $13.467
Number of accumulation units outstanding at end of period 32,088 14,817
AETNA MONEY MARKET VP
Value at beginning of period $11.929 $11.592(1)
Value at end of period $12.393 $11.929
Number of accumulation units outstanding at end of period 123,429 176,703
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $8.524(7)
Value at end of period $8.857
Number of accumulation units outstanding at end of period 1,342
AETNA SMALL COMPANY VP
Value at beginning of period $13.629 $13.629(2)
Value at end of period $13.574 $13.629
Number of accumulation units outstanding at end of period 21,070 82
</TABLE>
93
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
--------------- ----------------
<S> <C> <C>
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $13.237 $13.237(2)
Value at end of period $15.960 $13.237
Number of accumulation units outstanding at end of period 15,870 84
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $17.808 $14.934(1)
Value at end of period $20.397 $17.808
Number of accumulation units outstanding at end of period 24,487 20,521
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $15.808 $12.711(1)
Value at end of period $17.384 $15.808
Number of accumulation units outstanding at end of period 222,658 117,588
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $13.879 $11.373(1)
Value at end of period $19.072 $13.879
Number of accumulation units outstanding at end of period 228,969 104,982
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $12.247 $11.253(1)
Value at end of period $13.603 $12.247
Number of accumulation units outstanding at end of period 11,523 8,098
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $15.242 $12.388(1)
Value at end of period $19.516 $15.242
Number of accumulation units outstanding at end of period 157,444 146,381
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $15.773 $12.594(1)
Value at end of period $20.861 $15.773
Number of accumulation units outstanding at end of period 100,075 85,304
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $14.984 $12.760(1)
Value at end of period $19.822 $14.984
Number of accumulation units outstanding at end of period 53,980 19,967
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $14.347 $13.025(1)
Value at end of period $15.420 $14.347
Number of accumulation units outstanding at end of period 14,524 8,189
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $15.386 $12.975(1)
Value at end of period $20.562 $15.386
Number of accumulation units outstanding at end of period 56,525 53,182
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $16.689 $14.439(1)
Value at end of period $21.196 $16.689
Number of accumulation units outstanding at end of period 182,951 168,191
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $15.512 $13.756(1)
Value at end of period $12.283 $15.512
Number of accumulation units outstanding at end of period 14,342 26,426
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Value at beginning of period $9.728(6)
Value at end of period $10.001
Number of accumulation units outstanding at end of period 152
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $9.666(8)
Value at end of period $9.878
Number of accumulation units outstanding at end of period 11
PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $14.899 $15.090(9)
Value at end of period $19.032 $14.899
Number of accumulation units outstanding at end of period 135,641 131,565
PORTFOLIO PARTNERS MFS RESEARCH PORTFOLIO
Value at beginning of period $13.770 $14.044(9)
Value at end of period $16.685 $13.770
Number of accumulation units outstanding at end of period 146,728 149,523
PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO
Value at beginning of period $19.256 $18.985(9)
Value at end of period $24.041 $19.256
Number of accumulation units outstanding at end of period 28,002 25,830
PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $16.955 $16.749(9)
Value at end of period $19.892 $16.955
Number of accumulation units outstanding at end of period 45,320 48,385
PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $14.374 $14.090(9)
Value at end of period $18.068 $14.374
Number of accumulation units outstanding at end of period 91,620 79,799
</TABLE>
94
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(1) Funds were first received in this option during April 1997.
(2) Funds were first received in this option during December 1997.
(3) Funds were first received in this option during August 1998.
(4) Funds were first received in this option during July 1998.
(5) Funds were first received in this option during May 1998.
(6) Funds were first received in this option during June 1998.
(7) Funds were first received in this option during September 1998.
(8) Funds were first received in this option during November 1998.
(9) Funds were first received in this option during November 1997.
95
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE XII
FOR CONTRACTS CONTAINING LIMITS ON FEES ISSUED UNDER 403(b) PLANS
AND DEFERRED COMPENSATION PLANS
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for each of the periods in
the two-year period ended December 31, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997
--------------- -----------------
<S> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.453 $13.971(1)
Value at end of period $15.974 $15.453
Number of accumulation units outstanding at end of period 9,888 10,257
AETNA BALANCED VP
Value at beginning of period $18.837 $16.739(1)
Value at end of period $21.808 $18.837
Number of accumulation units outstanding at end of period 429,954 454,232
AETNA BOND VP
Value at beginning of period $13.249 $12.629(1)
Value at end of period $14.171 $13.249
Number of accumulation units outstanding at end of period 421,225 453,723
AETNA CROSSROADS VP
Value at beginning of period $14.485 $13.199(1)
Value at end of period $15.204 $14.485
Number of accumulation units outstanding at end of period 50,297 50,297
AETNA GROWTH VP
Value at beginning of period $13.173 $12.615(2)
Value at end of period $17.912 $13.173
Number of accumulation units outstanding at end of period 25,257 1,565
AETNA GROWTH AND INCOME VP
Value at beginning of period $22.226 $19.673(1)
Value at end of period $25.193 $22.226
Number of accumulation units outstanding at end of period 5,670,691 6,093,102
AETNA HIGH YIELD VP
Value at beginning of period $9.135(3)
Value at end of period $9.212
Number of accumulation units outstanding at end of period 2,225
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.452 $12.748(1)
Value at end of period $18.802 $14.452
Number of accumulation units outstanding at end of period 48,459 13,748
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $6.682(4)
Value at end of period $8.815
Number of accumulation units outstanding at end of period 748
AETNA LEGACY VP
Value at beginning of period $13.518 $12.496(1)
Value at end of period $14.327 $13.518
Number of accumulation units outstanding at end of period 10,684 16,060
AETNA MONEY MARKET VP
Value at beginning of period $11.951 $11.674(1)
Value at end of period $12.447 $11.951
Number of accumulation units outstanding at end of period 553,915 591,901
AETNA SMALL COMPANY VP
Value at beginning of period $13.654 $13.092(2)
Value at end of period $13.633 $13.654
Number of accumulation units outstanding at end of period 4,297 1,779
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $12.899(5)
Value at end of period $16.030
Number of accumulation units outstanding at end of period 5,261
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $17.840 $16.178(1)
Value at end of period $20.485 $17.840
Number of accumulation units outstanding at end of period 3,612 3,576
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $15.837 $14.065(1)
Value at end of period $17.459 $15.837
Number of accumulation units outstanding at end of period 44,812 49,884
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $13.904 $12.498(1)
Value at end of period $19.155 $13.904
Number of accumulation units outstanding at end of period 41,575 31,477
</TABLE>
96
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
--------------- ----------------
<S> <C> <C>
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $12.269 $12.518(1)
Value at end of period $13.662 $12.269
Number of accumulation units outstanding at end of period 1,816 1,206
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $15.270 $13.443(1)
Value at end of period $19.601 $15.270
Number of accumulation units outstanding at end of period 31,455 29,365
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $15.801 $14.156(1)
Value at end of period $20.951 $15.801
Number of accumulation units outstanding at end of period 32,182 26,177
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $15.012 $13.573(1)
Value at end of period $19.908 $15.012
Number of accumulation units outstanding at end of period 23,035 8,663
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $14.373 $13.448(1)
Value at end of period $15.487 $14.373
Number of accumulation units outstanding at end of period 9,337 323
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $15.414 $13.985(1)
Value at end of period $20.651 $15.414
Number of accumulation units outstanding at end of period 7,088 6,389
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $16.720 $15.828(1)
Value at end of period $21.288 $16.720
Number of accumulation units outstanding at end of period 67,482 63,534
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $15.541 $15.221(1)
Value at end of period $12.336 $15.541
Number of accumulation units outstanding at end of period 745 8,053
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Value at beginning of period $8.115(4)
Value at end of period $10.018
Number of accumulation units outstanding at end of period 2,465
PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $14.927 $15.114(6)
Value at end of period $19.114 $14.927
Number of accumulation units outstanding at end of period 40,140 56,819
PORTFOLIO PARTNERS MFS RESEARCH PORTFOLIO
Value at beginning of period $13.795 $14.067(6)
Value at end of period $16.758 $13.795
Number of accumulation units outstanding at end of period 56,680 55,233
PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO
Value at beginning of period $19.291 $19.016(6)
Value at end of period $24.145 $19.291
Number of accumulation units outstanding at end of period 5,460 7,188
PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $16.986 $16.776(6)
Value at end of period $19.978 $16.986
Number of accumulation units outstanding at end of period 3,855 6,970
PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $14.400 $14.112(6)
Value at end of period $18.146 $14.400
Number of accumulation units outstanding at end of period 29,384 24,650
</TABLE>
- -----------------
(1) Funds were first received in this option during June 1997.
(2) Funds were first received in this option during December 1997.
(3) Funds were first received in this option during December 1998.
(4) Funds were first received in this option during October 1998.
(5) Funds were first received in this option during January 1998.
(6) Funds were first received in this option during November 1997.
97
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE XIII
FOR DEFERRED COMPENSATION CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES
OF 0.95% EFFECTIVE ON JANUARY 15, 1996
(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, 1998 (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, 1998 are included in
the Statement of Additional Information. The accumulation unit values and the
percentage change in the value of an accumulation unit reflect a mortality and
expense risk charge of 1.25% until January 15, 1996, when the mortality and
expense risk charge was reduced to 0.95% during the accumulation phase. It will
increase to 1.25% during the income phase.
<TABLE>
<CAPTION>
1998 1997 1996 1995
--------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.514 $13.063 $10.673 $10.000(1)
Value at end of period $16.028 $15.514 $13.063 $10.673
Number of accumulation units
outstanding at end of period 80,754 65,940 22,888 393,053
AETNA BALANCED VP, INC
Value at beginning of period $18.922 $15.596 $13.673 $10.868
Value at end of period $21.917 $18.922 $15.596 $13.673
Number of accumulation units
outstanding at end of period 768,510 776,268 768,178 38,152,395
AETNA BOND VP
Value at beginning of period $13.316 $12.413 $12.098 $10.360
Value at end of period $14.264 $13.316 $12.413 $12.098
Number of accumulation units
outstanding at end of period 389,466 328,774 354,731 21,379,976
AETNA CROSSROADS VP
Value at beginning of period $14.541 $12.486 $10.612 $10.000(1)
Value at end of period $15.255 $14.541 $12.486 $10.612
Number of accumulation units
outstanding at end of period 78,788 71,276 35,151 294,673
AETNA GROWTH VP
Value at beginning of period $13.202 $12.787(5)
Value at end of period $18.005 $13.202
Number of accumulation units
outstanding at end of period 115,677 6,619
AETNA GROWTH AND
INCOME VP
Value at beginning of period $22.325 $17.352 $14.077 $10.778
Value at end of period $25.319 $22.325 $17.352 $14.077
Number of accumulation units
outstanding at end of period 5,019,611 5,232,193 4,796,196 188,964,022
AETNA HIGH YIELD VP
Value at beginning of period $9.216(7)
Value at end of period $9.231
Number of accumulation units
outstanding at end of period 1,842
AETNA INDEX PLUS
LARGE CAP VP
Value at beginning of period $14.500 $10.934 $10.000(8)
Value at end of period $18.902 $14.500 $10.934
Number of accumulation units
outstanding at end of period 386,036 159,318 27,436
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $7.633(9)
Value at end of period $10.913
Number of accumulation units
outstanding at end of period 5,166
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $6.425(9)
Value at end of period $8.834
Number of accumulation units
outstanding at end of period 6,054
AETNA INTERNATIONAL VP
Value at beginning of period $8.779(9)
Value at end of period 9.785
Number of accumulation units
outstanding at end of period 583
<CAPTION>
1994 1993 1992 1991 1990 1989
--------------- -------------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA BALANCED VP, INC
Value at beginning of period $11.057 $10.189 $12.736(2) $10.896 $10.437 $10.000(3)
Value at end of period $10.868 $11.057 $10.189 $12.736 $10.896 $10.437
Number of accumulation units
outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986
AETNA BOND VP
Value at beginning of period $10.905 $10.068 $36.789(4) $31.192 $28.943 $25.574
Value at end of period $10.360 $10.905 $10.068 $36.789 $31.192 $28.943
Number of accumulation units
outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834
AETNA CROSSROADS VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
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 $11.020 $10.454 $97.165(6) $77.845 $76.311 $59.871
Value at end of period $10.778 $11.020 $10.454 $97.165 $77.845 $76.311
Number of accumulation units
outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820
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>
98
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
--------------- ------------------ ---------- -------------------
<S> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $13.571 $11.965 $10.580 $10.000(1)
Value at end of period $14.375 $13.571 $11.965 $10.580
Number of accumulation units
outstanding at end of period 63,385 38,899 13,861 143,637
AETNA MONEY MARKET VP
Value at beginning of period $12.022 $11.506 $11.026 $10.528
Value at end of period $12.558 $12.022 $11.506 $11.026
Number of accumulation units
outstanding at end of period 230,562 262,519 228,698 12,999,680
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $8.634(9)
Value at end of period $8.891
Number of accumulation units
outstanding at end of period 673
AETNA SMALL COMPANY
VP
Value at beginning of period $13.684 $13.119(5)
Value at end of period $13.704 $13.684
Number of accumulation units
outstanding at end of period 61,244 1,098
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $13.290 $13.037(11)
Value at end of period $16.113 $13.290
Number of accumulation units
outstanding at end of period 54,627 3,417
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $17.946 $15.088 $13.527 $10.554
Value at end of period $20.668 $17.946 $15.088 $13.527
Number of accumulation units
outstanding at end of period 71,154 66,428 57,557 966,098
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $15.931 $12.554 $11.092 $10.000(1)
Value at end of period $17.615 $15.931 $12.554 $11.092
Number of accumulation units
outstanding at end of period 239,214 196,921 116,432 1,660,304
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $13.987 $11.435 $10.066 $10.000(1)
Value at end of period $19.326 $13.987 $11.435 $10.066
Number of accumulation units
outstanding at end of period 292,985 181,487 112,748 1,833,794
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $12.342 $11.169 $9.961 $10.000(1)
Value at end of period $13.784 $12.342 $11.169 $9.961
Number of accumulation units
outstanding at end of period 26,108 22,047 10,848 196,090
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period $15.360 $12.491 $10.397 $10.000(1)
Value at end of period $19.776 $15.360 $12.491 $10.397
Number of accumulation units
outstanding at end of period 209,707 171,832 92,021 2,116,732
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $15.895 $14.243 $13.322 $10.581
Value at end of period $21.139 $15.895 $14.243 $13.322
Number of accumulation units
outstanding at end of period 283,821 253,316 226,504 4,887,060
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.100 $12.485 $10.850 $10.000(1)
Value at end of period $20.086 $15.100 $12.485 $10.850
Number of accumulation units
outstanding at end of period 105,755 45,503 29,442 93,304
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.458 $13.060 $12.077 $9.873
Value at end of period $15.626 $14.458 $13.060 $12.077
Number of accumulation units
outstanding at end of period 57,101 13,925 6,607 315,361
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ------------- ------------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA MONEY MARKET VP
Value at beginning of period $10.241 $10.048 $33.812(10) $32.138 $30.012 $27.783
Value at end of period $10.528 $10.241 $10.048 $33.812 $32.138 $30.012
Number of accumulation units
outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033
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
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $11.036 $10.278 $10.000(12)
Value at end of period $10.554 $11.036 $10.278
Number of accumulation units
outstanding at end of period 521,141 144,168 2,556
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $10.581
Number of accumulation units
outstanding at end of period 753,862
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $9.873
Number of accumulation units
outstanding at end of period 28,543
</TABLE>
99
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
--------------- ------------------ ----------
<S> <C> <C> <C>
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $15.505 $12.753 $10.870
Value at end of period $20.836 $15.505 $12.753
Number of accumulation units
outstanding at end of period 128,844 83,855 51,761
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $16.819 $13.900 $10.877
Value at end of period $21.478 $16.819 $13.900
Number of accumulation units
outstanding at end of period 655,881 511,940 212,494
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $15.633 $14.729 $11.720
Value at end of period $12.446 $15.633 $14.729
Number of accumulation units
outstanding at end of period 37,897 73,258 42,174
OPPEHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $8.907(9)
Value at end of period $10.039
Number of accumulation units
outstanding at end of period 774
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $9.660(9)
Value at end of period $9.915
Number of accumulation units
outstanding at end of period 176
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $15.015 $15.199(14)
Value at end of period $19.285 $15.015
Number of accumulation units
outstanding at end of period 595,462 573,528
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $13.877 $14.147(14)
Value at end of period $16.907 $13.877
Number of accumulation units
outstanding at end of period 378,798 418,965
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $19.405 $19.123(14)
Value at end of period $24.361 $19.405
Number of accumulation units
outstanding at end of period 182,557 192,553
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $17.087 $16.871(14)
Value at end of period $20.157 $17.087
Number of accumulation units
outstanding at end of period 273,684 295,952
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.485 $14.192(14)
Value at end of period $18.309 $14.485
Number of accumulation units
outstanding at end of period 277,044 212,654
<CAPTION>
1995 1994 1993 1992 1991 1990 1989
---------------- ---------- ---------- ------------------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
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 259,196
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.877
Number of accumulation units
outstanding at end of period 1,036,040
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $10.154 $10.877 $9.832 $10.000(12)
Value at end of period $11.720 $10.154 $10.877 $9.832
Number of accumulation units
outstanding at end of period 711,892 703,676 135,614 561
OPPEHEIMER 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
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</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 August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $13.118. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(3) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
100
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(4) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $38.521. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(5) Funds were first received in this option during December 1997.
(6) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $97.817. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(7) Funds were first received in this option during November 1998.
(8) The initial accumulation unit value was established during August 1996
when the portfolio became available under the contract, when funds were
first received in this option or when the applicable daily asset charge
was first utilized. Funds were first received in this option during
October 1998.
(9) Funds were first received in this option during October 1998.
(10) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $34.397. 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 August 1997.
(12) The initial accumulation unit value was established at $10.000 on August
21, 1992, the date on which the fund/portfolio became available under
contract.
(13) The initial accumulation unit value was established at $10.000 during
October 1994, when the funds were first received in this option.
(14) Funds were first received in this option during November 1997.
101
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE XIV
FOR DEFERRED COMPENSATION CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES
OF 0.95% EFFECTIVE ON MAY 25, 1996
(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, 1998 (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, 1998 are included in
the Statement of Additional Information. The accumulation unit values and the
percentage change in the value of an accumulation unit reflect a mortality and
expense risk charge of 1.25% until May 25, 1996, when the mortality and expense
risk charge was reduced to 0.95% during the accumulation phase. It will
increase to 1.25% during the income phase.
<TABLE>
<CAPTION>
1998 1997 1996 1995
--------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.497 $13.049 $10.673 $10.000(1)
Value at end of period $16.011 $15.497 $13.049 $10.673
Number of accumulation units
outstanding at end of period 29,149 178,233 35,180 393,053
AETNA BALANCED VP, INC
Value at beginning of period $18.901 $15.579 $13.673 $10.868
Value at end of period $21.893 $18.901 $15.579 $13.673
Number of accumulation units
outstanding at end of period 266,636 1,511,041 1,528,051 38,152,395
AETNA BOND VP
Value at beginning of period $13.301 $12.399 $12.098 $10.360
Value at end of period $14.248 $13.301 $12.399 $12.098
Number of accumulation units
outstanding at end of period 200,650 463,068 493,485 21,379,976
AETNA CROSSROADS VP
Value at beginning of period $14.526 $12.473 $10.612 $10.000(1)
Value at end of period $15.239 $14.526 $12.473 $10.612
Number of accumulation units
outstanding at end of period 30,057 99,660 28,829 294,673
AETNA GROWTH VP
Value at beginning of period $13.202 $12.975(5)
Value at end of period $18.005 $13.202
Number of accumulation units
outstanding at end of period 81,693 4,360
AETNA GROWTH AND
INCOME VP
Value at beginning of period $22.301 $17.333 $14.077 $10.778
Value at end of period $25.291 $22.301 $17.333 $14.077
Number of accumulation units
outstanding at end of period 2,491,029 7,667,724 7,250,286 188,964,022
AETNA HIGH YIELD VP
Value at beginning of period $8.889(7)
Value at end of period $9.231
Number of accumulation units
outstanding at end of period 17
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.500 $10.934 $10.000(8)
Value at end of period $18.902 $14.500 $10.934
Number of accumulation units
outstanding at end of period 145,736 190,348 28,473
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $9.927(9)
Value at end of period $10.913
Number of accumulation units
outstanding at end of period 9,117
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $9.997(9)
Value at end of period $8.834
Number of accumulation units
outstanding at end of period 12,800
AETNA INTERNATIONAL VP
Value at beginning of period $10.183(9)
Value at end of period $9.785
Number of accumulation units
outstanding at end of period 7,767
<CAPTION>
1994 1993 1992 1991 1990 1989
--------------- -------------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA BALANCED VP, INC
Value at beginning of period $11.057 $10.189 $12.736(2) $10.896 $10.437 $10.000(3)
Value at end of period $10.868 $11.057 $10.189 $12.736 $10.896 $10.437
Number of accumulation units
outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986
AETNA BOND VP
Value at beginning of period $10.905 $10.068 $36.789(4) $31.192 $28.943 $25.574
Value at end of period $10.360 $10.905 $10.068 $36.789 $31.192 $28.943
Number of accumulation units
outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834
AETNA CROSSROADS VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
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 $11.020 $10.454 $97.165(6) $77.845 $76.311 $59.871
Value at end of period $10.778 $11.020 $10.454 $97.165 $77.845 $76.311
Number of accumulation units
outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820
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>
102
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------------- ---------------- ---------- -------------------
<S> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $13.557 $11.953 $10.580 $10.000(1)
Value at end of period $14.361 $13.557 $11.953 $10.580
Number of accumulation units
outstanding at end of period 17,756 58,121 15,755 143,637
AETNA MONEY MARKET VP
Value at beginning of period $12.009 $11.494 $11.026 $10.528
Value at end of period $12.545 $12.009 $11.494 $11.026
Number of accumulation units
outstanding at end of period 132,737 328,674 351,832 12,999,680
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $10.127(9)
Value at end of period $8.891
Number of accumulation units
outstanding at end of period 11,639
AETNA SMALL COMPANY
VP
Value at beginning of period $13.684 $13.248(5)
Value at end of period $13.704 $13.684
Number of accumulation units
outstanding at end of period 52,936 12,603
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $13.290 $13.093(5)
Value at end of period $16.113 $13.290
Number of accumulation units
outstanding at end of period 19,971 8,131
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $17.926 $15.071 $13.527 $10.554
Value at end of period $20.646 $17.926 $15.071 $13.527
Number of accumulation units
outstanding at end of period 21,808 40,783 35,511 966,098
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $15.914 $12.541 $11.092 $10.000(1)
Value at end of period $17.596 $15.914 $12.541 $11.092
Number of accumulation units
outstanding at end of period 74,067 121,281 82,568 1,660,304
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $13.972 $11.423 $10.066 $10.000(1)
Value at end of period $19.305 $13.972 $11.423 $10.066
Number of accumulation units
outstanding at end of period 100,561 176,877 135,704 1,833,794
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $12.328 $11.157 $9.961 $10.000(1)
Value at end of period $13.769 $12.328 $11.157 $9.961
Number of accumulation units
outstanding at end of period 14,165 40,516 29,108 196,090
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period $15.343 $12.477 $10.397 $10.000(1)
Value at end of period $19.755 $15.343 $12.477 $10.397
Number of accumulation units
outstanding at end of period 176,553 320,226 175,463 2,116,732
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $15.878 $14.227 $13.322 $10.581
Value at end of period $21.116 $15.878 $14.227 $13.322
Number of accumulation units
outstanding at end of period 120,002 211,783 171,747 4,887,060
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.084 $12.472 $10.850 $10.000(1)
Value at end of period $20.064 $15.084 $12.472 $10.850
Number of accumulation units
outstanding at end of period 45,435 58,999 29,198 93,304
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.442 $13.046 $12.077 $9.873
Value at end of period $15.609 $14.442 $13.046 $12.077
Number of accumulation units
outstanding at end of period 10,857 11,145 9,054 315,361
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ------------- ------------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA MONEY MARKET VP
Value at beginning of period $10.241 $10.048 $33.812(10) $32.138 $30.012 $27.783
Value at end of period $10.528 $10.241 $10.048 $33.812 $32.138 $30.012
Number of accumulation units
outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033
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
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $11.036 $10.278 $10.000(11)
Value at end of period $10.554 $11.036 $10.278
Number of accumulation units
outstanding at end of period 521,141 144,168 2,556
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000(12)
Value at end of period $10.581
Number of accumulation units
outstanding at end of period 753,862
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $10.000(12)
Value at end of period $9.873
Number of accumulation units
outstanding at end of period 28,543
</TABLE>
103
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
------------------ -------------------- ----------
<S> <C> <C> <C>
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $15.489 $12.739 $10.870
Value at end of period $20.813 $15.489 $12.739
Number of accumulation units
outstanding at end of period 47,157 86,733 67,001
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $16.800 $13.885 $10.877
Value at end of period $21.455 $16.800 $13.885
Number of accumulation units
outstanding at end of period 236,904 586,164 241,823
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $15.616 $14.713 $11.720
Value at end of period $12.433 $15.616 $14.713
Number of accumulation units
outstanding at end of period 16,414 72,475 43,665
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.080(9)
Value at end of period $10.039
Number of accumulation units
outstanding at end of period 3,153
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $10.056(13)
Value at end of period $9.915
Number of accumulation units
outstanding at end of period 1,158
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $14.999 $15.183 (14)
Value at end of period $19.264 $14.999
Number of accumulation units
outstanding at end of period 289,625 586,517
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $13.862 $14.131 (14)
Value at end of period $16.889 $13.862
Number of accumulation units
outstanding at end of period 158,866 317,033
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $19.384 $19.102 (14)
Value at end of period $24.335 $19.384
Number of accumulation units
outstanding at end of period 48,711 84,592
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $17.068 $16.853 (14)
Value at end of period $20.135 $17.068
Number of accumulation units
outstanding at end of period 81,257 273,402
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.470 $14.176(14)
Value at end of period $18.289 $14.470
Number of accumulation units
outstanding at end of period 84,842 227,469
<CAPTION>
1995 1994 1993 1992 1991 1990 1989
---------------- ---------- ---------- ------------------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
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 259,196
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.877
Number of accumulation units
outstanding at end of period 1,036,040
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $10.154 $10.877 $9.832 $10.000(11)
Value at end of period $11.720 $10.154 $10.877 $9.832
Number of accumulation units
outstanding at end of period 711,892 703,676 135,614 561
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
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</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 August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $13.118. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(3) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
104
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(4) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $38.521. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(5) Funds were first received in this option during December 1997.
(6) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $97.817. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(7) Funds were first received in this option during October 1998.
(8) The initial accumulation unit value was established during August 1996
when the portfolio became available under the contract, when funds were
first received in this option or when the applicable daily asset charge
was first utilized.
(9) Funds were first received in this option during May 1998.
(10)The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $34.397. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(11)The initial accumulation unit value was established at $10.000 August 21,
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)Funds were first received in this option during July 1998.
(14)Funds were first received in this option during November 1997.
105
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE XV
FOR DEFERRED COMPENSATION CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES
OF 0.95% EFFECTIVE ON OR AFTER DECEMBER 16, 1996
(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, 1998 (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, 1998 are included in
the Statement of Additional Information. The accumulation unit values and the
percentage change in the value of an accumulation unit reflect a mortality and
expense risk charge of 1.25% until December 16, 1996, when the mortality and
expense risk charge was reduced to 0.95% during the accumulation phase. It will
increase to 1.25% during the income phase. The class of accumulation unit value
shown below may also be used for contracts with 0.95% total separate account
charges issued after December 16, 1996; however, the condensed financial
information for periods prior to December 16, 1996 will not be applicable.
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.471 $13.027 $10.673 $10.000(1)
Value at end of period $15.984 $15.471 $13.027 $10.673
Number of accumulation units
outstanding at end of period 38,675 86,255 32,497 393,053
AETNA BALANCED VP, INC
Value at beginning of period $18.870 $15.553 $13.673 $10.868
Value at end of period $21.857 $18.870 $15.553 $13.673
Number of accumulation units
outstanding at end of period 771,906 1,144,876 270,688 38,152,395
AETNA BOND VP
Value at beginning of period $13.279 $12.379 $12.098 $10.360
Value at end of period $14.225 $13.279 $12.379 $12.098
Number of accumulation units
outstanding at end of period 289,651 553,279 159,594 21,379,976
AETNA CROSSROADS VP
Value at beginning of period $14.501 $12.452 $10.612 $10.000(1)
Value at end of period $15.214 $14.501 $12.452 $10.612
Number of accumulation units
outstanding at end of period 100,734 101,836 9,415 294,673
AETNA GROWTH VP
Value at beginning of period $13.202 $12.912(5)
Value at end of period $18.005 $13.202
Number of accumulation units
outstanding at end of period 59,374 7
AETNA GROWTH AND
INCOME VP
Value at beginning of period $22.264 $17.304 $14.077 $10.778
Value at end of period $25.249 $22.264 $17.304 $14.077
Number of accumulation units
outstanding at end of period 4,070,904 8,238,898 3,033,655 188,964,022
AETNA HIGH YIELD VP
Value at beginning of period $10.044(7)
Value at end of period $9.231
Number of accumulation units
outstanding at end of period 1,308
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.489 $10.925 $11.038(8)
Value at end of period $18.888 $14.489 $10.925
Number of accumulation units
outstanding at end of period 136,252 293,223 23,856
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $9.962(9)
Value at end of period $10.913
Number of accumulation units
outstanding at end of period 26,111
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $9.876(9)
Value at end of period $8.834
Number of accumulation units
outstanding at end of period 26,257
<CAPTION>
1994 1993 1992 1991 1990 1989
--------------- -------------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA BALANCED VP, INC
Value at beginning of period $11.057 $10.189 $12.736(2) $10.896 $10.437 $10.000(3)
Value at end of period $10.868 $11.057 $10.189 $12.736 $10.896 $10.437
Number of accumulation units
outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986
AETNA BOND VP
Value at beginning of period $10.905 $10.068 $36.789(4) $31.192 $28.943 $25.574
Value at end of period $10.360 $10.905 $10.068 $36.789 $31.192 $28.943
Number of accumulation units
outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834
AETNA CROSSROADS VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
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 $11.020 $10.454 $97.165(6) $77.845 $76.311 $59.871
Value at end of period $10.778 $11.020 $10.454 $97.165 $77.845 $76.311
Number of accumulation units
outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820
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
</TABLE>
106
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
----------------- ---------------- ---------- -------------------
<S> <C> <C> <C> <C>
AETNA INTERNATIONAL VP
Value at beginning of period $9.974(10)
Value at end of period $9.785
Number of accumulation units
outstanding at end of period 168
AETNA LEGACY VP
Value at beginning of period $13.534 $11.932 $10.580 $10.000(1)
Value at end of period $14.336 $13.534 $11.932 $10.580
Number of accumulation units
outstanding at end of period 80,907 82,178 7,543 143,637
AETNA MONEY MARKET VP
Value at beginning of period $11.989 $11.475 $11.026 $10.528
Value at end of period $12.524 $11.989 $11.475 $11.026
Number of accumulation units
outstanding at end of period 300,195 477,490 179,361 12,999,680
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $10.024(9)
Value at end of period $8.891
Number of accumulation units
outstanding at end of period 1,415
AETNA SMALL COMPANY
VP
Value at beginning of period $13.684 $13.248(5)
Value at end of period $13.704 $13.684
Number of accumulation units
outstanding at end of period 49,514 4,993
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $13.290 $13.093(5)
Value at end of period $16.113 $13.290
Number of accumulation units
outstanding at end of period 32,612 4,910
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $17.896 $15.046 $13.527 $10.554
Value at end of period $20.612 $17.896 $15.046 $13.527
Number of accumulation units
outstanding at end of period 37,944 62,328 21,317 966,098
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $15.887 $12.520 $11.092 $10.000(1)
Value at end of period $17.567 $15.887 $12.520 $11.092
Number of accumulation units
outstanding at end of period 68,970 114,725 27,814 1,660,304
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $13.948 $11.404 $10.066 $10.000(1)
Value at end of period $19.273 $13.948 $11.404 $10.066
Number of accumulation units
outstanding at end of period 176,188 191,151 60,491 1,833,794
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $12.308 $11.138 $9.961 $10.000(1)
Value at end of period $13.746 $12.308 $11.138 $9.961
Number of accumulation units
outstanding at end of period 17,178 19,949 2,023 196,090
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period $15.318 $12.457 $10.397 $10.000(1)
Value at end of period $19.722 $15.318 $12.457 $10.397
Number of accumulation units
outstanding at end of period 187,525 263,159 41,394 2,116,732
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $15.851 $14.204 $13.322 $10.581
Value at end of period $21.081 $15.851 $14.204 $13.322
Number of accumulation units
outstanding at end of period 212,741 294,623 122,154 4,887,060
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.059 $12.451 $10.850 $10.000(1)
Value at end of period $20.031 $15.059 $12.451 $10.850
Number of accumulation units
outstanding at end of period 89,095 78,052 12,340 93,304
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ------------- ------------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
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
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA MONEY MARKET VP
Value at beginning of period $10.241 $10.048 $33.812(11) $32.138 $30.012 $27.783
Value at end of period $10.528 $10.241 $10.048 $33.812 $32.138 $30.012
Number of accumulation units
outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033
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
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $11.036 $10.278 $10.000(12)
Value at end of period $10.554 $11.036 $10.278
Number of accumulation units
outstanding at end of period 521,141 144,168 2,556
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $10.581
Number of accumulation units
outstanding at end of period 753,862
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</TABLE>
107
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------------- ------------------ ---------- ----------------
<S> <C> <C> <C> <C>
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.418 $13.024 $12.077 $9.873
Value at end of period $15.583 $14.418 $13.024 $12.077
Number of accumulation units
outstanding at end of period 20,317 13,587 3,861 315,361
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $15.463 $12.718 $10.870 $10.000(1)
Value at end of period $20.778 $15.463 $12.718 $10.870
Number of accumulation units
outstanding at end of period 61,355 93,386 29,696 259,196
JANUS ASPEN
WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $16.773 $13.862 $10.877 $10.000(1)
Value at end of period $21.419 $16.773 $13.862 $10.877
Number of accumulation units
outstanding at end of period 301,775 538,281 124,749 1,036,040
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $15.590 $14.688 $11.720 $10.154
Value at end of period $12.412 $15.590 $14.688 $11.720
Number of accumulation units
outstanding at end of period 38,283 103,604 10,977 711,892
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.042(9)
Value at end of period $10.039
Number of accumulation units
outstanding at end of period 382
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $9.992(9)
Value at end of period $9.915
Number of accumulation units
outstanding at end of period 5,938
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $14.974 $15.158(14)
Value at end of period $19.232 $14.974
Number of accumulation units
outstanding at end of period 398,717 703,653
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $13.839 $14.108(14)
Value at end of period $16.861 $13.839
Number of accumulation units
outstanding at end of period 431,603 627,658
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $19.352 $19.071(14)
Value at end of period $24.294 $19.352
Number of accumulation units
outstanding at end of period 171,102 206,191
PORTFOLIO PARTNERS
MFS SCUDDER
INTERNATIONAL GROWTH
PORTFOLIO
Value at beginning of period $17.040 $16.825(14)
Value at end of period $20.102 $17.040
Number of accumulation units
outstanding at end of period 353,311 457,354
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.445 $14.153(14)
Value at end of period $18.258 $14.445
Number of accumulation units
outstanding at end of period 109,123 200,374
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ---------- ------------------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $9.873
Number of accumulation units
outstanding at end of period 28,543
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN
WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $10.877 $9.832 $10.000(12)
Value at end of period $10.154 $10.877 $9.832
Number of accumulation units
outstanding at end of period 703,676 135,614 561
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
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS SCUDDER
INTERNATIONAL GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</TABLE>
108
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(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 August 21, 1992
upon the commencement of a new administrative system. Immedately prior to
that date, the accumulation unit value of the fund was $13.118. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(3) The initial accumulation unit value was established at $10.000 on June
23, 1989, the date on which the fund commenced operations.
(4) The accumulation unit value was established at $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $38.521. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(5) Funds were first received in this option during December 1997.
(6) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $97.817. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(7) Funds were first received in this option during July 1998.
(8) The initial accumulation unit value was established during December 1996
when the portfolio became available under the contract, when the funds
were first received in this option or when the applicable daily asset
charge was first utilized.
(9) Funds were first received in this option during May 1998.
(10) Funds were first received in this option during August 1998.
(11) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $34.397. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(12) The initial accumulation unit value was established at $10.000 on August
21, 1992, the date on which the fund/portfolio became available under the
contract.
(13) The initial accumulation unit value was established at $10.000 during
October 1994, when the funds ere first received in this option.
(14) Funds were first received in this option during November 1997.
109
<PAGE>
For Master Applications Only
- --------------------------------------------------------------------------------
I hereby acknowledge receipt of an Account C prospectus dated May 3, 1999, as
well as all current prospectuses for the funds available under the Contracts.
- --- Please send an Account C Statement of Additional Information (Form No.
SAI.01107-99) dated May 3, 1999.
- --------------------------------------------------------------------------------
CONTRACT HOLDER'S SIGNATURE
- --------------------------------------------------------------------------------
DATE
PROS.01107-99
110
<PAGE>
Prospectus - May 3, 1999
- --------------------------------------------------------------------------------
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
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
Aetna Small Company VP
Aetna Value Opportunity VP
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 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*
Oppenheimer Global Securities Fund/VA
Oppenheimer Strategic Bond Fund/VA
Portfolio Partners MFS Emerging Equities Portfolio
Portfolio Partners MFS Research Growth Portfolio
Portfolio Partners MFS Value Equity Portfolio
Portfolio Partners Scudder International Growth Portfolio
Portfolio Partners T. Rowe Price Growth Equity Portfolio
The Contracts. The contracts described in this prospectus are group or
individual 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 and to 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).
Why reading this Prospectus is Important. Before you participate in the
contract through your retirement plan, you should read this prospectus. It
provides facts about the contract and its investment options. Plan sponsors
(generally your employer or a trust) 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 3
Contract Design. The contracts are designed to:
>Help you save for retirement while receiving beneficial tax treatment
>Offer a variety of investment options to help meet long-term financial goals
>Provide a benefit to a beneficiary in the event of death
>Provide future income payments over a lifetime or for a specified period
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 C (the separate account), a
separate account of the Company. Each subaccount invests in one of the mutual
funds (funds) listed on this page. Earnings on amounts invested in a subaccount
will vary depending on the performance and fees of its underlying fund. You do
not invest directly in or hold shares of the funds.
The funds in which the subaccounts invest have various risks. For information
about risks of investing in the funds see "Investment Options" in this
prospectus and each fund prospectus. Retain the fund prospectuses for future
reference.
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.
- -------------------------
* 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 (except loan
repayments that we automatically deposit into the subaccount according to
our loan repayment procedures).
<PAGE>
Prospectus - May 3, 1999 (continued)
- --------------------------------------------------------------------------------
Getting Additional Information. You may obtain the May 3, 1999, Statement of
Additional Information (SAI) by indicating your request on your enrollment
materials or calling the Company at 1-800-525-4225. 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, http://www.sec.gov and may also be
obtained, free of charge, by contacting the SEC Public Reference Room at
202-942-8090. The SAI table of contents is listed on page 45 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
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 from that contained in this prospectus.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Contract Overview ............................... 4
Who's Who
The Contract and Your Retirement Plan
Contract Rights
Contract Facts
Contract Phases: Accumulation Phase, Income Phase
Questions: Contacting the Company
Sending Requests in Good Order
</TABLE>
<TABLE>
<S> <C>
Fee Table ................................... 6
Condensed Financial Information ............. 10
Investment Options .......................... 10
Transfers ................................... 12
Contract Purchase and Participation ......... 13
Contract Ownership and Rights ............... 14
Right to Cancel ............................. 15
Fees ........................................ 16
Your Account Value .......................... 22
Withdrawals ................................. 24
Loans ....................................... 26
Systematic Distribution Options ............. 26
Death Benefit ............................... 27
Income Phase ................................ 29
Taxation .................................... 33
Other Topics ................................ 40
</TABLE>
The Company - Variable Annuity Account C - Performance Reporting - Voting
Rights - Contract Distribution - Contract Modification - Legal Matters and
Proceedings - Payment Delay or Suspension - Transfer of Ownership; Assignment -
Account Termination - Year 2000 Readiness
<TABLE>
<S> <C>
Contents of the Statement of Additional Information ..................... 45
Appendix I - Guaranteed Accumulation Account ............................ 46
Appendix II - Fixed Account ............................................. 48
Appendix III - Fixed Plus Account ....................................... 50
Appendix IV - Employee Appointment of Employer as Agent ................. 54
Appendix V - Fund Descriptions .......................................... 55
Appendix VI - Condensed Financial Information Table of Contents ......... 58
</TABLE>
3
<PAGE>
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.
Plan Type: We refer to the retirement plan by the Tax Code section under which
it qualifies. For example: a "457 plan" is a plan that qualifies for tax
treatment under code section 457. To learn which code section applies to your
plan, contact your plan sponsor, your Aetna representative or the Company.
Contract Rights: Rights under the contract and who may exercise those rights,
may vary by plan type. Also, while the contract may reserve certain rights for
the contract holder, the contract holder may permit you to exercise those
rights through the plan.
Contract Overview
- --------------------------------------------------------------------------------
The following is a summary. Please read each section of this prospectus for
additional information.
- --------------------------------------------------------------------------------
Who's Who
You (the participant)*: The individual who participates in the contract through
a retirement plan.
Plan Sponsor: The sponsor of your retirement plan. Generally, your employer or
a trust.
Contract Holder*: The person 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."
- -------------------------
* Certain contracts are purchased by and issued directly to persons
participating in certain plans. The words "you" and "participant" apply to
these individuals, except that these individuals have all rights under the
contract. The word "contract holder" also applies to these individuals,
except that these individuals have no responsibilities to other participants
or beneficiaries.
- --------------------------------------------------------------------------------
Contract Facts
Free look/Right to Cancel: Contract holders may cancel the contract no later
than 10 days after they receive the contract. Participants in 403(b) plans or
in some plans under 401(a)/401(k) or 403(a) may cancel their participation in
the contract no later than 10 days after they receive evidence of participation
in the contract. See "Right to Cancel."
Death Benefit: A beneficiary may receive a benefit in the event of your death
prior to the income phase. Death benefits during the income phase depend on the
payment option selected. See "Death Benefit" and "Income Phase."
Withdrawals: During the accumulation phase, you may, under some plans, withdraw
all or part of your account value. Amounts withdrawn may be subject to an early
withdrawal charge, other deductions, tax withholding and taxation. See
"Withdrawals" and "Taxation."
Systematic Distribution Options: These allow 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."
Taxation: The Tax Code has certain rules that apply to amounts accumulated and
distributed under the contract. Tax penalties may apply if rules are not
followed. See "Taxation."
4
<PAGE>
Questions? Contact your local representative or write or call the Home Office:
Aetna Retirement Services
Annuity Services
151 Farmington Avenue
Hartford, CT 06156-1277
1-800-525-5225
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 Phases
I. The Accumulation Phase (accumulating retirement benefits)
<TABLE>
<S> <C>
STEP 1: You or the contract
holder provide Aetna Life +--------------+
Insurance and Annuity Company | Payments to |
with your completed enrollment | Your Account |
materials. According to the +--------------+
plan, we set up one or more Step 1 [arrow down]
accounts for you. We may set +------------------------------------------+
up account(s) for employer | Aetna Life Insurance and Annuity Company |
contributions and/or for +------------------------------------------+
contributions from your a. [arrow down] Step 2 b. [arrow down]
salary. +--------+ +----------------------------+
| Fixed | | Variable Annuity |
STEP 2: The contract holder, |Interest| | Account C |
or you if permitted by your |Options | | |
plan, directs us to invest | | | Variable Investment Options|
your account dollars in any of +--------+ +----------------------------+
the: The Subaccounts
(a) Fixed Interest Options +--------+---------+---------+
(b) Variable Investment | A | B | Etc. |
Options. (The variable +--------+---------+---------+
investment options are the Step 2(b)[arrow down]
subaccounts of Variable +--------+---------+---------+
Annuity Account C. Each | Mutual | Mutual | Etc. |
one invests in a specific | Fund A | Fund B | |
mutual fund.) +--------+---------+---------+
STEP 2(b), continued:. The
subaccount(s) selected
purchases shares of its
corresponding fund.
</TABLE>
II. The Income Phase
The contract offers several payment options (see "Income Phase"). In general,
you may:
>Receive payments over a lifetime or a specified period
>Receive payments monthly, quarterly, semi-annually or annually
>Select an option that provides a death benefit to beneficiaries
>Select fixed payments or payments that vary based on the performance of the
variable investment options you select.
5
<PAGE>
In This Section:
>Maximum Transaction Fees
>Maximum Fees deducted from investments in the Subaccounts
>Fund Fees
>Examples of Fee Deductions
See "Fees" for:
>Early Withdrawal Charge Schedules
>How, When and Why Fees are Deducted
>Reduction, Waiver and/or Elimination of Certain Fees
>Premium and Other Taxes
See "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
"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
Transaction Fees
Maximum Early Withdrawal Charge*...5% of amount withdrawn
This is a deferred sales charge. It is a percentage of the amount withdrawn.
The percentage will be determined by the applicable early withdrawal charge
schedule in the "Fees" section. In certain cases this charge may not apply to a
portion or all of your withdrawal. The early withdrawal charge reduces over
time.
Maximum Annual Maintenance Fee*....................................... $20.00
Fees Deducted From the Subaccounts
Maximum Amounts*
(Daily deductions equal to the given percentage on an annual basis)
Mortality and Expense Risk Charge..................................... 1.25%
Administrative Expense
Charge............................................................... 0.25%
------
Total Separate Account Expenses....................................... 1.50%
======
- -------------------------
*These fees may be waived, reduced or eliminated in certain circumstances. See
"Fees."
6
<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 the 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, 1998.
<TABLE>
<CAPTION>
Total Fund Net Fund
Annual Annual
Expenses Expenses
Investment Without Total After
Advisory Other Waivers or Waivers and Waivers or
Fees(1) Expenses Reductions Reductions Reductions
------------ ---------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75%
Aetna Balanced VP, Inc.(3) 0.50% 0.09% 0.59% -- 0.59%
Aetna Bond VP(3) 0.40% 0.10% 0.50% -- 0.50%
Aetna Crossroads VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75%
Aetna Growth VP(2)(3) 0.60% 0.15% 0.75% 0.00% 0.75%
Aetna Growth and Income VP(3) 0.50% 0.08% 0.58% -- 0.58%
Aetna High Yield VP(2)(3) 0.65% 0.40% 1.05% 0.25% 0.80%
Aetna Index Plus Large Cap VP(2)(3) 0.35% 0.10% 0.45% 0.00% 0.45%
Aetna Index Plus Mid Cap VP(2)(3) 0.40% 0.51% 0.91% 0.31% 0.60%
Aetna Index Plus Small Cap VP(2)(3) 0.40% 0.61% 1.01% 0.41% 0.60%
Aetna International VP(2)(3) 0.85% 1.22% 2.07% 0.92% 1.15%
Aetna Legacy VP(2)(3) 0.60% 0.16% 0.76% 0.00% 0.76%
Aetna Money Market VP(3) 0.25% 0.09% 0.34% -- 0.34%
Aetna Real Estate Securities VP(2)(3) 0.75% 0.73% 1.48% 0.53% 0.95%
Aetna Small Company VP(2)(3) 0.75% 0.14% 0.89% 0.00% 0.89%
Aetna Value Opportunity VP(2)(3) 0.60% 0.14% 0.74% 0.00% 0.74%
AIM V. I. Capital Appreciation Fund(4) 0.62% 0.05% 0.67% -- 0.67%
AIM V. I. Growth Fund(4) 0.64% 0.08% 0.72% -- 0.72%
AIM V. I. Growth and Income Fund(4) 0.61% 0.04% 0.65% -- 0.65%
AIM V. I. Value Fund(4) 0.61% 0.05% 0.66% -- 0.66%
Calvert Social Balanced Portfolio(5) 0.70% 0.18% 0.88% 0.02% 0.86%
Fidelity VIP Equity-Income Portfolio(6) 0.49% 0.09% 0.58% 0.01% 0.57%
Fidelity VIP Growth Portfolio(6) 0.59% 0.09% 0.68% 0.02% 0.66%
Fidelity VIP Overseas Portfolio(6) 0.74% 0.17% 0.91% 0.02% 0.89%
Fidelity VIP II Contrafund Portfolio(6) 0.59% 0.11% 0.70% 0.04% 0.66%
Janus Aspen Aggressive Growth Portfolio(7) 0.72% 0.03% 0.75% 0.00% 0.75%
Janus Aspen Balanced Portfolio(7) 0.72% 0.02% 0.74% 0.00% 0.74%
Janus Aspen Flexible Income Portfolio(7) 0.65% 0.08% 0.73% 0.00% 0.73%
Janus Aspen Growth Portfolio(7) 0.72% 0.03% 0.75% 0.07% 0.68%
Janus Aspen Worldwide Growth Portfolio(7) 0.67% 0.07% 0.74% 0.02% 0.72%
Lexington Natural Resources Trust(8) 1.00% 0.29% 1.29% 0.00% 2.50%
Oppenheimer Global Securities Fund/VA(4) 0.68% 0.06% 0.74% -- 0.74%
Oppenheimer Strategic Bond Fund/VA(4) 0.74% 0.06% 0.80% -- 0.80%
Portfolio Partners MFS Emerging Equities Portfolio (9) 0.68% 0.13% 0.81% 0.00% 0.83%
Portfolio Partners MFS Research Growth Portfolio (9) 0.70% 0.15% 0.85% -- 0.85%
Portfolio Partners MFS Value Equity Portfolio(9) 0.65% 0.25% 0.90% -- 0.90%
Portfolio Partners Scudder International Growth
Portfolio(9) 0.80% 0.20% 1.00% -- 1.00%
Portfolio Partners T. Rowe Price Growth Equity Portfolio(9) 0.60% 0.15% 0.75% -- 0.75%
</TABLE>
7
<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 management 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, 1999
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 portfolio's Total Fund Annual Expenses do not
exceed the percentage reflected under Net fund Annual Expenses After Waivers
or Reductions.
(3) Prior to May 1, 1998, the portfolio's investment adviser provided
administrative services to the portfolio and assumed the portfolio's
ordinary recurring direct costs under an administrative services agreement.
After that date, the portfolio's investment adviser provided administrative
services but no longer assumed all of the porfolio's ordinary recurring
direct costs under an administrative services agreement. The administrative
fee is 0.075% on the first $5 billion in assets and 0.050% on all assets
over $5 billion. The "Other Expenses" shown are not based on actual figures
for the year ended December 31, 1998, but reflect the fee payable under the
new administrative services agreement and estimates the portfolio's ordinary
recurring direct costs.
(4) Fee waiver/expense reimbursement obligations do not apply to these
porfolios.
(5) The figures above are based on expenses for fiscal year 1998, and have been
restated to reflect the elimination of a performance adjustment. The
restatement includes an addition of 0.01% to the portfolio management fee.
Other Expenses reflect an indirect fee of 0.02% relating to an expense
offset arrangement with the portfolio's custodian. Amount shown under Total
Waivers and Reductions reflect a voluntary reduction of fees paid
indirectly.
(6) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds, or the investment adviser
on behalf of certain funds, have entered into arrangements with their
custodian whereby credits realized as a result of uninvested cash balances
were used to reduce custodian expenses. These credits are included under
Total Waivers and Reductions.
(7) All expenses are stated both with and without contractual waivers and fee
reductions by Janus Capital. Fee reductions for the Aggressive Growth,
Balanced, Growth and Worldwide Growth Portfolios reduce the Management fee
to the level of the corresponding Janus retail fund. Other waivers, if
applicable, are first applied against the Management Fee and then against
Other Expenses. Janus Capital has agreed to continue other waivers and fee
reduction until at least the next annual renewal of the advisory agreement.
(8) For 1998, the fund's investment adviser voluntarily agreed to limit the
total expenses of the fund (excluding interest, taxes, brokerage
commissions, and extraordinary expense, but including management fees and
operating expenses) to an annual rate of 2.50% of the fund's average daily
net assets. This voluntary agreement will remain in effect through December
31, 1999.
(9) The investment adviser has agreed to reimburse the portfolios for expenses
and/or waive its fees, so that, through at least April 30, 2000, 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. For the Porfolio Partners
MFS Emerging Equities Portfolio, the Total Fund Annual Expenses Without
Waivers or Reductions for 1998 were less than the percentage reflected under
the Net Fund Annual Expenses After Waivers or Reductions column.
Nevertheless, the investment adviser will waive fees and/or reimburse
expenses if that portfolio's Total Fund Annual Expenses Without Waivers or
Reductions for 1999 exceed the percentage reflected under the Net Fund
Annual Expenses After Waivers or Reductions column.
8
<PAGE>
Hypothetical Examples
Account Fees Incurred Over Time. The following hypothetical examples show the
fees paid over time if $1,000 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% on an annual basis, administrative expense charge
of 0.25% on an annual basis, and a maintenance fee of $20.00 (converted to a
percentage of assets equal to 0.050%). The total annual fund expenses used are
those shown in the column "Total Annual Expenses Without Waivers or Reductions"
in the Fund Expense Table.
- -------------------------------------------
> 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.
- -------------------------------------------
<TABLE>
<CAPTION>
EXAMPLE A EXAMPLE B
--------------------------------------- --------------------------------------
If you leave your entire account
If you withdraw your entire account value invested or if you select an income
value at the end of the periods shown, phase payment option at the end of the
you would pay the following fees, periods shown, you would pay the
including any applicable early following fees (no early withdrawal
withdrawal charge assessed:* 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 V $75 $126 $180 $264 $23 $72 $123 $264
Aetna Balanced VP, Inc. $73 $121 $173 $247 $22 $67 $115 $247
Aetna Bond VP $72 $119 $168 $238 $21 $64 $110 $238
Aetna Crossroads VP $75 $126 $180 $264 $23 $72 $123 $264
Aetna Growth VP $75 $126 $180 $264 $23 $72 $123 $264
Aetna Growth and Income VP $73 $121 $172 $246 $22 $67 $114 $246
Aetna High Yield VP $78 $135 $194 $293 $26 $81 $138 $293
Aetna Index Plus Large Cap VP $72 $117 $166 $233 $20 $63 $108 $233
Aetna Index Plus Mid Cap VP $76 $131 $188 $280 $25 $77 $131 $280
Aetna Index Plus Small Cap VP $77 $133 $192 $290 $26 $80 $136 $290
Aetna International VP $87 $163 $241 $388 $36 $111 $187 $388
Aetna Legacy VP $75 $126 $181 $265 $23 $72 $124 $265
Aetna Money Market VP $71 $114 $160 $221 $19 $59 $102 $221
Aetna Real Estate Securities VP $82 $147 $214 $335 $31 $94 $159 $335
Aetna Small Company VP $76 $130 $187 $278 $25 $76 $130 $278
Aetna Value Opportunity VP $75 $126 $180 $263 $23 $72 $123 $263
AIM V.I. Capital Appreciation Fund $74 $124 $176 $255 $23 $69 $119 $255
AIM V.I. Growth Fund $74 $125 $179 $261 $23 $71 $122 $261
AIM V.I. Growth and Income Fund $74 $123 $175 $253 $22 $69 $118 $253
AIM V.I. Value Fund $74 $123 $176 $254 $22 $69 $118 $254
Calvert Social Balanced Portfolio $76 $130 $186 $277 $25 $76 $130 $277
Fidelity VIP Equity-Income Portfolio $73 $121 $172 $246 $22 $67 $114 $246
Fidelity VIP Growth Portfolio $74 $124 $177 $256 $23 $70 $119 $256
Fidelity VIP II Contrafund Portfolio $74 $125 $178 $258 $23 $70 $120 $258
Fidelity VIP Overseas Portfolio $76 $131 $188 $280 $25 $77 $131 $280
Janus Aspen Aggressive Growth Portfolio $75 $126 $180 $264 $23 $72 $123 $264
Janus Aspen Balanced Portfolio $75 $126 $180 $263 $23 $72 $123 $263
Janus Aspen Flexible Income Portfolio $74 $125 $179 $262 $23 $71 $122 $262
Janus Aspen Growth Portfolio $75 $126 $180 $264 $23 $72 $123 $264
Janus Aspen Worldwide Growth Portfolio $75 $126 $180 $263 $23 $72 $123 $263
Lexington Natural Resources Trust $80 $141 $206 $317 $29 $88 $150 $317
Oppenheimer Global Securities Fund/VA $75 $126 $180 $263 $23 $72 $123 $263
Oppenheimer Strategic Bond Fund/VA $75 $127 $183 $269 $24 $73 $126 $269
Portfolio Partners MFS Emerging Equities Portfolio $75 $128 $183 $270 $24 $74 $126 $270
Portfolio Partners MFS Research Growth Portfolio $76 $129 $185 $274 $24 $75 $128 $274
Portfolio Partners MFS Value Equity Portfolio $76 $130 $187 $279 $25 $76 $131 $279
Portfolio Partners Scudder International Growth
Portfolio $77 $133 $192 $289 $26 $79 $136 $289
Portfolio Partners T. Rowe Price Growth Equity
Portfolio $75 $126 $180 $264 $23 $72 $123 $264
</TABLE>
- -----------------
* This example reflects deduction of an early withdrawal charge calculated
using Early Withdrawal Charge Schedule I (based on completed purchase
payment periods.) Schedule I is listed in "Fees." Under that schedule, if
only one $1,000 payment was made as described above, fewer than 5 purchase
payments 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.
** Example B will not apply if during the income phase a nonlifetime payment
option is elected with variable payments and a lump sum payment is
requested within a certain number of years as specified in the contract. In
that case, the lump sum payment is treated as a withdrawal during the
accumulation phase and may be subject to an early withdrawal charge. (Refer
to Example A.)
9
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
Understanding Condensed Financial Information. In Appendix VI, we provide
condensed financial information about the Variable Annuity Account C (the
separate account) subaccounts available under the contracts. These tables show
the values 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 C (the separate account), a
separate account of the Company. Earnings on amounts invested in a subaccount
will vary depending on the performance and fees of its underlying mutual fund.
You do not invest directly in or hold shares of the funds.
>Fund Descriptions. We provide brief descriptions of the funds in Appendix V.
Please refer to the fund prospectuses for additional information. Fund
prospectuses may be obtained, free of charge, by calling the Company at the
telephone number listed on the cover of this prospectus, by contacting the
SEC's website, or by contacting the SEC 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 prospectuses, fixed interest
option appendices and the Guaranteed Accumulation Account prospectus.
Limits on Option Availability. Some funds and fixed interest options may not be
available through certain contracts and plans, or in some states. We may add,
withdraw or substitute funds, subject to the conditions in the contract and in
compliance with regulatory requirements.
10
<PAGE>
Limits on Number of Options Selected. Generally, the contract holder, or you if
permitted by the plan, may select no more than 18 investment options at one
time during the accumulation phase of your account. If you have an outstanding
loan (403(b) and some 401 or 403(a) plans only), you may currently make a total
of 18 cumulative selections over the life of the account. Each subaccount, the
Fixed Account, Fixed Plus Account, and each classification of the Guaranteed
Accumulation Account selected counts toward these limits. If you have a loan on
the account, each option counts toward the limit, even after the full value is
transferred to other options.
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 payments 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, are 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 in order to identify any conflicts
which may arise and to determine what action, if any, should be taken to
address such conflicts.
11
<PAGE>
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 among investment options. Transfers from fixed
interest options are restricted as outlined in Appendices I, II and III.
Transfers may be requested in writing, by telephone or, where available,
electronically. Transfers must be made in accordance with the terms of the
contract.
Value of Transferred Dollars. The value of amounts transferred in or out of
subaccounts will be based on the subaccount unit values next determined after
we receive your request in good order at our Home Office.
Telephone Transfers: Security Measures. To prevent fraudulent use of telephone
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 transactions. We are not liable for losses resulting
from following telephone 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. Certain contracts allow you to 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."
12
<PAGE>
Contract Purchase and Participation
- --------------------------------------------------------------------------------
Contracts Available for Purchase. The contracts available for purchase are
group or individual deferred annuity contracts that the Company offers in
connection with plans established by eligible organizations under Tax Code
sections 401(a), 401(k), 403(a), 403(b), 414(h) and 457.
ERISA Notification. Some plans under Sections 401, 403(a) and 403(b) are
subject to Title I of the Employee Retirement Income Security Act of 1974
(ERISA) as amended. The contract holder must notify the Company whether Title I
of ERISA applies to the plan.
Purchasing the Contract.
1. The contract holder submits the required forms and application to the
Company
2. We approve the forms and issue a contract to the contract holder
Participating in the Contract.
1. We provide you with enrollment materials for completion and return to us
(occasionally enrollment is conducted by someone unaffiliated with us who
is assisting the contract holder)
2. If your enrollment materials are complete and in good order, we establish
one or more accounts for you. Under certain plans we establish an employee
account for contributions from your salary and an employer account for
employer contributions.
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 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 payments for
longer periods with the permission of the contract holder. If we agree to do
this, we will deposit the 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 payments.
13
<PAGE>
Methods of Payment. The contract may allow one or more of the following
payment methods:
>Lump sum payments--A one-time payment to your account in the form of a
transfer from a previous plan
>Installment payments--More than one payment made over time to your account
The plan and the contract may have certain rules or restrictions that apply to
use of these two methods. For example, we may require that installment payments
meet certain minimums. Under some contracts, we will place the different types
of payments in distinct accounts, where each account will have its own early
withdrawal charge schedule. (See "Fees--Early Withdrawal Charge Schedules")
Allocation of 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
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. (See "Investment Options"
and "Transfers.")
Transfer Credits The Company provides a transfer credit in some cases on
transferred assets, as defined by the Company, subject to certain conditions
and state approvals. 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.")
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?
>Under 457 Plans. The Tax Code requires that 457 plan assets of governmental
employers be held in trust for the exclusive benefit of you and your
beneficiaries. An annuity contract satisfies the trust requirement of the Tax
Code.
>Under 403(b) Plans. Under the contract we may establish one or more accounts
for you. Generally we establish an employee account to receive salary
reduction and rollover amounts and an employer account to receive employer
contributions. You have the right to the value of your employee account and
any employer account to the extent you are vested as interpreted by the
contract holder.
14
<PAGE>
Under 401(a)/401(k) or 403(a) Plans. Under the contract, we may establish one
or more accounts for you. Generally, we establish an employee account to
receive salary reduction and rollover amounts and an employer account to
receive employer contributions. You have the right to the value of your
employee account and any employer account to the extent that you are vested
under the plan as interpreted by the contract holder.
Who Holds Rights under the Contract?
>Under all contracts, except those issued through a voluntary 403(b) plan, the
contract holder holds all rights under the contract. The contract holder may
permit you to exercise some of those rights. For example, the contract holder
may allow you to choose investment options.
>If you participate in the contract through a voluntary 403(b) plan, you hold
all rights under the contract.
Right to Cancel
- --------------------------------------------------------------------------------
When and How to Cancel. If the contract holder chooses to cancel a contract, we
must receive the contract and a written notice of cancellation within 10 days
(or a longer period if required by state law) after the contract holder's
receipt of the contract.
If you wish to cancel participation in the contract and are allowed to do so
under the contract and the plan, you must send the document evidencing your
participation and a written notice of cancellation to the Company within 10
days after you receive confirmation of your participation in the contract.
Refunds. We will produce a refund not later than seven days after we receive
the required documents and written notice in good order at our Home Office. The
refund will equal amounts contributed to the contract or account(s), as
applicable, plus any earnings or less any losses attributable to the investment
options in which amounts were invested. In certain states, we are required to
refund contributions. When a refund of contributions is not required, the
investor bears any investment risk.
15
<PAGE>
Types of Fees
There are three types of fees which you may incur under the contract:
>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 I and II
>Account Year--a 12-month period measured from the date we establish your
account, or measured from any anniversary of that date.
>Contract Year--a 12-month period measured from the date we establish the
contract, or measured from any anniversary of that date.
>Purchase Payment Period (for installment payments under some contracts)-- 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 payments are made. If only
11 payments are made, the payment period is not completed until the twelfth
payment is made. At any given time, the number of payment periods completed can
not 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" section 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. Our remaining
sales and administrative expenses are covered by our general assets which are
attributable in part to the mortality and expense risk charge described below.
Amount: The charge is a percentage of the amount that you withdraw from the
subaccounts, the Fixed Account and the Guaranteed Accumulation Account. We do
not deduct an early withdrawal charge from amounts that you withdraw from the
Fixed Plus Account. The percentage is determined by the early withdrawal charge
schedule that applies to your account. Some of these schedules are listed
below. The charge will never be more than 8.5% of your total payments to the
account.
Early Withdrawal Charge Schedules. You may determine which schedule applies to
you by consulting your certificate, or the contract (held by the contract
holder).
Schedule I. This is the maximum early withdrawal charge schedule under the
contracts. It grades down to zero over a 10-year period, as shown below. Some
contracts have schedules that grade down to zero over fewer than 10 years.
Each contract will specify whether a schedule is based on one of the following:
1) The number of years since the account was established; 2) the number of
years since the contract was established; 3) the number of completed purchase
payment periods.
Unless the contract provides otherwise, the same schedule applies to
installment payments (ongoing contributions) and to single payments (rollovers,
exchanges or other one-time contributions).
Schedule I
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Payment Periods, Contract Years or
Account Years Completed (depending
on the contract) Early Withdrawal Charge
- ------------------------------------------ ------------------------
<S> <C>
Fewer than 5 5%
5 or more but fewer than 7 4%
7 or more but fewer than 9 3%
9 or more but fewer than 10 2%
more than 10 0%
- --------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
Schedule II. For contracts where we establish distinct accounts for installment
payments and single payments (defined above), Schedule I applies to installment
payment accounts and Schedule II applies to single payment accounts. As shown
below, Schedule II grades down to zero over a nine-year period as account years
are completed.
Schedule II
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Account Years Completed Early Withdrawal Charge
- --------------------------------------- ------------------------
<S> <C>
Fewer than 5 5%
5 or more but fewer than 6 4%
6 or more but fewer than 7 3%
7 or more but fewer than 8 2%
8 or more but fewer than 9 1%
9 or more 0%
- --------------------------------------------------------------------------------
</TABLE>
Early Withdrawal Charge Waivers under all Contracts. These apply to all
contracts. Also read the following two subsections regarding additional
waivers, reduction or elimination of the charge.
This charge is waived for portions of a withdrawal that are:
>Used to provide income payments during the income phase;
>Paid because of your death before income payments begin;
>Paid where your account value is $3,500 or less and no part of the account has
been taken as a withdrawal, used to provide income payments or taken as a loan
within the prior 12 months;
>Taken because of the election of a systematic distribution option (see
"Systematic Distribution Options");
>Taken on or after the tenth anniversary of the effective date of the account;
or
>Taken under accounts with an early withdrawal charge schedule based on
completed payment periods, when you are at least age 591/2 and have completed
at least nine payment periods.
Early Withdrawal Charge Waivers under Certain Contracts. To find out which
waivers apply to the contract issued in connection with your plan, consult the
certificate or the contract (held by the contract holder).
This charge is waived for portions of a withdrawal that are:
>Taken after you have separated from service with your employer. Under certain
contracts, the employer must provide documentation of separation to the
Company;
>Used to purchase an Aetna single premium immediate annuity or other contracts
allowed by the Company, under the condition that you do not cancel the new
contract and obtain a refund during the cancellation period. If you cancel the
new contract, we will reinstate the account under the old contract. The amount
returned to the account from the new contract may then be withdrawn, subject
to any early withdrawal charge that would have applied at the time the new
contract was established;
>Depending on the plan, due to financial hardship or hardship resulting from an
unforeseeable emergency as defined by the Tax Code;
>From contracts used with plans under section 401(a)/401(k), section 403(a) or
section 403(b) of the Tax Code, that is not more than 10% of your
17
<PAGE>
account value and is the first partial withdrawal in a calendar year. To
qualify for this waiver you must be between the ages of 591/2 and 701/2 and
cannot have elected the systematic withdrawal option. Any outstanding loans are
not included in the account value when determining the 10% amount. This waiver
does not apply to full withdrawals or to a withdrawal due to a loan default;
>Withdrawn due to the transfer of your account value to another of the
retirement products the Company offers under the contract holder's plan,
subject to various conditions agreed to by the contract holder and the
Company; or
>When we terminate an account under the circumstances described in "Other
Topics--Account Termination."
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
>Our assessment of financial risk to the Company relating to withdrawals
>Whether the contract results from the exchange of another contract issued by
the Company to the same plan sponsor
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.
18
<PAGE>
Reduction for Certain New York Contracts. For master 403(b) plan contracts
issued after July 29, 1993 in New York, in addition to waivers or reductions
that we grant, the state of New York requires a reduced early withdrawal charge
schedule for withdrawals from the Guaranteed Accumulation Account. The schedule
grades down over a seven-year period as account years are completed, as shown
in the table below.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Completed Account Years Early Withdrawal Charge
- --------------------------------------------------------------------------------
<S> <C>
Fewer than 3 5%
3 or more but fewer than 4 4%
4 or more but fewer than 5 3%
5 or more but fewer than 6 2%
6 or more but fewer than 7 1%
7 or more 0%
- --------------------------------------------------------------------------------
</TABLE>
Maintenance Fee
Maximum Amount: $20.00
When/How: For those plans that have a maintenance fee, each year during the
accumulation phase we deduct this fee 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.
We do not deduct this fee from a single payment account. Under some plans we
deduct the maintenance fee from both employer and employee accounts. Under some
installment plans, your employer elects whether the fee is deducted from the
employee account, employer account, or a portion from each. The Company may
send a bill to your employer at or prior to such deduction.
Purpose: This fee helps defray the administrative expenses we incur in
establishing and maintaining your account.
Reduction or elimination: When a 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 to which a contract is issued;
>The expected level of assets under the plan. Under some contracts, we may
aggregate accounts under different contracts issued by the Company to the same
contract holder;
>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;
>The number of eligible participants and the program's participation rate.
Due to factors on which the maintenance fee is based, it is possible that it
may increase or decrease from year to year as the characteristics of the group
changes.
We will not unfairly discriminate against any group if we reduce or eliminate
the maintenance fee. We will make any reduction according to our own rules in
effect at the time we approve the application for a contract. We reserve the
right to change these rules from time to time.
19
<PAGE>
II. Fees Deducted from the Subaccounts
Mortality and Expense Risk Charge
Maximum Amount: 1.25% annually of your account value invested in the
subaccounts.
When/How: This fee is deducted daily from the subaccounts. We do not deduct
this from any fixed interest option.
Purpose: The 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 payments based on annuity rates specified in the contracts and our
funding of the death benefits 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. Any reduction will reflect differences in
expenses for administration based on such factors as:
>The expected level of assets under the plan. Under some contracts, we may
aggregate accounts under different contracts issued by the Company to the same
contract holder.
>The size of the prospective group, projected annual number of eligible
participants and the program's participation rate.
>The plan design. For example, the plan may favor stability of invested assets
and limit the conditions for withdrawals, loans and available investment
options, which in turn lowers administrative expenses.
>The frequency, consistency and method of submitting payments and loan
repayments.
>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.
>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
contract application is approved. We reserve the right to change these rules
from time to time. Under some contracts we will reassess and increase or
decrease this fee each year on the anniversary of the date the contract was
established.
20
<PAGE>
Administrative Expense Charge
Maximum Amount: 0.25% annually of your account value invested in the
subaccounts.
When/How: For all participants who became covered under a contract on or after
November 5, 1984, we reserve the right to charge an administrative expense
charge of up to 0.25% annually. We are currently deducting this charge under the
contracts issued to some plans. If charged, this fee is deducted daily from the
subaccounts. We do not deduct this from any fixed interest option. This fee may
be assessed during the accumulation phase and/or the income phase. 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 to you during the
entire income phase.
Purpose: This fee helps defray our administrative expenses that cannot be
covered by the mortality and expense charge described above. The fee is not
intended to exceed our average expected cost of administering the contracts. We
do not expect to make a profit from this fee.
Reduction: Under some contracts, if we charge the administrative expense
charge, we may reduce it from the maximum when the plan meets certain criteria
and we agree to the reduction with the contract holder, in writing. The level
of the fee may be reassessed and increased or decreased at each contract
anniversary as the characteristics of the group change.
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 fund's investment advisor and operating
expenses.
IV. 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 on the
jurisdiction.
When/How: We reserve the right to deduct premium taxes from your account value
or from payments to the 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.")
21
<PAGE>
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)
>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 C 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 expense 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
federal income tax liability offset by foreign tax credits to the extent
allowed);
>Divided by the total value of the subaccount's units at the preceding
valuation;
>Minus a daily deduction for the mortality and expense risk charge and the
administrative expense charge (if any). See "Fees."
The net investment rate may be either positive or negative.
22
<PAGE>
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.
<TABLE>
<S> <C>
+-------------------+
|$5,000 contribution|
Step 1: An Investor +-------------------+
contributes $5000 Step 1 [arrow down]
+----------------------------------------+
Step 2: |Aetna Life Insurance and Annuity Company|
A. He directs us to invest +----------------------------------------+
$3,000 in Fund A. His Step 2 [arrow down]
dollars purchase 300 +----------------------------------------+
accumulation units of | Variable Annuity Account C |
Subaccount A ($3,000 +---------------+-----------------+------+
divided by the current $10 | Subaccount A | Subaccount B | Etc. |
AUV). | 300 | 80 | |
B. He directs us to invest | accumulation | accumulation | |
$2,000 in Fund B. His | units | units | |
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 (NAV). +---------------+-----------------+------+
Step 3 [arrow down]
+------+ +------+
|Fund A| |Fund B|
+------+ +------+
</TABLE>
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.
23
<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")
>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."
Payments to Your Account. If all or a portion of initial 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, as described in "Contract Purchase and Participation." Subsequent
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
interest options and other restrictions (see "Withdrawal Restrictions" below),
the contract holder, or you if permitted by the plan, may withdraw all or a
portion of your account value 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
o 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 the Fixed
Account, minus any applicable early withdrawal charge, plus the amount
available for withdrawal from the Fixed Plus Account.
o 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
adjustments 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 options. If this is not specified, we will withdraw dollars
proportionally from each investment option in which you have an account value.
>Properly complete a disbursement form and submit it to the 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, we will send your payment not later
than seven calendar days following our receipt of your disbursement form in
good order.
24
<PAGE>
Reinvestment Privilege (not applicable to contracts under 457 plans). Some
contracts allow one-time use of a reinvestment privilege. Within 30 days after
a full withdrawal, if allowed by law and the contract, you may elect to
reinvest all or a portion of the proceeds. We must receive reinvested amounts
within 60 days of the withdrawal. We will credit the account for the amount
reinvested based on the subaccount values next computed following our receipt
of your request and the amount to be reinvested. We will credit the amount
reinvested proportionally for maintenance fees and early withdrawal charges
imposed at the time of withdrawal. We will deduct from the amounts reinvested
any maintenance fee which fell due after the withdrawal and before the
reinvestment. We will reinvest in the same investment options and proportions
in place at the time of withdrawal. Special rules apply to reinvestments of
amounts withdrawn from the Guaranteed Accumulation Account (see Appendix I).
Seek competent advice regarding the tax consequences associated with
reinvestment.
Withdrawal Restrictions. Some plans may have other limits on withdrawals, other
than or in addition to those listed below.
>Section 403(b)(11) of the Tax Code generally prohibits withdrawal under 403(b)
contracts prior to your death, disability, attainment of age 591/2, separation
from service or financial hardship, of the following:
(1) Salary reduction contributions made after December 31, 1988 and;
(2) Earnings on those contributions and earnings on amounts held before 1989
and credited after December 31, 1988.
>401(k) plans generally prohibit withdrawal of salary reduction contributions
and associated earnings prior to your death, disability, attainment of age
591/2, separation from service, or financial hardship. Income attributable to
salary reduction contributions and credited on or after January 1, 1989 may
not be distributed in the case of hardship.
>The contract may require that the contract holder certify that you are
eligible for the distribution.
>If you are married and covered by an ERISA plan, the contract holder must
provide certification that Retirement Equity Act requirements have been met.
>Participants in Ball State University Alternate Pension Plan--The portion of
your account value attributable to employer contributions and applicable
earnings may not be withdrawn unless your employment is terminated with Ball
State University, or you have died, retired or separated from service. The
contract holder may withdraw the employer account value, and you may transfer
employer account values pursuant to an IRS Revenue Ruling 90-24 transfer,
without regard to this restriction. No early withdrawal charge will apply to
the first 20% of the employer account value transferred via a 90-24 transfer
in a calendar year. This waiver does not apply to a 90-24 transfer of the full
employer account value.
>Participants in Texas Optional Retirement Program--You may not receive any
distribution before retirement, except upon becoming totally disabled or
terminating employment with Texas public institutions of higher learning.
Conditions under which you may exercise the right to withdraw and the right to
advance the date on which an income phase payment option is to begin are
limited. These restrictions are imposed by reason of the Texas Attorney
General's interpretation of Texas law.
25
<PAGE>
Features of a Systematic Distribution Option (SDO)
If available under your plan, an SDO allows you to receive regular payments
from your account without moving into the income phase. By remaining in the
accumulation phase, you retain certain rights and investment flexibility not
available during the income phase. Because the account remains in the
accumulation phase, all accumulation phase charges continue to apply.
Loans
- --------------------------------------------------------------------------------
Availability. For certain 403(b) plans and some 401(a)/401(k) and 403(a) plans,
if allowed by the contract and the plan, you may take out a loan from your
account value during the accumulation phase. Some contracts restrict loans from
your employer account. Loans are only allowed from amounts allocated to certain
subaccounts and fixed interest options. Additional restrictions may apply under
the Tax Code or due to our administrative practices.
Requests. If you are eligible to obtain a loan, you may request one by properly
completing the loan request form and submitting it to our Home Office. Read the
terms of the loan agreement before submitting any request.
Systematic Distribution Options
- --------------------------------------------------------------------------------
Availability of Systematic Distribution Options (SDOs) 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 SDOs are available, check with the
contract holder or the Company. The Company reserves the right to discontinue
the availability of one or all of the SDOs at any time, and/or to change the
terms for future elections.
SDOs currently available under the contract include the following:
>SWO--Systematic Withdrawal Option. SWO is a series of partial withdrawals from
your account based on a payment method you select. It is designed for those
who want a periodic income while retaining accumulation phase investment
flexibility for amounts accumulated under the account. (This option may not be
available if you have an outstanding loan.)
>ECO--Estate Conservation Option. Also allows you to maintain the account in
the accumulation phase and provides periodic payments designed to meet the Tax
Code's minimum distribution requirement.
Under ECO, the Company calculates the minimum distribution amount required by
law at age 701/2 (for certain plans, 701/2 or retirement, if later) and pays
you that amount once a year.
For certain contracts issued in the state of New York, no market value
adjustment is imposed on ECO withdrawals from the Guaranteed Accumulation
Account.
>Other SDOs may be available from time to time. Additional information relating
to any of the SDOs may be obtained from your local representative or from the
Company's Home Office.
Electing an SDO. The contract holder, or you if permitted by the plan, makes
the election of an SDO. For some contracts, the contract holder must provide
the Company with certification that the distribution is in accordance with
terms of the plan.
Terminating an SDO. Once you elect an SDO, except for accounts that are part of
457 plan contracts, you may revoke it at any time through a written request to
our Home Office. Once revoked, an option may not be elected again, nor may any
other SDO be elected, unless the Tax Code permits it.
26
<PAGE>
During the Income Phase
This section provides information about the accumulation phase. For death
benefit information applicable to the income phase (see "Income Phase").
Tax Consequences. Withdrawals received through these options may have tax
consequences. See "Taxation."
Death Benefit
- --------------------------------------------------------------------------------
The contract provides a death benefit in the event of your death, which is
payable to the beneficiary named under the contract (contract beneficiary).
>Under contracts issued in connection with most types of plans except voluntary
403(b) plans, the contract holder must be named as the contract beneficiary,
but may direct that we make any payments to the beneficiary you name under the
plan (plan beneficiary).
>Under contracts issued in connection with voluntary 403(b) plans, you may
generally designate your own contract beneficiary, who will normally be your
plan beneficiary as well.
During the Accumulation Phase
Payment Process
1. Following your death, the contract beneficiary (on behalf of the plan
beneficiary if applicable), 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 distributions will be made.
Benefit Payment Options. The following payment options are available, if
allowed by the Tax Code:
>Lump-sum payment
>Payment under an available income phase payment option (see "Income
Phase--Payment Options")
If the contract beneficiary or plan beneficiary is your spouse, payment under
an available systematic distribution option (not available under all plans)
The following options are also available under some contracts, however, the Tax
Code limits how long the death benefit proceeds may be left in these options:
>Leaving the account value invested in the contract
>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 currently credited on such deposits.
The balance on deposit can be withdrawn at any time or paid in accordance with
any of the available income phase payment options (see "Income Phase--Payment
Options").
27
<PAGE>
Death Benefit Calculation. For most contracts the death benefit will be based
on your account value. 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.
The death benefit is calculated as of the next time we value your account
following the date on which we receive proof of death and payment request in
good order. In addition to this amount, some states require we pay interest
calculated from date of death at a rate specified by state law.
Some contracts provide a guaranteed death benefit if the contract beneficiary
(on behalf of the plan beneficiary, if applicable) elects a lump-sum
distribution or an income phase payment option within six months of your death.
For those contracts, the guaranteed death benefit is the greater of :
(a) Your account value on the day that notice of death and request for payment
are received in good order at our Home Office, plus any positive aggregate
market value adjustment that applies to amounts allocated to the GAA
(b) The sum of payments (minus any applicable premium tax) made to your
account, minus withdrawals made from your account and any outstanding loan
amount.
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.
28
<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
Income Phase
- --------------------------------------------------------------------------------
During the income phase you receive payments from your accumulated account
value.
Initiating 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
>Payment option (see the payment options table in this section)
>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)
>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 payments. Once a payment option is
selected, it may not be changed; however, certain options allow you to withdraw
a lump sum.
What Affects Payment Amounts? Some of the factors that may affect payment
amounts include: your age, your account value, the payment option selected,
number of guaranteed payments (if any) selected, and whether you select
variable or fixed payments.
Fixed Payments. Amounts funding fixed payments will be held in the Company's
general account. Fixed payments will remain the same over time.
Variable Payments. Amounts funding your income phase payments will be held in
the subaccount(s) selected, or a combination of subaccounts and fixed interest
options. Some contracts restrict the subaccounts available, the number of
investment options to be selected and how many transfers, if any, are allowed
among options. For variable payments, an assumed net investment rate must be
selected.
Payments from the Fixed Plus Account. Under some contracts, 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. For variable payments, an assumed net investment
rate must be selected. If you select a 5% rate, your first payment will be
higher, but subsequent payments will increase only if the investment
performance of the subaccounts you 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 you select a 31/2% rate, your first payment will be lower and subsequent
payments will increase more rapidly or decline more slowly depending on the
investment performance of the subaccounts you selected. For more information
about selecting an assumed net investment rate, request a copy of the Statement
of Additional Information by calling the Company. (see "Contract
Overview--Questions").
29
<PAGE>
Selecting an Increasing Payment. Under certain payment options, if you select
fixed payments, some contracts will allow you to elect an increase of one, two,
or three percent, compounded annually. The higher your percentage, the lower
your initial payment will be, while future payments will increase each year at
a greater rate. Generally, this feature is not available with cash refund
payment options and nonlifetime options.
Fees Deducted
>If variable payments are elected, we make a daily deduction for mortality and
expense risks from any amounts held in the subaccounts. The maximum mortality
and expense risk charge during the income phase is 1.25% on an annual basis.
Under some contracts, we may reduce this fee based on certain factors. (See
"Fees--Mortality and Expense Risk Charge.")
>We may also deduct a daily administrative charge from amounts held in the
subaccounts. 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. 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.
Required Minimum Payment Amounts. The initial payment or the annual payment
total must meet the minimums stated in the contract. If your account value is
too low to meet these minimum payment amounts, you will receive one lump sum
payment.
Death Benefit During the Income Phase. The death benefits that may be available
to a beneficiary are outlined in the 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 and the payment request
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.")
30
<PAGE>
Payment Options
The following tables list the payment options and accompanying death benefits
which may be available under the contracts. Some contracts restrict the options
and the terms available. Refer to your certificate or check with your contract
holder for details. We may offer additional 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.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Lifetime Payment Options
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Length of Payments: For as long as the annuitant lives. It is possible that only one payment will
Life Income be made should the annuitant die prior to the second payment's due date.
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 your
Life Income-- choice of 5-30 years or as otherwise specified in the contract.
Guaranteed Pay- Death Benefit--Payment to the Beneficiary: If the annuitant dies before we have made all the
ments guaranteed payments, we will pay the beneficiary a lump-sum (unless otherwise requested) 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:
Life Income--Two (a) When you select this option you choose for 100%, 662/3% or 50% of the payment to continue
Lives after the first death; or
(b) 100% of the payment to continue on the second annuitant's death, and 50% of the payment
to continue on the annuitant's death.
Death Benefit--None: All payments end after the death of both annuitants.
- ---------------------------------------------------------------------------------------------------------------------------
Length of Payments: For as long as either annuitant lives, with payments guaranteed from 5 to
30 years, or as otherwise specified in the contract.
Life Income--Two Continuing Payments: 100% of the payment to continue after the first death.
Lives--Guaranteed Death Benefit--Payment to the Beneficiary: If both annuitants die before the guaranteed pay-
Payments ments have all been paid, we will pay the beneficiary a lump-sum (unless otherwise requested)
equal to the present value of the remaining guaranteed payments.
- ---------------------------------------------------------------------------------------------------------------------------
Life Income--Cash Length of Payments: For as long as the annuitant lives.
Refund Option Death Benefit--Payment to the Beneficiary: Following the annuitant's death, we will pay a lump
(limited sum payment equal to the amount originally applied to the payment option (less any premium
availability-- tax) and less the total amount of fixed payments paid.
fixed payment
only)
- ---------------------------------------------------------------------------------------------------------------------------
Life Income--Two Length of Payments: For as long as either annuitant lives.
Lives--Cash Continuing Payment: 100% of the payment to continue after the first death.
Refund Option Death Benefit--Payment to the Beneficiary: When both annuitants die, we will pay a lump sum
(limited payment equal to the amount applied to the payment option (less any premium tax) and less
availability--fixed the total amount of fixed payments paid.
payment only)
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
Table continued [arrow right]
31
<PAGE>
Payment options continued
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
Nonlifetime Payment Options (1)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Length of Payments: Payments will continue for the number of years you choose, based on what is
available under the contract. Under some contracts, 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
Nonlifetime-- years. In certain cases a lump sum 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 pay the beneficiary a lump sum (unless otherwise requested) equal
to the present value of the remaining guaranteed payments, and we will not impose any early
withdrawal charge.
- ---------------------------------------------------------------------------------------------------------------------------
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 sum. A lump sum elected before
three or five years of payments have been completed as specified by the contract 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 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 the Home Office.
Calculation of Lump Sum Payments: If a lump sum payment is available to a beneficiary or to you in the 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 3-1/2% or 5% assumed net investment
rate for variable payments).
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For contracts issued to the State of Montana and Board of Trustees,
University of Illinois the Nonlifetime option is available only with fixed
payments.
32
<PAGE>
In This Section
I. Introduction
II. Your Retirement Plan
III. Withdrawals and other Distributions
o Taxation of Distributions
o 10% Penalty Tax
o Withholding
IV. Minimum Distribution Requirements
o 50% Excise Tax
V. Rules Specific to Certain Plans
o Code Section 457 Plans
o Code Section 403(b) Plans
o Code Section 401(a), 401(k) and 403(a) Plans
o 415(m) Arrangements
o Bona Fide Severance Pay Plans
VI. Taxation of the Company
When consulting a tax advisor, be certain that he or she has expertise in the
Tax Code sections applicable to your tax concerns.
Taxation
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I. 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.
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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.
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II. 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 retirement plans that qualify
under code sections 401(a), 401(k), 403(a), 403(b) or 457. A code section 457
plan may be either a 457(b) (eligible) plan or a 457 (f) (ineligible) plan. The
contract may also be used with code section 415(m) arrangements.
The Contract and Retirement Plans. 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.
III. 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,
rollovers and any death benefit.
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.
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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.
401(a), 401(k), 403(a) or 403(b) Plans. All distributions from these plans are
taxed as received unless:
>The distribution is rolled over to another plan of the same type or to a
traditional individual retirement annuity/account (IRA) in accordance with the
Tax Code, or
>You made after-tax contributions to the plan. In this case, depending on the
type of distribution, a portion may be excluded from gross income according to
rules detailed in the Tax Code.
Taxation of Death Benefits
In general, payments received by your beneficiaries after your death are taxed
in the same manner as if you had received those payments.
10% Penalty Tax
The Tax Code imposes a 10% penalty tax on the taxable portion of any
distribution from a 401(a), 401(k) or 403(b) plan, unless one or more of the
following have occurred:
(a) You have attained age 591/2;
(b) You have become permanently disabled;
(c) You have died;
(d) You have separated from service with the plan sponsor at or after age 55;
(e) The distribution amount is rolled over into another plan of the same type
or to an IRA in accordance with the terms of the Tax Code; or
(f) The distribution amount is made in substantially equal periodic payments
(at least annually) over your life or life expectancy or the joint lives
or joint life expectancies of you and your beneficiary. Also, you must
have separated from service with the plan sponsor.
In addition, the penalty tax does not apply for the amount of a distribution
equal to unreimbursed medical expenses incurred by you that qualify for
deduction as specified in the Tax Code. The Tax Code may impose other penalty
taxes in other circumstances.
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.
401(a), 401(k), 403(a) or 403(b) Plans. Generally, under these plans you or a
beneficiary may elect not to have tax withheld from distributions. However,
certain distributions from these plans are subject to a mandatory 20% federal
income tax withholding.
457 Plans. All distributions from a 457 plan, except death benefits, 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.
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IV. 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 do not
apply to 457(f) 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
>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 701/2 or
retire, whichever occurs later, unless:
>You are a 5% owner, in which case such distributions must begin by April 1st
of the calendar year following the calendar year in which you attain age
701/2, or
>Under 403(b) plans, if you had amounts under the contract as of December 31,
1986. In this case, distribution of these amounts generally must begin by the
end of the calendar year in which you attain age 75 or retire, if later.
However, if you take any distributions in excess of the minimum required
amount, then special rules require that some or all of the December 31, 1986
balance be distributed earlier.
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 (457(b) Plan Only). 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 Benefits. The following applies to all plans
except 457(f) 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:
>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.
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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, 1999, your entire balance must be
distributed to the beneficiary by December 31, 2004. However, if the
distribution begins by 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
>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
>December 31 of the calendar year in which you would have attained age 701/2.
V. Rules Specific to Certain Plans
457 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. The plan may either be 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.
457(b) Plan. A 457(b) plan is subject to restrictions on contributions and
distributions.
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.
The Contract. We make this contract available to plans subject to code section
457 only if a governmental employer sponsors the plan.
Trust Requirement. 457(b) plans maintained by state or local governments, their
political subdivisions, agencies, instrumentalities and certain affiliates are
required to hold all assets and income of the plan in trust for the exclusive
benefit of plan participants and their beneficiaries. For purposes of meeting
this requirement, custodial accounts and annuity contracts are treated as
trusts.
Contributions Excluded from Gross Income. 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).
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Restrictions on Distributions. Under a 457(b) plan, amounts may not be made
available to you earlier than (1) the calendar year you attain age 701/2, (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.
403(b) Plans
Under code section 403(b), contributions made by public school systems or
nonprofit healthcare organizations and other Section 501(c)(3) tax exempt
organizations to purchase annuity contracts for their employees are generally
excludable from the gross income of the employee. Adverse tax consequences to
the plan and/or to you may result if your beneficial interest in the contract
is assigned or transferred to any person except to an alternate payee under a
qualified domestic relations order in accordance with code section 414(p) or to
the Company as collateral for a loan.
Exclusions from Gross Income. In order to be excludable from gross income,
total annual contributions made by you and your employer cannot exceed the
lesser of the following limits set by the Tax Code.
>The first limit, under code section 415, is generally the lesser of 25% of
your compensation or $30,000. Compensation means your compensation from the
employer sponsoring the plan and, for years beginning after December 31, 1997,
includes any elective deferrals under code section 402(g) and any amounts not
includible in gross income under code section 125 or 457.
>The second limit, which is the exclusion allowance under code section 403(b),
is usually calculated according to a formula that takes into account your
length of employment, any pretax contributions you and your employer have
already made under the plan, and any pretax contributions to certain other
retirement plans.
These two limits apply to your contributions as well as to any contributions
made by your employer on your behalf.
>An additional limit specifically limits your salary reduction contributions to
generally no more than $10,000 annually (subject to indexing). Your own limit
may be higher or lower, depending on certain conditions.
Payments to your account(s) will be excluded from your gross income only if the
plan meets certain nondiscrimination requirements.
Restrictions on Distributions. Code section 403(b)(11) restricts the
distribution under Section 403(b) contracts of:
>salary reduction contributions made after December 31, 1988;
>earnings on those contributions; and
>earnings during such period on amounts held as of December 31, 1988.
Distribution of those amounts may only occur upon your death, attainment of age
591/2, separation from service, disability, or financial hardship. Income
attributable to salary reduction contributions and credited on or after January
1, 1989 may not be distributed in the case of hardship.
Transfers from 403(b)(7) Custodial Accounts. If, pursuant to Revenue Ruling
90-24, the Company agrees to accept, under any of the contracts, amounts
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transferred from a code section 403(b)(7) custodial account, such amounts will
be subject to the withdrawal restrictions set forth in code section
403(b)(7)(A)(ii).
Taxation of Gains Prior to Distribution. Generally no amounts accumulated under
the contract will be taxable prior to the time of actual distribution.
However, the IRS has stated in published rulings that a variable contract
owner, including participants under code section 403(b) plans, will be
considered the owner of separate account assets if the contract owner possesses
incidents of investment control over the assets. In these circumstances, income
and gains from the separate account assets would be currently includible in the
variable contract owner's gross income.
The Treasury announced that it will issue guidance regarding the extent to
which owners could direct their investments among subaccounts without being
treated as owners of the underlying assets of the separate account. It is
possible that the Treasury's position, when announced, may adversely affect the
tax treatment of existing contracts. The Company therefore reserves the right
to modify the contract as necessary to attempt to prevent the owner from being
considered the federal tax owner of a pro rata share of the assets of the
separate account.
401(a), 401(k) and 403(a) Plans
Code sections 401(a), 401(k) and 403(a) permit certain employers to establish
various types of retirement plans for employees, and permit self-employed
individuals to establish various types of retirement plans for themselves and
for their employees. These retirement plans may permit the purchase of the
contracts to accumulate retirement savings under the plans.
Assignment or Transfer of Contracts. Adverse tax consequences to the plan
and/or to you may result if your beneficial interest in the contract is
assigned or transferred to persons other than: a plan participant as a means to
provide benefit payments; an alternate payee under a qualified domestic
relations order in accordance with code section 414(p); or to the Company as
collateral for a loan.
Exclusion From Gross Income. The Tax Code imposes a maximum limit on annual
payments to your account(s) that may be excluded from gross income. The
employer must calculate this limit under the plan in accordance with code
section 415. This limit is generally the lesser of 25% of your compensation or
$30,000. Compensation means your compensation from the employer sponsoring the
plan and, for years beginning after December 31, 1997, includes any elective
deferrals under code section 402(g) and any amounts not includible in gross
income under code sections 125 or 457. The limit applies to your contributions
as well as any contributions made by your employer on your behalf. There is an
additional limit that specifically limits your salary reduction contributions
under a 401(k) plan to generally no more than $10,000 annually (subject to
indexing). Your own limits may be higher or lower, depending on certain
conditions. In addition, payments to your account(s) will be excluded from your
gross income only if the plan meets certain nondiscrimination requirements.
Restrictions on Distributions. Code section 401(k) restricts distribution from
your 401(k) employee account, and possibly all or a portion of your 401(k)
employer account if such amounts are included in determining compliance with
certain nondiscrimination requirements under the Tax Code.
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Subject to the terms of the 401(k) plan, distribution of these restricted
amounts may only occur upon: retirement, death, attainment of age 591/2,
disability, separation from service, financial hardship, termination of the
plan in certain circumstances, or, generally, if your employer is a corporation
and disposes of substantially all of its assets or disposes of a subsidiary. In
addition, income attributable to salary reduction contributions and credited on
or after January 1, 1989, may not be distributed in the case of hardship.
Code Section 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
"Contributions Excluded from Taxable Income" 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 generally not taxable until paid or made available to you.
However, 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.
VI. Taxation of the Company
We are taxed as a life insurance company under the Tax Code. Variable Annuity
Separate Account C 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.
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Other Topics
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The Company
Aetna Life Insurance and Annuity Company (the Company, we) 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 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 C
We established Variable Annuity Account C (the "separate account") in 1976 as a
segregated asset account to fund our variable annuity contracts. The separate
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
>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.
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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 separate account. Generally, under contracts
issued in connection with section 403(b), 401 or 403(a) plans, you have a fully
vested interest in the value of your employee account, and in your employer
account to the extent of your vested percentage in the plan. Therefore, under
such plans you generally have the right to instruct the contract holder how to
direct us to vote shares attributable to your account. Under contracts issued
in connection with section 457 plans, the contract holder retains 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 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, whole and fractional, any person is entitled to direct
will be determined as of the record date set by any fund in which that person
invests through the subaccounts.
>During the accumulation phase the number of votes is equal to the portion of
your 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
under 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."
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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 a maximum
of 7% 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 names 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.
>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, and under some contracts, to
discontinue accepting payments to existing accounts. Certain changes will
require the approval of appropriate state or federal regulatory authorities.
In addition, under some contracts we reserve the right, without contract holder
consent, to change the tables for determining the amount of income payments or
the income payment options available. Such a change would only apply to income
payments attributable to contributions accepted after the date of change.
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Legal Matters and Proceedings
We are aware of no material legal proceedings pending which involve the
separate account or the Company 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.
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), or when trading on the Exchange
is restricted;
(b) when an emergency exists as determined by the SEC so that disposal of
securities held in the subaccounts is not reasonably practicable or it is
not reasonably practicable for us fairly to determine the value of the
subaccount's assets;
(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.
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.
Account Termination
Under some contracts, where allowed by state law, we reserve the right to
terminate an individual account if the account value is less than $3,500 and
this value is not due to negative investment performance. We will notify you or
the contract holder 90 days prior to terminating the account. If we exercise
this right we will not deduct an early withdrawal charge.
Year 2000 Readiness
As a healthcare and financial services enterprise, Aetna Inc. (referred to
collectively with its affiliates and subsidiaries as "Aetna"), is dependent on
computer systems and applications to conduct its business. Aetna has developed
and is currently executing a comprehensive risk-based plan designed to make its
mission-critical information technology (IT) systems and embedded systems Year
2000 ready. The plan for IT systems covers five stages including (i)
assessment, (ii) remediation, (iii) testing, (iv) implementation and (v) Year
2000 approval. At year end 1997, Aetna, including the Company, had
substantially completed the assessment stage. The remediation of mission-
critical IT systems was completed year end 1998. Testing of all
mission-critical IT systems is underway with Year 2000 approval targeted for
completion by mid-1999. The costs of these efforts will not affect the separate
account.
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The Company, its affiliates and the mutual funds that serve as investment
options for the separate account also have relationships with investment
advisers, broker dealers, transfer agents, custodians or other securities
industry participants or other service providers that are not affiliated with
Aetna. Aetna, including the Company, has initiated communication with its
critical external relationships to determine the extent to which Aetna may be
vulnerable to such parties' failure to resolve their own Year 2000 issues.
Aetna and the Company have assessed and are prioritizing responses in an
attempt to mitigate risks with respect to the failure of these parties to be
Year 2000 ready. There can be no assurance that failure of third parties to
complete adequate preparations in a timely manner, and any resulting systems
interruptions or other consequences, would not have an adverse effect, directly
or indirectly, on the separate account, including, without limitation, its
operation or the valuation of its assets and units.
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Contents of the Statement of Additional Information
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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 C
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 the Company
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Appendix I
Guaranteed Accumulation Account
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The Guaranteed Accumulation Account (GAA) is a fixed interest option that may
be available during the accumulation phase. This appendix is only a summary of
certain facts about the 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 that 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 on 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.
Under some contracts issued in New York, if you have elected ECO as described
in "Systematic Distribution Options," no MVA applies to amounts withdrawn from
GAA.
Guaranteed Terms. The guaranteed term is the period of time account dollars
must be left in GAA in order to earn the 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.
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In general we offer the following guaranteed terms:
>short-term--three years or less
>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
>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. 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.
Loans. You cannot take a loan from your account value in GAA. However, we
include your account value in GAA when determining the amount of your account
value we may distribute as a loan.
Reinvesting amounts withdrawn from GAA. If amounts are withdrawn from GAA and
then reinvested in GAA, we will apply the reinvested amount to the current
deposit period. The guaranteed annual interest rate, and guaranteed terms
available on the date of reinvestment will apply. Amounts will be reinvested
proportionately in the same way as they were allocated before withdrawal.
Your account value will not be credited for any negative MVA that was deducted
at the time of withdrawal.
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Appendix II
Fixed Account
- --------------------------------------------------------------------------------
The Fixed Account is an investment option available during the accumulation
phase under some contracts. Under some contracts, this option is available to
installment purchase plans only. This option is not available in the state of
New York under some contracts.
- --------------------------------------------------------------------------------
Additional information about this option may be found in the contract.
- --------------------------------------------------------------------------------
Amounts allocated to the Fixed Account are held in the Company's general
account which supports insurance and annuity obligations.
General Disclosure. Interests in the Fixed Account have not been registered
with the SEC in reliance on exemptions under the Securities Act of 1933, as
amended. Disclosure in this prospectus regarding 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. 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 interest rates reflects 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, some contracts allow us to
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, some contracts provide
that we may pay withdrawals in equal payments with interest, over a period not
to exceed 60 months when:
(a) The Fixed Account withdrawal value 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 within the past 12 calendar months exceeds 20% of the
amount in the Fixed Account on the day before the 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 each calendar year or each
12-month period, depending on the contract. We determine the amount available
for transfer based on your Fixed Account value either (1) on the January 1st
preceding the transfer request or (2) as of the date we receive the transfer
request in good order at our Home Office. The 10% limit does not apply to
amounts being transferred into the Fixed Plus Account (if available under the
contract).
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By notifying the Home Office at least 30 days before income payments begin you,
or the contract holder on your behalf, may elect to have amounts transferred to
one or more of the funds available during the income phase to provide variable
payments.
Contract Loans. If available under your plan, contract loans may be made from
account values held in Fixed Account.
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Appendix III
Fixed Plus Account
- --------------------------------------------------------------------------------
The Fixed Plus Account is an investment option available during the
accumulation phase under some contracts.
Amounts allocated to the Fixed Plus 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 Plus Account have not been
registered with the SEC in reliance on exemptions under the Securities Act of
1933, as amended. Disclosure in this prospectus regarding 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.
Certain Restrictions. This option is not available in the state of New York
under some contracts. We reserve the right to limit investment in or transfers
to the Fixed Plus Account. Under most contracts, you may not elect certain
withdrawal options including, under most contracts, the systematic distribution
option, if you have requested a Fixed Plus Account transfer or withdrawal in
the prior 12-month period. For some contracts, under certain emergency
conditions, we may defer payment of a withdrawal from the Fixed Plus Account
for a period of up to six months or as provided by federal law.
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. Under
some contracts, 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.
Our determination of interest rates reflects 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.
Requests for Partial Withdrawals. The contract holder or you, if permitted by
the plan, may take up to 20% of the Fixed Plus Account value as a partial
withdrawal in each twelve (12) month period, or under some contracts, in each
calendar year. We determine the amount eligible for partial withdrawal as of
the date we receive a request for partial withdrawal in good order at our Home
Office or as of the January 1st preceding the partial withdrawal request,
depending on the terms of the contract. The amount allowed for partial
withdrawal is reduced by any Fixed Plus Account withdrawals, transfers, loans
or amounts applied to income phase payment options made in the prior 12 months
(or, under some contracts, the prior calendar year). Under most contracts, in
calculating the 20% limit, we reserve the right to include payments made due to
the election of a systematic distribution option.
Waiver of Partial Withdrawal Limits. We generally waive the 20% limit if the
partial withdrawal is due to the election of an income phase payment option
(under some contracts, the waiver does not apply to the election of a
nonlifetime payment option with variable payments). We also waive the 20% limit
for withdrawals due to your death. Under most contracts, the waiver upon death
may only be exercised once, must occur within six months after your date of
death and must be made proportionally from all subaccounts and fixed interest
options in which the account was invested.
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Also, under some contracts the 20% limit is waived if the withdrawal is due to
hardship from an unforeseeable emergency, or an unforeseeable emergency as
defined by the Tax Code, and the following requirements are satisfied:
>The hardship is certified (required under most contracts);
>The partial withdrawal is taken proportionally from each investment option in
which the your account invests;
>The amount is paid directly to you; and
>The amount paid for all withdrawals due to hardship during the previous
12-month period does not exceed 10% of the average value of your account(s)
and all other accounts under the relevant contracts during that same period.
Under some contracts, the percentage limit is also waived if the partial
withdrawal is due to separation from service and the following conditions are
met:
>The employer certifies you have separated from service;
>The amount withdrawn is paid directly to you; and
>The amount paid for all partial and full withdrawals due to separation from
service during the previous 12-month period does not exceed 20% of the average
value of your account(s) and all other accounts under the relevant contracts
providing this waiver during that same period.
Additionally, we may allow other waivers of the percentage limit on partial
withdrawals to participants in certain plans. You can determine what additional
waivers, if any, apply to you by referring to the contract or certificate.
Requests for Full Withdrawals. 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 the request is received,
reduced by any Fixed Plus Account withdrawals, transfers, amounts used to fund
income phase payments, or loans made during the prior 12 months (or, under
some contracts, during the prior calendar year);
>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.
Under some contracts, there is a different method of calculating the amount
available each year. The full withdrawal will be paid in installments of 20% of
your account value held in the Fixed Plus Account, reduced by any Fixed Plus
Account withdrawals, transfers, amounts used to fund income phase payments, or
loans made during the prior 12 months in each of four consecutive 12-month
periods. Under this provision, the remaining Fixed Plus Account balance in the
account may be withdrawn any time after the end of the fourth 12-month period.
Once we receive a request for a full withdrawal, no further withdrawals, loans
or transfers will be permitted from the Fixed Plus Account. A full withdrawal
from the Fixed Plus Account may be canceled at any time before the end of the
five-payment period.
Waiver of Full Withdrawal Provisions. We will waive the Fixed Plus Account
five-installment payout for full withdrawals made due to one or more of the
following:
(a) Due to the election of an income phase payment option (under some contracts
this waiver does not apply to the election of a nonlifetime payment option
with variable payments)
(b) Due to your death during the accumulation phase. Some contracts require
that we be notified of your death, or that the withdrawal be taken, within
six months of the death
(c) When the Fixed Plus Account value is $3,500 or less ($2,000 or less under
some contracts). Most contracts also require that no withdrawals,
transfers, loans or elections of income phase payment options have been
made from the account within the prior 12 months (or, under some
contracts, within the prior calendar year).
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Additionally, under certain contracts, we will waive the five-payment full
withdrawal provision due to one or more of the following:
1. Due to hardship from an unforeseeable emergency, as defined by the Tax Code,
if all of the following conditions are met:
>The hardship is certified by the employer, and, under some contracts;
>The amount is paid directly to you; and
>The amount paid for all withdrawals due to hardship during the previous
12-month period does not exceed 10% of the average value of your account(s)
and all other accounts under the relevant contract during that same period.
2. Due to your separation from service with the employer, provided that all the
following apply*:
>The employer certifies that you have separated from service;
>The amount withdrawn is paid directly to you (under some contracts it must be
paid directly to you only if you withdraw the amounts more than one year after
separation); and
>Under most contracts, if the amount paid for all partial and full withdrawals
due to separation from service during the previous 12-month period does not
exceed 20% of the average value of all your account(s) and all other accounts
under the relevant contract during that same period.
3. If you are at least age 591/2 and have completed nine payment periods
4. If we terminate your account based on our right to do so for accounts below
a certain value (usually $3,500).
5. Additionally, we may allow other waivers of the five installment payout for
full withdrawals to participants in certain plans. You can determine what
additional waivers, if any, apply to you by referring to the contract or
certificate.
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. The contract holder or you, if allowed by the plan, may transfer 20%
of your account value held in the Fixed Plus Account in each 12-month period or
during each calendar year, depending on the terms of the contract. We determine
the amount eligible for transfer on the day we receive a transfer request in
good order at our Home Office, or under some contracts, as of the January 1st
preceding the transfer request. We will reduce amounts allowed for transfer by
any Fixed Plus Account withdrawals, transfers, loans or amounts applied to
income phase payment options during the prior 12 months (or, under some
contracts, during the prior calendar year). Under most contracts, in
calculating the percentage limit on transfers, we reserve the right to include
payments made due to the election of any of the systematic distribution
options. We will waive the percentage limit on transfers when the value in the
Fixed Plus Account is $1,000 or less ($2,000 or less under some contracts).
Under some contracts, if you transfer 20% of your account value held in the
Fixed Plus Account in each of four consecutive 12-month periods, you may
transfer the remaining balance in the succeeding 12-month period provided you
do not allocate any amount to or transfer any other amount from the Fixed Plus
Account during the five-year period. The 20% amount available to transfer under
this provision will be reduced by any amount transferred, taken as a loan or
applied to income phase payment options within the 12-month period preceding
the first 20% transfer. Also, we may reduce it for payments we made from your
Fixed Plus Account value under any systematic distribution option.
- -----------------
* Instead of the provisions under number 2 above, some contracts waive the
five-payment full withdrawal provision for separation from service if all of
the following apply:
>The hardship is certified by the employer;
>We receive the withdrawal request within 60 days of the date of separation;
and
>You pay a 3% charge based on the entire Fixed Plus Account value.
If you instead choose to have your payout in five annual installments as
described above, then we will not assess the charge.
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Income Phase. Amounts accumulating under the Fixed Plus Account can be
transferred to subaccounts to fund variable payments during the income phase.
Availability of subaccounts may vary during the income phase. Some contracts do
not permit Fixed Plus Account values to fund nonlifetime income options with
variable payments.
Contract Loans. If permitted under the plan, loans may be made from account
values held in the Fixed Plus Account. See the loan agreement for a description
of the amount available and possible consequences upon loan default if Fixed
Plus Account values are used for a loan.
Transfer Credits. The Company provides a transfer credit in certain
circumstances. See "Contract Purchase and Participation--Transfer Credits." The
transfer credit is a specified percentage of the assets transferred to the
Company under a contract that remain in the accounts for the period of time
specified by the Company, plus the interest that would have been credited had
that amount been deposited in the Fixed Plus Account on the first business day
of the calendar month following its calculation. We apply the transfer credit
to the current value held in the Fixed Plus Account.
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Appendix IV
Employee Appointment of Employer as Agent
Under an Annuity Contract
- --------------------------------------------------------------------------------
For Plans under Section 403(b), 401 or 403(a) of the Code (except voluntary
Section 403(b) Plans)
================================================================================
My employer has adopted a plan under Internal Revenue Code Sections 403(b),
401(a)/401(k) or 403(a) ("Plan") and has purchased an Aetna Life Insurance and
Annuity Company ("Company") group variable annuity contract ("Contract") as the
funding vehicle. Contributions under this Plan will be made by me through
salary reduction to an Employee Account, and by my employer to an Employer
Account.
By electing to participate in my employer's Plan, I voluntarily appoint my
employer, who is the Contract Holder, as my agent for the purposes of all
transactions under the Contract in accordance with the terms of the Plan. The
Company is not a party to the Plan and does not interpret the Plan provisions.
As a Participant in the Plan, I understand and agree to the following terms and
conditions:
>I own the value of my Employee Account subject to the restrictions of Sections
403(b), 401(a)/401(k) or 403(a) and the terms of the Plan. Subject to the
terms of the vesting schedule in the Plan and the restrictions of Sections
403(b), 401(a)/401(k) or 403(a), I have ownership in the value of my Employer
Account.
>I understand that the Company will process transactions only with my
employer's written direction to the Company. I agree to be bound by my
employer's interpretation of the Plan provisions and its written direction to
the Company.
>My employer may permit me to make investment selections under the Employee
Account and/or the Employer Account directly with the Company under the terms
of the Contract. Without my employer's written permission, I will be unable to
make any investment selections under the Contract.
>On my behalf, my employer may request a loan in accordance with the terms of
the Contract and the provisions of the Plan. The Company will make payment of
the loan amount directly to me. I will be responsible for making repayments
directly to the Company in a timely manner.
>In the event of my death, my employer is the named Beneficiary under the terms
of the Contract. I have the right to name a personal Beneficiary as determined
under the terms of the Plan and file that Beneficiary election with my
employer. It is my employer's responsibility to direct the Company to properly
pay any death benefits.
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Appendix V
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. Shares of the
funds are not bank deposits and are not guaranteed, endorsed or insured by any
financial institution, 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 designed 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 designed 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 designed 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 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 U.S. 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
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portfolio of equity securities issued by real estate companies, the majority of
which are real estate investment trusts (REITs).(1)
>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 Value Opportunity VP seeks growth of
capital primarily through investment in a diversified portfolio of common
stocks and securities convertible into common stocks.(1)(a)
>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 advisor to be
undervalued relative to the investment advisor'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, nondiversified
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)
>Fidelity Variable Insurance Products Fund (VIP)-- 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 (VIP)-- 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 (VIP)-- Overseas Portfolio seeks
long-term growth of capital by investing in foreign securities, primarily in
common stocks.(4)
>Fidelity Variable Insurance Products Fund II (VIP II)--Contrafund 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)
>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, 1998, they ranged from approximately
$142 million to $73 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
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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 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.
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 (except loan repayments that we
automatically deposit into the subaccount according to our loan repayment
procedures).(6)
>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.--MFS Emerging Equities Portfolio seeks long-term
growth of capital.(8)(a)
>Portfolio Partners, Inc.--MFS Research Growth Portfolio seeks long-term growth
of capital and future income.(8)(a)
>Portfolio Partners, Inc.--MFS Value Equity Portfolio seeks capital
appreciation.(8)(a)
>Portfolio Partners, Inc.--Scudder International Growth Portfolio seeks
long-term growth of capital.(8)(b)
>Portfolio Partners, Inc.--T. Rowe Price Growth Equity Portfolio seeks
long-term capital growth, and, secondarily, increasing dividend income.(8)(c)
Investment Advisers for each of the Funds:
(1) Aeltus Investment Management, Inc.
(a) Bradley, Foster & Sargent, Inc.
(subadviser)
(2) AIM Advisors, Inc.
(3) Calvert Asset Management Company, Inc.
(4) Fidelity Management & Research Company (adviser)
(5) Janus Capital Corporation
(6) Lexington Management Corporation
(adviser); Market Systems Research Advisors, Inc. (subadviser)
(7) OppenheimerFunds, Inc.
(8) Aetna Life Insurance and Annuity Company (adviser);
(a) Massachusetts Financial Services Company (subadviser)
(b) Scudder Kemper Investments, Inc. (subadviser)
(c) T. Rowe Price Associates, Inc. (subadviser)
57
<PAGE>
Appendix VI
Condensed Financial Information
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
<TABLE>
<S> <C>
Table I--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
0.40%, 0.45%, and 0.50% .................................... 59
Table II--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
0.75%, 0.80%, and 0.85% .................................... 62
Table III--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
0.90% and 0.95% ............................................ 65
Table IV--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
1.00% and 1.05% ............................................ 68
Table V--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
1.10% and 1.15% ............................................ 72
Table VI--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
1.20% and Those Issued Since 1996 with Total Separate
Account Charges of 1.25% ................................... 76
Table VII--For Contracts Issued Under 403(b), 401(a)
and 401(k) Plans with Total Separate Account Charges of
1.30% and 1.40% ............................................ 79
Table VIII--For Contracts Issued Since 1996 Under 403(b),
401(a) and 401(k) Plans with Total Separate Account Charges
of 1.50% ................................................... 82
Table IX--For Contracts Issued Under 403(b) Plans and
Deferred Compensation Plans with Total Separate Account
Charges of 1.25% ........................................... 85
Table X--For Multiple Option Contracts Issued to
San Bernardino County and Macomb County with Total
Separate Account Charges of 1.25% .......................... 89
Table XI--For Contracts Issued Under 403(b) Plans and
Deferred Compensation Plans with Total Separate Account
Charges of 1.50% (including a 0.25% Administrative Expense
Charge Beginning April 7, 1997) ............................ 92
Table XII--For Contracts Containing Limits on Fees Issued
Under 403(b) Plans and Deferred Compensation Plans ......... 95
Table XIII--For Deferred Compensation Contracts with
Total Separate Account Charges of 0.95% Effective
On January 15, 1996 ........................................ 97
Table XIV--For Deferred Compensation Contracts with
Total Separate Account Charges of 0.95% Effective
On May 25, 1996 ............................................ 101
Table XV--For Deferred Compensation Contracts with
Total Separate Account Charges of 0.95% Effective
On or After December 16, 1996 .............................. 105
</TABLE>
58
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE I
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.40%, 0.45%, AND 0.50%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for the period ended
December 31, 1998 (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, 1998 are included in the Statement of
Additional Information.
<TABLE>
<CAPTION>
0.40% Total Charges 0.45% Total Charges 0.50% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.239(1) $9.146(2) $10.475(3)
Value at end of period $14.086 $9.519 $9.848
Number of accumulation units outstanding at end
of period 86,321 779 2,670
AETNA BALANCED VP, INC.
Value at beginning of period $14.244(1) $10.369(4)
Value at end of period $15.331 $11.077
Number of accumulation units outstanding at end
of period 653,272 310,846
AETNA BOND VP
Value at beginning of period $11.893(1) $10.118(4)
Value at end of period $12.079 $10.662
Number of accumulation units outstanding at end
of period 190,084 88,895
AETNA CROSSROADS VP
Value at beginning of period $12.991(1) $9.531(2) $10.298(4)
Value at end of period $13.628 $9.800 $10.086
Number of accumulation units outstanding at end
of period 51,878 731 1,127
AETNA GROWTH VP
Value at beginning of period $15.200(1) $10.444(2) $10.479(4)
Value at end of period $18.018 $11.470 $12.397
Number of accumulation units outstanding at end
of period 21,805 291 19,997
AETNA GROWTH AND INCOME VP
Value at beginning of period $15.108(1) $9.561(2) $10.580(4)
Value at end of period $16.747 $10.152 $10.665
Number of accumulation units outstanding at end
of period 2,888,622 1,119 719,561
AETNA HIGH YIELD VP
Value at beginning of period $9.125(1) $9.961(3)
Value at end of period $9.238 $9.260
Number of accumulation units outstanding at end
of period 1,146 834
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $16.874(1) $10.639(2) $10.708(4)
Value at end of period $18.916 $11.307 $12.019
Number of accumulation units outstanding at end
of period 87,238 859 13,477
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $9.480(1) $10.050(3)
Value at end of period $10.921 $10.947
Number of accumulation units outstanding at end
of period 1,187 2,662
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $8.071(1) $9.328(5)
Value at end of period $8.840 $8.861
Number of accumulation units outstanding at end
of period 3,928 17
AETNA INTERNATIONAL VP
Value at beginning of period $9.231(2) $8.967(1)
Value at end of period $9.567 $9.815
Number of accumulation units outstanding at end
of period 61 562
AETNA LEGACY VP
Value at beginning of period $12.598(1) $10.115(5)
Value at end of period $13.111 $10.293
Number of accumulation units outstanding at end
of period 19,291 165
</TABLE>
59
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.40% Total Charges 0.45% Total Charges 0.50% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
AETNA MONEY MARKET VP
Value at beginning of period $11.148(1) $10.050(4)
Value at end of period $11.225 $10.399
Number of accumulation units outstanding at end
of period 107,285 34,355
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $8.679(1) $9.655(5)
Value at end of period $8.898 $8.919
Number of accumulation units outstanding at end
of period 1,099 649
AETNA SMALL COMPANY VP
Value at beginning of period $12.820(1) $8.583(2) $10.719(4)
Value at end of period $13.714 $9.176 $9.312
Number of accumulation units outstanding at end
of period 15,614 318 7,541
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $13.986(1) $10.508(4)
Value at end of period $16.125 $11.369
Number of accumulation units outstanding at end
of period 11,799 993
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $13.635(1) $10.217(2) $10.377(4)
Value at end of period $14.976 $10.714 $10.966
Number of accumulation units outstanding at end
of period 38,218 553 50,868
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $14.267(1) $9.516(2) $10.522(4)
Value at end of period $15.192 $9.968 $10.363
Number of accumulation units outstanding at end
of period 54,320 519 6,791
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $15.510(1) $10.651(4)
Value at end of period $17.525 $12.779
Number of accumulation units outstanding at end
of period 128,518 18,614
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $12.178(1) $10.774(4)
Value at end of period $13.170 $10.183
Number of accumulation units outstanding at end
of period 10,817 251
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $15.219(1) $10.553(2) $10.673(4)
Value at end of period $17.813 $11.475 $11.985
Number of accumulation units outstanding at end
of period 197,022 1,754 8,618
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $11.663(1) $10.570(4)
Value at end of period $14.125 $12.541
Number of accumulation units outstanding at end
of period 198,264 134,432
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $15.614(1) $10.945(2) $10.615(4)
Value at end of period $17.878 $11.816 $12.415
Number of accumulation units outstanding at end
of period 39,424 612 30,062
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $12.743(1) $10.457(2) $10.186(4)
Value at end of period $13.053 $10.446 $10.640
Number of accumulation units outstanding at end
of period 21,374 82 13,364
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $14.790(1) $10.286(4)
Value at end of period $17.807 $12.391
Number of accumulation units outstanding at end
of period 73,901 7,785
JANUS ASPEN WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $15.344(1) $9.630(2) $10.980(4)
Value at end of period $17.582 $10.235 $11.485
Number of accumulation units outstanding at end
of period 383,490 1,186 37,288
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $9.754(1)
Value at end of period $9.626
Number of accumulation units outstanding at end
of period 12,237
</TABLE>
60
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.40% Total Charges 0.45% Total Charges 0.50% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Value at beginning of period $9.004(1) $10.131(6)
Value at end of period $10.047 $10.070
Number of accumulation units outstanding at end
of period 1,564 180
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $9.695(1) $9.975(2) $9.995(3)
Value at end of period $9.923 $9.953 $9.946
Number of accumulation units outstanding at end
of period 1,513 575 14
PORTFOLIO PARTNERS MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period $10.705(1) $10.094(2) $9.990(4)
Value at end of period $12.776 $11.002 $10.841
Number of accumulation units outstanding at end
of period 339,956 371 178,398
PORTFOLIO PARTNERS MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period $9.362(1) $9.862(2) $10.490(4)
Value at end of period $10.641 $10.577 $11.127
Number of accumulation units outstanding at end
of period 331,958 473 79,769
PORTFOLIO PARTNERS MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $14.188(1) $9.984(2) $10.726(4)
Value at end of period $15.676 $10.673 $11.320
Number of accumulation units outstanding at end
of period 36,644 192 71,605
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $12.570(1) $10.711(4)
Value at end of period $13.602 $10.797
Number of accumulation units outstanding at end
of period 168,912 113,511
PORTFOLIO PARTNERS T. ROWE PRICE
GROWTH PORTFOLIO
Value at beginning of period $15.042(1) $10.302(2) $10.256(4)
Value at end of period $16.863 $11.057 $11.551
Number of accumulation units outstanding at end
of period 169,615 817 4,869
</TABLE>
- -----------------
(1) Funds were first received in this option during November 1998.
(2) Funds were first received in this option during December 1998.
(3) Funds were first received in this option during May 1998.
(4) Funds were first received in this option during April 1998.
(5) Funds were first received in this option during June 1998.
(6) Funds were first received in this option during July 1998.
61
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE II
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) and 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.75%, 0.80%, AND 0.85%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for the period ended
December 31, 1998 (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, 1998 are included in the Statement of
Additional Information.
<TABLE>
<CAPTION>
0.75% Total Charges 0.80% Total Charges 0.85% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $9.913(1) $10.604(2) $13.699(3)
Value at end of period $9.502 $10.101 $14.113
Number of accumulation units outstanding at end
of period 43,142 255,775 70,991
AETNA BALANCED VP, INC.
Value at beginning of period $10.002(1) $10.646(2) $13.327(3)
Value at end of period $10.648 $11.358 $15.360
Number of accumulation units outstanding at end
of period 183,347 3,962,527 1,379,122
AETNA BOND VP
Value at beginning of period $10.058(1) $10.157(2) $11.381(3)
Value at end of period $10.502 $10.650 $12.102
Number of accumulation units outstanding at end
of period 51,916 771,660 654,765
AETNA CROSSROADS VP
Value at beginning of period $9.936(1) $10.524(2) $13.063(3)
Value at end of period $9.782 $10.312 $13.654
Number of accumulation units outstanding at end
of period 62,144 213,970 102,916
AETNA GROWTH VP
Value at beginning of period $9.925(1) $11.326(2) $13.357(3)
Value at end of period $11.449 $13.030 $18.036
Number of accumulation units outstanding at end
of period 18,200 303,987 24,240
AETNA GROWTH AND INCOME VP
Value at beginning of period $9.935(1) $10.925(2) $14.694(3)
Value at end of period $10.133 $11.108 $16.779
Number of accumulation units outstanding at end
of period 773,713 15,809,881 5,795,667
AETNA HIGH YIELD VP
Value at beginning of period $10.145(4) $9.939(1) $9.899(5)
Value at end of period $9.284 $9.241 $9.238
Number of accumulation units outstanding at end
of period 0 15,411 644
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $10.015(1) $11.117(2) $14.692(3)
Value at end of period $11.286 $12.587 $18.945
Number of accumulation units outstanding at end
of period 48,831 1,974,900 459,428
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $9.822(1) $9.576(1) $9.028(5)
Value at end of period $11.183 $10.925 $10.921
Number of accumulation units outstanding at end
of period 1,623 80,312 5,681
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $9.642(1) $9.269(1) $8.464(5)
Value at end of period $9.201 $8.843 $8.840
Number of accumulation units outstanding at end
of period 1,481 90,819 6,564
AETNA INTERNATIONAL VP
Value at beginning of period $9.600(5) $10.043(1) $9.580(5)
Value at end of period $9.550 $9.795 $9.792
Number of accumulation units outstanding at end
of period 7 45,801 8,719
AETNA LEGACY VP
Value at beginning of period $9.977(1) $10.359(2) $12.497(3)
Value at end of period $10.054 $10.423 $13.136
Number of accumulation units outstanding at end
of period 21,150 418,989 61,043
</TABLE>
62
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.75% Total Charges 0.80% Total Charges 0.85% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
AETNA MONEY MARKET VP
Value at beginning of period $10.022(1) $10.136(2) $10.799(3)
Value at end of period $10.283 $10.414 $11.246
Number of accumulation units outstanding at end
of period 26,810 1,574,454 396,669
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $9.792(1) $10.041(4) $10.041(4)
Value at end of period $8.944 $8.900 8.897
Number of accumulation units outstanding at end
of period 9 27,225 398
AETNA SMALL COMPANY VP
Value at beginning of period $9.812(1) $10.578(2) $13.558(3)
Value at end of period $9.159 $9.764 $13.728
Number of accumulation units outstanding at end
of period 13,043 1,165,745 25,298
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $9.921(1) $10.972(2) $13.404(3)
Value at end of period $10.620 $11.692 $16.141
Number of accumulation units outstanding at end
of period 14.488 350,826 15,014
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $10.081(1) $10.492(2) $13.124(3)
Value at end of period $10.694 $11.254 $15.005
Number of accumulation units outstanding at end
of period 9,543 91,333 132,605
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $9.914(1) $10.873(2) $13.708(3)
Value at end of period $9.950 $10.850 $15.220
Number of accumulation units outstanding at end
of period 67,227 846,660 306,099
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $9.956(1) $10.887(2) $12.857(3)
Value at end of period $12.150 $13.307 $17.558
Number of accumulation units outstanding at end
of period 63,727 981,477 399,820
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $9.912(1) $11.184(2) $12.182(3)
Value at end of period $9.427 $10.530 $13.195
Number of accumulation units outstanding at end
of period 4,502 47,503 13,937
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $9.912(1) $10.937(2) $13.824(3)
Value at end of period $11.454 $12.589 $17.847
Number of accumulation units outstanding at end
of period 78,075 2,102,805 217,720
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $9.887(1) $10.647(2) $10.427(3)
Value at end of period $12.109 $13.056 $14.152
Number of accumulation units outstanding at end
of period 117,103 1,605,726 320,159
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $9.856(1) $10.741(2) $13.744(3)
Value at end of period $11.794 $12.741 $17.912
Number of accumulation units outstanding at end
of period 26,592 425,125 47,668
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $10.062(1) $10.210(2) $12.306(3)
Value at end of period $10.427 $10.643 $13.078
Number of accumulation units outstanding at end
of period 6,947 367,677 25,566
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $9.810(1) $10.918(2) $13.512(3)
Value at end of period $11.666 $12.836 $17.841
Number of accumulation units outstanding at end
of period 41,104 434,913 446,603
JANUS ASPEN WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $9.953(1) $11.798(2) $14.300(3)
Value at end of period $10.217 $12.009 $17.615
Number of accumulation units outstanding at end
of period 167,606 4,480,348 710,851
</TABLE>
63
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.75% Total Charges 0.80% Total Charges 0.85% Total Charges
--------------------- --------------------- --------------------
1998 1998 1998
--------------------- --------------------- --------------------
<S> <C> <C> <C>
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $9.791(1) $10.922(2) $11.047(3)
Value at end of period $7.696 $8.415 $9.645
Number of accumulation units outstanding at end
of period 13,175 140,250 14,190
OPPENHEIMER GLOBAL SECURITIES
FUND/VA
Value at beginning of period $9.713(1) $10.001(4) $9.275(5)
Value at end of period $10.027 $10.050 $10.046
Number of accumulation units outstanding at end
of period 535 2,686 7,592
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $10.029(4) $10.025(1) $9.935(5)
Value at end of period $9.935 $9.926 $9.922
Number of accumulation units outstanding at end
of period 925 18,786 2,776
PORTFOLIO PARTNERS MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period $9.828(1) $10.687(2) $10.399(3)
Value at end of period $10.982 $11.846 $12.800
Number of accumulation units outstanding at end
of period 139,547 3,491,454 706,142
PORTFOLIO PARTNERS MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period $9.917(1) $11.019(2) $8.861(3)
Value at end of period $10.558 $11.682 $10.661
Number of accumulation units outstanding at end
of period 46,475 750,388 616,205
PORTFOLIO PARTNERS MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $9.963(1) $11.274(2) $12.661(3)
Value at end of period $10.653 $12.055 $15.706
Number of accumulation units outstanding at end
of period 49,316 376,471 382,755
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $10.009(1) $11.338(2) $11.868(3)
Value at end of period $9.781 $11.041 $13.628
Number of accumulation units outstanding at end
of period 34,688 850,743 434,054
PORTFOLIO PARTNERS T. ROWE PRICE
GROWTH PORTFOLIO
Value at beginning of period $9.961(1) $10.967(2) $13.562(3)
Value at end of period $11.036 $12.153 $16.895
Number of accumulation units outstanding at end
of period 42,865 1,058,534 129,123
</TABLE>
- -----------------
(1) Funds were first received in this option during June 1998.
(2) Funds were first received in this option during May 1998.
(3) Funds were first received in this option during January 1998.
(4) Funds were first received in this option during July 1998.
(5) Funds were first received in this option during August 1998.
64
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE III
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 0.90% AND 0.95%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for each of the periods
ended December 31, 1998, 1997 and 1996 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
0.90% Total
Charges 0.95% Total Charges
--------------- -------------------------------------------------------
1998 1998 1997 1996
--------------- ---------------- ---------------- -----------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $9.227(1) $13.624 $11.472 $10.000(2)
Value at end of period $9.953 $14.076 $13.624 $11.472
Number of accumulation units
outstanding at end of period 212 75,369 119,471 20,237
AETNA BALANCED VP, INC.
Value at beginning of period $10.451(3) $13.226 $10.902 $10.000(2)
Value at end of period $11.157 $15.320 $13.226 $10.902
Number of accumulation units
outstanding at end of period 1,648 468,468 986,711 702,222
AETNA BOND VP
Value at beginning of period $10.070(4) $11.268 $10.503 $10.000(2)
Value at end of period $10.654 $12.070 $11.268 $10.503
Number of accumulation units
outstanding at end of period 383 187,653 251,156 161,765
AETNA CROSSROADS VP
Value at beginning of period $12.980 $11.146 $10.000(2)
Value at end of period $13.618 $12.980 $11.146
Number of accumulation units
outstanding at end of period 105,586 117,725 7,882
AETNA GROWTH VP
Value at beginning of period $10.958(3) $13.202 $12.787(5)
Value at end of period $12.681 $18.005 $13.202
Number of accumulation units
outstanding at end of period 628 25,778 1,880
AETNA GROWTH AND INCOME VP
Value at beginning of period $10.562(4) $14.756 $11.469 $10.000(2)
Value at end of period $10.804 $16.736 $14.756 $11.469
Number of accumulation units
outstanding at end of period 8,243 2,224,467 3,760,076 2,876,728
AETNA HIGH YIELD VP
Value at beginning of period $10.078(6)
Value at end of period $9.231
Number of accumulation units
outstanding at end of period 799
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $10.648(4) $14.500 $10.934 $10.000(7)
Value at end of period $12.206 $18.902 $14.500 $10.934
Number of accumulation units
outstanding at end of period 2,384 108,387 62,360 2,697
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $10.108(8)
Value at end of period $10.913
Number of accumulation units
outstanding at end of period 564
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $9.582(6) $9.366(9)
Value at end of period $8.837 $8.834
Number of accumulation units
outstanding at end of period 62 2,625
AETNA INTERNATIONAL VP
Value at beginning of period $10.103(8)
Value at end of period $9.785
Number of accumulation units
outstanding at end of period 1,247
AETNA LEGACY VP
Value at beginning of period $10.390(8) $12.369 $10.905 $10.000(2)
Value at end of period $10.351 $13.102 $12.369 $10.905
Number of accumulation units
outstanding at end of period 37 55,494 47,726 61
</TABLE>
65
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.90% Total
Charges 0.95% Total Charges
---------------- --------------------------------------------------------
1998 1998 1997 1996
---------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
AETNA MONEY MARKET VP
Value at beginning of period $10.297(1) $10.738 $10.277 $10.000(2)
Value at end of period $10.381 $11.217 $10.738 $10.277
Number of accumulation units
outstanding at end of period 1,235 127,186 147,123 39,811
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $10.053(8)
Value at end of period $8.891
Number of accumulation units
outstanding at end of period 15,245
AETNA SMALL COMPANY VP
Value at beginning of period $10.939(3) $13.684 $13.119(10)
Value at end of period $9.513 $13.704 $13.684
Number of accumulation units
outstanding at end of period 2,604 44,944 2,124
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $10.515(4) $13.290 $12.912(10)
Value at end of period $11.462 $16.113 $13.290
Number of accumulation units
outstanding at end of period 3,526 29,112 587
CALVERT SOCIAL BALANCED
PORTFOLIO
Value at beginning of period $12.994 $10.924 $10.000(2)
Value at end of period $14.965 $12.994 $10.924
Number of accumulation units
outstanding at end of period 95,020 93,905 19,808
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Value at beginning of period $9.265(11) $13.729 $10.819 $10.000(2)
Value at end of period $10.671 $15.180 $13.729 $10.819
Number of accumulation units
outstanding at end of period 20 147,150 125,669 27,639
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $10.757(3) $12.674 $10.362 $10.000(2)
Value at end of period $12.978 $17.512 $12.674 $10.362
Number of accumulation units
outstanding at end of period 1,343 165,194 150,612 54,133
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $11.783 $10.664 $10.000(2)
Value at end of period $13.160 $11.783 $10.664
Number of accumulation units
outstanding at end of period 9,217 20,273 3,820
FIDELITY VIP II CONTRAFUND
PORTFOLIO
Value at beginning of period $10.737(4) $13.825 $11.243 $10.000(2)
Value at end of period $12.293 $17.800 $13.825 $11.243
Number of accumulation units
outstanding at end of period 1,038 254,734 266,396 95,199
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $10.787(3) $10.613 $9.510 $10.000(2)
Value at end of period $12.830 $14.114 $10.613 $9.510
Number of accumulation units
outstanding at end of period 353 375,663 416,100 125,232
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $10.570(3) $13.431 $11.105 $10.000(2)
Value at end of period $12.490 $17.865 $13.431 $11.105
Number of accumulation units
outstanding at end of period 479 81,983 42,699 9,188
JANUS ASPEN FLEXIBLE INCOME
PORTFOLIO
Value at beginning of period $10.232(3) $12.069 $10.902 $10.000(7)
Value at end of period $10.638 $13.043 $12.069 $10.902
Number of accumulation units
outstanding at end of period 393 36,740 29,665 1,402
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $10.569(9) $13.242 $10.891 $10.000(2)
Value at end of period $12.464 $17.794 $13.242 $10.891
Number of accumulation units
outstanding at end of period 128 53,448 92,666 39,841
</TABLE>
66
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
0.90% Total
Charges 0.95% Total Charges
---------------- --------------------------------------------------------
1998 1998 1997 1996
---------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.606(4) $13.757 $11.370 $10.000(2)
Value at end of period $11.745 $17.569 $13.757 $11.370
Number of accumulation units
outstanding at end of period 5,140 427,855 555,448 151,935
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $12.082 $11.383 $10.000(2)
Value at end of period $9.619 $12.082 $11.383
Number of accumulation units
outstanding at end of period 51,077 85,577 5,295
OPPENHEIMER GLOBAL SECURITIES
FUND/VA
Value at beginning of period $10.182(6)
Value at end of period $10.039
Number of accumulation units
outstanding at end of period 144
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $10.037(6)
Value at end of period $9.915
Number of accumulation units
outstanding at end of period 614
PORTFOLIO PARTNERS MFS
EMERGING EQUITIES PORTFOLIO
Value at beginning of period $10.233(9) $9.940 $10.062(12)
Value at end of period $11.462 $12.767 $9.940
Number of accumulation units
outstanding at end of period 236 626,638 795,375
PORTFOLIO PARTNERS MFS
RESEARCH GROWTH PORTFOLIO
Value at beginning of period $10.954(3) $8.727 $8.897(12)
Value at end of period $11.375 $10.633 $8.727
Number of accumulation units
outstanding at end of period 828 237,867 484,407
PORTFOLIO PARTNERS MFS
VALUE EQUITY PORTFOLIO
Value at beginning of period $11.183(3) $12.478 $12.296(12)
Value at end of period $11.654 $15.664 $12.478
Number of accumulation units
outstanding at end of period 957 103,317 96,338
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $10.020(1) $11.522 $11.376(12)
Value at end of period $11.029 $13.592 $11.522
Number of accumulation units
outstanding at end of period 10 234,075 351,150
PORTFOLIO PARTNERS T. ROWE
PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $10.840(3) $13.332 $13.062(12)
Value at end of period $11.792 $16.851 $13.332
Number of accumulation units
outstanding at end of period 169 197,938 238,562
</TABLE>
- -----------------
(1) Funds were first received in this option during October 1998.
(2) 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.
(3) Funds were first received in this option during April 1998.
(4) Funds were first received in this option during March 1998.
(5) Funds were first received in this option during August 1997.
(6) Funds were first received in this option during July 1998.
(7) 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.
(8) Funds were first received in this option during May 1998.
(9) Funds were first received in this option during June 1998.
(10) Funds were first received in this option during December 1997.
(11) Funds were first received in this option during September 1998.
(12) Funds were first received in this option during November 1997.
67
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE IV
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.00% AND 1.05%
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for each of the periods
ended December 31, 1998, 1997 and 1996 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1.00% Total Charges 1.05% Total Charges
---------------------------------------------------- ----------------------------------
1998 1997 1996 1998 1997
------------------ ---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.613 $11.468 $10.000(1) $13.602 $11.629(2)
Value at end of period $14.057 $13.613 $11.468 $14.039 $13.602
Number of accumulation units
outstanding at end of period 520,438 14,463 13 55,886 24,508
AETNA BALANCED VP, INC.
Value at beginning of period $13.215 $13.054(3) $13.204 $12.677(3)
Value at end of period $15.300 $13.215 $15.279 $13.204
Number of accumulation units
outstanding at end of period 2,019,116 57,737 61,615 4,205
AETNA BOND VP
Value at beginning of period $11.258 $10.500 $10.000(1) $11.249 $10.587(2)
Value at end of period $12.054 $11.258 $10.500 $12.038 $11.249
Number of accumulation units
outstanding at end of period 802,876 64,958 679 50,220 11,619
AETNA CROSSROADS VP
Value at beginning of period $12.970 $12.945(4) $12.959 $11.292(2)
Value at end of period $13.600 $12.970 $13.582 $12.959
Number of accumulation units
outstanding at end of period 168,964 2,786 38,257 12,847
AETNA GROWTH VP
Value at beginning of period $12.674(5) $13.192 $13.184(6)
Value at end of period $17.989 $17.974 $13.192
Number of accumulation units
outstanding at end of period 194,081 23,219 31
AETNA GROWTH AND
INCOME VP
Value at beginning of period $14.744 $11.465 $10.000(1) $14.732 $12.312(2)
Value at end of period $16.713 $14.744 $11.465 $16.691 $14.732
Number of accumulation units
outstanding at end of period 9,871,041 362,675 13,125 326,490 44,425
AETNA HIGH YIELD VP
Value at beginning of period $9.149(7) $9.995(8)
Value at end of period $9.228 $9.225
Number of accumulation units
outstanding at end of period 9,211 110
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.491 $14.289(9) $14.481 $14.043(3)
Value at end of period $18.880 $14.491 $18.859 $14.481
Number of accumulation units
Outstanding at end of period 648,540 29 51,170 1,083
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $7.996(7) $9.624(10)
Value at end of period $10.909 $10.906
Number of accumulation units
outstanding at end of period 24,016 168
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $9.580(10) $9.530(10)
Value at end of period $8.831 $8.827
Number of accumulation units
outstanding at end of period 27,047 330
AETNA INTERNATIONAL VP
Value at beginning of period $10.061(11) $8.935(12)
Value at end of period $9.781 $9.778
Number of accumulation units
outstanding at end of period 14,898 182
</TABLE>
68
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.00% Total Charges 1.05% Total Charges
------------------------------------------------------ --------------------------------
1998 1997 1996 1998 1997
------------------ ------------------ ---------------- --------------- ----------------
<S> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $12.358 $12.242(2) $12.348 $11.009(2)
Value at end of period $13.084 $12.358 $13.067 $12.348
Number of accumulation units
outstanding at end of period 190,406 64 62,453 6,221
AETNA MONEY MARKET VP
Value at beginning of period $10.729 $10.274 $10.000(1) $10.720 $10.322(2)
Value at end of period $11.202 $10.729 $10.274 $11.187 $10.720
Number of accumulation units
outstanding at end of period 1,039,909 65,496 1,551 43,461 1,863
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $9.214(7) $9.899(8)
Value at end of period $8.888 $8.885
Number of accumulation units
outstanding at end of period 6,500 131
AETNA SMALL COMPANY VP
Value at beginning of period $14.234(13) $13.674 $12.485(3)
Value at end of period $13.692 $13.680 $13.674
Number of accumulation units
outstanding at end of period 404,068 5,235 125
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $12.765(5) $13.281 $12.796(6)
Value at end of period $16.099 $16.085 $13.281
Number of accumulation units
outstanding at end of period 98,683 3,648 17
CALVERT SOCIAL BALANCED
PORTFOLIO
Value at beginning of period $12.983 $12.982(14) $12.972 $12.278(3)
Value at end of period $14.945 $12.983 $14.926 $12.972
Number of accumulation units
outstanding at end of period 108,344 25,620 25,822 766
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Value at beginning of period $13.718 $13.438(14) $13.706 $11.435(2)
Value at end of period $15.160 $13.718 $15.140 $13.706
Number of accumulation units
outstanding at end of period 409,327 29,808 81,062 34,010
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $12.663 $10.358 $10.000(1) $12.653 $10.988(2)
Value at end of period $17.489 $12.663 $10.358 $17.466 $12.653
Number of accumulation units
outstanding at end of period 581,798 61,043 21 65,095 22,425
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $11.774 $11.818(9) $11.764 $10.798(2)
Value at end of period $13.143 $11.774 $13.126 $11.764
Number of accumulation units
outstanding at end of period 44,183 1,294 9,113 3,858
FIDELITY VIP II CONTRAFUND
PORTFOLIO
Value at beginning of period $13.814 $11.239 $10.000(1) $13.802 $12.865(3)
Value at end of period $17.776 $13.814 $11.239 $17.753 $13.802
Number of accumulation units
outstanding at end of period 1,138,180 139,417 20,020 90,950 9,650
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.604 $9.507 $10.000(1) $10.596 $8.894(2)
Value at end of period $14.096 $10.604 $9.507 $14.077 $10.596
Number of accumulation units
outstanding at end of period 997,760 106,350 17,055 114,249 38,785
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $13.420 $13.490(14) $13.409 $11.587(2)
Value at end of period $17.841 $13.420 $17.818 $13.409
Number of accumulation units
outstanding at end of period 184,550 5,846 37,434 14,527
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $12.059 $10.857(15) $12.049 $11.571(3)
Value at end of period $13.026 $12.059 $13.009 $12.049
Number of accumulation units
outstanding at end of period 414,151 12,527 13,507 700
</TABLE>
69
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.00% Total Charges 1.05% Total Charges
----------------------------------------------------- ----------------------------------
1998 1997 1996 1998 1997
----------------- ------------------ ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $13.231 $10.929(15) $13.220 $13.078(3)
Value at end of period $17.770 $13.231 $17.747 $13.220
Number of accumulation units
outstanding at end of period 220,151 17,098 45,804 7,726
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $13.746 $11.366 $10.000(1) $13.735 $12.089(2)
Value at end of period $17.545 $13.746 $11.366 $17.522 $13.735
Number of accumulation units
outstanding at end of period 2,151,202 207,630 36,305 202,768 59,673
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $12.072 $13.838(14) $12.062 $12.407(3)
Value at end of period $9.606 $12.072 $9.594 $12.062
Number of accumulation units
outstanding at end of period 75,695 12,963 2,961 791
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $9.484(12) $9.801(8)
Value at end of period $10.036 $10.032
Number of accumulation units
outstanding at end of period 5,395 180
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $9.991(11) $9.582(16)
Value at end of period $9.912 $9.908
Number of accumulation units
outstanding at end of period 7,329 5
PORTFOLIO PARTNERS MFS
EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $9.932 $10.054(9) $9.923 $10.046(9)
Value at end of period $12.750 $9.932 $12.733 $9.923
Number of accumulation units
outstanding at end of period 2,223,125 180,890 102,952 26,577
PORTFOLIO PARTNERS MFS
RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $8.720 $8.890(9) $8.713 $8.883(9)
Value at end of period $10.619 $8.720 $10.605 $8.713
Number of accumulation units
outstanding at end of period 741,693 55,616 40,974 1,465
PORTFOLIO PARTNERS MFS
VALUE EQUITY PORTFOLIO
Value at beginning of period $12.467 $12.287(9) $12.457 $12.277(9)
Value at end of period $15.644 $12.467 $15.623 $12.457
Number of accumulation units
outstanding at end of period 291,492 68,968 25,784 1,514
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $11.512 $11.367(9) $11.503 $11.358(9)
Value at end of period $13.574 $11.512 $13.556 $11.503
Number of accumulation units
outstanding at end of period 715,389 80,978 29,581 8,780
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $13.321 $13.052(9) $13.310 $13.042(9)
Value at end of period $16.829 $13.321 $16.806 $13.310
Number of accumulation units
outstanding at end of period 767,053 65,906 51,412 18,429
</TABLE>
- -----------------
(1) 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.
(2) Funds were first received in this option during February 1997.
(3) Funds were first received in this option during July 1997.
(4) Funds were first received in this option during September 1997.
(5) Funds were first received in this option during January 1998.
(6) Funds were first received in this option during August 1997.
(7) Funds were first received in this option during September 1998.
70
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(8) Funds were first received in this option during June 1998.
(9) Funds were first received in this option during November 1997.
(10) Funds were first received in this option during July 1998.
(11) Funds were first received in this option during May 1998.
(12) Funds were first received in this option during August 1998.
(13) Funds were first received in this option during February 1998.
(14) Funds were first received in this option during October 1997.
(15) Funds were first received in this option during January 1997.
(16) Funds were first received in this option during October 1998.
71
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE V
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.10% AND 1.15%
(Selected data for accumulation units outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The condensed financial information presented below for each of the periods
ended December 31, 1998, 1997 and 1996 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1.10% Total Charges 1.15% Total Charges
---------------------------------- ------------------------------------------
1998 1997 1998 1997 1996
--------------- ---------------- --------------- ---------------- -----
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.590 $13.275(1) $13.579 $11.525(2)
Value at end of period $14.020 $13.590 $14.002 $13.579
Number of accumulation units
outstanding at end of period 9,573 42 26,911 6,392
AETNA BALANCED VP, INC.
Value at beginning of period $13.194 $12.915(1) $13.183 $11.130(2)
Value at end of period $15.259 $13.194 $15.239 $13.183
Number of accumulation units
outstanding at end of period 10,484 294 275,681 250,060
AETNA BOND VP
Value at beginning of period $11.240 $11.219(3) $11.231 $10.476(2)
Value at end of period $12.022 $11.240 $12.006 $11.231
Number of accumulation units
outstanding at end of period 2,532 6 106,179 89,517
AETNA CROSSROADS VP
Value at beginning of period $12.949 $12.904(1) $12.938 $11.182(2)
Value at end of period $13.564 $12.949 $13.546 $12.938
Number of accumulation units
outstanding at end of period 14,611 14 24,882 7,129
AETNA GROWTH VP
Value at beginning of period $13.188 $13.325(1) $13.183 $13.348(4)
Value at end of period $17.958 $13.188 $17.943 $13.183
Number of accumulation units
outstanding at end of period 1,761 37 14,989 118
AETNA GROWTH AND
INCOME VP
Value at beginning of period $14.720 $14.520(1) $14.708 $11.805(2)
Value at end of period $16.669 $14.720 $16.647 $14.708
Number of accumulation units
outstanding at end of period 33,836 570 581,226 508,938
AETNA HIGH YIELD VP
Value at beginning of period $9.096(5) $9.959(6)
Value at end of period $9.222 $9.218
Number of accumulation units
outstanding at end of period 10 1,725
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.472 $14.078(1) $14.463 $11.663(2)
Value at end of period $18.837 $14.472 $18.815 $14.463
Number of accumulation units
outstanding at end of period 10,488 215 26,210 5,517
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $9.772(7) $9.105(8)
Value at end of period $10.902 $10.898
Number of accumulation units
outstanding at end of period 3 96
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $9.569(9)
Value at end of period $8.821
Number of accumulation units
outstanding at end of period 1,234
AETNA INTERNATIONAL VP
Value at beginning of period $9.763(8)
Value at end of period $9.771
Number of accumulation units
outstanding at end of period 167
</TABLE>
72
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.10% Total Charges 1.15% Total Charges
----------------------------------- ----------------------------------------------------
1998 1997 1998 1997 1996
------------------ ---------------- ---------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $12.338 $12.223(2) $12.328 $10.927(2)
Value at end of period $13.050 $12.338 $13.033 $12.328
Number of accumulation units
outstanding at end of period 3,369 851 23,052 21,027
AETNA MONEY MARKET VP
Value at beginning of period $10.711 $10.663(1) $10.702 $10.264 $10.000(10)
Value at end of period $11.172 $10.711 $11.158 $10.702 $10.264
Number of accumulation units
outstanding at end of period 6,784 145 76,594 44,265 9,856
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $9.159(5) $10.034(9)
Value at end of period $8.882 $8.879
Number of accumulation units
outstanding at end of period 16 2,845
AETNA SMALL COMPANY VP
Value at beginning of period $13.669 $13.331(1) $13.664 $13.709(4)
Value at end of period $13.668 $13.669 $13.657 $13.664
Number of accumulation units
outstanding at end of period 6,323 650 9,141 119
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $13.276 $12.952(1) $13.271 $13.244(4)
Value at end of period $16.071 $13.276 $16.057 $13.271
Number of accumulation units
outstanding at end of period 1,219 46 4,025 47
CALVERT SOCIAL BALANCED
PORTFOLIO
Value at beginning of period $13.068(11) $12.951 $11.071(2)
Value at end of period $14.906 $14.886 $12.951
Number of accumulation units
outstanding at end of period 1,048 48,553 37,416
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Value at beginning of period $13.695 $13.343(1) $13.684 $10.805 $10.000(10)
Value at end of period $15.120 $13.695 $15.100 $13.684 $10.805
Number of accumulation units
outstanding at end of period 4,490 589 62,313 40,977 4,215
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $12.643 $12.740(1) $12.632 $10.348 $10.000(10)
Value at end of period $17.443 $12.643 $17.420 $12.632 $10.348
Number of accumulation units
outstanding at end of period 13,478 416 70,232 43,953 4,472
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $11.754 $11.651(3) $11.745 $10.662(1)
Value at end of period $13.108 $11.754 $13.091 $11.745
Number of accumulation units
outstanding at end of period 1,860 5 9,778 6,203
FIDELITY VIP II CONTRAFUND
PORTFOLIO
Value at beginning of period $13.791 $13.502(1) $13.780 $11.228 $10.000(10)
Value at end of period $17.729 $13.791 $17.706 $13.780 $11.228
Number of accumulation units
outstanding at end of period 5,768 110 85,591 56,042 4,169
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.587 $10.337(1) $10.578 $9.498 $10.000(10)
Value at end of period $14.059 $10.587 $14.040 $10.578 $9.498
Number of accumulation units
outstanding at end of period 3,032 269 103,123 77,340 4,932
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $13.398 $13.138(1) $13.387 $11.090 $10.000(10)
Value at end of period $17.794 $13.398 $17.771 $13.387 $11.090
Number of accumulation units
outstanding at end of period 4,709 256 36,442 15,461 13
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $12.039 $11.872(1) $12.029 $10.882(2)
Value at end of period $12.992 $12.039 $12.975 $12.029
Number of accumulation units
outstanding at end of period 2,780 12 8,869 4,140
</TABLE>
73
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.10% Total Charges 1.15% Total Charges
----------------------------------- ---------------------------------------------------
1998 1997 1998 1997 1996
------------------ ---------------- --------------- ---------------- ------------------
<S> <C> <C> <C> <C> <C>
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $13.209 $12.995(1) $13.198 $11.138(2)
Value at end of period $17.723 $13.209 $17.700 $13.198
Number of accumulation units
outstanding at end of period 2,555 498 39,188 22,179
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $13.724 $13.565(1) $13.712 $11.355 $10.000(10)
Value at end of period $17.499 $13.724 $17.476 $13.712 $11.355
Number of accumulation units
outstanding at end of period 14,918 971 130,326 77,286 9
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $8.980(8) $12.042 $11.865(2)
Value at end of period $9.581 $9.568 $12.042
Number of accumulation units
outstanding at end of period 31 12,059 12,454
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.160(9) $9.974(9)
Value at end of period $10.029 $10.025
Number of accumulation units
outstanding at end of period 27 295
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $9.720(5) $10.052(9)
Value at end of period $9.905 $9.902
Number of accumulation units
outstanding at end of period 22 689
PORTFOLIO PARTNERS MFS
EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $9.915 $10.039(1) $9.907 $10.031(1)
Value at end of period $12.716 $9.915 $12.699 $9.907
Number of accumulation units
outstanding at end of period 6,017 16 196,772 165,668
PORTFOLIO PARTNERS MFS
RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $10.008(12) $8.698 $8.869(1)
Value at end of period $10.591 $10.577 $8.698
Number of accumulation units
outstanding at end of period 121 135,559 122,863
PORTFOLIO PARTNERS MFS
VALUE EQUITY PORTFOLIO
Value at beginning of period $14.846(13) $12.437 $12.258(1)
Value at end of period $15.602 $15.582 $12.437
Number of accumulation units
outstanding at end of period 1,488 75,920 79,382
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $11.633(11) $11.484 $11.341(1)
Value at end of period $13.538 $13.520 $11.484
Number of accumulation units
outstanding at end of period 3,300 88,163 77,528
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.258(14) $13.288 $13.021(1)
Value at end of period $16.784 $16.762 $13.288
Number of accumulation units
outstanding at end of period 2,769 60,127 42,110
</TABLE>
- -----------------
(1) Funds were first received in this option during November 1997.
(2) Funds were first received in this option during January 1997.
(3) Funds were first received in this option during December 1997.
(4) Funds were first received in this option during September 1997.
(5) Funds were first received in this option during September 1998.
(6) Funds were first received in this option during June 1998.
(7) Funds were first received in this option during December 1998.
(8) Funds were first received in this option during August 1998.
74
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(9) Funds were first received in this option during July 1998.
(10) 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.
(11) Funds were first received in this option during January 1998.
(12) Funds were first received in this option during May 1998.
(13) Funds were first received in this option during April 1998.
(14) Funds were first received in this option during February 1998.
75
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE VI
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.20%
AND THOSE ISSUED SINCE 1996 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 two-year period ended December 31, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
Issued Since 1996 with 1.25% Total
1.20% Total Charges Charges
----------------------------------- -----------------------------------
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.587(1) $13.557 $12.564(2)
Value at end of period $13.983 $13.965 $13.557
Number of accumulation units
outstanding at end of period 90,247 1,249 253
AETNA BALANCED VP, INC.
Value at beginning of period $13.676(3) $13.161 $11.921(2)
Value at end of period $15.219 $15.199 $13.161
Number of accumulation units
outstanding at end of period 33,673 1,535 133
AETNA BOND VP
Value at beginning of period $11.283(3) $11.217(1)
Value at end of period $11.990 $11.975
Number of accumulation units
outstanding at end of period 23,608 1,197
AETNA CROSSROADS VP
Value at beginning of period $12.915(1) $12.917 $12.024(2)
Value at end of period $13.528 $13.510 $12.917
Number of accumulation units
outstanding at end of period 499,874 8,075 93
AETNA GROWTH VP
Value at beginning of period $14.173(3) $12.876(1)
Value at end of period $17.927 $17.912
Number of accumulation units
outstanding at end of period 7,333 5,419
AETNA GROWTH AND INCOME VP
Value at beginning of period $14.696 $13.746(4) $14.684 $12.851(5)
Value at end of period $16.625 $14.696 $16.603 $14.684
Number of accumulation units
outstanding at end of period 224,761 25 35,133 1,646
AETNA HIGH YIELD VP
Value at beginning of period $9.935(6)
Value at end of period $9.215
Number of accumulation units
outstanding at end of period 132
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.453 $13.642(4) $14.444 $14.070(7)
Value at end of period $18.794 $14.453 $18.772 $14.444
Number of accumulation units
outstanding at end of period 28,911 24 594 10
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $9.662(6)
Value at end of period $10.894
Number of accumulation units
outstanding at end of period 452
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $9.244(6)
Value at end of period $8.818
Number of accumulation units
outstanding at end of period 989
AETNA INTERNATIONAL VP
Value at beginning of period $9.973(6)
Value at end of period $9.768
Number of accumulation units
outstanding at end of period 123
AETNA LEGACY VP
Value at beginning of period $12.606(3) $12.308 $12.362(8)
Value at end of period $13.015 $12.998 $12.308
Number of accumulation units
outstanding at end of period 61,973 5,866 2
</TABLE>
76
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Issued Since 1996 with 1.25% Total
1.20% Total Charges Charges
----------------------------------- -----------------------------------
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
AETNA MONEY MARKET VP
Value at beginning of period $10.761(3) $10.746(3)
Value at end of period $11.143 $11.128
Number of accumulation units
outstanding at end of period 15,147 6,649
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $9.633(6)
Value at end of period $8.876
Number of accumulation units
outstanding at end of period 372
AETNA SMALL COMPANY VP
Value at beginning of period $14.380(3) $13.203(1)
Value at end of period $13.645 $13.633
Number of accumulation units
outstanding at end of period 24,930 7,548
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $14.033(3) $12.844(1)
Value at end of period $16.044 $16.030
Number of accumulation units
outstanding at end of period 12,115 1,234
CALVERT SOCIAL BALANCED
PORTFOLIO
Value at beginning of period $13.354(3) $12.930 $12.790(9)
Value at end of period $14.867 $14.847 $12.930
Number of accumulation units
outstanding at end of period 2,926 51 6
FIDELITY VIP EQUITY-INCOME
PORTFOLIO
Value at beginning of period $14.168(3) $13.661 $13.299(9)
Value at end of period $15.080 $15.061 $13.661
Number of accumulation units
outstanding at end of period 13,584 8,741 6
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $13.438(3) $12.612 $11.704(2)
Value at end of period $17.397 $17.374 $12.612
Number of accumulation units
outstanding at end of period 58,305 9,906 214
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $12.430(3) $11.726 $12.512(7)
Value at end of period $13.074 $13.056 $11.726
Number of accumulation units
outstanding at end of period 5,797 688 22
FIDELITY VIP II CONTRAFUND
PORTFOLIO
Value at beginning of period $13.768 $12.889(2) $13.757 $11.902(5)
Value at end of period $17.683 $13.768 $17.659 $13.757
Number of accumulation units
outstanding at end of period 29,528 27 11,737 390
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $10.956(3) $10.561 $9.646(2)
Value at end of period $14.022 $14.003 $10.561
Number of accumulation units
outstanding at end of period 43,050 4,812 262
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $14.246(3) $13.370(1)
Value at end of period $17.747 $17.724
Number of accumulation units
outstanding at end of period 21,105 798
JANUS ASPEN FLEXIBLE INCOME
PORTFOLIO
Value at beginning of period $12.212(3) $12.112(1)
Value at end of period $12.958 $12.940
Number of accumulation units
outstanding at end of period 13,990 126
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $14.218(3) $13.177 $13.270(7)
Value at end of period $17.677 $17.653 $13.177
Number of accumulation units
outstanding at end of period 19,754 5,365 32
</TABLE>
77
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Issued Since 1996 with 1.25% Total
1.20% Total Charges Charges
----------------------------------- -------------------------------------
1998 1997 1998 1997
---------------- ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
JANUS ASPEN WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $13.701 $13.856(2) $13.690 $13.125(2)
Value at end of period $17.453 $13.701 $17.430 $13.690
Number of accumulation units
outstanding at end of period 46,824 27 10,441 273
LEXINGTON NATURAL RESOURCES
TRUST
Value at beginning of period $11.980(6) $12.022 $11.717(2)
Value at end of period $9.556 $9.543 $12.022
Number of accumulation units
outstanding at end of period 2,826 53 35
OPPENHEIMER STRATEGIC BOND
FUND/VA
Value at beginning of period $9.905(10)
Value at end of period $9.898
Number of accumulation units
outstanding at end of period 57
PORTFOLIO PARTNERS MFS
EMERGING EQUITIES PORTFOLIO
Value at beginning of period $11.093(3) $9.891 $10.015(9)
Value at end of period $12.683 $12.666 $9.891
Number of accumulation units
outstanding at end of period 88,261 21,617 99
PORTFOLIO PARTNERS MFS
RESEARCH GROWTH PORTFOLIO
Value at beginning of period $9.310(3) $8.597(1)
Value at end of period $10.563 $10.549
Number of accumulation units
outstanding at end of period 49,879 3,244
PORTFOLIO PARTNERS MFS VALUE
EQUITY PORTFOLIO
Value at beginning of period $13.387(3) $12.394(1)
Value at end of period $15.561 $15.541
Number of accumulation units
outstanding at end of period 19,782 1,060
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH
PORTFOLIO
Value at beginning of period $12.274(3) $11.465 $11.323(9)
Value at end of period $13.502 $13.485 $11.465
Number of accumulation units
outstanding at end of period 13,604 2,493 189
PORTFOLIO PARTNERS T. ROWE
PRICE GROWTH EQUITY
PORTFOLIO
Value at beginning of period $14.232(3) $13.156((1)
Value at end of period $16.740 $16.718
Number of accumulation units
outstanding at end of period 45,971 1,239
</TABLE>
- -----------------
(1) Funds were first received in this option during January 1998.
(2) Funds were first received in this option during June 1997.
(3) Funds were first received in this option during February 1998.
(4) Funds were first received in this option during July 1997.
(5) Funds were first received in this option during May 1997.
(6) Funds were first received in this option during June 1998.
(7) Funds were first received in this option during September 1997.
(8) Funds were first received in this option during October 1997.
(9) Funds were first received in this option during November 1997.
(10) Funds were first received in this option during December 1998.
78
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE VII
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS SINCE 1996
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.30% AND 1.40%
(Selected data for accumulation units outstanding throughout each period)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The condensed financial information presented below for each of the periods
ended December 31, 1998 and 1997 (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, 1998 are included in the
Statement of Additional Information.
<TABLE>
<CAPTION>
1.30% Total Charges 1.40% Total Charges
---------------------------------- --------------------
1998 1997 1998
--------------- ---------------- --------------------
<S> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.546 $11.759(1) $14.731(2)
Value at end of period $13.946 $13.546 $13.910
Number of accumulation units outstanding at end
of period 1,424 855 136
AETNA BALANCED VP, INC.
Value at beginning of period $13.150 $11.717(3) $14.278(2)
Value at end of period $15.179 $13.150 $15.139
Number of accumulation units outstanding at end
of period 8 459 533
AETNA BOND VP
Value at beginning of period $11.203 $10.974(1) $11.423(2)
Value at end of period $11.959 $11.203 $11.927
Number of accumulation units outstanding at end
of period 59,443 279 189
AETNA CROSSROADS VP
Value at beginning of period $12.906 $11.380(1) $13.846(2)
Value at end of period $13.492 $12.906 $13.457
Number of accumulation units outstanding at end
of period 521 641 501
AETNA GROWTH VP
Value at beginning of period $15.724(2)
Value at end of period $17.865
Number of accumulation units outstanding at end
of period 211
AETNA GROWTH AND INCOME VP
Value at beginning of period $14.672 $12.519(1) $16.562(4)
Value at end of period $16.581 $14.672 $16.537
Number of accumulation units outstanding at end
of period 2,880 3,082 934
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.435 $11.470(5) $16.556(2)
Value at end of period $18.751 $14.435 $18.708
Number of accumulation units outstanding at end
of period 12,423 8,665 173
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $9.805(6)
Value at end of period $10.887
Number of accumulation units outstanding at end
of period 41
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $8.198(6)
Value at end of period $8.812
Number of accumulation units outstanding at end
of period 49
AETNA LEGACY VP
Value at beginning of period $12.298 $11.401(3)
Value at end of period $12.981 $12.298
Number of accumulation units outstanding at end
of period 30,755 74
AETNA MONEY MARKET VP
Value at beginning of period $10.676 $10.358(5) $10.821(2)
Value at end of period $11.114 $10.676 $11.084
Number of accumulation units outstanding at end
of period 13,000 8,302 161
AETNA SMALL COMPANY VP
Value at beginning of period $11.872(7)
Value at end of period $13.598
Number of accumulation units outstanding at end
of period 72
</TABLE>
79
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.30% Total Charges 1.40% Total Charges
------------------------------------- --------------------
1998 1997 1998
---------------- ------------------ --------------------
<S> <C> <C> <C>
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $15.827(8) $15.181(2)
Value at end of period $16.016 $15.988
Number of accumulation units outstanding at end
of period 88 39
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $12.919 $11.742(3)
Value at end of period $14.827 $12.919
Number of accumulation units outstanding at end
of period 13 44
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $13.650 $10.942(5) $15.124(2)
Value at end of period $15.041 $13.650 $15.001
Number of accumulation units outstanding at end
of period 3,612 7,817 2,077
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $12.601 $10.724(1) $14.386(2)
Value at end of period $17.351 $12.601 $17.305
Number of accumulation units outstanding at end
of period 2,636 2,031 4,116
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $11.716 $11.785(1) $13.828(2)
Value at end of period $13.039 $11.716 $13.005
Number of accumulation units outstanding at end
of period 408 348 113
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $13.746 $11.031(5) $15.738(4)
Value at end of period $17.636 $13.746 $17.590
Number of accumulation units outstanding at end
of period 10,681 7,728 1,990
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $10.552 $8.944(1) $11.943(4)
Value at end of period $13.985 $10.552 $13.948
Number of accumulation units outstanding at end
of period 3,586 2,527 1,441
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $13.354 $12.113(3) $15.102(2)
Value at end of period $17.701 $13.354 $17.654
Number of accumulation units outstanding at end
of period 668 369 564
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $12.225(9) $12.375(2)
Value at end of period $12.923 $12.889
Number of accumulation units outstanding at end
of period 8,960 30
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $13.166 $10.962(5) $15.123(2)
Value at end of period $17.630 $13.166 $17.584
Number of accumulation units outstanding at end
of period 911 637 2,368
JANUS ASPEN WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $13.679 $11.961(5) $16.231(4)
Value at end of period $17.407 $13.679 $17.361
Number of accumulation units outstanding at end
of period 6,473 2,018 649
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $12.012 $10.678(5)
Value at end of period $9.340 $12.012
Number of accumulation units outstanding at end
of period 0 5
OPPENHEIMER GLOBAL SECURITIES
FUND/VA
Value at beginning of period $9.965(8) $10.041(10)
Value at end of period $10.015 $10.008
Number of accumulation units outstanding at end
of period 139 14
PORTFOLIO PARTNERS MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period $9.883 $10.007(11) $11.707(2)
Value at end of period $12.649 $9.883 $12.616
Number of accumulation units outstanding at end
of period 5,462 3,595 928
</TABLE>
80
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1.30% Total Charges 1.40% Total Charges
----------------------------- --------------------
1998 1997 1998
--------- ----------------- --------------------
<S> <C> <C> <C>
PORTFOLIO PARTNERS MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period $8.677 $8.848(11) $9.977(2)
Value at end of period $10.535 $8.677 $10.507
Number of accumulation units outstanding at end
of period 5,146 1,788 220
PORTFOLIO PARTNERS MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $12.406 $12.230(11) $14.631(2)
Value at end of period $15.520 $12.406 $15.479
Number of accumulation units outstanding at end
of period 1,074 237 46
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $11.456 $11.314(11) $13.542(2)
Value at end of period $13.467 $11.456 $13.431
Number of accumulation units outstanding at end
of period 313 200 125
PORTFOLIO PARTNERS T. ROWE PRICE
GROWTH PORTFOLIO
Value at beginning of period $13.256 $12.991(11) $15.190(2)
Value at end of period $16.696 $13.256 $16.652
Number of accumulation units outstanding at end
of period 2,748 1,649 1,525
</TABLE>
- -----------------
(1) Funds were first received in this option during May 1997.
(2) Funds were first received in this option during May 1998.
(3) Funds were first received in this option during June 1997.
(4) Funds were first received in this option during April 1998.
(5) Funds were first received in this option during April 1997.
(6) Funds were first received in this option during November 1998.
(7) Funds were first received in this option during September 1998.
(8) Funds were first received in this option during December 1998.
(9) Funds were first received in this option during March 1998.
(10) Funds were first received in this option during July 1998.
(11) Funds were first received in this option during November 1997.
81
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE VIII
FOR CONTRACTS ISSUED UNDER 403(b), 401(a) AND 401(k) PLANS SINCE 1996
WITH TOTAL SEPARATE ACCOUNT CHARGES OF 1.50%
(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, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996
---------------- ---------------- ----------------
<S> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $13.502 $11.422(1)
Value at end of period $13.873 $13.502
Number of accumulation units outstanding at end
of period 14,280 9,985
AETNA BALANCED VP, INC
Value at beginning of period $13.107 $11.009(1)
Value at end of period $15.099 $13.107
Number of accumulation units outstanding at end
of period 9,091 7,997
AETNA BOND VP
Value at beginning of period $11.166 $10.442(1)
Value at end of period $11.896 $11.166
Number of accumulation units outstanding at end
of period 27,680 2,940
AETNA CROSSROADS VP
Value at beginning of period $12.864 $11.093(1)
Value at end of period $13.421 $12.864
Number of accumulation units outstanding at end
of period 22,768 30,806
AETNA GROWTH VP
Value at beginning of period $13.027(2)
Value at end of period $17.834
Number of accumulation units outstanding at end
of period 3,470
AETNA GROWTH AND INCOME VP
Value at beginning of period $14.624 $11.429 $10.000(3)
Value at end of period $16.493 $14.624 $11.429
Number of accumulation units outstanding at end
of period 47,950 40,309 5
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.397 $11.374(1)
Value at end of period $18.665 $14.397
Number of accumulation units outstanding at end
of period 16,814 3,156
AETNA INDEX PLUS MID CAP VP
Value at beginning of period $9.216(4)
Value at end of period $10.872
Number of accumulation units outstanding at end
of period 45
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $7.150(4)
Value at end of period $8.800
Number of accumulation units outstanding at end
of period 78
AETNA LEGACY VP
Value at beginning of period $12.257 $10.835(5)
Value at end of period $12.913 $12.257
Number of accumulation units outstanding at end
of period 14,097 14,983
AETNA MONEY MARKET VP
Value at beginning of period $10.641 $10.249(1)
Value at end of period $11.055 $10.641
Number of accumulation units outstanding at end
of period 13,218 13,868
AETNA SMALL COMPANY VP
Value at beginning of period $13.629 $13.952(6)
Value at end of period $13.574 $13.629
Number of accumulation units outstanding at end
of period 3,581 47
</TABLE>
82
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
--------------- ---------------- ----------------
<S> <C> <C> <C>
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $13.237 $12.103(7)
Value at end of period $15.960 $13.237
Number of accumulation units outstanding at end
of period 2,432 795
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $12.877 $10.955(1)
Value at end of period $14.749 $12.877
Number of accumulation units outstanding at end
of period 1,709 1,007
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $13.606 $10.905(1)
Value at end of period $14.961 $13.606
Number of accumulation units outstanding at end
of period 9,414 9,207
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $12.560 $10.537(1)
Value at end of period $17.259 $12.560
Number of accumulation units outstanding at end
of period 12,956 2,793
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $11.678 $10.566(1)
Value at end of period $12.971 $11.678
Number of accumulation units outstanding at end
of period 468 107
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $13.701 $11.436(1)
Value at end of period $17.543 $13.701
Number of accumulation units outstanding at end
of period 11,751 8,704
JANUS ASPEN AGGRESSIVE GROWTH
PORTFOLIO
Value at beginning of period $10.518 $9.477 $10.000(3)
Value at end of period $13.911 $10.518 $9.477
Number of accumulation units outstanding at end
of period 13,650 12,648 9
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $13.310 $11.136(1)
Value at end of period $17.607 $13.310
Number of accumulation units outstanding at end
of period 20,319 2,801
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $11.960 $10.955(5)
Value at end of period $12.855 $11.960
Number of accumulation units outstanding at end
of period 248 118
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $13.123 $11.002(1)
Value at end of period $17.537 $13.123
Number of accumulation units outstanding at end
of period 8,842 5,724
JANUS ASPEN WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $13.634 $11.483(1)
Value at end of period $17.315 $13.634
Number of accumulation units outstanding at end
of period 23,085 16,828
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $11.973 $11.712(1)
Value at end of period $9.480 $11.973
Number of accumulation units outstanding at end
of period 318 627
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $9.973(8)
Value at end of period $9.878
Number of accumulation units outstanding at end
of period 3
PORTFOLIO PARTNERS MFS EMERGING
EQUITIES PORTFOLIO
Value at beginning of period $9.850 $9.976(9)
Value at end of period $12.582 $9.850
Number of accumulation units outstanding at end
of period 5,349 2,413
</TABLE>
83
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------------- -----
<S> <C> <C> <C>
PORTFOLIO PARTNERS MFS RESEARCH
GROWTH PORTFOLIO
Value at beginning of period $8.649 $8.821(9)
Value at end of period $10.479 $8.649
Number of accumulation units outstanding at end
of period 1,814 442
PORTFOLIO PARTNERS MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $12.365 $12.192(9)
Value at end of period $15.438 $12.365
Number of accumulation units outstanding at end
of period 1,256 80
PORTFOLIO PARTNERS SCUDDER
INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $11.418 $11.279(9)
Value at end of period $13.396 $11.418
Number of accumulation units outstanding at end
of period 3,208 2,665
PORTFOLIO PARTNERS T. ROWE PRICE
GROWTH PORTFOLIO
Value at beginning of period $13.212 $12.951(9)
Value at end of period $16.608 $13.212
Number of accumulation units outstanding at end
of period 5,824 3,802
</TABLE>
- -----------------
(1) Funds were first received in this option during January 1997.
(2) Funds were first received in this option during January 1998.
(3) 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) Funds were first received in this option during August 1998.
(5) Funds were first received in this option during April 1997.
(6) Funds were first received in this option during September 1997.
(7) Funds were first received in this option during July 1997.
(8) Funds were first received in this option during May 1998.
(9) Funds were first received in this option during November 1997.
84
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE IX
FOR CONTRACTS ISSUED UNDER 403(b) PLANS AND DEFERRED COMPENSATION PLANS
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, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996 1995
----------------- ------------------ ----------------- -------------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.422 $13.025 $10.673 $10.000(1)
Value at end of period $15.886 $15.422 $13.025 $10.673
Number of accumulation units
outstanding at end of period 3,508,677 3,543,367 1,314,997 393,053
AETNA BALANCED VP
Value at beginning of period $18.811 $15.551 $13.673 $10.868
Value at end of period $21.723 $18.811 $15.551 $13.673
Number of accumulation units
outstanding at end of period 25,990,902 34,194,804 36,147,028 38,152,395
AETNA BOND VP
Value at beginning of period $13.238 $12.377 $12.098 $10.360
Value at end of period $14.137 $13.238 $12.377 $12.098
Number of accumulation units
outstanding at end of period 15,101,998 18,047,780 20,036,622 21,379,976
AETNA CROSSROADS VP
Value at beginning of period $14.456 $12.450 $10.612 $10.000(1)
Value at end of period $15.120 $14.456 $12.450 $10.612
Number of accumulation units
outstanding at end of period 2,863,812 2,469,082 918,336 294,673
AETNA GROWTH VP
Value at beginning of period $13.173 $11.635(5)
Value at end of period $17.912 $13.173
Number of accumulation units
outstanding at end of period 2,395,680 41,928
AETNA GROWTH AND
INCOME VP
Value at beginning of period $22.194 $17.302 $14.077 $10.778
Value at end of period $25.094 $22.194 $17.302 $14.077
Number of accumulation units
outstanding at end of period 134,233,828 177,627,474 185,328,132 188,964,022
AETNA HIGH YIELD VP
Value at beginning of period $9.969(7)
Value at end of period $9.212
Number of accumulation units
outstanding at end of period 91,056
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.444 $10.924 $10.000(8)
Value at end of period $18.772 $14.444 $10.924
Number of accumulation units
outstanding at end of period 7,100,483 4,796,644 879,588
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $10.107(7)
Value at end of period $10.891
Number of accumulation units
outstanding at end of period 146,921
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $9.996(7)
Value at end of period $8.815
Number of accumulation units
outstanding at end of period 253,184
AETNA INTERNATIONAL VP
Value at beginning of period $10.182(7)
Value at end of period $9.765
Number of accumulation units
outstanding at end of period 97,660
<CAPTION>
1994 1993 1992 1991 1990 1989
--------------- -------------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA BALANCED VP
Value at beginning of period $11.057 $10.189 $12.736(2) $10.896 $10.437 $10.000(3)
Value at end of period $10.868 $11.057 $10.189 $12.736 $10.896 $10.437
Number of accumulation units
outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986
AETNA BOND VP
Value at beginning of period $10.905 $10.068 $36.789(4) $31.192 $28.943 $25.574
Value at end of period $10.360 $10.905 $10.068 $36.789 $31.192 $28.943
Number of accumulation units
outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834
AETNA CROSSROADS VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
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 $11.020 $10.454 $97.165(6) $77.845 $76.311 $59.871
Value at end of period $10.778 $11.020 $10.454 $97.165 $77.845 $76.311
Number of accumulation units
outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820
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>
85
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------------- ------------------ -------------- -------------------
<S> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $13.491 $11.930 $10.580 $10.000(1)
Value at end of period $14.248 $13.491 $11.930 $10.580
Number of accumulation units
outstanding at end of period 11,971,281 1,624,842 513,590 143,637
AETNA MONEY MARKET VP
Value at beginning of period $11.951 $11.473 $11.026 $10.528
Value at end of period $12.447 $11.951 $11.473 $11.026
Number of accumulation units
outstanding at end of period 10,102,496 12,191,085 13,898,826 12,999,680
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $10.126(7)
Value at end of period $8.873
Number of accumulation units
outstanding at end of period 90,949
AETNA SMALL COMPANY
VP
Value at beginning of period $13.654 $12.299(10)
Value at end of period $13.633 $13.654
Number of accumulation units
outstanding at end of period 1,696,714 253,548
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $13.261 $12.913(11)
Value at end of period $16.030 $13.261
Number of accumulation units
outstanding at end of period 1,079,291 100,928
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $17.840 $15.044 $13.527 $10.554
Value at end of period $20.485 $17.840 $15.044 $13.527
Number of accumulation units
outstanding at end of period 1,306,652 1,499,989 1,313,324 966,098
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $15.837 $12.518 $11.092 $10.000(2)
Value at end of period $17.459 $15.837 $12.518 $11.092
Number of accumulation units
outstanding at end of period 6,281,077 7,111,490 5,007,706 1,660,304
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $13.904 $11.402 $10.066 $10.000(1)
Value at end of period $19.155 $13.904 $11.402 $10.066
Number of accumulation units
outstanding at end of period 7,144,438 6,586,698 5,171,098 1,833,794
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $12.269 $11.137 $9.961 $10.000(1)
Value at end of period $13.662 $12.269 $11.137 $9.961
Number of accumulation units
outstanding at end of period 651,566 718,565 487,709 196,090
FIDELITY VIP II
CONTRAFUND PORTFOLIO
Value at beginning of period $15.270 $12.455 $10.397 $10.000(1)
Value at end of period $19.601 $15.270 $12.455 $10.397
Number of accumulation units
outstanding at end of period 9,575,608 11,399,666 6,812,870 2,116,732
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $15.801 $14.202 $13.322 $10.581
Value at end of period $20.951 $15.801 $14.202 $13.322
Number of accumulation units
outstanding at end of period 7,536,062 9,271,525 8,835,470 4,887,060
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.012 $12.449 $10.850 $10.000(1)
Value at end of period $19.908 $15.012 $12.449 $10.850
Number of accumulation units
outstanding at end of period 3,192,160 1,911,789 996,510 93,304
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.373 $13.022 $12.077 $9.873
Value at end of period $15.487 $14.373 $13.022 $12.077
Number of accumulation units
outstanding at end of period 1,213,451 934,053 619,287 315,361
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ------------- ------------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA MONEY MARKET VP
Value at beginning of period $10.241 $10.048 $33.812(9) $32.138 $30.012 $27.783
Value at end of period $10.528 $10.241 $10.048 $33.812 $32.138 $30.012
Number of accumulation units
outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033
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
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $11.036 $10.278 $10.000(12)
Value at end of period $10.554 $11.036 $10.278
Number of accumulation units
outstanding at end of period 521,141 144,168 2,556
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP II
CONTRAFUND PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $10.581
Number of accumulation units
outstanding at end of period 753,862
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $9.873
Number of accumulation units
outstanding at end of period 28,543
</TABLE>
86
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
----------------- --------------------- -------------
<S> <C> <C> <C>
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $15.414 $12.716 $10.870
Value at end of period $20.651 $15.414 $12.716
Number of accumulation units
outstanding at end of period 2,995,268 3,100,436 2,018,527
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $16.720 $13.860 $10.877
Value at end of period $21.288 $16.720 $13.860
Number of accumulation units
outstanding at end of period 14,519,620 17,194,687 8,715,825
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $15.541 $14.686 $11.720
Value at end of period $12.336 $15.541 $14.686
Number of accumulation units
outstanding at end of period 755,984 1,786,409 966,482
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.079(7)
Value at end of period $10.018
Number of accumulation units
outstanding at end of period 39,441
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $10.015(7)
Value at end of period $9.895
Number of accumulation units
outstanding at end of period 71,074
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $14.927 $15.114(14)
Value at end of period $19.114 $14.927
Number of accumulation units
outstanding at end of period 11,377,408 16,549,322
PORTFOLIO PARTNERS
MFS RESEARCH
PORTFOLIO
Value at beginning of period $13.795 $14.067(14)
Value at end of period $16.758 $13.795
Number of accumulation units
outstanding at end of period 8,758,123 11,539,850
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $19.291 $19.016(14)
Value at end of period $24.145 $19.291
Number of accumulation units
outstanding at end of period 2,186,996 2,879,845
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $16.986 $16.776(14)
Value at end of period $19.978 $16.986
Number of accumulation units
outstanding at end of period 4,030,904 6,242,299
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.400 $14.112(14)
Value at end of period $18.146 $14.400
Number of accumulation units
outstanding at end of period 6,541,819 8,296,964
<CAPTION>
1995 1994 1993 1992 1991 1990 1989
---------------- ---------- ---------- ------------------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
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 259,196
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.877
Number of accumulation units
outstanding at end of period 1,036,040
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $10.154 $10.877 $9.832 $10.000(12)
Value at end of period $11.720 $10.154 $10.877 $9.832
Number of accumulation units
outstanding at end of period 711,892 703,676 135,614 561
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
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS RESEARCH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</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 August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $13.118. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(3) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
87
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(4) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $38.521. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(5) Funds were first received in this option during June 1997.
(6) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $97.817. On the
date of conversion, additional units were issued so that account values
were not changed as a result of the conversion.
(7) Funds were first received in this option during May 1998.
(8) The initial accumulation unit value was established at $10.000 during
August 1996, when the portfolio became available under the contract.
(9) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $34.397. On the
date of conversion, additional units were issued so that account value
were not changed as a result of the conversion.
(10) Funds were first received in this option during July 1997.
(11) Funds were first received in this option during August 1997.
(12) The initial accumulation unit value was established at $10.000 on August
21, 1992, the date on which the fund/portfolio became available under the
contract.
(13) The initial accumulation unit value was established at $10.000 during
October 1994, when the funds were first received in this option.
(14) Funds were first received in this option during November 1997.
88
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE X
FOR MULTIPLE OPTION CONTRACTS ISSUED TO
SAN BERNARDINO COUNTY AND MACOMB COUNTY
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, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997 1996 1995
----------------- ----------------- ------------- -------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.422 $13.291(1)
Value at end of period $15.886 $15.422
Number of accumulation units
outstanding at end of period 21,430 380
AETNA BALANCED VP, INC
Value at beginning of period $24.700 $20.419 $17.954 $14.270
Value at end of period $28.524 $24.700 $20.419 $17.954
Number of accumulation units
outstanding at end of period 2,294,877 2,160,305 2,716,641 9,193,181
AETNA BOND VP
Value at beginning of period $51.330 $47.992 $46.913 $40.173
Value at end of period $54.819 $51.330 $47.992 $46.913
Number of accumulation units
outstanding at end of period 994,987 959,336 835,724 2,377,622
AETNA CROSSROADS VP
Value at beginning of period $14.456 $12.577(1)
Value at end of period $15.120 $14.456
Number of accumulation units
outstanding at end of period 31,468 873
AETNA GROWTH VP
Value at beginning of period $11.392(3)
Value at end of period $13.597
Number of accumulation units
outstanding at end of period 17
AETNA GROWTH AND
INCOME VP
Value at beginning of period $217.359 $169.448 $137.869 $105.558
Value at end of period $245.765 $217.359 $169.448 $137.869
Number of accumulation units
outstanding at end of period 1,747,097 1,826,355 2,071,139 6,364,000
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.444 $14.493(14)
Value at end of period $18.772 $14.444
Number of accumulation units
outstanding at end of period 1,302,825 17,771
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $9.928(4)
Value at end of period $11.338
Number of accumulation units
outstanding at end of period 35,201
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $10.193(4)
Value at end of period $9.157
Number of accumulation units
outstanding at end of period 81,388
AETNA LEGACY VP
Value at beginning of period $13.491 $12.296(5)
Value at end of period $14.248 $13.491
Number of accumulation units
outstanding at end of period 95,526 2,279
AETNA MONEY MARKET VP
Value at beginning of period $41.174 $39.528 $37.988 $36.271
Value at end of period $42.883 $41.174 $39.528 $37.988
Number of accumulation units
outstanding at end of period 564,537 455,502 597,656 1,836,260
<CAPTION>
1994 1993 1992 1991 1990 1989
-------------- -------------- -------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA BALANCED VP, INC
Value at beginning of period $14.519 $13.379 $12.736 $10.896 $10.437 $10.000(2)
Value at end of period $14.270 $14.519 $13.379 $12.736 $10.896 $10.437
Number of accumulation units
outstanding at end of period 21,990,186 30,784,750 34,802,433 22,898,099 17,078,985 9,535,986
AETNA BOND VP
Value at beginning of period $42.283 $39.038 $36.789 $31.192 $28.943 $25.574
Value at end of period $40.173 $42.283 $39.038 $36.789 $31.192 $28.943
Number of accumulation units
outstanding at end of period 5,108,720 8,210,666 8,507,292 7,844,412 6,984,793 6,202,834
AETNA CROSSROADS VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
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 $107.925 $102.383 $97.165 $77.845 $76.311 $59.871
Value at end of period $105.558 $107.925 $102.383 $97.165 $77.845 $76.311
Number of accumulation units
outstanding at end of period 13,966,072 21,148,863 24,201,565 20,948,226 18,362,906 17,142,820
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 LEGACY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA MONEY MARKET VP
Value at beginning of period $35.282 $34.619 $33.812 $32.138 $30.012 $27.783
Value at end of period $36.271 $35.282 $34.619 $33.812 $32.138 $30.012
Number of accumulation units
outstanding at end of period 3,679,802 5,086,515 7,534,662 8,430,082 10,220,110 8,286,033
</TABLE>
89
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
------------------ ---------------- ------------- -----------------
<S> <C> <C> <C> <C>
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $11.472(4)
Value at end of period $12.088
Number of accumulation units
outstanding at end of period 33,957
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $23.675 $19.965 $17.951 $13.990
Value at end of period $27.186 $23.675 $19.965 $17.951
Number of accumulation units
outstanding at end of period 917,567 929,282 898,279 856,361
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $16.587 $13.110 $11.617 $10.000(7)
Value at end of period $18.285 $16.587 $13.110 $11.617
Number of accumulation units
outstanding at end of period 2,533,673 2,139,178 1,454,755 628,582
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $14.087 $11.843(8)
Value at end of period $19.406 $14.087
Number of accumulation units
outstanding at end of period 72 29
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $11.400 $10.197 $10.000(9)
Value at end of period $12.560 $11.400 $10.197
Number of accumulation units
outstanding at end of period 0 1,302
FIDELITY VIP II
CONTRAFUND PORTFOLIO
Value at beginning of period $17.276 $14.092 $11.763 $10.000(7)
Value at end of period $22.177 $17.276 $14.092 $11.763
Number of accumulation units
outstanding at end of period 3,333,320 2,706,862 1,522,169 525,476
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $18.174 $16.334 $15.323 $12.169
Value at end of period $24.098 $18.174 $16.334 $15.323
Number of accumulation units
outstanding at end of period 2,142,130 1,939,607 1,893,718 1,280,953
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.016 $12.453 $10.853 $10.000(9)
Value at end of period $19.914 $15.016 $12.453 $10.853
Number of accumulation units
outstanding at end of period 3,698 7,873 231 161
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.430 $13.074 $12.124 $9.911
Value at end of period $15.548 $14.430 $13.074 $12.124
Number of accumulation units
outstanding at end of period 8,967 5,211 3,761 3,345
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $16.816 $13.872 $11.859 $10.000(9)
Value at end of period $22.529 $16.816 $13.872 $11.859
Number of accumulation units
outstanding at end of period 1,354,047 1,109,942 663,945 109,717
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $18.690 $15.493 $12.158 $10.000(9)
Value at end of period $23.797 $18.690 $15.493 $12.158
Number of accumulation units
outstanding at end of period 4,687,167 3,873,511 2,090,908 314,653
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $14.403 $13.611 $10.862 $9.412
Value at end of period $11.433 $14.403 $13.611 $10.862
Number of accumulation units
outstanding at end of period 534,962 650,486 587,248 530,562
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.077(12)
Value at end of period $10.303
Number of accumulation units
outstanding at end of period 20,548
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ---------- ---------- ---------- ---------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA VALUE
OPPORTUNITY VP
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 $14.640 $13.726 $12.913 $11.233 $10.568 $10.000(6)
Value at end of period $13.990 $14.640 $13.726 $12.913 $11.233 $10.568
Number of accumulation units
outstanding at end of period 743,464 705,415 503,006 355,851 148,576 20,710
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP II
CONTRAFUND PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000(10)
Value at end of period $12.169
Number of accumulation units
outstanding at end of period 393,553
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $10.000(11)
Value at end of period $9.911
Number of accumulation units
outstanding at end of period 1,555
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $10.071 $9.193 $9.018 $9.608 $11.441 $10.000(6)
Value at end of period $9.412 $10.071 $9.193 $9.018 $9.608 $11.441
Number of accumulation units
outstanding at end of period 533,016 341,771 198,338 144,139 75,052 11,481
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</TABLE>
90
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
---------------- ------------------- ------ ------ ------ ------ ------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $10.055(4)
Value at end of period $9.935
Number of accumulation units
outstanding at end of period 100,555
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $15.046 $15.236(13)
Value at end of period $19.268 $15.046
Number of accumulation units
outstanding at end of period 3,101,880 2,707,904
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $11.960 $12.195(13)
Value at end of period $14.528 $11.960
Number of accumulation units
outstanding at end of period 1,379,653 232,418
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $23.440 $23.106(13)
Value at end of period $29.339 $23.440
Number of accumulation units
outstanding at end of period 2,244,308 2,018,219
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $17.709 $17.490(13)
Value at end of period $20.829 $17.709
Number of accumulation units
outstanding at end of period 2,962,631 3,237,710
PORTFOLIO PARTNERS T.
ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $16.608 $16.276(13)
Value at end of period $20.929 $16.608
Number of accumulation units
outstanding at end of period 1,564,888 1,317,058
</TABLE>
- -----------------
(1) Funds were first received in this option during February 1997.
(2) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
(3) Funds were first received in this option during September 1998.
(4) Funds were first received in this option during May 1998.
(5) Funds were first received in this option during February 1997.
(6) The initial accumulation unit value was established at $10.000 on May 31,
1989, the date on which the fund/portfolio became available under the
contract.
(7) The initial accumulation unit value was established at $10.000 during May
1995, when the fund became available under the contract.
(8) Funds were first received in this option during January 1997.
(9) The initial accumulation unit value was established at $10.000 during July
1995, when the fund became available under the contract.
(10) The initial accumulation unit value was established at $10.000 during June
1994, when funds were first received in this option.
(11) The initial accumulation unit value was established at $10.000 during
November 1994, when funds were first received in this option.
(12) Funds were first received in this option during June 1998.
(13) Funds were first received in this option during November 1997.
(14) Funds were first received in this option during December 1997.
91
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE XI
FOR CONTRACTS ISSUED UNDER 403(b) PLANS AND DEFERRED COMPENSATION PLANS
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 two-year period ended December 31, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997
--------------- -----------------
<S> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.394 $13.020(1)
Value at end of period $15.818 $15.394
Number of accumulation units outstanding at end of period 38,620 29,840
AETNA BALANCED VP
Value at beginning of period $18.776 $15.674(1)
Value at end of period $21.629 $18.776
Number of accumulation units outstanding at end of period 385,862 478,117
AETNA BOND VP
Value at beginning of period $13.213 $12.302(1)
Value at end of period $14.076 $13.213
Number of accumulation units outstanding at end of period 199,388 215,650
AETNA CROSSROADS VP
Value at beginning of period $14.430 $12.449(1)
Value at end of period $15.055 $14.430
Number of accumulation units outstanding at end of period 32,997 26,483
AETNA GROWTH VP(10)
Value at beginning of period $13.149 $12.739(2)
Value at end of period $17.834 $13.149
Number of accumulation units outstanding at end of period 36,839 3,326
AETNA GROWTH AND INCOME VP
Value at beginning of period $22.153 $17.861(1)
Value at end of period $24.986 $22.153
Number of accumulation units outstanding at end of period 1,587,351 1,699,982
AETNA HIGH YIELD VP
Value at beginning of period $9.616(3)
Value at end of period $9.196
Number of accumulation units outstanding at end of period 65
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.418 $11.345(1)
Value at end of period $18.691 $14.418
Number of accumulation units outstanding at end of period 68,841 27,945
AETNA INDEX PLUS MID CAP VP
Value at beginning of periodd
Value at end of period $9.946(4)
Value at end of period $10.872
Number of accumulation units outstanding at end of period 203
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $9.775(5)
Value at end of period $8.800
Number of accumulation units outstanding at end of period 598
AETNA INTERNATIONAL VP
Value at beginning of period $9.737(6)
Value at end of period $9.748
Number of accumulation units outstanding at end of period 1,095
AETNA LEGACY VP
Value at beginning of period $13.467 $11.873(1)
Value at end of period $14.187 $13.467
Number of accumulation units outstanding at end of period 32,088 14,817
AETNA MONEY MARKET VP
Value at beginning of period $11.929 $11.592(1)
Value at end of period $12.393 $11.929
Number of accumulation units outstanding at end of period 123,429 176,703
AETNA REAL ESTATE SECURITIES VP
Value at beginning of period $8.524(7)
Value at end of period $8.857
Number of accumulation units outstanding at end of period 1,342
AETNA SMALL COMPANY VP
Value at beginning of period $13.629 $13.629(2)
Value at end of period $13.574 $13.629
Number of accumulation units outstanding at end of period 21,070 82
</TABLE>
92
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
--------------- ----------------
<S> <C> <C>
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $13.237 $13.237(2)
Value at end of period $15.960 $13.237
Number of accumulation units outstanding at end of period 15,870 84
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $17.808 $14.934(1)
Value at end of period $20.397 $17.808
Number of accumulation units outstanding at end of period 24,487 20,521
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $15.808 $12.711(1)
Value at end of period $17.384 $15.808
Number of accumulation units outstanding at end of period 222,658 117,588
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $13.879 $11.373(1)
Value at end of period $19.072 $13.879
Number of accumulation units outstanding at end of period 228,969 104,982
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $12.247 $11.253(1)
Value at end of period $13.603 $12.247
Number of accumulation units outstanding at end of period 11,523 8,098
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $15.242 $12.388(1)
Value at end of period $19.516 $15.242
Number of accumulation units outstanding at end of period 157,444 146,381
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $15.773 $12.594(1)
Value at end of period $20.861 $15.773
Number of accumulation units outstanding at end of period 100,075 85,304
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $14.984 $12.760(1)
Value at end of period $19.822 $14.984
Number of accumulation units outstanding at end of period 53,980 19,967
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $14.347 $13.025(1)
Value at end of period $15.420 $14.347
Number of accumulation units outstanding at end of period 14,524 8,189
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $15.386 $12.975(1)
Value at end of period $20.562 $15.386
Number of accumulation units outstanding at end of period 56,525 53,182
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $16.689 $14.439(1)
Value at end of period $21.196 $16.689
Number of accumulation units outstanding at end of period 182,951 168,191
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $15.512 $13.756(1)
Value at end of period $12.283 $15.512
Number of accumulation units outstanding at end of period 14,342 26,426
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Value at beginning of period $9.728(6)
Value at end of period $10.001
Number of accumulation units outstanding at end of period 152
OPPENHEIMER STRATEGIC BOND FUND/VA
Value at beginning of period $9.666(8)
Value at end of period $9.878
Number of accumulation units outstanding at end of period 11
PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $14.899 $15.090(9)
Value at end of period $19.032 $14.899
Number of accumulation units outstanding at end of period 135,641 131,565
PORTFOLIO PARTNERS MFS RESEARCH PORTFOLIO
Value at beginning of period $13.770 $14.044(9)
Value at end of period $16.685 $13.770
Number of accumulation units outstanding at end of period 146,728 149,523
PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO
Value at beginning of period $19.256 $18.985(9)
Value at end of period $24.041 $19.256
Number of accumulation units outstanding at end of period 28,002 25,830
PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $16.955 $16.749(9)
Value at end of period $19.892 $16.955
Number of accumulation units outstanding at end of period 45,320 48,385
PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $14.374 $14.090(9)
Value at end of period $18.068 $14.374
Number of accumulation units outstanding at end of period 91,620 79,799
</TABLE>
93
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(1) Funds were first received in this option during April 1997.
(2) Funds were first received in this option during December 1997.
(3) Funds were first received in this option during August 1998.
(4) Funds were first received in this option during July 1998.
(5) Funds were first received in this option during May 1998.
(6) Funds were first received in this option during June 1998.
(7) Funds were first received in this option during September 1998.
(8) Funds were first received in this option during November 1998.
(9) Funds were first received in this option during November 1997.
94
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE XII
FOR CONTRACTS CONTAINING LIMITS ON FEES ISSUED UNDER 403(b) PLANS
AND DEFERRED COMPENSATION PLANS
(Selected data for accumulation units outstanding throughout each period)
================================================================================
The condensed financial information presented below for each of the periods in
the two-year period ended December 31, 1998 (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, 1998 are included in
the Statement of Additional Information.
<TABLE>
<CAPTION>
1998 1997
--------------- -----------------
<S> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.453 $13.971(1)
Value at end of period $15.974 $15.453
Number of accumulation units outstanding at end of period 9,888 10,257
AETNA BALANCED VP
Value at beginning of period $18.837 $16.739(1)
Value at end of period $21.808 $18.837
Number of accumulation units outstanding at end of period 429,954 454,232
AETNA BOND VP
Value at beginning of period $13.249 $12.629(1)
Value at end of period $14.171 $13.249
Number of accumulation units outstanding at end of period 421,225 453,723
AETNA CROSSROADS VP
Value at beginning of period $14.485 $13.199(1)
Value at end of period $15.204 $14.485
Number of accumulation units outstanding at end of period 50,297 50,297
AETNA GROWTH VP
Value at beginning of period $13.173 $12.615(2)
Value at end of period $17.912 $13.173
Number of accumulation units outstanding at end of period 25,257 1,565
AETNA GROWTH AND INCOME VP
Value at beginning of period $22.226 $19.673(1)
Value at end of period $25.193 $22.226
Number of accumulation units outstanding at end of period 5,670,691 6,093,102
AETNA HIGH YIELD VP
Value at beginning of period $9.135(3)
Value at end of period $9.212
Number of accumulation units outstanding at end of period 2,225
AETNA INDEX PLUS LARGE CAP VP
Value at beginning of period $14.452 $12.748(1)
Value at end of period $18.802 $14.452
Number of accumulation units outstanding at end of period 48,459 13,748
AETNA INDEX PLUS SMALL CAP VP
Value at beginning of period $6.682(4)
Value at end of period $8.815
Number of accumulation units outstanding at end of period 748
AETNA LEGACY VP
Value at beginning of period $13.518 $12.496(1)
Value at end of period $14.327 $13.518
Number of accumulation units outstanding at end of period 10,684 16,060
AETNA MONEY MARKET VP
Value at beginning of period $11.951 $11.674(1)
Value at end of period $12.447 $11.951
Number of accumulation units outstanding at end of period 553,915 591,901
AETNA SMALL COMPANY VP
Value at beginning of period $13.654 $13.092(2)
Value at end of period $13.633 $13.654
Number of accumulation units outstanding at end of period 4,297 1,779
AETNA VALUE OPPORTUNITY VP
Value at beginning of period $12.899(5)
Value at end of period $16.030
Number of accumulation units outstanding at end of period 5,261
CALVERT SOCIAL BALANCED PORTFOLIO
Value at beginning of period $17.840 $16.178(1)
Value at end of period $20.485 $17.840
Number of accumulation units outstanding at end of period 3,612 3,576
FIDELITY VIP EQUITY-INCOME PORTFOLIO
Value at beginning of period $15.837 $14.065(1)
Value at end of period $17.459 $15.837
Number of accumulation units outstanding at end of period 44,812 49,884
FIDELITY VIP GROWTH PORTFOLIO
Value at beginning of period $13.904 $12.498(1)
Value at end of period $19.155 $13.904
Number of accumulation units outstanding at end of period 41,575 31,477
</TABLE>
95
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
--------------- ----------------
<S> <C> <C>
FIDELITY VIP OVERSEAS PORTFOLIO
Value at beginning of period $12.269 $12.518(1)
Value at end of period $13.662 $12.269
Number of accumulation units outstanding at end of period 1,816 1,206
FIDELITY VIP II CONTRAFUND PORTFOLIO
Value at beginning of period $15.270 $13.443(1)
Value at end of period $19.601 $15.270
Number of accumulation units outstanding at end of period 31,455 29,365
JANUS ASPEN AGGRESSIVE GROWTH PORTFOLIO
Value at beginning of period $15.801 $14.156(1)
Value at end of period $20.951 $15.801
Number of accumulation units outstanding at end of period 32,182 26,177
JANUS ASPEN BALANCED PORTFOLIO
Value at beginning of period $15.012 $13.573(1)
Value at end of period $19.908 $15.012
Number of accumulation units outstanding at end of period 23,035 8,663
JANUS ASPEN FLEXIBLE INCOME PORTFOLIO
Value at beginning of period $14.373 $13.448(1)
Value at end of period $15.487 $14.373
Number of accumulation units outstanding at end of period 9,337 323
JANUS ASPEN GROWTH PORTFOLIO
Value at beginning of period $15.414 $13.985(1)
Value at end of period $20.651 $15.414
Number of accumulation units outstanding at end of period 7,088 6,389
JANUS ASPEN WORLDWIDE GROWTH PORTFOLIO
Value at beginning of period $16.720 $15.828(1)
Value at end of period $21.288 $16.720
Number of accumulation units outstanding at end of period 67,482 63,534
LEXINGTON NATURAL RESOURCES TRUST
Value at beginning of period $15.541 $15.221(1)
Value at end of period $12.336 $15.541
Number of accumulation units outstanding at end of period 745 8,053
OPPENHEIMER GLOBAL SECURITIES FUND/VA
Value at beginning of period $8.115(4)
Value at end of period $10.018
Number of accumulation units outstanding at end of period 2,465
PORTFOLIO PARTNERS MFS EMERGING EQUITIES PORTFOLIO
Value at beginning of period $14.927 $15.114(6)
Value at end of period $19.114 $14.927
Number of accumulation units outstanding at end of period 40,140 56,819
PORTFOLIO PARTNERS MFS RESEARCH PORTFOLIO
Value at beginning of period $13.795 $14.067(6)
Value at end of period $16.758 $13.795
Number of accumulation units outstanding at end of period 56,680 55,233
PORTFOLIO PARTNERS MFS VALUE EQUITY PORTFOLIO
Value at beginning of period $19.291 $19.016(6)
Value at end of period $24.145 $19.291
Number of accumulation units outstanding at end of period 5,460 7,188
PORTFOLIO PARTNERS SCUDDER INTERNATIONAL GROWTH PORTFOLIO
Value at beginning of period $16.986 $16.776(6)
Value at end of period $19.978 $16.986
Number of accumulation units outstanding at end of period 3,855 6,970
PORTFOLIO PARTNERS T. ROWE PRICE GROWTH EQUITY PORTFOLIO
Value at beginning of period $14.400 $14.112(6)
Value at end of period $18.146 $14.400
Number of accumulation units outstanding at end of period 29,384 24,650
</TABLE>
- -----------------
(1) Funds were first received in this option during June 1997.
(2) Funds were first received in this option during December 1997.
(3) Funds were first received in this option during December 1998.
(4) Funds were first received in this option during October 1998.
(5) Funds were first received in this option during January 1998.
(6) Funds were first received in this option during November 1997.
96
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE XIII
FOR DEFERRED COMPENSATION CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES
OF 0.95% EFFECTIVE ON JANUARY 15, 1996
(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, 1998 (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, 1998 are included in
the Statement of Additional Information. The accumulation unit values and the
percentage change in the value of an accumulation unit reflect a mortality and
expense risk charge of 1.25% until January 15, 1996, when the mortality and
expense risk charge was reduced to 0.95% during the accumulation phase. It will
increase to 1.25% during the income phase.
<TABLE>
<CAPTION>
1998 1997 1996 1995
--------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.514 $13.063 $10.673 $10.000(1)
Value at end of period $16.028 $15.514 $13.063 $10.673
Number of accumulation units
outstanding at end of period 80,754 65,940 22,888 393,053
AETNA BALANCED VP, INC
Value at beginning of period $18.922 $15.596 $13.673 $10.868
Value at end of period $21.917 $18.922 $15.596 $13.673
Number of accumulation units
outstanding at end of period 768,510 776,268 768,178 38,152,395
AETNA BOND VP
Value at beginning of period $13.316 $12.413 $12.098 $10.360
Value at end of period $14.264 $13.316 $12.413 $12.098
Number of accumulation units
outstanding at end of period 389,466 328,774 354,731 21,379,976
AETNA CROSSROADS VP
Value at beginning of period $14.541 $12.486 $10.612 $10.000(1)
Value at end of period $15.255 $14.541 $12.486 $10.612
Number of accumulation units
outstanding at end of period 78,788 71,276 35,151 294,673
AETNA GROWTH VP
Value at beginning of period $13.202 $12.787(5)
Value at end of period $18.005 $13.202
Number of accumulation units
outstanding at end of period 115,677 6,619
AETNA GROWTH AND
INCOME VP
Value at beginning of period $22.325 $17.352 $14.077 $10.778
Value at end of period $25.319 $22.325 $17.352 $14.077
Number of accumulation units
outstanding at end of period 5,019,611 5,232,193 4,796,196 188,964,022
AETNA HIGH YIELD VP
Value at beginning of period $9.216(7)
Value at end of period $9.231
Number of accumulation units
outstanding at end of period 1,842
AETNA INDEX PLUS
LARGE CAP VP
Value at beginning of period $14.500 $10.934 $10.000(8)
Value at end of period $18.902 $14.500 $10.934
Number of accumulation units
outstanding at end of period 386,036 159,318 27,436
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $7.633(9)
Value at end of period $10.913
Number of accumulation units
outstanding at end of period 5,166
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $6.425(9)
Value at end of period $8.834
Number of accumulation units
outstanding at end of period 6,054
AETNA INTERNATIONAL VP
Value at beginning of period $8.779(9)
Value at end of period 9.785
Number of accumulation units
outstanding at end of period 583
<CAPTION>
1994 1993 1992 1991 1990 1989
--------------- -------------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA BALANCED VP, INC
Value at beginning of period $11.057 $10.189 $12.736(2) $10.896 $10.437 $10.000(3)
Value at end of period $10.868 $11.057 $10.189 $12.736 $10.896 $10.437
Number of accumulation units
outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986
AETNA BOND VP
Value at beginning of period $10.905 $10.068 $36.789(4) $31.192 $28.943 $25.574
Value at end of period $10.360 $10.905 $10.068 $36.789 $31.192 $28.943
Number of accumulation units
outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834
AETNA CROSSROADS VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
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 $11.020 $10.454 $97.165(6) $77.845 $76.311 $59.871
Value at end of period $10.778 $11.020 $10.454 $97.165 $77.845 $76.311
Number of accumulation units
outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820
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>
97
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
--------------- ------------------ ---------- -------------------
<S> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $13.571 $11.965 $10.580 $10.000(1)
Value at end of period $14.375 $13.571 $11.965 $10.580
Number of accumulation units
outstanding at end of period 63,385 38,899 13,861 143,637
AETNA MONEY MARKET VP
Value at beginning of period $12.022 $11.506 $11.026 $10.528
Value at end of period $12.558 $12.022 $11.506 $11.026
Number of accumulation units
outstanding at end of period 230,562 262,519 228,698 12,999,680
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $8.634(9)
Value at end of period $8.891
Number of accumulation units
outstanding at end of period 673
AETNA SMALL COMPANY
VP
Value at beginning of period $13.684 $13.119(5)
Value at end of period $13.704 $13.684
Number of accumulation units
outstanding at end of period 61,244 1,098
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $13.290 $13.037(11)
Value at end of period $16.113 $13.290
Number of accumulation units
outstanding at end of period 54,627 3,417
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $17.946 $15.088 $13.527 $10.554
Value at end of period $20.668 $17.946 $15.088 $13.527
Number of accumulation units
outstanding at end of period 71,154 66,428 57,557 966,098
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $15.931 $12.554 $11.092 $10.000(1)
Value at end of period $17.615 $15.931 $12.554 $11.092
Number of accumulation units
outstanding at end of period 239,214 196,921 116,432 1,660,304
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $13.987 $11.435 $10.066 $10.000(1)
Value at end of period $19.326 $13.987 $11.435 $10.066
Number of accumulation units
outstanding at end of period 292,985 181,487 112,748 1,833,794
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $12.342 $11.169 $9.961 $10.000(1)
Value at end of period $13.784 $12.342 $11.169 $9.961
Number of accumulation units
outstanding at end of period 26,108 22,047 10,848 196,090
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period $15.360 $12.491 $10.397 $10.000(1)
Value at end of period $19.776 $15.360 $12.491 $10.397
Number of accumulation units
outstanding at end of period 209,707 171,832 92,021 2,116,732
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $15.895 $14.243 $13.322 $10.581
Value at end of period $21.139 $15.895 $14.243 $13.322
Number of accumulation units
outstanding at end of period 283,821 253,316 226,504 4,887,060
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.100 $12.485 $10.850 $10.000(1)
Value at end of period $20.086 $15.100 $12.485 $10.850
Number of accumulation units
outstanding at end of period 105,755 45,503 29,442 93,304
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.458 $13.060 $12.077 $9.873
Value at end of period $15.626 $14.458 $13.060 $12.077
Number of accumulation units
outstanding at end of period 57,101 13,925 6,607 315,361
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ------------- ------------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA MONEY MARKET VP
Value at beginning of period $10.241 $10.048 $33.812(10) $32.138 $30.012 $27.783
Value at end of period $10.528 $10.241 $10.048 $33.812 $32.138 $30.012
Number of accumulation units
outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033
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
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $11.036 $10.278 $10.000(12)
Value at end of period $10.554 $11.036 $10.278
Number of accumulation units
outstanding at end of period 521,141 144,168 2,556
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $10.581
Number of accumulation units
outstanding at end of period 753,862
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $9.873
Number of accumulation units
outstanding at end of period 28,543
</TABLE>
98
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
--------------- ------------------ ----------
<S> <C> <C> <C>
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $15.505 $12.753 $10.870
Value at end of period $20.836 $15.505 $12.753
Number of accumulation units
outstanding at end of period 128,844 83,855 51,761
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $16.819 $13.900 $10.877
Value at end of period $21.478 $16.819 $13.900
Number of accumulation units
outstanding at end of period 655,881 511,940 212,494
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $15.633 $14.729 $11.720
Value at end of period $12.446 $15.633 $14.729
Number of accumulation units
outstanding at end of period 37,897 73,258 42,174
OPPEHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $8.907(9)
Value at end of period $10.039
Number of accumulation units
outstanding at end of period 774
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $9.660(9)
Value at end of period $9.915
Number of accumulation units
outstanding at end of period 176
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $15.015 $15.199(14)
Value at end of period $19.285 $15.015
Number of accumulation units
outstanding at end of period 595,462 573,528
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $13.877 $14.147(14)
Value at end of period $16.907 $13.877
Number of accumulation units
outstanding at end of period 378,798 418,965
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $19.405 $19.123(14)
Value at end of period $24.361 $19.405
Number of accumulation units
outstanding at end of period 182,557 192,553
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $17.087 $16.871(14)
Value at end of period $20.157 $17.087
Number of accumulation units
outstanding at end of period 273,684 295,952
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.485 $14.192(14)
Value at end of period $18.309 $14.485
Number of accumulation units
outstanding at end of period 277,044 212,654
<CAPTION>
1995 1994 1993 1992 1991 1990 1989
---------------- ---------- ---------- ------------------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
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 259,196
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.877
Number of accumulation units
outstanding at end of period 1,036,040
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $10.154 $10.877 $9.832 $10.000(12)
Value at end of period $11.720 $10.154 $10.877 $9.832
Number of accumulation units
outstanding at end of period 711,892 703,676 135,614 561
OPPEHEIMER 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
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</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 August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $13.118. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(3) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
99
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(4) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $38.521. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(5) Funds were first received in this option during December 1997.
(6) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $97.817. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(7) Funds were first received in this option during November 1998.
(8) The initial accumulation unit value was established during August 1996 when
the portfolio became available under the contract, when funds were first
received in this option or when the applicable daily asset charge was first
utilized. Funds were first received in this option during October 1998.
(9) Funds were first received in this option during October 1998.
(10) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $34.397. 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 August 1997.
(12) The initial accumulation unit value was established at $10.000 on August
21, 1992, the date on which the fund/portfolio became available under
contract.
(13) The initial accumulation unit value was established at $10.000 during
October 1994, when the funds were first received in this option.
(14) Funds were first received in this option during November 1997.
100
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE XIV
FOR DEFERRED COMPENSATION CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES
OF 0.95% EFFECTIVE ON MAY 25, 1996
(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, 1998 (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, 1998 are included in
the Statement of Additional Information. The accumulation unit values and the
percentage change in the value of an accumulation unit reflect a mortality and
expense risk charge of 1.25% until May 25, 1996, when the mortality and expense
risk charge was reduced to 0.95% during the accumulation phase. It will
increase to 1.25% during the income phase.
<TABLE>
<CAPTION>
1998 1997 1996 1995
--------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.497 $13.049 $10.673 $10.000(1)
Value at end of period $16.011 $15.497 $13.049 $10.673
Number of accumulation units
outstanding at end of period 29,149 178,233 35,180 393,053
AETNA BALANCED VP, INC
Value at beginning of period $18.901 $15.579 $13.673 $10.868
Value at end of period $21.893 $18.901 $15.579 $13.673
Number of accumulation units
outstanding at end of period 266,636 1,511,041 1,528,051 38,152,395
AETNA BOND VP
Value at beginning of period $13.301 $12.399 $12.098 $10.360
Value at end of period $14.248 $13.301 $12.399 $12.098
Number of accumulation units
outstanding at end of period 200,650 463,068 493,485 21,379,976
AETNA CROSSROADS VP
Value at beginning of period $14.526 $12.473 $10.612 $10.000(1)
Value at end of period $15.239 $14.526 $12.473 $10.612
Number of accumulation units
outstanding at end of period 30,057 99,660 28,829 294,673
AETNA GROWTH VP
Value at beginning of period $13.202 $12.975(5)
Value at end of period $18.005 $13.202
Number of accumulation units
outstanding at end of period 81,693 4,360
AETNA GROWTH AND
INCOME VP
Value at beginning of period $22.301 $17.333 $14.077 $10.778
Value at end of period $25.291 $22.301 $17.333 $14.077
Number of accumulation units
outstanding at end of period 2,491,029 7,667,724 7,250,286 188,964,022
AETNA HIGH YIELD VP
Value at beginning of period $8.889(7)
Value at end of period $9.231
Number of accumulation units
outstanding at end of period 17
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.500 $10.934 $10.000(8)
Value at end of period $18.902 $14.500 $10.934
Number of accumulation units
outstanding at end of period 145,736 190,348 28,473
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $9.927(9)
Value at end of period $10.913
Number of accumulation units
outstanding at end of period 9,117
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $9.997(9)
Value at end of period $8.834
Number of accumulation units
outstanding at end of period 12,800
AETNA INTERNATIONAL VP
Value at beginning of period $10.183(9)
Value at end of period $9.785
Number of accumulation units
outstanding at end of period 7,767
<CAPTION>
1994 1993 1992 1991 1990 1989
--------------- -------------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA BALANCED VP, INC
Value at beginning of period $11.057 $10.189 $12.736(2) $10.896 $10.437 $10.000(3)
Value at end of period $10.868 $11.057 $10.189 $12.736 $10.896 $10.437
Number of accumulation units
outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986
AETNA BOND VP
Value at beginning of period $10.905 $10.068 $36.789(4) $31.192 $28.943 $25.574
Value at end of period $10.360 $10.905 $10.068 $36.789 $31.192 $28.943
Number of accumulation units
outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834
AETNA CROSSROADS VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
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 $11.020 $10.454 $97.165(6) $77.845 $76.311 $59.871
Value at end of period $10.778 $11.020 $10.454 $97.165 $77.845 $76.311
Number of accumulation units
outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820
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>
101
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------------- ---------------- ---------- -------------------
<S> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period $13.557 $11.953 $10.580 $10.000(1)
Value at end of period $14.361 $13.557 $11.953 $10.580
Number of accumulation units
outstanding at end of period 17,756 58,121 15,755 143,637
AETNA MONEY MARKET VP
Value at beginning of period $12.009 $11.494 $11.026 $10.528
Value at end of period $12.545 $12.009 $11.494 $11.026
Number of accumulation units
outstanding at end of period 132,737 328,674 351,832 12,999,680
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $10.127(9)
Value at end of period $8.891
Number of accumulation units
outstanding at end of period 11,639
AETNA SMALL COMPANY
VP
Value at beginning of period $13.684 $13.248(5)
Value at end of period $13.704 $13.684
Number of accumulation units
outstanding at end of period 52,936 12,603
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $13.290 $13.093(5)
Value at end of period $16.113 $13.290
Number of accumulation units
outstanding at end of period 19,971 8,131
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $17.926 $15.071 $13.527 $10.554
Value at end of period $20.646 $17.926 $15.071 $13.527
Number of accumulation units
outstanding at end of period 21,808 40,783 35,511 966,098
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $15.914 $12.541 $11.092 $10.000(1)
Value at end of period $17.596 $15.914 $12.541 $11.092
Number of accumulation units
outstanding at end of period 74,067 121,281 82,568 1,660,304
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $13.972 $11.423 $10.066 $10.000(1)
Value at end of period $19.305 $13.972 $11.423 $10.066
Number of accumulation units
outstanding at end of period 100,561 176,877 135,704 1,833,794
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $12.328 $11.157 $9.961 $10.000(1)
Value at end of period $13.769 $12.328 $11.157 $9.961
Number of accumulation units
outstanding at end of period 14,165 40,516 29,108 196,090
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period $15.343 $12.477 $10.397 $10.000(1)
Value at end of period $19.755 $15.343 $12.477 $10.397
Number of accumulation units
outstanding at end of period 176,553 320,226 175,463 2,116,732
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $15.878 $14.227 $13.322 $10.581
Value at end of period $21.116 $15.878 $14.227 $13.322
Number of accumulation units
outstanding at end of period 120,002 211,783 171,747 4,887,060
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.084 $12.472 $10.850 $10.000(1)
Value at end of period $20.064 $15.084 $12.472 $10.850
Number of accumulation units
outstanding at end of period 45,435 58,999 29,198 93,304
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.442 $13.046 $12.077 $9.873
Value at end of period $15.609 $14.442 $13.046 $12.077
Number of accumulation units
outstanding at end of period 10,857 11,145 9,054 315,361
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ------------- ------------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
AETNA LEGACY VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA MONEY MARKET VP
Value at beginning of period $10.241 $10.048 $33.812(10) $32.138 $30.012 $27.783
Value at end of period $10.528 $10.241 $10.048 $33.812 $32.138 $30.012
Number of accumulation units
outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033
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
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $11.036 $10.278 $10.000(11)
Value at end of period $10.554 $11.036 $10.278
Number of accumulation units
outstanding at end of period 521,141 144,168 2,556
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000(12)
Value at end of period $10.581
Number of accumulation units
outstanding at end of period 753,862
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $10.000(12)
Value at end of period $9.873
Number of accumulation units
outstanding at end of period 28,543
</TABLE>
102
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996
------------------ -------------------- ----------
<S> <C> <C> <C>
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $15.489 $12.739 $10.870
Value at end of period $20.813 $15.489 $12.739
Number of accumulation units
outstanding at end of period 47,157 86,733 67,001
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $16.800 $13.885 $10.877
Value at end of period $21.455 $16.800 $13.885
Number of accumulation units
outstanding at end of period 236,904 586,164 241,823
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $15.616 $14.713 $11.720
Value at end of period $12.433 $15.616 $14.713
Number of accumulation units
outstanding at end of period 16,414 72,475 43,665
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.080(9)
Value at end of period $10.039
Number of accumulation units
outstanding at end of period 3,153
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $10.056(13)
Value at end of period $9.915
Number of accumulation units
outstanding at end of period 1,158
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $14.999 $15.183 (14)
Value at end of period $19.264 $14.999
Number of accumulation units
outstanding at end of period 289,625 586,517
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $13.862 $14.131 (14)
Value at end of period $16.889 $13.862
Number of accumulation units
outstanding at end of period 158,866 317,033
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $19.384 $19.102 (14)
Value at end of period $24.335 $19.384
Number of accumulation units
outstanding at end of period 48,711 84,592
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period $17.068 $16.853 (14)
Value at end of period $20.135 $17.068
Number of accumulation units
outstanding at end of period 81,257 273,402
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.470 $14.176(14)
Value at end of period $18.289 $14.470
Number of accumulation units
outstanding at end of period 84,842 227,469
<CAPTION>
1995 1994 1993 1992 1991 1990 1989
---------------- ---------- ---------- ------------------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C> <C>
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 259,196
JANUS ASPEN WORLDWIDE
GROWTH PORTFOLIO
Value at beginning of period $10.000(1)
Value at end of period $10.877
Number of accumulation units
outstanding at end of period 1,036,040
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $10.154 $10.877 $9.832 $10.000(11)
Value at end of period $11.720 $10.154 $10.877 $9.832
Number of accumulation units
outstanding at end of period 711,892 703,676 135,614 561
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
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
SCUDDER INTERNATIONAL
GROWTH PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</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 August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $13.118. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(3) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
103
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(4) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $38.521. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(5) Funds were first received in this option during December 1997.
(6) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $97.817. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(7) Funds were first received in this option during October 1998.
(8) The initial accumulation unit value was established during August 1996 when
the portfolio became available under the contract, when funds were first
received in this option or when the applicable daily asset charge was first
utilized.
(9) Funds were first received in this option during May 1998.
(10) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $34.397. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(11) The initial accumulation unit value was established at $10.000 August 21,
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) Funds were first received in this option during July 1998.
(14) Funds were first received in this option during November 1997.
104
<PAGE>
Condensed Financial Information
- --------------------------------------------------------------------------------
TABLE XV
FOR DEFERRED COMPENSATION CONTRACTS WITH TOTAL SEPARATE ACCOUNT CHARGES
OF 0.95% EFFECTIVE ON OR AFTER DECEMBER 16, 1996
(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, 1998 (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, 1998 are included in
the Statement of Additional Information. The accumulation unit values and the
percentage change in the value of an accumulation unit reflect a mortality and
expense risk charge of 1.25% until December 16, 1996, when the mortality and
expense risk charge was reduced to 0.95% during the accumulation phase. It will
increase to 1.25% during the income phase. The class of accumulation unit value
shown below may also be used for contracts with 0.95% total separate account
charges issued after December 16, 1996; however, the condensed financial
information for periods prior to December 16, 1996 will not be applicable.
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------------- ---------------- ---------------- -------------------
<S> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period $15.471 $13.027 $10.673 $10.000(1)
Value at end of period $15.984 $15.471 $13.027 $10.673
Number of accumulation units
outstanding at end of period 38,675 86,255 32,497 393,053
AETNA BALANCED VP, INC
Value at beginning of period $18.870 $15.553 $13.673 $10.868
Value at end of period $21.857 $18.870 $15.553 $13.673
Number of accumulation units
outstanding at end of period 771,906 1,144,876 270,688 38,152,395
AETNA BOND VP
Value at beginning of period $13.279 $12.379 $12.098 $10.360
Value at end of period $14.225 $13.279 $12.379 $12.098
Number of accumulation units
outstanding at end of period 289,651 553,279 159,594 21,379,976
AETNA CROSSROADS VP
Value at beginning of period $14.501 $12.452 $10.612 $10.000(1)
Value at end of period $15.214 $14.501 $12.452 $10.612
Number of accumulation units
outstanding at end of period 100,734 101,836 9,415 294,673
AETNA GROWTH VP
Value at beginning of period $13.202 $12.912(5)
Value at end of period $18.005 $13.202
Number of accumulation units
outstanding at end of period 59,374 7
AETNA GROWTH AND
INCOME VP
Value at beginning of period $22.264 $17.304 $14.077 $10.778
Value at end of period $25.249 $22.264 $17.304 $14.077
Number of accumulation units
outstanding at end of period 4,070,904 8,238,898 3,033,655 188,964,022
AETNA HIGH YIELD VP
Value at beginning of period $10.044(7)
Value at end of period $9.231
Number of accumulation units
outstanding at end of period 1,308
AETNA INDEX PLUS LARGE
CAP VP
Value at beginning of period $14.489 $10.925 $11.038(8)
Value at end of period $18.888 $14.489 $10.925
Number of accumulation units
outstanding at end of period 136,252 293,223 23,856
AETNA INDEX PLUS MID
CAP VP
Value at beginning of period $9.962(9)
Value at end of period $10.913
Number of accumulation units
outstanding at end of period 26,111
AETNA INDEX PLUS SMALL
CAP VP
Value at beginning of period $9.876(9)
Value at end of period $8.834
Number of accumulation units
outstanding at end of period 26,257
<CAPTION>
1994 1993 1992 1991 1990 1989
--------------- -------------- ---------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
AETNA ASCENT VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA BALANCED VP, INC
Value at beginning of period $11.057 $10.189 $12.736(2) $10.896 $10.437 $10.000(3)
Value at end of period $10.868 $11.057 $10.189 $12.736 $10.896 $10.437
Number of accumulation units
outstanding at end of period 23,139,604 11,368,365 11,508 22,898,099 17,078,985 9,535,986
AETNA BOND VP
Value at beginning of period $10.905 $10.068 $36.789(4) $31.192 $28.943 $25.574
Value at end of period $10.360 $10.905 $10.068 $36.789 $31.192 $28.943
Number of accumulation units
outstanding at end of period 11,713,354 4,084,142 3,870 7,844,412 6,984,793 6,202,834
AETNA CROSSROADS VP
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
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 $11.020 $10.454 $97.165(6) $77.845 $76.311 $59.871
Value at end of period $10.778 $11.020 $10.454 $97.165 $77.845 $76.311
Number of accumulation units
outstanding at end of period 114,733,035 44,166,470 21,250 20,948,226 18,362,906 17,142,820
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
</TABLE>
105
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
----------------- ---------------- ---------- -------------------
<S> <C> <C> <C> <C>
AETNA INTERNATIONAL VP
Value at beginning of period $9.974(10)
Value at end of period $9.785
Number of accumulation units
outstanding at end of period 168
AETNA LEGACY VP
Value at beginning of period $13.534 $11.932 $10.580 $10.000(1)
Value at end of period $14.336 $13.534 $11.932 $10.580
Number of accumulation units
outstanding at end of period 80,907 82,178 7,543 143,637
AETNA MONEY MARKET VP
Value at beginning of period $11.989 $11.475 $11.026 $10.528
Value at end of period $12.524 $11.989 $11.475 $11.026
Number of accumulation units
outstanding at end of period 300,195 477,490 179,361 12,999,680
AETNA REAL ESTATE
SECURITIES VP
Value at beginning of period $10.024(9)
Value at end of period $8.891
Number of accumulation units
outstanding at end of period 1,415
AETNA SMALL COMPANY
VP
Value at beginning of period $13.684 $13.248(5)
Value at end of period $13.704 $13.684
Number of accumulation units
outstanding at end of period 49,514 4,993
AETNA VALUE
OPPORTUNITY VP
Value at beginning of period $13.290 $13.093(5)
Value at end of period $16.113 $13.290
Number of accumulation units
outstanding at end of period 32,612 4,910
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $17.896 $15.046 $13.527 $10.554
Value at end of period $20.612 $17.896 $15.046 $13.527
Number of accumulation units
outstanding at end of period 37,944 62,328 21,317 966,098
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period $15.887 $12.520 $11.092 $10.000(1)
Value at end of period $17.567 $15.887 $12.520 $11.092
Number of accumulation units
outstanding at end of period 68,970 114,725 27,814 1,660,304
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period $13.948 $11.404 $10.066 $10.000(1)
Value at end of period $19.273 $13.948 $11.404 $10.066
Number of accumulation units
outstanding at end of period 176,188 191,151 60,491 1,833,794
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period $12.308 $11.138 $9.961 $10.000(1)
Value at end of period $13.746 $12.308 $11.138 $9.961
Number of accumulation units
outstanding at end of period 17,178 19,949 2,023 196,090
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period $15.318 $12.457 $10.397 $10.000(1)
Value at end of period $19.722 $15.318 $12.457 $10.397
Number of accumulation units
outstanding at end of period 187,525 263,159 41,394 2,116,732
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $15.851 $14.204 $13.322 $10.581
Value at end of period $21.081 $15.851 $14.204 $13.322
Number of accumulation units
outstanding at end of period 212,741 294,623 122,154 4,887,060
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period $15.059 $12.451 $10.850 $10.000(1)
Value at end of period $20.031 $15.059 $12.451 $10.850
Number of accumulation units
outstanding at end of period 89,095 78,052 12,340 93,304
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ------------- ------------------ ------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
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
Value at end of period
Number of accumulation units
outstanding at end of period
AETNA MONEY MARKET VP
Value at beginning of period $10.241 $10.048 $33.812(11) $32.138 $30.012 $27.783
Value at end of period $10.528 $10.241 $10.048 $33.812 $32.138 $30.012
Number of accumulation units
outstanding at end of period 7,673,528 2,766,044 825 8,430,082 10,220,110 8,286,033
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
CALVERT SOCIAL
BALANCED PORTFOLIO
Value at beginning of period $11.036 $10.278 $10.000(12)
Value at end of period $10.554 $11.036 $10.278
Number of accumulation units
outstanding at end of period 521,141 144,168 2,556
FIDELITY VIP EQUITY-
INCOME PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP OVERSEAS
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
FIDELITY VIP II
CONTRAFUND
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN AGGRESSIVE
GROWTH PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $10.581
Number of accumulation units
outstanding at end of period 753,862
JANUS ASPEN BALANCED
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</TABLE>
106
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997 1996 1995
---------------- ------------------ ---------- ----------------
<S> <C> <C> <C> <C>
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $14.418 $13.024 $12.077 $9.873
Value at end of period $15.583 $14.418 $13.024 $12.077
Number of accumulation units
outstanding at end of period 20,317 13,587 3,861 315,361
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period $15.463 $12.718 $10.870 $10.000(1)
Value at end of period $20.778 $15.463 $12.718 $10.870
Number of accumulation units
outstanding at end of period 61,355 93,386 29,696 259,196
JANUS ASPEN
WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period $16.773 $13.862 $10.877 $10.000(1)
Value at end of period $21.419 $16.773 $13.862 $10.877
Number of accumulation units
outstanding at end of period 301,775 538,281 124,749 1,036,040
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $15.590 $14.688 $11.720 $10.154
Value at end of period $12.412 $15.590 $14.688 $11.720
Number of accumulation units
outstanding at end of period 38,283 103,604 10,977 711,892
OPPENHEIMER GLOBAL
SECURITIES FUND/VA
Value at beginning of period $10.042(9)
Value at end of period $10.039
Number of accumulation units
outstanding at end of period 382
OPPENHEIMER STRATEGIC
BOND FUND/VA
Value at beginning of period $9.992(9)
Value at end of period $9.915
Number of accumulation units
outstanding at end of period 5,938
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period $14.974 $15.158(14)
Value at end of period $19.232 $14.974
Number of accumulation units
outstanding at end of period 398,717 703,653
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period $13.839 $14.108(14)
Value at end of period $16.861 $13.839
Number of accumulation units
outstanding at end of period 431,603 627,658
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period $19.352 $19.071(14)
Value at end of period $24.294 $19.352
Number of accumulation units
outstanding at end of period 171,102 206,191
PORTFOLIO PARTNERS
MFS SCUDDER
INTERNATIONAL GROWTH
PORTFOLIO
Value at beginning of period $17.040 $16.825(14)
Value at end of period $20.102 $17.040
Number of accumulation units
outstanding at end of period 353,311 457,354
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period $14.445 $14.153(14)
Value at end of period $18.258 $14.445
Number of accumulation units
outstanding at end of period 109,123 200,374
<CAPTION>
1994 1993 1992 1991 1990 1989
------------------ ---------- ------------------ ------ ------ -----
<S> <C> <C> <C> <C> <C> <C>
JANUS ASPEN FLEXIBLE
INCOME PORTFOLIO
Value at beginning of period $10.000(13)
Value at end of period $9.873
Number of accumulation units
outstanding at end of period 28,543
JANUS ASPEN GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
JANUS ASPEN
WORLDWIDE GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
LEXINGTON NATURAL
RESOURCES TRUST
Value at beginning of period $10.877 $9.832 $10.000(12)
Value at end of period $10.154 $10.877 $9.832
Number of accumulation units
outstanding at end of period 703,676 135,614 561
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
PORTFOLIO PARTNERS
MFS EMERGING EQUITIES
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS RESEARCH GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS VALUE EQUITY
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
MFS SCUDDER
INTERNATIONAL GROWTH
PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
PORTFOLIO PARTNERS
T. ROWE PRICE GROWTH
EQUITY PORTFOLIO
Value at beginning of period
Value at end of period
Number of accumulation units
outstanding at end of period
</TABLE>
107
<PAGE>
Condensed Financial Information (continued)
- --------------------------------------------------------------------------------
(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 August 21, 1992
upon the commencement of a new administrative system. Immedately prior to
that date, the accumulation unit value of the fund was $13.118. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(3) The initial accumulation unit value was established at $10.000 on June 23,
1989, the date on which the fund commenced operations.
(4) The accumulation unit value was established at $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $38.521. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(5) Funds were first received in this option during December 1997.
(6) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $97.817. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(7) Funds were first received in this option during July 1998.
(8) The initial accumulation unit value was established during December 1996
when the portfolio became available under the contract, when the funds were
first received in this option or when the applicable daily asset charge was
first utilized.
(9) Funds were first received in this option during May 1998.
(10) Funds were first received in this option during August 1998.
(11) The accumulation unit value was converted to $10.000 on August 21, 1992
upon the commencement of a new administrative system. Immediately prior to
that date, the accumulation unit value of the fund was $34.397. On the date
of conversion, additional units were issued so that account values were not
changed as a result of the conversion.
(12) The initial accumulation unit value was established at $10.000 on August
21, 1992, the date on which the fund/portfolio became available under the
contract.
(13) The initial accumulation unit value was established at $10.000 during
October 1994, when the funds ere first received in this option.
(14) Funds were first received in this option during November 1997.
108
<PAGE>
For Master Applications Only
- --------------------------------------------------------------------------------
I hereby acknowledge receipt of an Account C prospectus dated May 3, 1999, as
well as all current prospectuses for the funds available under the Contracts.
____ Please send an Account C Statement of Additional Information (Form No.
SAI.01107-99) dated May 3, 1999.
- --------------------------------------------------------------------------------
CONTRACT HOLDER'S SIGNATURE
- --------------------------------------------------------------------------------
DATE
PROS.01107-99
<PAGE>
- --------------------------------------------------------------------------------
VARIABLE ANNUITY ACCOUNT C
OF
AETNA LIFE INSURANCE AND ANNUITY COMPANY
- --------------------------------------------------------------------------------
Statement of Additional Information dated May 3, 1999
This Statement of Additional Information is not a prospectus and should be read
in conjunction with the current prospectus dated May 3, 1999. The contracts
offered in connection with the prospectus are group or individual deferred
variable annuity contracts funded through Variable Annuity Account C (the
"separate account").
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
1-800-525-4225
Read the prospectus before you invest. Unless otherwise indicated, 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 C...................................................... 2
Offering and Purchase of Contracts.............................................. 3
Performance Data................................................................ 3
General................................................................... 3
Average Annual Total Return Quotations.................................... 4
Income Phase Payments........................................................... 7
Sales Material and Advertising.................................................. 8
Independent Auditors............................................................ 8
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, 1998, the Company and
its subsidiary life company had $43 billion invested through their products,
including $29 billion in their separate accounts (of which the Company or an
affiliate oversees the management of $21 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, 1997. 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 C" 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 C
Variable Annuity Account C 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>
<TABLE>
<S> <C>
The funds currently available under the contract are as follows:
o Aetna Ascent VP o AIM V.I. Value Fund
o Aetna Balanced VP, Inc. o Calvert Social Balanced Portfolio
o Aetna Income Shares d/b/a Aetna Bond VP o Fidelity Variable Insurance Products Fund (VIP)
o Aetna Crossroads VP Equity-Income Portfolio
o Aetna Growth VP o Fidelity Variable Insurance Products Fund (VIP)
o Aetna Variable Fund d/b/a Aetna Growth and Income VP Growth Portfolio
o Aetna High Yield VP o Fidelity Variable Insurance Products Fund (VIP)
o Aetna Index Plus Large Cap VP Overseas Portfolio
o Aetna Index Plus Mid Cap VP o Fidelity Variable Insurance Product Fund II (VIP II)
o Aetna Index Plus Small Cap VP Contrafund Portfolio
o Aetna International VP o Janus Aspen Aggressive Growth Portfolio
o Aetna Legacy VP o Janus Aspen Balanced Portfolio
o Aetna Variable Encore Fund d/b/a Aetna Money Market VP o Janus Aspen Flexible Income Portfolio
o Aetna Real Estate Securities VP o Janus Aspen Growth Portfolio
o Aetna Small Company VP o Janus Aspen Worldwide Growth Portfolio
o Aetna Value Opportunity VP o Lexington Natural Resources Trust*
o AIM V.I. Capital Appreciation Fund o Oppenheimer Global Securities Fund/VA
o AIM V.I. Growth Fund o Oppenheimer Strategic Bond Fund/VA
o AIM V.I. Growth and Income Fund o Portfolio Partners MFS Emerging Equities Portfolio
o Portfolio Partners MFS Research Growth Portfolio
o Portfolio Partners MFS Value Equity Portfolio
o Portfolio Partners Scudder International Growth Portfolio
o Portfolio Partners T. Rowe Price Growth Equity Portfolio
</TABLE>
* 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 (except loan repayments that we
automatically deposit into the subaccount according to our loan repayment
procedures).
A complete description of each of the funds, including their investment
objectives, policies, risks and fees and expenses, is contained in the
prospectus and statement 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 under 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 titled "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
total return"), as well as the "non-standardized total return," 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 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 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 fund under 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,
administrative expense charges, maintenance fees and early withdrawal charges).
These
3
<PAGE>
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 reflected the investment performance of the underlying
fund plus any cash held by the subaccount.
The non-standardized total return 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
any applicable 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 fund under 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 maximum maintenance fee has
been deducted for the purposes of calculating the returns.
Investment results of the funds 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 reflect the average annual standardized and non-standardized
total return quotation figures for the periods ended December 31, 1998 for the
subaccounts under the contracts. The standardized returns (Table A) assume the
maximum mortality and expense risk charge of 1.25%, maximum administrative
expense charge of 0.25%, maximum maintenance fee of $20 and early withdrawal
charges corresponding to Schedule I in the prospectus that is based on completed
payment periods. The non-standardized returns (Table B) assume the same charges
but do not include the early withdrawal charges. We may also advertise returns
based on other fee schedules that apply to a particular contract. 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 A
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Date
Installment Payment Account Contributions
($20 Maintenance Fee) STANDARDIZED First
Received
Under the
Separate
Account
- ------------------------------------------------------------------------------------------------
Since
SUBACCOUNT 1 Year 5 Year 10 Year Inception*
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Ascent VP (2.44%) 13.10% 07/05/1995
- ------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc. 9.39% 12.96% 10.66% 04/03/1989
- ------------------------------------------------------------------------------------------------
Aetna Bond VP(1) 1.16% 3.94% 7.60%
- ------------------------------------------------------------------------------------------------
Aetna Crossroads VP (0.93%) 11.35% 07/05/1995
- ------------------------------------------------------------------------------------------------
Aetna Growth VP 28.80% 30.69% 05/30/1997
- ------------------------------------------------------------------------------------------------
Aetna Growth and Income VP(1) 7.10% 16.35% 14.67%
- ------------------------------------------------------------------------------------------------
Aetna High Yield VP (12.40%) 05/04/1998
- ------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 23.11% 27.65% 10/31/1996
- ------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP 2.15% 05/04/1998
- ------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP (16.41%) 05/04/1998
- ------------------------------------------------------------------------------------------------
Aetna International VP (9.09%) 05/04/1998
- ------------------------------------------------------------------------------------------------
Aetna Legacy VP 0.03% 9.27% 07/05/1995
- ------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2) (1.36%) 2.61% 4.13%
- ------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP (16.94%) 05/04/1998
- ------------------------------------------------------------------------------------------------
Aetna Small Company VP (5.44%) 8.54% 05/30/1997
- ------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP 14.50% 22.52% 05/30/1997
- ------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio 8.76% 11.67% 10.04% 05/31/1989
- ------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio 4.42% 17.02% 05/31/1994
- ------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio 30.49% 21.97% 05/31/1994
- ------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio 5.47% 6.77% 05/31/1994
- ------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 21.59% 22.89% 05/31/1995
- ------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 25.60% 20.02% 06/30/1994
- ------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 25.62% 20.33% 06/30/1995
- ------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 2.06% 9.43% 10/31/1994
- ------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 26.91% 22.37% 06/30/1995
- ------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 20.60% 25.07% 05/31/1995
- ------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust (24.83%) 1.22% 2.60% 10/14/1991
- ------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA (5.77%) 05/04/1998
- ------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA (6.34%) 05/07/1998
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Portfolio Partners MFS Emerging Equities 21.30% 17.98% 11/28/1997
Portfolio
- ------------------------------------------------------------------------------------------------
Alger American Small Cap/Portfolio Partners 21.30% 12.36% 12.14% 09/30/1993
MFS Emerging Equities(3)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Portfolio Partners MFS Research Growth 15.06% 11.69% 11/28/1997
Portfolio
- ------------------------------------------------------------------------------------------------
American Century VP Capital
Appreciation/Portfolio Partners MFS Research 15.06% 5.40% 7.17% 08/31/1992
Growth(3)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Portfolio Partners MFS Value Equity Portfolio 18.56% 18.42% 11/28/1997
- ------------------------------------------------------------------------------------------------
Neuberger Berman AMT Growth/Portfolio Partners 18.56% 13.98% 10.80% 05/31/1989
MFS Value Equity(3)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Portfolio Partners Scudder International 11.41% 11.65% 11/28/1997
Growth Portfolio
- ------------------------------------------------------------------------------------------------
Scudder International Portfolio Class
A/Portfolio Partners Scudder International 11.41% 7.62% 7.99% 07/31/1989
Growth(3)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Portfolio Partners T. Rowe Price Growth Equity 19.37% 19.80% 11/28/1997
Portfolio
- ------------------------------------------------------------------------------------------------
Alger American Growth/Portfolio Partners T. 19.37% 21.10% 10/31/1994
Rowe Price Growth Equity(3)
- ------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in 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 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 7-day period ended December
31, 1998 (on an annualized basis) was 3.52%. 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.
5
<PAGE>
TABLE B
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Fund
Installment Payment Account NON-STANDARDIZED Inception
($20 Maintenance Fee) Date
- ------------------------------------------------------------------------------------------------
Since
SUBACCOUNT 1 Year 3 Years 5 Years 10 Years Inception**
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Aetna Ascent VP 2.70% 13.84% 14.77% 07/05/1995
- ------------------------------------------------------------------------------------------------
Aetna Balanced VP, Inc. 15.15% 16.34% 14.13% 11.25% 04/03/1989
- ------------------------------------------------------------------------------------------------
Aetna Bond VP(1) 6.48% 5.01% 5.01% 7.60%
- ------------------------------------------------------------------------------------------------
Aetna Crossroads VP 4.29% 12.19% 13.00% 07/05/1995
- ------------------------------------------------------------------------------------------------
Aetna Growth VP 35.58% 33.23% 12/13/1996
- ------------------------------------------------------------------------------------------------
Aetna Growth and Income VP(1) 12.74% 20.90% 17.55% 14.67%
- ------------------------------------------------------------------------------------------------
Aetna High Yield VP (1.81%) (0.40%) 12/10/1997
- ------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP 29.59% 31.29% 09/16/1996
- ------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP 22.40% 25.40% 12/16/1997
- ------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP (2.87%) 1.21% 12/19/1997
- ------------------------------------------------------------------------------------------------
Aetna International VP 17.10% 19.69% 12/22/1997
- ------------------------------------------------------------------------------------------------
Aetna Legacy VP 5.30% 10.10% 10.89% 07/05/1995
- ------------------------------------------------------------------------------------------------
Aetna Money Market VP(1)(2) 3.84% 3.81% 3.67% 4.13%
- ------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP (14.20%) (10.70%) 12/15/1997
- ------------------------------------------------------------------------------------------------
Aetna Small Company VP (0.46%) 15.36% 12/27/1996
- ------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP 20.52% 29.12% 12/13/1996
- ------------------------------------------------------------------------------------------------
AIM V.I. Capital Appreciation Fund 17.49% 14.99% 15.46% 16.97% 05/05/1993
- ------------------------------------------------------------------------------------------------
AIM V.I. Growth Fund 32.10% 24.28% 19.60% 19.04% 05/05/1993
- ------------------------------------------------------------------------------------------------
AIM V.I. Growth and Income Fund 25.75% 22.52% 20.64% 05/02/1994
- ------------------------------------------------------------------------------------------------
AIM V.I. Value Fund 30.41% 21.63% 19.86% 20.06% 05/05/1993
- ------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio(1) 14.49% 14.50% 12.82% 11.15%
- ------------------------------------------------------------------------------------------------
Fidelity VIP Equity-Income Portfolio(1) 9.92% 15.98% 16.96% 13.86%
- ------------------------------------------------------------------------------------------------
Fidelity VIP Growth Portfolio(1) 37.37% 23.56% 19.88% 17.59%
- ------------------------------------------------------------------------------------------------
Fidelity VIP Overseas Portfolio(1) 11.02% 10.75% 8.02% 8.40%
- ------------------------------------------------------------------------------------------------
Fidelity VIP II Contrafund Portfolio 28.00% 23.14% 26.68% 01/03/1995
- ------------------------------------------------------------------------------------------------
Janus Aspen Aggressive Growth Portfolio 32.21% 15.95% 17.52% 20.06% 09/13/1993
- ------------------------------------------------------------------------------------------------
Janus Aspen Balanced Portfolio 32.24% 22.06% 17.29% 17.67% 09/13/1993
- ------------------------------------------------------------------------------------------------
Janus Aspen Flexible Income Portfolio 7.43% 8.32% 8.63% 8.17% 09/13/1993
- ------------------------------------------------------------------------------------------------
Janus Aspen Growth Portfolio 33.59% 23.49% 19.56% 19.03% 09/13/1993
- ------------------------------------------------------------------------------------------------
Janus Aspen Worldwide Growth Portfolio 26.96% 24.72% 19.46% 22.14% 09/13/1993
- ------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust (20.87%) 1.42% 2.26% 3.33% 10/14/1991
- ------------------------------------------------------------------------------------------------
Oppenheimer Global Securities Fund/VA 12.36% 16.25% 7.98% 10.77% 11/12/1990
- ------------------------------------------------------------------------------------------------
Oppenheimer Strategic Bond Fund/VA 1.31% 6.17% 5.19% 5.15% 05/03/1993
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Portfolio Partners MFS Emerging Equities 27.69% 23.60% 11/27/1997
Portfolio
- ------------------------------------------------------------------------------------------------
Alger American Small Cap/Portfolio Partners 27.69% 12.10% 13.52% 19.16%
MFS Emerging Equities(3)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Portfolio Partners MFS Research Growth 21.12% 17.02% 11/27/1997
Portfolio
- ------------------------------------------------------------------------------------------------
American Century VP Capital
Appreciation/Portfolio Partners MFS Research 21.12% 2.92% 6.49% 9.55%
Growth(3)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Portfolio Partners MFS Value Equity Portfolio 24.80% 23.90% 11/27/1997
- ------------------------------------------------------------------------------------------------
Neuberger Berman AMT Growth/Portfolio 24.80% 18.60% 15.15% 12.96%
Partners MFS Value Equity(3)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Portfolio Partners Scudder International 17.27% 17.21% 11/27/1997
Growth Portfolio
- ------------------------------------------------------------------------------------------------
Scudder International Portfolio Class
A/Portfolio Partners Scudder International 17.27% 12.46% 8.73% 10.30%
Growth(3)
- ------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------
Portfolio Partners T. Rowe Price Growth 25.65% 25.36% 11/27/1997
Equity Portfolio
- ------------------------------------------------------------------------------------------------
Alger American Growth/Portfolio Partners T.
Rowe Price Growth Equity(3) 25.65% 20.98% 18.90% 18.64% 01/09/1989
- ------------------------------------------------------------------------------------------------
</TABLE>
Please refer to the discussion preceding the tables for an explanation of the
charges included and methodology used in 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 7-day period ended December
31, 1998 (on an annualized basis) was 3.52%. 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.
6
<PAGE>
INCOME PHASE PAYMENTS
When you begin receiving payments under the contract during the income phase
(see "Income Phase" in the prospectus), the value of your account is determined
using accumulation unit values as of the tenth valuation before the first
payment is due. Such value (less any applicable premium tax) is applied to
provide payments to you in accordance with the payment option and investment
options elected.
The Annuity option tables found in the contract show, for each option, the
amount of the first 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 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
payment, but payments will increase thereafter only to the extent that the net
investment rate increases by more than 5% on an annual basis. Payments would
decline if the rate failed to increase by 5%. Use of the 3.5% assumed rate
causes a lower first payment, but subsequent 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 on 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 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 payment option elected, a first monthly variable
payment of $6.68 per $1000 of value applied; the annuitant's first monthly
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 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
payment, multiplying this factor by .9999058* (to neutralize 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 payment is due.
7
<PAGE>
The second monthly 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.
*If an assumed net investment rate of 5% is elected, the appropriate factor to
neutralize such assumed rate would be .9998663.
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 review of filings made with the SEC.
8
<PAGE>
FINANCIAL STATEMENTS
VARIABLE ANNUITY ACCOUNT C
Index
<TABLE>
<S> <C>
Statement of Assets and Liabilities....................................... S-2
Statements of Operations and Changes in Net Assets........................ S-6
Condensed Financial Information .......................................... S-7
Notes to Financial Statements ............................................ S-27
Independent Auditors' Report.............................................. S-41
</TABLE>
S-1
<PAGE>
Variable Annuity Account C
Statement of Assets and Liabilities - December 31, 1998
<TABLE>
<CAPTION>
ASSETS:
Investments, at net asset value: (Note 1)
Net
Shares Cost Assets
------ ---- ------
<S> <C> <C> <C>
Aetna Ascent VP: 6,134,112 $84,102,680 $86,000,256
Aetna Balanced VP: 64,322,517 924,156,866 1,011,793,195
Aetna Bond VP: 29,408,694 379,592,879 384,077,541
Aetna Crossroads VP: 5,563,073 73,501,226 74,100,133
Aetna Get Fund, Series B: 4,080,903 52,990,050 59,581,177
Aetna Get Fund, Series C: 13,705,460 145,612,096 198,180,953
Aetna Get Fund, Series D: 26,960,783 270,904,139 270,980,130
Aetna Growth and Income VP: 193,821,381 6,185,564,837 6,175,149,210
Aetna Growth VP: 4,793,106 57,756,294 64,850,726
Aetna High Yield VP: 137,652 1,348,506 1,244,378
Aetna Index Plus Bond VP: 139,903 1,485,972 1,425,611
Aetna Index Plus Large Cap VP: 13,588,180 200,817,845 239,016,092
Aetna Index Plus Mid Cap VP: 337,416 3,695,668 4,116,477
Aetna Index Plus Small Cap VP: 502,348 4,557,249 4,953,155
Aetna International VP: 173,945 1,962,427 2,016,027
Aetna Legacy VP: 4,311,341 53,451,493 53,331,289
Aetna Money Market VP: 19,342,066 253,530,714 258,939,971
Aetna Real Estate Securities VP: 183,009 1,671,798 1,561,066
Aetna Small Company VP: 3,751,125 48,380,625 47,976,886
Aetna Value Opportunity VP: 1,997,581 25,293,161 28,785,139
Calvert Social Balanced Portfolio: 29,902,390 54,315,545 63,901,407
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 8,898,556 188,619,345 226,201,287
Growth Portfolio: 5,135,023 170,211,305 230,408,503
High Income Portfolio: 139,771 1,602,694 1,611,556
Overseas Portfolio: 738,883 14,561,214 14,814,602
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 1,470,246 22,725,399 26,699,659
Contrafund Portfolio: 14,733,278 253,946,769 360,081,326
Index 500 Portfolio: 660,901 66,696,529 93,352,318
Janus Aspen Series:
Aggressive Growth Portfolio: 10,591,848 192,335,439 292,229,082
Balanced Portfolio: 4,216,755 74,736,185 94,876,992
Flexible Income Portfolio: 2,694,962 32,325,750 32,501,248
Growth Portfolio: 5,647,105 98,534,718 132,932,852
Worldwide Growth Portfolio: 21,182,596 478,559,912 616,201,712
Lexington Emerging Markets Fund: 722,126 5,748,692 4,094,455
Lexington Natural Resources Trust Fund: 1,789,785 25,967,652 19,741,327
MFS Funds:
Total Return Series: 21,290 364,758 385,767
Oppenheimer Funds:
Global Securities Fund: 44,228 885,530 976,121
Strategic Bond Fund: 440,840 2,233,363 2,257,099
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio: 7,831,597 346,198,947 434,183,761
PPI MFS Research Growth Portfolio: 20,275,336 201,414,681 242,087,516
PPI MFS Value Equity Portfolio: 3,985,534 120,187,249 150,852,476
PPI Scudder International Growth Portfolio: 12,050,466 183,514,369 201,965,809
PPI T. Rowe Price Growth Equity Portfolio: 3,903,977 170,360,011 215,928,990
--------------- ---------------
NET ASSETS $11,476,422,581 $12,426,365,277
=============== ===============
</TABLE>
S-2
<PAGE>
Variable Annuity Account C
Statement of Assets and Liabilities - December 31, 1998 (continued):
<TABLE>
<S> <C>
Net Assets represented by:
Reserves for annuity contracts in accumulation and payment period: (Notes 1 and 5)
Aetna Ascent VP:
Annuity contracts in accumulation ............................................ $86,000,256
Aetna Balanced VP:
Annuity contracts in accumulation ............................................ 982,574,403
Annuity contracts in payment period .......................................... 29,218,792
Aetna Bond VP:
Annuity contracts in accumulation ............................................ 377,693,504
Annuity contracts in payment period .......................................... 6,384,037
Aetna Crossroads VP:
Annuity contracts in accumulation ............................................ 74,028,644
Annuity contracts in payment period .......................................... 71,489
Aetna Get Fund, Series B:
Annuity contracts in accumulation ............................................ 59,581,177
Aetna Get Fund, Series C:
Annuity contracts in accumulation ............................................ 198,180,953
Aetna Get Fund, Series D:
Annuity contracts in accumulation ............................................ 270,980,130
Aetna Growth and Income VP:
Annuity contracts in accumulation ............................................ 5,846,282,205
Annuity contracts in payment period .......................................... 328,867,005
Aetna Growth VP:
Annuity contracts in accumulation ............................................ 64,734,239
Annuity contracts in payment period .......................................... 116,487
Aetna High Yield VP:
Annuity contracts in accumulation ............................................ 1,244,378
Aetna Index Plus Bond VP:
Annuity contracts in accumulation ............................................ 1,425,611
Aetna Index Plus Large Cap VP:
Annuity contracts in accumulation ............................................ 238,578,749
Annuity contracts in payment period .......................................... 437,343
Aetna Index Plus Mid Cap VP:
Annuity contracts in accumulation ............................................ 4,116,477
Aetna Index Plus Small Cap VP:
Annuity contracts in accumulation ............................................ 4,953,155
Aetna International VP:
Annuity contracts in accumulation ............................................ 2,016,027
Aetna Legacy VP:
Annuity contracts in accumulation ............................................ 53,070,226
Annuity contracts in payment period .......................................... 261,063
Aetna Money Market VP:
Annuity contracts in accumulation ............................................ 258,856,854
Annuity contracts in payment period .......................................... 83,117
Aetna Real Estate Securities VP:
Annuity contracts in accumulation ............................................ 1,561,066
Aetna Small Company VP:
Annuity contracts in accumulation ............................................ 47,966,985
Annuity contracts in payment period .......................................... 9,901
</TABLE>
S-3
<PAGE>
Variable Annuity Account C
Statement of Assets and Liabilities - December 31, 1998 (continued):
<TABLE>
<S> <C>
Aetna Value Opportunity VP:
Annuity contracts in accumulation ................... $28,785,139
Calvert Social Balanced Portfolio:
Annuity contracts in accumulation ................... 63,901,407
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio:
Annuity contracts in accumulation ................... 226,201,287
Growth Portfolio:
Annuity contracts in accumulation ................... 230,408,503
High Income Portfolio:
Annuity contracts in accumulation ................... 1,611,556
Overseas Portfolio:
Annuity contracts in accumulation ................... 14,814,602
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio:
Annuity contracts in accumulation ................... 26,699,659
Contrafund Portfolio:
Annuity contracts in accumulation ................... 360,081,326
Index 500 Portfolio:
Annuity contracts in accumulation ................... 93,352,318
Janus Aspen Series:
Aggressive Growth Portfolio:
Annuity contracts in accumulation ................... 292,229,082
Balanced Portfolio:
Annuity contracts in accumulation ................... 94,876,992
Flexible Income Portfolio:
Annuity contracts in accumulation ................... 32,501,248
Growth Portfolio:
Annuity contracts in accumulation ................... 132,697,360
Annuity contracts in payment period ................. 235,492
Worldwide Growth Portfolio:
Annuity contracts in accumulation ................... 615,835,740
Annuity contracts in payment period ................. 365,972
Lexington Emerging Markets Fund:
Annuity contracts in accumulation ................... 4,094,455
Lexington Natural Resources Trust Fund:
Annuity contracts in accumulation ................... 19,741,327
MFS Funds:
Total Return Series:
Annuity contracts in accumulation ................... 385,767
Oppenheimer Funds:
Global Securities Fund:
Annuity contracts in accumulation ................... 976,121
Strategic Bond Fund:
Annuity contracts in accumulation ................... 2,253,578
Annuity contracts in payment period ................. 3,521
</TABLE>
S-4
<PAGE>
Variable Annuity Account C
Statement of Assets and Liabilities - December 31, 1998 (continued):
<TABLE>
<S> <C>
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Annuity contracts in accumulation ...... $434,156,330
Annuity contracts in payment period .... 27,431
PPI MFS Research Growth Portfolio:
Annuity contracts in accumulation ...... 242,087,516
PPI MFS Value Equity Portfolio:
Annuity contracts in accumulation ...... 150,852,476
PPI Scudder International Growth Portfolio:
Annuity contracts in accumulation ...... 201,965,809
PPI T. Rowe Price Growth Equity Portfolio:
Annuity contracts in accumulation ...... 215,872,943
Annuity contracts in payment period .... 56,047
---------------
$12,426,365,277
===============
</TABLE>
See Notes to Financial Statements
S-5
<PAGE>
Variable Annuity Account C
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
Year ended December 31,
1998 1997
------------------- -------------------
<S> <C> <C>
INVESTMENT INCOME:
Income: (Notes 1, 3 and 5)
Dividends .............................................................. $1,447,620,640 $1,552,106,208
Expenses: (Notes 2 and 5)
Valuation period deductions ............................................ (138,558,611) (120,867,375)
---------------- ---------------
Net investment income ................................................... 1,309,062,029 1,431,238,833
---------------- ---------------
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on sales of investments: (Notes 1, 4 and 5)
Proceeds from sales .................................................... 2,443,668,181 2,013,561,413
Cost of investments sold ............................................... 2,067,610,422 1,773,010,971
---------------- ---------------
Net realized gain ..................................................... 376,057,759 240,550,442
Net unrealized gain on investments: (Note 5)
Beginning of year ...................................................... 915,465,761 612,391,085
End of year ............................................................ 949,942,696 915,465,761
---------------- ---------------
Net change in unrealized gain ......................................... 34,476,935 303,074,676
---------------- ---------------
Net realized and unrealized gain on investments ......................... 410,534,694 543,625,118
---------------- ---------------
Net increase in net assets resulting from operations .................... 1,719,596,723 1,974,863,951
---------------- ---------------
FROM UNIT TRANSACTIONS:
Variable annuity contract purchase payments ............................. 1,136,921,898 1,039,113,157
Transfer from the Company for mortality guarantee adjustments ........... 849,771 2,085,609
Transfers from the Company's fixed account options ...................... 112,197,035 166,510,610
Transfer to the Company's other variable annuity accounts ............... (66,773,776) (88,238,000)
Redemptions by contract holders ......................................... (1,591,935,338) (474,257,152)
Annuity payments ........................................................ (41,589,989) (31,253,253)
Other ................................................................... 1,844,602 1,227,066
---------------- ---------------
Net increase (decrease) in net assets from unit transactions (Note 5) .. (448,485,797) 615,188,037
---------------- ---------------
Change in net assets .................................................... 1,271,110,926 2,590,051,988
NET ASSETS:
Beginning of year ....................................................... 11,155,254,351 8,565,202,363
---------------- ---------------
End of year ............................................................. $12,426,365,277 $11,155,254,351
================ ===============
</TABLE>
See Notes to Financial Statements
S-6
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998
<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:
Qualified I $13.836 $14.260 3.06% 347.4 $4,953
Qualified III 15.422 15.886 3.01% 21,430.4 340,447
Qualified V 15.363 15.800 2.84% 1,408.7 22,258
Qualified VI 15.422 15.886 3.01% 3,508,677.1 55,739,609
Qualified VIII 15.419 15.882 3.00% 803.0 12,754
Qualified X (1.15) 15.900 16.395 3.11% 21,004.4 344,364
Qualified X (1.25) 15.860 16.337 3.01% 592,246.9 9,675,801
Qualified XI 15.514 16.028 3.31% 80,753.8 1,294,336
Qualified XII (0.40) 13.239 14.086 6.40% (11) 86,320.6 1,215,931
Qualified XII (0.45) 9.146 9.519 4.08% (12) 778.8 7,414
Qualified XII (0.50) 10.475 9.848 (5.99%) (5) 2,670.4 26,297
Qualified XII (0.75) 9.913 9.502 (4.15%) (6) 43,141.8 409,924
Qualified XII (0.80) 10.604 10.101 (4.74%) (5) 255,775.2 2,583,503
Qualified XII (0.85) 13.699 14.113 3.02% (1) 70,990.9 1,001,901
Qualified XII (0.90) 9.227 9.953 7.87% (10) 211.7 2,107
Qualified XII (0.95) 13.624 14.076 3.32% 75,369.1 1,060,884
Qualified XII (1.00) 13.613 14.057 3.26% 520,438.2 7,315,952
Qualified XII (1.05) 13.602 14.039 3.21% 55,886.3 784,572
Qualified XII (1.10) 13.590 14.020 3.16% 9,573.2 134,219
Qualified XII (1.15) 13.579 14.002 3.12% 26,910.5 376,793
Qualified XII (1.20) 13.587 13.983 2.91% (1) 90,247.0 1,261,945
Qualified XII (1.25) 13.557 13.965 3.01% 1,249.2 17,444
Qualified XII (1.30) 13.546 13.946 2.95% 1,424.3 19,864
Qualified XII (1.40) 14.731 13.910 (5.57%) (5) 136.0 1,891
Qualified XII (1.50) 13.502 13.873 2.75% 14,280.4 198,111
Qualified XIII 15.497 16.011 3.32% 29,149.3 466,701
Qualified XV 15.471 15.984 3.32% 38,675.0 618,187
Qualified XVI 15.394 15.818 2.75% 38,619.9 610,875
Qualified XVII 15.453 15.974 3.37% 9,887.5 157,940
Qualified XVIII 15.892 16.427 3.37% 17,853.0 293,279
- ------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP:
Qualified I 24.826 28.687 15.55% 73,629.4 2,112,224
Qualified III 24.700 28.524 15.48% 2,294,876.9 65,458,720
Qualified V 18.777 21.650 15.30% 2,680.4 58,031
Qualified VI 18.811 21.723 15.48% 25,990,902.2 564,602,474
Qualified VII 18.092 20.906 15.55% 266,036.8 5,561,697
Qualified VIII 17.463 20.165 15.47% 3,910.4 78,852
Qualified IX 17.464 20.269 16.06% 3,983.4 80,739
Qualified X (1.15) 18.889 21.836 15.60% 167,719.9 3,662,292
Qualified X (1.25) 18.811 21.723 15.48% 6,268,762.3 136,176,831
Qualified XI 18.922 21.917 15.83% 768,509.7 16,843,580
Qualified XII (0.40) 14.244 15.331 7.63% (11) 653,272.0 10,015,389
Qualified XII (0.50) 10.369 11.077 6.83% (4) 310,845.7 3,443,125
Qualified XII (0.75) 10.002 10.648 6.46% (6) 183,346.5 1,952,257
Qualified XII (0.80) 10.646 11.358 6.69% (5) 3,962,527.0 45,007,206
Qualified XII (0.85) 13.327 15.360 15.25% (1) 1,379,122.4 21,183,810
Qualified XII (0.90) 10.451 11.157 6.76% (4) 1,648.2 18,389
Qualified XII (0.95) 13.226 15.320 15.83% 468,467.7 7,176,841
Qualified XII (1.00) 13.215 15.300 15.78% 2,019,116.4 30,891,695
Qualified XII (1.05) 13.204 15.279 15.71% 61,615.2 941,444
Qualified XII (1.10) 13.194 15.259 15.65% 10,484.1 159,980
Qualified XII (1.15) 13.183 15.239 15.60% 275,680.7 4,201,140
Qualified XII (1.20) 13.676 15.219 11.28% (2) 33,673.0 512,471
Qualified XII (1.25) 13.161 15.199 15.49% 1,535.4 23,337
Qualified XII (1.30) 13.150 15.179 15.43% 7.8 118
Qualified XII (1.40) 14.278 15.139 6.03% (5) 532.9 8,068
</TABLE>
S-7
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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 Balanced VP (continued):
Qualified XII (1.50) $13.107 $15.099 15.20% 9,090.9 $137,262
Qualified XIII 18.901 21.893 15.83% 266,635.9 5,837,554
Qualified XV 18.870 21.857 15.83% 771,905.7 16,871,521
Qualified XVI 18.776 21.629 15.19% 385,861.9 8,345,934
Qualified XVII 18.837 21.808 15.77% 429,954.4 9,376,647
Qualified XVIII 18.837 21.808 15.77% 643,218.8 14,027,618
Qualified XIX 24.861 28.800 15.84% 122,357.8 3,523,901
Qualified XX 24.735 28.636 15.77% 149,576.3 4,283,256
Annuity contracts in payment period 29,218,792
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP:
Qualified I 51.930 55.494 6.86% 26,694.1 1,481,367
Qualified III 51.330 54.819 6.80% 994,987.1 54,544,521
Qualified V 13.397 14.285 6.63% 8,614.2 123,053
Qualified VI 13.238 14.137 6.79% 15,101,998.1 213,504,437
Qualified VII 12.243 13.083 6.86% 189,500.4 2,479,295
Qualified VIII 12.190 13.018 6.79% 5,300.1 68,997
Qualified IX 12.330 13.221 7.23% 4,239.4 56,049
Qualified X (1.15) 13.293 14.211 6.91% 102,449.7 1,455,907
Qualified X (1.25) 13.238 14.137 6.79% 2,490,831.9 35,214,126
Qualified XI 13.316 14.264 7.12% 389,465.9 5,555,291
Qualified XII (0.40) 11.893 12.079 1.56% (11) 190,084.0 2,295,979
Qualified XII (0.50) 10.118 10.662 5.38% (4) 88,895.1 947,790
Qualified XII (0.75) 10.058 10.502 4.41% (6) 51,915.9 545,210
Qualified XII (0.80) 10.157 10.650 4.85% (5) 771,660.4 8,217,815
Qualified XII (0.85) 11.381 12.102 6.34% (1) 654,764.8 7,923,819
Qualified XII (0.90) 10.070 10.654 5.80% (3) 383.2 4,082
Qualified XII (0.95) 11.268 12.070 7.12% 187,652.9 2,264,942
Qualified XII (1.00) 11.258 12.054 7.07% 802,875.7 9,677,807
Qualified XII (1.05) 11.249 12.038 7.01% 50,220.3 604,552
Qualified XII (1.10) 11.240 12.022 6.96% 2,532.3 30,443
Qualified XII (1.15) 11.231 12.006 6.90% 106,178.7 1,274,807
Qualified XII (1.20) 11.283 11.990 6.27% (2) 23,608.3 283,072
Qualified XII (1.25) 11.217 11.975 6.76% (1) 1,197.4 14,338
Qualified XII (1.30) 11.203 11.959 6.75% 59,442.7 710,861
Qualified XII (1.40) 11.423 11.927 4.41% (5) 189.1 2,255
Qualified XII (1.50) 11.166 11.896 6.54% 27,679.9 329,273
Qualified XIII 13.301 14.248 7.12% 200,649.9 2,858,924
Qualified XV 13.279 14.225 7.12% 289,650.5 4,120,181
Qualified XVI 13.213 14.076 6.53% 199,388.3 2,806,677
Qualified XVII 13.249 14.171 6.96% 421,225.2 5,969,111
Qualified XVIII 13.249 14.171 6.96% 703,076.6 9,963,181
Qualified XIX 51.975 55.625 7.02% 18,270.8 1,016,314
Qualified XX 51.374 54.949 6.96% 24,550.7 1,349,028
Annuity contracts in payment period 6,384,037
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP:
Qualified III 14.456 15.120 4.59% 31,468.2 475,808
Qualified V 14.400 15.038 4.43% 266.3 4,005
Qualified VI 14.456 15.120 4.59% 2,863,811.8 43,301,656
Qualified VIII 14.453 15.116 4.59% 1,655.9 25,031
Qualified X (1.15) 14.835 15.532 4.70% 35,562.4 552,349
Qualified X (1.25) 14.797 15.478 4.60% 514,093.4 7,956,893
Qualified XI 14.541 15.255 4.91% 78,787.6 1,201,936
Qualified XII (0.40) 12.991 13.628 4.90% (11) 51,877.8 706,979
Qualified XII (0.45) 9.531 9.800 2.82% (12) 731.1 7,165
Qualified XII (0.50) 10.298 10.086 (2.06%) (4) 1,126.5 11,362
Qualified XII (0.75) 9.936 9.782 (1.55%) (6) 62,143.7 607,879
</TABLE>
S-8
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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 Crossroads VP (continued):
Qualified XII (0.80) $10.524 $10.312 (2.01%) (5) 213,969.6 $2,206,459
Qualified XII (0.85) 13.063 13.654 4.52% (1) 102,916.2 1,405,196
Qualified XII (0.95) 12.980 13.618 4.92% 105,585.7 1,437,839
Qualified XII (1.00) 12.970 13.600 4.86% 168,963.5 2,297,868
Qualified XII (1.05) 12.959 13.582 4.81% 38,256.6 519,594
Qualified XII (1.10) 12.949 13.564 4.75% 14,611.0 198,182
Qualified XII (1.15) 12.938 13.546 4.70% 24,882.2 337,055
Qualified XII (1.20) 12.915 13.528 4.75% (1) 499,874.0 6,762,356
Qualified XII (1.25) 12.917 13.510 4.59% 8,074.9 109,094
Qualified XII (1.30) 12.906 13.492 4.54% 520.6 7,025
Qualified XII (1.40) 13.846 13.457 (2.81%) (5) 500.9 6,741
Qualified XII (1.50) 12.864 13.421 4.33% 22,767.6 305,573
Qualified XIII 14.526 15.239 4.91% 30,057.3 458,037
Qualified XV 14.501 15.214 4.92% 100,733.6 1,532,512
Qualified XVI 14.430 15.055 4.33% 32,996.7 496,765
Qualified XVII 14.485 15.204 4.96% 50,296.8 764,691
Qualified XVIII 14.827 15.563 4.96% 21,371.1 332,594
Annuity contracts in payment period 71,489
- ------------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series B:
Qualified III 20.718 24.374 17.65% 2,484.4 60,555
Qualified VI 20.718 24.374 17.65% 985,962.2 24,031,914
Qualified X (1.25) 20.718 24.374 17.65% 256,573.6 6,253,743
Qualified XI 20.840 24.592 18.00% 239,997.9 5,901,967
Qualified XII (0.75) 10.505 10.948 4.22% (4) 5,251.3 57,493
Qualified XII (1.00) 9.974 10.323 3.50% (6) 2,321.4 23,963
Qualified XII (1.05) 11.069 11.514 4.02% (6) 277,120.5 3,190,757
Qualified XII (1.15) 12.852 15.216 18.39% (1) 35,803.1 544,787
Qualified XII (1.20) 12.870 15.186 18.00% 13,718.5 208,336
Qualified XII (1.25) 13.203 15.172 14.91% (10) 865,901.2 13,137,159
Qualified XII (1.30) 12.825 15.157 18.18% (1) 68,080.8 1,031,891
Qualified XII (1.40) 12.845 15.127 17.77% 1,060.3 16,040
Qualified XII (1.45) 14.415 15.112 4.84% (6) 1,372.5 20,741
Qualified XIII 20.818 24.565 18.00% 93,996.0 2,309,015
Qualified XV 20.783 24.524 18.00% 86,349.0 2,117,644
Qualified XVI 20.680 24.269 17.35% 1,049.7 25,475
Qualified XVII 20.718 24.374 17.65% 26,655.2 649,697
- ------------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series C:
Qualified III 12.636 15.904 25.86% 737,715.1 11,732,640
Qualified VI 12.636 15.904 25.86% 7,446,679.1 118,432,185
Qualified XI 12.685 16.014 26.24% 761,714.6 12,197,745
Qualified XII (0.65) 14.392 16.025 11.35% (11) 42,433.1 680,005
Qualified XII (0.75) 10.520 11.696 11.18% (4) 14,905.0 174,326
Qualified XII (1.00) 10.012 10.999 9.86% (6) 10,347.4 113,809
Qualified XII (1.05) 11.056 12.202 10.37% (5) 1,503,095.6 18,340,765
Qualified XII (1.15) 12.877 16.050 24.64% (1) 118,746.7 1,905,910
Qualified XII (1.20) 12.685 16.014 26.24% 75,185.0 1,203,977
Qualified XII (1.25) 12.677 15.995 26.17% 1,498,695.3 23,971,956
Qualified XII (1.30) 12.841 15.977 24.42% (1) 20,116.4 321,400
Qualified XII (1.35) 14.400 15.959 10.83% (5) 2,128.7 33,971
Qualified XII (1.40) 12.653 15.940 25.98% 4,413.8 70,358
Qualified XII (1.45) 14.270 15.922 11.58% (6) 3,012.0 47,957
Qualified XII (1.75) 12.596 15.813 25.54% 495.7 7,839
Qualified XIII 12.685 16.014 26.24% 240,222.9 3,846,819
Qualified XV 12.676 16.002 26.24% 149,252.7 2,388,342
Qualified XVI 12.613 15.835 25.55% 38,452.8 608,917
Qualified XVII 12.636 15.904 25.86% 132,169.9 2,102,032
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-9
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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:
Qualified III $9.997 $10.062 0.65% (10) 1,665,880.7 $16,761,305
Qualified V 10.020 10.058 0.38% (11) 7,666.4 77,106
Qualified VI 9.997 10.062 0.65% (10) 11,162,070.9 112,307,489
Qualified IX 10.039 10.065 0.26% (12) 2,996.2 30,157
Qualified X (1.15) 10.009 10.062 0.53% (11) 107,240.1 1,078,999
Qualified X (1.25) 9.997 10.062 0.65% (10) 1,726,930.2 17,375,556
Qualified XI 9.998 10.068 0.70% (10) 1,733,084.5 17,449,528
Qualified XII (0.65) 10.020 10.076 0.56% (11) 37,674.2 379,602
Qualified XII (0.75) 10.065 10.079 0.14% (12) 5,093.2 51,334
Qualified XII (0.85) 9.998 10.071 0.73% (10) 143,089.7 1,441,027
Qualified XII (1.00) 9.998 10.073 0.75% (10) 17,547.2 176,755
Qualified XII (1.05) 9.998 10.072 0.74% (10) 3,535,548.4 35,609,867
Qualified XII (1.20) 9.996 10.068 0.72% (10) 94,345.5 949,916
Qualified XII (1.25) 10.000 10.067 0.67% (10) 5,027,992.4 50,618,444
Qualified XII (1.30) 9.998 10.066 0.68% (10) 217,493.5 2,189,324
Qualified XII (1.40) 9.997 10.064 0.67% (10) 18,631.2 187,501
Qualified XII (1.55) 10.002 10.060 0.58% (10) 32,997.9 331,971
Qualified XII (1.75) 10.019 10.056 0.37% (11) 7,346.0 73,870
Qualified XIII 9.998 10.068 0.70% (10) 423,655.2 4,265,565
Qualified XV 9.997 10.068 0.71% (10) 433,459.3 4,364,276
Qualified XVI 9.995 10.056 0.61% (10) 91,815.2 923,270
Qualified XVII 9.995 10.062 0.67% (10) 113,411.8 1,141,096
Qualified XVIII 9.997 10.062 0.65% (10) 317,662.6 3,196,172
- -----------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP:
Qualified I 285.511 323.019 13.14% 140,708.4 45,451,460
Qualified III 217.359 245.765 13.07% 1,747,097.1 429,375,391
Qualified V 22.179 25.037 12.89% 13,723.7 343,603
Qualified VI 22.194 25.094 13.07% 134,233,827.6 3,368,523,807
Qualified VII 20.910 23.657 13.14% 8,868,088.4 209,791,507
Qualified VIII 20.609 23.301 13.06% 46,913.0 1,093,115
Qualified IX 20.525 23.323 13.63% 18,215.5 424,846
Qualified X (1.15) 22.287 25.225 13.18% 548,039.2 13,824,162
Qualified X (1.25) 22.194 25.094 13.07% 19,989,922.4 501,636,068
Qualified XI 22.325 25.319 13.41% 5,019,610.7 127,089,481
Qualified XII (0.40) 15.108 16.747 10.85% (11) 2,888,621.7 48,375,779
Qualified XII (0.45) 9.561 10.152 6.18% (12) 1,118.7 11,357
Qualified XII (0.50) 10.580 10.665 0.80% (4) 719,561.3 7,673,863
Qualified XII (0.75) 9.935 10.133 1.99% (6) 773,713.1 7,840,042
Qualified XII (0.80) 10.925 11.108 1.68% (5) 15,809,881.3 175,619,924
Qualified XII (0.85) 14.694 16.779 14.19% (1) 5,795,666.6 97,245,182
Qualified XII (0.90) 10.562 10.804 2.29% (3) 8,242.8 89,055
Qualified XII (0.95) 14.756 16.735 13.41% 2,224,466.5 37,225,732
Qualified XII (1.00) 14.744 16.713 13.35% 9,871,040.8 164,971,221
Qualified XII (1.05) 14.732 16.691 13.30% 326,490.2 5,449,309
Qualified XII (1.10) 14.720 16.669 13.24% 33,835.9 563,996
Qualified XII (1.15) 14.708 16.647 13.18% 581,225.8 9,675,416
Qualified XII (1.20) 14.696 16.625 13.13% 224,760.7 3,736,553
Qualified XII (1.25) 14.684 16.603 13.07% 35,132.5 583,294
Qualified XII (1.30) 14.672 16.581 13.01% 2,879.7 47,748
Qualified XII (1.40) 16.562 16.537 (0.15%) (4) 934.1 15,447
Qualified XII (1.50) 14.624 16.493 12.78% 47,949.7 790,856
Qualified XIII 22.301 25.291 13.41% 2,491,029.4 63,000,811
Qualified XV 22.264 25.249 13.41% 4,070,904.3 102,786,499
Qualified XVI 22.153 24.986 12.79% 1,587,350.5 39,661,776
Qualified XVII 22.226 25.193 13.35% 5,670,690.8 142,862,116
Qualified XVIII 22.226 25.193 13.35% 6,366,412.9 160,389,491
</TABLE>
S-10
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (continued):
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Value Increase
Per Unit (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 Growth and Income VP (continued):
Qualified XIX $285.918 $324.288 13.42% 98,421.8 $31,917,036
Qualified XX 217.668 246.731 13.35% 195,339.4 48,196,262
Annuity contracts in payment period 328,867,005
- ----------------------------------------------------------------------------------------------------------------------
Aetna Growth VP:
Qualified III 11.392 13.597 19.36% (9) 17.1 232
Qualified V 15.281 17.862 16.89% (4) 196.7 3,513
Qualified VI 13.173 17.912 35.98% 2,395,679.9 42,910,679
Qualified VIII 14.183 17.909 26.27% (2) 933.5 16,717
Qualified X (1.15) 13.183 17.943 36.11% 26,152.5 469,247
Qualified X (1.25) 13.173 17.912 35.98% 289,055.2 5,177,468
Qualified XI 13.202 18.005 36.38% 115,676.6 2,082,742
Qualified XII (0.40) 15.200 18.018 18.54% (11) 21,805.3 392,890
Qualified XII (0.45) 10.444 11.470 9.82% (12) 291.1 3,339
Qualified XII (0.50) 10.479 12.397 18.30% (4) 19,997.4 247,910
Qualified XII (0.75) 9.925 11.449 15.36% (6) 18,200.0 208,378
Qualified XII (0.80) 11.326 13.030 15.05% (5) 303,987.0 3,961,021
Qualified XII (0.85) 13.357 18.036 35.03% (1) 24,239.7 437,189
Qualified XII (0.90) 10.958 12.681 15.72% (4) 628.2 7,966
Qualified XII (0.95) 13.202 18.005 36.38% 25,777.5 464,120
Qualified XII (1.00) 12.674 17.989 41.94% (1) 194,080.7 3,491,376
Qualified XII (1.05) 13.192 17.974 36.25% 23,218.5 417,323
Qualified XII (1.10) 13.188 17.958 36.17% 1,760.5 31,615
Qualified XII (1.15) 13.183 17.943 36.11% 14,989.3 268,948
Qualified XII (1.20) 14.173 17.927 26.49% (2) 7,333.1 131,461
Qualified XII (1.25) 12.876 17.912 39.11% (1) 5,418.5 97,054
Qualified XII (1.40) 15.724 17.865 13.62% (5) 210.5 3,760
Qualified XII (1.50) 13.027 17.834 36.90% (1) 3,470.4 61,893
Qualified XIII 13.202 18.005 36.38% 81,692.7 1,470,865
Qualified XV 13.202 18.005 36.38% 59,373.8 1,069,017
Qualified XVI 13.149 17.834 35.63% 36,839.4 657,009
Qualified XVII 13.173 17.912 35.98% 25,257.0 452,395
Qualified XVIII 15.603 18.010 15.43% (5) 11,000.2 198,112
Annuity contracts in payment period 116,487
- ----------------------------------------------------------------------------------------------------------------------
Aetna High Yield VP:
Qualified VI 9.969 9.212 (7.59%) (5) 91,056.3 838,818
Qualified X (1.25) 9.968 9.212 (7.58%) (6) 7,393.7 68,111
Qualified XI 9.216 9.231 0.16% (11) 1,841.9 17,003
Qualified XII (0.40) 9.125 9.238 1.24% (11) 1,146.3 10,589
Qualified XII (0.50) 9.961 9.260 (7.04%) (5) 834.1 7,723
Qualified XII (0.75) 10.145 9.284 (8.49%) (7) 0.3 3
Qualified XII (0.80) 9.939 9.241 (7.02%) (6) 15,410.5 142,405
Qualified XII (0.85) 9.899 9.238 (6.68%) (8) 643.7 5,946
Qualified XII (0.95) 10.078 9.231 (8.40%) (7) 798.8 7,374
Qualified XII (1.00) 9.149 9.228 0.86% (9) 9,210.9 84,998
Qualified XII (1.05) 9.995 9.225 (7.70%) (6) 110.4 1,019
Qualified XII (1.10) 9.096 9.222 1.39% (9) 10.2 94
Qualified XII (1.15) 9.959 9.218 (7.44%) (6) 1,725.0 15,902
Qualified XII (1.20) 9.935 9.215 (7.25%) (6) 131.8 1,215
Qualified XIII 8.889 9.231 3.85% (10) 16.5 153
Qualified XV 10.044 9.231 (8.09%) (7) 1,308.2 12,076
Qualified XVI 9.616 9.196 (4.37%) (8) 64.5 593
Qualified XVII 9.135 9.212 0.84% (12) 2,225.0 20,497
Qualified XVIII 10.003 9.212 (7.91%) (6) 1,070.3 9,859
- ----------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Bond VP:
Qualified III 10.128 10.578 4.44% (5) 134,777.2 1,425,611
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
S-11
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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 Index Plus Large Cap VP:
Qualified V $14.414 $18.704 29.76% 3,164.5 $59,187
Qualified VI 14.444 18.772 29.96% 7,100,482.5 133,292,287
Qualified VIII 14.443 18.769 29.95% 843.6 15,833
Qualified X (1.15) 14.463 18.815 30.09% 45,787.2 861,504
Qualified X (1.25) 14.444 18.772 29.96% 616,723.6 11,577,311
Qualified XI 14.500 18.902 30.36% 386,035.6 7,296,824
Qualified XII (0.40) 16.874 18.916 12.10% (11) 87,237.6 1,650,175
Qualified XII (0.45) 10.639 11.307 6.28% (12) 859.2 9,715
Qualified XII (0.50) 10.708 12.019 12.24% (4) 13,477.2 161,986
Qualified XII (0.75) 10.015 11.286 12.69% (6) 48,831.3 551,106
Qualified XII (0.80) 11.117 12.587 13.22% (5) 1,974,900.4 24,858,384
Qualified XII (0.85) 14.692 18.945 28.95% (1) 459,427.5 8,704,042
Qualified XII (0.90) 10.648 12.206 14.63% (3) 2,383.9 29,098
Qualified XII (0.95) 14.500 18.902 30.36% 108,387.2 2,048,730
Qualified XII (1.00) 14.491 18.880 30.29% 648,540.4 12,244,624
Qualified XII (1.05) 14.481 18.859 30.23% 51,170.0 964,995
Qualified XII (1.10) 14.472 18.837 30.16% 10,487.9 197,560
Qualified XII (1.15) 14.463 18.815 30.09% 26,209.5 493,143
Qualified XII (1.20) 14.453 18.794 30.04% 28,911.2 543,351
Qualified XII (1.25) 14.444 18.772 29.96% 593.5 11,141
Qualified XII (1.30) 14.435 18.751 29.90% 12,423.1 232,941
Qualified XII (1.40) 16.556 18.708 13.00% (5) 172.5 3,228
Qualified XII (1.50) 14.397 18.665 29.65% 16,814.2 313,835
Qualified XIII 14.500 18.902 30.36% 145,736.2 2,754,698
Qualified XIV 14.444 18.772 29.96% 1,302,824.7 24,456,998
Qualified XV 14.489 18.888 30.36% 136,251.8 2,573,507
Qualified XVI 14.418 18.691 29.64% 68,840.7 1,286,721
Qualified XVII 14.452 18.802 30.10% 48,458.7 911,108
Qualified XVIII 16.559 18.876 13.99% (5) 25,149.7 474,717
Annuity contracts in payment period 437,343
- ------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP:
Qualified III 9.928 11.338 14.20% (5) 35,201.0 399,109
Qualified VI 10.107 10.891 7.76% (5) 146,921.2 1,600,074
Qualified X (1.25) 9.925 10.891 9.73% (5) 35,030.5 381,506
Qualified XI 7.633 10.913 42.97% (10) 5,165.7 56,375
Qualified XII (0.40) 9.480 10.921 15.20% (11) 1,186.8 12,961
Qualified XII (0.50) 10.050 10.947 8.93% (5) 2,661.9 29,140
Qualified XII (0.75) 9.822 11.183 13.86% (6) 1,622.7 18,147
Qualified XII (0.80) 9.576 10.925 14.09% (6) 80,312.2 877,375
Qualified XII (0.85) 9.028 10.921 20.97% (8) 5,681.1 62,042
Qualified XII (0.95) 10.108 10.913 7.96% (5) 564.1 6,156
Qualified XII (1.00) 7.996 10.909 36.43% (9) 24,015.5 261,997
Qualified XII (1.05) 9.624 10.906 13.32% (7) 167.7 1,829
Qualified XII (1.10) 9.772 10.902 11.56% (12) 2.6 28
Qualified XII (1.15) 9.105 10.898 19.69% (8) 95.5 1,040
Qualified XII (1.20) 9.662 10.894 12.75% (6) 451.6 4,920
Qualified XII (1.30) 9.805 10.887 11.04% (11) 40.6 442
Qualified XII (1.50) 9.216 10.872 17.97% (8) 44.9 488
Qualified XIII 9.927 10.913 9.93% (5) 9,117.4 99,501
Qualified XV 9.962 10.913 9.55% (5) 26,111.0 284,957
Qualified XVI 9.946 10.872 9.31% (7) 202.8 2,204
Qualified XVIII 9.017 10.891 20.78% (8) 1,486.1 16,186
- ------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP:
Qualified III 10.193 9.157 (10.16%) (5) 81,388.0 745,282
Qualified V 6.661 8.806 32.20% (10) 7.3 64
Qualified VI 9.996 8.815 (11.81%) (5) 253,183.9 2,231,889
</TABLE>
S-12
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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 Index Plus Small Cap VP (continued):
Qualified X (1.25) $9.918 $8.815 (11.12%) (5) 40,793.4 $359,606
Qualified XI 6.425 8.834 37.49% (10) 6,054.3 53,481
Qualified XII (0.40) 8.071 8.840 9.53% (11) 3,928.4 34,727
Qualified XII (0.50) 9.328 8.861 (5.01%) (6) 17.2 153
Qualified XII (0.75) 9.642 9.201 (4.57%) (6) 1,480.7 13,624
Qualified XII (0.80) 9.269 8.843 (4.60%) (6) 90,819.3 803,093
Qualified XII (0.85) 8.464 8.840 4.44% (8) 6,564.0 58,024
Qualified XII (0.90) 9.582 8.837 (7.77%) (7) 62.0 548
Qualified XII (0.95) 9.366 8.834 (5.68%) (6) 2,625.2 23,190
Qualified XII (1.00) 9.580 8.831 (7.82%) (7) 27,046.5 238,835
Qualified XII (1.05) 9.530 8.827 (7.38%) (7) 329.5 2,909
Qualified XII (1.15) 9.569 8.821 (7.82%) (7) 1,234.1 10,887
Qualified XII (1.20) 9.244 8.818 (4.61%) (6) 989.0 8,721
Qualified XII (1.30) 8.198 8.812 7.49% (11) 48.7 429
Qualified XII (1.50) 7.150 8.800 23.08% (8) 77.6 683
Qualified XIII 9.997 8.834 (11.63%) (5) 12,799.8 113,068
Qualified XV 9.876 8.834 (10.55%) (5) 26,256.7 231,941
Qualified XVI 9.775 8.800 (9.97%) (5) 597.9 5,261
Qualified XVII 6.682 8.815 31.92% (10) 748.3 6,597
Qualified XVIII 8.454 8.815 4.27% (8) 1,150.8 10,143
- --------------------------------------------------------------------------------------------------------------------------
Aetna International VP:
Qualified VI 10.182 9.765 (4.10%) (5) 97,659.7 953,611
Qualified X (1.25) 10.182 9.765 (4.10%) (5) 25,090.2 244,996
Qualified XI 8.779 9.785 11.46% (10) 583.1 5,705
Qualified XII (0.45) 9.231 9.567 3.64% (12) 61.4 587
Qualified XII (0.50) 8.967 9.815 9.46% (11) 561.5 5,512
Qualified XII (0.75) 9.600 9.550 (0.52%) (8) 7.1 68
Qualified XII (0.80) 10.043 9.795 (2.47%) (6) 45,800.6 448,617
Qualified XII (0.85) 9.580 9.792 2.21% (8) 8,719.1 85,374
Qualified XII (0.95) 10.103 9.785 (3.15%) (5) 1,246.5 12,197
Qualified XII (1.00) 10.061 9.781 (2.78%) (5) 14,897.8 145,723
Qualified XII (1.05) 8.935 9.778 9.43% (8) 182.1 1,781
Qualified XII (1.15) 9.763 9.771 0.08% (8) 166.5 1,627
Qualified XII (1.20) 9.973 9.768 (2.06%) (6) 122.9 1,201
Qualified XIII 10.183 9.785 (3.91%) (5) 7,766.6 75,995
Qualified XV 9.974 9.785 (1.89%) (8) 168.2 1,646
Qualified XVI 9.737 9.748 0.11% (6) 1,095.3 10,677
Qualified XVIII 10.021 9.765 (2.55%) (6) 2,121.1 20,710
- --------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP:
Qualified III 13.491 14.248 5.61% 95,526.3 1,361,074
Qualified V 13.439 14.171 5.45% 536.8 7,607
Qualified VI 13.491 14.248 5.61% 1,971,280.9 28,087,126
Qualified X (1.15) 13.583 14.360 5.72% 76,396.2 1,097,045
Qualified X (1.25) 13.550 14.310 5.61% 507,368.3 7,260,552
Qualified XI 13.571 14.375 5.92% 63,385.3 911,193
Qualified XII (0.40) 12.598 13.111 4.07% (11) 19,291.3 252,937
Qualified XII (0.50) 10.115 10.293 1.76% (6) 165.1 1,699
Qualified XII (0.75) 9.977 10.054 0.77% (6) 21,150.2 212,634
Qualified XII (0.80) 10.359 10.423 0.62% (5) 418,989.2 4,367,015
Qualified XII (0.85) 12.497 13.136 5.11% (1) 61,042.9 801,884
Qualified XII (0.90) 10.390 10.351 (0.38%) (5) 37.0 383
Qualified XII (0.95) 12.369 13.102 5.93% 55,493.5 727,061
Qualified XII (1.00) 12.358 13.084 5.87% 190,406.2 2,491,362
Qualified XII (1.05) 12.348 13.067 5.82% 62,452.8 816,080
Qualified XII (1.10) 12.338 13.050 5.77% 3,369.4 43,971
Qualified XII (1.15) 12.328 13.033 5.72% 23,052.4 300,435
</TABLE>
S-13
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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 Legacy VP (continued):
Qualified XII (1.20) $12.606 $13.015 3.24% (2) 61,972.6 $806,604
Qualified XII (1.25) 12.308 12.998 5.61% 5,866.3 76,253
Qualified XII (1.30) 12.298 12.981 5.55% 30,754.8 399,233
Qualified XII (1.50) 12.257 12.913 5.35% 14,096.9 182,030
Qualified XIII 13.557 14.361 5.93% 17,755.5 254,980
Qualified XV 13.534 14.336 5.93% 80,906.6 1,159,876
Qualified XVI 13.467 14.187 5.35% 32,088.1 455,223
Qualified XVII 13.518 14.327 5.98% 10,683.7 153,062
Qualified XVIII 13.577 14.389 5.98% 58,579.8 842,907
Annuity contracts in payment period 261,063
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP:
Qualified I 41.763 43.523 4.21% 31,408.3 1,366,973
Qualified III 41.174 42.883 4.15% 564,537.2 24,209,040
Qualified V 11.888 12.362 3.99% 16,631.9 205,599
Qualified VI 11.951 12.447 4.15% 10,102,496.1 125,745,345
Qualified VII 11.867 12.367 4.21% 349,707.5 4,324,917
Qualified VIII 11.509 11.986 4.14% 3,278.4 39,294
Qualified IX 11.827 12.349 4.41% 1,816.8 22,435
Qualified X (1.15) 12.002 12.512 4.25% 190,680.2 2,385,820
Qualified X (1.25) 11.951 12.447 4.15% 2,329,194.7 28,991,388
Qualified XI 12.022 12.558 4.46% 230,562.1 2,895,449
Qualified XII (0.40) 11.148 11.225 0.69% (11) 107,235.3 1,203,719
Qualified XII (0.50) 10.050 10.399 3.47% (4) 34,355.4 357,246
Qualified XII (0.75) 10.022 10.283 2.60% (6) 26,809.9 275,699
Qualified XII (0.80) 10.136 10.414 2.74% (5) 1,574,453.7 16,396,164
Qualified XII (0.85) 10.799 11.246 4.14% (1) 396,668.8 4,461,110
Qualified XII (0.90) 10.297 10.381 0.82% (10) 1,235.3 12,824
Qualified XII (0.95) 10.738 11.217 4.46% 127,185.5 1,426,606
Qualified XII (1.00) 10.729 11.202 4.41% 1,039,908.8 11,649,013
Qualified XII (1.05) 10.720 11.187 4.36% 43,460.6 486,200
Qualified XII (1.10) 10.711 11.172 4.30% 6,783.6 75,790
Qualified XII (1.15) 10.702 11.158 4.26% 76,593.5 854,604
Qualified XII (1.20) 10.761 11.143 3.55% (2) 15,146.8 168,779
Qualified XII (1.25) 10.746 11.128 3.55% (2) 6,648.9 73,991
Qualified XII (1.30) 10.676 11.114 4.10% 13,000.2 144,478
Qualified XII (1.40) 10.821 11.084 2.43% (5) 160.5 1,779
Qualified XII (1.50) 10.641 11.055 3.89% 13,218.2 146,126
Qualified XIII 12.009 12.545 4.46% 132,737.2 1,665,127
Qualified XV 11.989 12.524 4.46% 300,194.8 3,759,548
Qualified XVI 11.929 12.393 3.89% 123,429.0 1,529,681
Qualified XVII 11.951 12.447 4.15% 553,914.9 6,894,555
Qualified XVIII 11.951 12.447 4.15% 853,247.4 10,620,334
Qualified XIX 41.763 43.523 4.21% 29,827.3 1,298,164
Qualified XX 41.174 42.883 4.15% 120,538.6 5,169,057
Annuity contracts in payment period 83,117
- -------------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP:
Qualified VI 10.126 8.873 (12.37%) (5) 90,949.1 806,970
Qualified VIII 10.031 8.872 (11.55%) (7) 182.8 1,622
Qualified X (1.25) 9.904 8.873 (10.41%) (6) 12,789.0 113,474
Qualified XI 8.634 8.891 2.98% (10) 672.8 5,982
Qualified XII (0.40) 8.679 8.898 2.52% (11) 1,098.6 9,775
Qualified XII (0.50) 9.655 8.919 (7.62%) (6) 649.4 5,792
Qualified XII (0.75) 9.792 8.944 (8.66%) (6) 8.6 77
Qualified XII (0.80) 10.041 8.900 (11.36%) (7) 27,224.5 242,309
Qualified XII (0.85) 10.041 8.897 (11.39%) (7) 397.9 3,540
Qualified XII (0.95) 10.053 8.891 (11.56%) (5) 15,245.1 135,547
</TABLE>
S-14
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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 (continued):
Qualified XII (1.00) $9.214 $8.888 (3.54%) (9) 6,500.0 $57,773
Qualified XII (1.05) 9.899 8.885 (10.24%) (6) 131.2 1,166
Qualified XII (1.10) 9.159 8.882 (3.02%) (9) 15.5 138
Qualified XII (1.15) 10.034 8.879 (11.51%) (7) 2,845.4 25,264
Qualified XII (1.20) 9.633 8.876 (7.86%) (6) 371.7 3,299
Qualified XIII 10.127 8.891 (12.20%) (5) 11,639.0 103,484
Qualified XV 10.024 8.891 (11.30%) (5) 1,414.9 12,580
Qualified XVI 8.524 8.857 3.91% (9) 1,342.4 11,890
Qualified XVIII 9.907 8.873 (10.44%) (6) 2,297.4 20,384
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Small Company VP:
Qualified V 13.186 13.595 3.10% (1) 11.6 158
Qualified VI 13.654 13.633 (0.15%) 1,696,713.8 23,131,181
Qualified VIII 13.346 13.631 2.14% (1) 105.6 1,440
Qualified X (1.15) 13.664 13.657 (0.05%) 20,254.4 276,606
Qualified X (1.25) 13.654 13.633 (0.15%) 208,453.6 2,841,833
Qualified XI 13.684 13.704 0.15% 61,244.3 839,286
Qualified XII (0.40) 12.820 13.714 6.97% (11) 15,613.9 214,129
Qualified XII (0.45) 8.583 9.176 6.91% (12) 317.8 2,916
Qualified XII (0.50) 10.719 9.312 (13.13%) (4) 7,540.9 70,221
Qualified XII (0.75) 9.812 9.159 (6.66%) (6) 13,042.9 119,462
Qualified XII (0.80) 10.578 9.764 (7.70%) (5) 1,165,744.5 11,382,850
Qualified XII (0.85) 13.558 13.728 1.25% (1) 25,298.1 347,283
Qualified XII (0.90) 10.939 9.513 (13.04%) (4) 2,603.8 24,770
Qualified XII (0.95) 13.684 13.704 0.15% 44,944.2 615,911
Qualified XII (1.00) 14.234 13.692 (3.81%) (2) 404,068.0 5,532,521
Qualified XII (1.05) 13.674 13.680 0.04% 5,235.3 71,620
Qualified XII (1.10) 13.669 13.668 (0.01%) 6,323.0 86,425
Qualified XII (1.15) 13.664 13.657 (0.05%) 9,141.2 124,838
Qualified XII (1.20) 14.380 13.645 (5.11%) (2) 24,930.3 340,167
Qualified XII (1.25) 13.203 13.633 3.26% (1) 7,547.6 102,896
Qualified XII (1.40) 11.872 13.598 14.54% (9) 71.7 975
Qualified XII (1.50) 13.629 13.574 (0.40%) 3,580.5 48,602
Qualified XIII 13.684 13.704 0.15% 52,935.6 725,425
Qualified XV 13.684 13.704 0.15% 49,514.4 678,541
Qualified XVI 13.629 13.574 (0.40%) 21,070.1 286,008
Qualified XVII 13.654 13.633 (0.15%) 4,296.5 58,574
Qualified XVIII 15.646 13.708 (12.39%) (5) 3,089.3 42,347
Annuity contracts in payment period 9,901
- ---------------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP:
Qualified III 11.472 12.088 5.37% (5) 33,957.0 410,457
Qualified V 14.922 15.985 7.12% (4) 116.2 1,857
Qualified VI 13.261 16.030 20.88% 1,079,290.5 17,300,643
Qualified VIII 14.070 16.028 13.92% (2) 170.3 2,730
Qualified X (1.25) 13.261 16.030 20.88% 112,738.5 1,807,157
Qualified XI 13.290 16.113 21.24% 54,627.0 880,205
Qualified XII (0.40) 13.986 16.125 15.29% (11) 11,799.4 190,264
Qualified XII (0.50) 10.508 11.369 8.19% (4) 992.7 11,286
Qualified XII (0.75) 9.921 10.620 7.05% (6) 14,488.0 153,864
Qualified XII (0.80) 10.972 11.692 6.56% (5) 350,825.7 4,101,946
Qualified XII (0.85) 13.404 16.141 20.42% (1) 15,014.4 242,346
Qualified XII (0.90) 10.515 11.462 9.01% (3) 3,526.4 40,419
Qualified XII (0.95) 13.290 16.113 21.24% 29,112.3 469,087
Qualified XII (1.00) 12.765 16.099 26.12% (1) 98,683.4 1,588,714
Qualified XII (1.05) 13.281 16.085 21.11% 3,647.9 58,677
Qualified XII (1.10) 13.276 16.071 21.05% 1,219.4 19,598
</TABLE>
S-15
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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 Value Opportunity VP (continued):
Qualified XII (1.15) $13.271 $16.057 20.99% 4,025.1 $64,633
Qualified XII (1.20) 14.033 16.044 14.33% (2) 12,115.1 194,368
Qualified XII (1.25) 12.844 16.030 24.81% (1) 1,234.3 19,786
Qualified XII (1.30) 15.827 16.016 1.19% (12) 87.7 1,405
Qualified XII (1.40) 15.181 15.988 5.32% (5) 39.1 625
Qualified XII (1.50) 13.237 15.960 20.57% 2,432.4 38,822
Qualified XIII 13.290 16.113 21.24% 19,971.3 321,798
Qualified XV 13.290 16.113 21.24% 32,611.7 525,472
Qualified XVI 13.237 15.960 20.57% 15,870.2 253,296
Qualified XVII 12.899 16.030 24.27% (1) 5,260.5 84,325
Qualified XVIII 16.118 16.118 0.00% (12) 84.5 1,359
- ----------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio:
Qualified III 23.675 27.186 14.83% 917,567.2 24,944,800
Qualified V 18.234 20.904 14.64% 1,516.9 31,708
Qualified VI 17.840 20.485 14.83% 1,306,652.4 26,767,345
Qualified VIII 16.207 18.609 14.82% 6,057.5 112,723
Qualified X (1.25) 9.839 10.500 6.72% (6) 17,067.7 179,203
Qualified XI 17.946 20.668 15.17% 71,154.2 1,470,649
Qualified XII (0.40) 13.635 14.976 9.83% (11) 38,218.1 572,357
Qualified XII (0.45) 10.217 10.714 4.86% (12) 552.8 5,922
Qualified XII (0.50) 10.377 10.966 5.68% (4) 50,868.4 557,814
Qualified XII (0.75) 10.081 10.694 6.08% (6) 9,542.9 102,055
Qualified XII (0.80) 10.492 11.254 7.26% (5) 91,332.8 1,027,864
Qualified XII (0.85) 13.124 15.005 14.33% (1) 132,604.9 1,989,689
Qualified XII (0.95) 12.994 14.965 15.17% 95,020.1 1,421,979
Qualified XII (1.00) 12.983 14.945 15.11% 108,344.1 1,619,237
Qualified XII (1.05) 12.972 14.926 15.06% 25,821.6 385,403
Qualified XII (1.10) 13.068 14.906 14.06% (1) 1,048.3 15,626
Qualified XII (1.15) 12.951 14.886 14.94% 48,552.7 722,766
Qualified XII (1.20) 13.354 14.867 11.33% (2) 2,926.4 43,505
Qualified XII (1.25) 12.930 14.847 14.83% 50.5 750
Qualified XII (1.30) 12.919 14.827 14.77% 13.0 192
Qualified XII (1.50) 12.877 14.749 14.54% 1,708.5 25,199
Qualified XIII 17.926 20.646 15.17% 21,808.2 450,252
Qualified XV 17.896 20.612 15.18% 37,944.0 782,091
Qualified XVI 17.808 20.397 14.54% 24,487.0 499,461
Qualified XVII 17.840 20.485 14.83% 3,612.3 74,000
Qualified XVIII 10.094 10.500 4.02% (7) 9,411.8 98,817
- ----------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products
Fund:
Equity-Income Portfolio:
Qualified III 16.587 18.285 10.24% 2,533,673.2 46,328,715
Qualified V 15.723 17.305 10.06% 488.1 8,446
Qualified VI 15.837 17.459 10.24% 6,281,076.6 109,662,239
Qualified VIII 15.781 17.395 10.23% 4,737.8 82,416
Qualified X (1.15) 19.890 21.948 10.35% 114,565.1 2,514,522
Qualified X (1.25) 19.818 21.848 10.24% 1,332,062.6 29,102,669
Qualified XI 15.931 17.615 10.57% 239,213.5 4,213,775
Qualified XII (0.40) 14.267 15.192 6.48% (11) 54,319.8 825,201
Qualified XII (0.45) 9.516 9.968 4.75% (12) 519.2 5,176
Qualified XII (0.50) 10.522 10.363 (1.51%) (4) 6,791.1 70,376
Qualified XII (0.75) 9.914 9.950 0.36% (6) 67,227.1 668,920
Qualified XII (0.80) 10.873 10.850 (0.21%) (5) 846,659.8 9,186,377
Qualified XII (0.85) 13.708 15.220 11.03% (1) 306,098.9 4,658,977
Qualified XII (0.90) 9.265 10.671 15.18% (9) 20.0 213
Qualified XII (0.95) 13.729 15.180 10.57% 147,150.0 2,233,784
Qualified XII (1.00) 13.718 15.160 10.51% 409,327.3 6,205,534
</TABLE>
S-16
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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>
Equity-Income Portfolio (continued):
Qualified XII (1.05) $13.706 $15.140 10.46% 81,061.5 $1,227,296
Qualified XII (1.10) 13.695 15.120 10.41% 4,490.0 67,891
Qualified XII (1.15) 13.684 15.100 10.35% 62,313.0 940,950
Qualified XII (1.20) 14.168 15.080 6.44% (2) 13,583.5 204,846
Qualified XII (1.25) 13.661 15.061 10.25% 8,740.6 131,639
Qualified XII (1.30) 13.650 15.041 10.19% 3,611.9 54,325
Qualified XII (1.40) 15.124 15.001 (0.81%) (5) 2,077.2 31,160
Qualified XII (1.50) 13.606 14.961 9.96% 9,413.6 140,841
Qualified XIII 15.914 17.596 10.57% 74,067.2 1,303,285
Qualified XV 15.887 17.567 10.57% 68,970.1 1,211,581
Qualified XVI 15.808 17.384 9.97% 222,658.2 3,870,640
Qualified XVII 15.837 17.459 10.24% 44,812.1 782,380
Qualified XVIII 19.818 21.848 10.24% 21,380.3 467,113
- -----------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Qualified I 13.142 18.115 37.84% 448.8 8,131
Qualified III 14.087 19.406 37.76% 71.9 1,395
Qualified V 14.021 19.285 37.54% 1,160.1 22,372
Qualified VI 13.904 19.155 37.77% 7,144,437.7 136,848,861
Qualified VIII 14.073 19.385 37.75% 5,391.9 104,524
Qualified X (1.15) 19.409 26.764 37.89% 76,868.5 2,057,310
Qualified X (1.25) 19.339 26.641 37.76% 1,278,104.0 34,049,762
Qualified XI 13.987 19.326 38.17% 292,984.6 5,662,140
Qualified XII (0.40) 15.510 17.525 12.99% (11) 128,517.6 2,252,224
Qualified XII (0.50) 10.651 12.779 19.98% (4) 18,614.4 237,873
Qualified XII (0.75) 9.956 12.150 22.04% (6) 63,727.2 774,299
Qualified XII (0.80) 10.887 13.307 22.23% (5) 981,477.1 13,060,689
Qualified XII (0.85) 12.857 17.558 36.56% (1) 399,819.9 7,020,059
Qualified XII (0.90) 10.757 12.978 20.65% (4) 1,343.2 17,433
Qualified XII (0.95) 12.674 17.512 38.17% 165,194.2 2,892,838
Qualified XII (1.00) 12.663 17.489 38.11% 581,798.3 10,174,875
Qualified XII (1.05) 12.653 17.466 38.04% 65,095.3 1,136,925
Qualified XII (1.10) 12.643 17.443 37.97% 13,477.5 235,081
Qualified XII (1.15) 12.632 17.420 37.90% 70,232.0 1,223,407
Qualified XII (1.20) 13.438 17.397 29.46% (2) 58,305.3 1,014,312
Qualified XII (1.25) 12.612 17.374 37.76% 9,906.3 172,109
Qualified XII (1.30) 12.601 17.351 37.70% 2,635.9 45,735
Qualified XII (1.40) 14.386 17.305 20.29% (5) 4,116.0 71,227
Qualified XII (1.50) 12.560 17.259 37.41% 12,955.9 223,609
Qualified XIII 13.972 19.305 38.17% 100,561.3 1,941,310
Qualified XV 13.948 19.273 38.18% 176,188.4 3,395,613
Qualified XVI 13.879 19.072 37.42% 228,968.9 4,366,889
Qualified XVII 13.904 19.155 37.77% 41,575.2 796,355
Qualified XVIII 19.339 26.641 37.76% 22,564.9 601,146
- -----------------------------------------------------------------------------------------------------------------
High Income Portfolio:
Qualified III 9.995 9.023 (9.72%) (5) 178,600.9 1,611,556
- -----------------------------------------------------------------------------------------------------------------
Overseas Portfolio:
Qualified V 12.222 13.587 11.17% 33.6 457
Qualified VI 12.269 13.662 11.35% 651,566.3 8,901,467
Qualified VIII 12.267 13.658 11.34% 243.9 3,331
Qualified X (1.15) 12.686 14.140 11.46% 15,875.5 224,473
Qualified X (1.25) 12.640 14.074 11.34% 194,687.2 2,740,125
Qualified XI 12.342 13.784 11.68% 26,108.2 359,869
Qualified XII (0.40) 12.178 13.170 8.15% (11) 10,817.1 142,461
Qualified XII (0.50) 10.774 10.183 (5.49%) (4) 251.0 2,556
Qualified XII (0.75) 9.912 9.427 (4.89%) (6) 4,502.1 42,443
Qualified XII (0.80) 11.184 10.530 (5.85%) (5) 47,503.2 500,227
</TABLE>
S-17
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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>
Overseas Portfolio (continued):
Qualified XII (0.85) $12.182 $13.195 8.32% (1) 13,936.7 $183,897
Qualified XII (0.95) 11.783 13.160 11.69% 9,216.6 121,293
Qualified XII (1.00) 11.774 13.143 11.63% 44,182.9 580,693
Qualified XII (1.05) 11.764 13.126 11.58% 9,112.9 119,612
Qualified XII (1.10) 11.754 13.108 11.52% 1,859.7 24,378
Qualified XII (1.15) 11.745 13.091 11.46% 9,778.0 128,004
Qualified XII (1.20) 12.430 13.074 5.18% (2) 5,796.8 75,785
Qualified XII (1.25) 11.726 13.056 11.34% 687.9 8,982
Qualified XII (1.30) 11.716 13.039 11.29% 408.4 5,325
Qualified XII (1.40) 13.828 13.005 (5.95%) (5) 112.7 1,466
Qualified XII (1.50) 11.678 12.971 11.07% 467.9 6,069
Qualified XIII 12.328 13.769 11.69% 14,164.7 195,030
Qualified XV 12.308 13.746 11.68% 17,178.0 236,126
Qualified XVI 12.247 13.603 11.07% 11,522.9 156,741
Qualified XVII 12.269 13.662 11.35% 1,816.0 24,809
Qualified XVIII 12.640 14.074 11.34% 2,059.3 28,983
- ----------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance
Products Fund II:
Asset Manager Portfolio:
Qualified III 14.715 16.719 13.62% 1,596,943.4 26,699,659
- ----------------------------------------------------------------------------------------------------------------
Contrafund Portfolio:
Qualified III 17.276 22.177 28.37% 3,333,319.6 73,922,966
Qualified V 15.315 19.627 28.16% 1,261.0 24,749
Qualified VI 15.270 19.601 28.36% 9,575,607.6 187,691,926
Qualified VIII 15.371 19.729 28.35% 3,321.4 65,530
Qualified X (1.15) 17.201 22.103 28.50% 19,136.2 422,961
Qualified X (1.25) 17.156 22.023 28.37% 834,976.3 18,388,472
Qualified XI 15.360 19.776 28.75% 209,707.3 4,147,194
Qualified XII (0.40) 15.219 17.813 17.04% (11) 197,022.1 3,509,529
Qualified XII (0.45) 10.553 11.475 8.74% (12) 1,753.8 20,125
Qualified XII (0.50) 10.673 11.985 12.29% (4) 8,618.1 103,285
Qualified XII (0.75) 9.912 11.454 15.56% (6) 78,074.5 894,250
Qualified XII (0.80) 10.937 12.589 15.10% (5) 2,102,804.7 26,471,967
Qualified XII (0.85) 13.824 17.847 29.10% (1) 217,720.3 3,885,627
Qualified XII (0.90) 10.737 12.293 14.49% (3) 1,037.9 12,758
Qualified XII (0.95) 13.825 17.800 28.75% 254,733.6 4,534,200
Qualified XII (1.00) 13.814 17.776 28.68% 1,138,179.9 20,232,652
Qualified XII (1.05) 13.802 17.753 28.63% 90,949.6 1,614,615
Qualified XII (1.10) 13.791 17.729 28.55% 5,767.6 102,257
Qualified XII (1.15) 13.780 17.706 28.49% 85,590.6 1,515,471
Qualified XII (1.20) 13.768 17.683 28.44% 29,528.3 522,139
Qualified XII (1.25) 13.757 17.659 28.36% 11,736.6 207,260
Qualified XII (1.30) 13.746 17.636 28.30% 10,680.8 188,366
Qualified XII (1.40) 15.738 17.590 11.77% (4) 1,990.2 35,007
Qualified XII (1.50) 13.701 17.543 28.04% 11,751.1 206,153
Qualified XIII 15.343 19.755 28.76% 176,552.7 3,487,733
Qualified XV 15.318 19.722 28.75% 187,525.3 3,698,342
Qualified XVI 15.242 19.516 28.04% 157,444.1 3,072,751
Qualified XVII 15.270 19.601 28.36% 31,455.3 616,556
Qualified XVIII 17.156 22.023 28.37% 22,090.1 486,485
- ----------------------------------------------------------------------------------------------------------------
Index 500 Portfolio:
Qualified III 18.662 23.650 26.73% 3,947,186.8 93,352,318
- ----------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio:
Qualified III 18.174 24.098 32.60% 2,142,129.7 51,620,505
Qualified V 15.720 20.810 32.38% 2,389.5 49,726
Qualified VI 15.801 20.951 32.59% 7,536,062.4 157,891,352
</TABLE>
S-18
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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):
Qualified VIII $15.798 $20.945 32.58% 5,606.5 $117,425
Qualified X (1.15) 15.295 20.300 32.72% 15,875.8 322,277
Qualified X (1.25) 15.254 20.226 32.59% 565,274.8 11,433,071
Qualified XI 15.895 21.139 32.99% 283,820.6 5,999,598
Qualified XII (0.40) 11.663 14.125 21.11% (11) 198,263.9 2,800,434
Qualified XII (0.50) 10.570 12.541 18.65% (4) 134,432.0 1,685,956
Qualified XII (0.75) 9.887 12.109 22.47% (6) 117,102.9 1,418,013
Qualified XII (0.80) 10.647 13.056 22.63% (5) 1,605,725.7 20,964,683
Qualified XII (0.85) 10.427 14.152 35.72% (1) 320,159.2 4,530,814
Qualified XII (0.90) 10.787 12.830 18.94% (4) 353.1 4,531
Qualified XII (0.95) 10.613 14.114 32.99% 375,663.3 5,302,265
Qualified XII (1.00) 10.604 14.096 32.93% 997,760.1 14,064,209
Qualified XII (1.05) 10.596 14.077 32.85% 114,249.2 1,608,306
Qualified XII (1.10) 10.587 14.059 32.79% 3,031.6 42,621
Qualified XII (1.15) 10.578 14.040 32.73% 103,123.2 1,447,854
Qualified XII (1.20) 10.956 14.022 27.98% (2) 43,050.2 603,629
Qualified XII (1.25) 10.561 14.003 32.59% 4,812.4 67,388
Qualified XII (1.30) 10.552 13.985 32.53% 3,585.6 50,142
Qualified XII (1.40) 11.943 13.948 16.79% (4) 1,441.3 20,102
Qualified XII (1.50) 10.518 13.911 32.26% 13,650.3 189,886
Qualified XIII 15.878 21.116 32.99% 120,002.0 2,533,930
Qualified XV 15.851 21.081 32.99% 212,741.1 4,484,705
Qualified XVI 15.773 20.861 32.26% 100,074.7 2,087,661
Qualified XVII 15.801 20.951 32.59% 32,181.5 674,250
Qualified XVIII 15.254 20.226 32.59% 10,568.2 213,749
- ----------------------------------------------------------------------------------------------------------------------
Balanced Portfolio:
Qualified III 15.016 19.914 32.62% 3,698.2 73,645
Qualified V 14.954 19.800 32.41% 426.9 8,452
Qualified VI 15.012 19.908 32.61% 3,192,160.0 63,550,099
Qualified VIII 15.009 19.903 32.61% 3,145.3 62,600
Qualified X (1.15) 15.616 20.731 32.75% 22,910.9 474,964
Qualified X (1.25) 15.576 20.657 32.62% 447,035.2 9,234,497
Qualified XI 15.100 20.086 33.02% 105,755.4 2,124,205
Qualified XII (0.40) 15.614 17.878 14.50% (11) 39,424.1 704,830
Qualified XII (0.45) 10.945 11.816 7.96% (12) 612.1 7,232
Qualified XII (0.50) 10.615 12.415 16.96% (4) 30,062.0 373,209
Qualified XII (0.75) 9.856 11.794 19.66% (6) 26,591.6 313,619
Qualified XII (0.80) 10.741 12.741 18.62% (5) 425,124.8 5,416,639
Qualified XII (0.85) 13.744 17.912 30.33% (1) 47,668.3 853,846
Qualified XII (0.90) 10.570 12.490 18.16% (4) 478.6 5,977
Qualified XII (0.95) 13.431 17.865 33.01% 81,982.5 1,464,616
Qualified XII (1.00) 13.420 17.841 32.94% 184,550.3 3,292,638
Qualified XII (1.05) 13.409 17.818 32.88% 37,433.9 666,991
Qualified XII (1.10) 13.398 17.794 32.81% 4,709.2 83,797
Qualified XII (1.15) 13.387 17.771 32.75% 36,442.2 647,610
Qualified XII (1.20) 14.246 17.747 24.58% (2) 21,104.5 374,551
Qualified XII (1.25) 13.370 17.724 32.57% (1) 797.9 14,141
Qualified XII (1.30) 13.354 17.701 32.55% 668.1 11,826
Qualified XII (1.40) 15.102 17.654 16.90% (5) 564.4 9,964
Qualified XII (1.50) 13.310 17.607 32.28% 20,319.3 357,771
Qualified XIII 15.084 20.064 33.02% 45,434.7 911,610
Qualified XV 15.059 20.031 33.02% 89,095.1 1,784,651
Qualified XVI 14.984 19.822 32.29% 53,979.8 1,070,002
Qualified XVII 15.012 19.908 32.61% 23,034.8 458,581
Qualified XVIII 15.576 20.657 32.62% 25,387.3 524,429
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
S-19
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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>
Flexible Income Portfolio:
Qualified III $14.430 $15.548 7.75% 8,966.5 $139,412
Qualified V 14.299 15.383 7.58% 24.7 380
Qualified VI 14.373 15.487 7.75% 1,213,451.1 18,792,980
Qualified VIII 14.370 15.482 7.74% 283.5 4,389
Qualified X (1.25) 10.054 10.419 3.63% (5) 54,517.2 568,008
Qualified XI 14.458 15.626 8.08% 57,101.4 892,246
Qualified XII (0.40) 12.743 13.053 2.43% (11) 21,373.8 278,992
Qualified XII (0.45) 10.457 10.446 (0.11%) (12) 82.2 859
Qualified XII (0.50) 10.186 10.640 4.46% (4) 13,363.7 142,197
Qualified XII (0.75) 10.062 10.427 3.63% (6) 6,947.4 72,440
Qualified XII (0.80) 10.210 10.643 4.24% (5) 367,677.1 3,913,004
Qualified XII (0.85) 12.306 13.078 6.27% (1) 25,566.1 334,351
Qualified XII (0.90) 10.232 10.638 3.97% (4) 392.7 4,178
Qualified XII (0.95) 12.069 13.043 8.07% 36,739.5 479,207
Qualified XII (1.00) 12.059 13.026 8.02% 414,150.6 5,394,811
Qualified XII (1.05) 12.049 13.009 7.97% 13,507.0 175,712
Qualified XII (1.10) 12.039 12.992 7.92% 2,779.8 36,115
Qualified XII (1.15) 12.029 12.975 7.86% 8,868.9 115,071
Qualified XII (1.20) 12.212 12.958 6.11% (2) 13,990.2 181,278
Qualified XII (1.25) 12.112 12.940 6.84% (1) 126.4 1,636
Qualified XII (1.30) 12.225 12.923 5.71% (3) 8,960.0 115,794
Qualified XII (1.40) 12.375 12.889 4.15% (5) 30.2 389
Qualified XII (1.50) 11.960 12.855 7.48% 247.6 3,183
Qualified XIII 14.442 15.609 8.08% 10,857.1 169,464
Qualified XV 14.418 15.583 8.08% 20,316.8 316,591
Qualified XVI 14.347 15.420 7.48% 14,524.0 223,965
Qualified XVII 14.373 15.487 7.75% 9,336.5 144,596
- --------------------------------------------------------------------------------------------------------------------
Growth Portfolio:
Qualified III 16.816 22.529 33.97% 1,354,047.1 30,505,388
Qualified V 15.368 20.556 33.76% 1,053.4 21,653
Qualified VI 15.414 20.651 33.98% 2,995,268.0 61,855,860
Qualified VIII 15.424 20.663 33.97% 1,852.6 38,279
Qualified X (1.15) 16.528 22.165 34.11% 33,675.9 746,443
Qualified X (1.25) 16.485 22.086 33.98% 465,445.6 10,279,993
Qualified XI 15.505 20.836 34.38% 128,843.5 2,684,540
Qualified XII (0.40) 14.790 17.807 20.40% (11) 73,901.1 1,315,941
Qualified XII (0.50) 10.286 12.391 20.46% (4) 7,784.6 96,459
Qualified XII (0.75) 9.810 11.666 18.92% (6) 41,103.5 479,534
Qualified XII (0.80) 10.918 12.836 17.57% (5) 434,912.8 5,582,684
Qualified XII (0.85) 13.512 17.841 32.04% (1) 446,603.2 7,967,771
Qualified XII (0.90) 10.569 12.464 17.93% (6) 127.7 1,591
Qualified XII (0.95) 13.242 17.794 34.38% 53,447.5 951,030
Qualified XII (1.00) 13.231 17.770 34.31% 220,151.3 3,912,152
Qualified XII (1.05) 13.220 17.747 34.24% 45,804.1 812,878
Qualified XII (1.10) 13.209 17.723 34.17% 2,555.4 45,291
Qualified XII (1.15) 13.198 17.700 34.11% 39,188.1 693,632
Qualified XII (1.20) 14.218 17.677 24.33% (2) 19,753.5 349,177
Qualified XII (1.25) 13.177 17.653 33.97% 5,365.3 94,715
Qualified XII (1.30) 13.166 17.630 33.91% 911.2 16,065
Qualified XII (1.40) 15.123 17.584 16.27% (5) 2,368.3 41,643
Qualified XII (1.50) 13.123 17.537 33.64% 8,841.6 155,057
Qualified XIII 15.489 20.813 34.37% 47,156.5 981,469
Qualified XV 15.463 20.778 34.37% 61,354.9 1,274,858
Qualified XVI 15.386 20.562 33.64% 56,524.9 1,162,269
Qualified XVII 15.414 20.651 33.98% 7,087.9 146,374
Qualified XVIII 16.485 22.086 33.98% 21,941.8 484,614
Annuity contracts in payment period 235,492
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
S-20
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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>
Worldwide Growth Portfolio:
Qualified III $18.690 $23.797 27.32% 4,687,166.8 $111,538,596
Qualified V 16.782 21.334 27.12% 2,948.4 62,899
Qualified VI 16.720 21.288 27.32% 14,519,619.8 309,094,974
Qualified VIII 16.670 21.223 27.31% 6,944.9 147,391
Qualified X (1.15) 18.828 23.996 27.45% 74,103.7 1,778,187
Qualified X (1.25) 18.779 23.910 27.32% 1,360,741.2 32,534,708
Qualified XI 16.819 21.478 27.70% 655,880.5 14,087,149
Qualified XII (0.40) 15.344 17.582 14.59% (11) 383,490.2 6,742,350
Qualified XII (0.45) 9.630 10.235 6.28% (12) 1,185.6 12,135
Qualified XII (0.50) 10.980 11.485 4.60% (4) 37,288.1 428,241
Qualified XII (0.75) 9.953 10.217 2.65% (6) 167,605.9 1,712,362
Qualified XII (0.80) 11.798 12.009 1.79% (5) 4,480,347.5 53,804,310
Qualified XII (0.85) 14.300 17.615 23.18% (1) 710,850.5 12,521,719
Qualified XII (0.90) 10.606 11.745 10.74% (3) 5,139.9 60,366
Qualified XII (0.95) 13.757 17.569 27.71% 427,855.0 7,516,824
Qualified XII (1.00) 13.746 17.545 27.64% 2,151,201.8 37,743,896
Qualified XII (1.05) 13.735 17.522 27.57% 202,767.8 3,552,963
Qualified XII (1.10) 13.724 17.499 27.51% 14,917.9 261,052
Qualified XII (1.15) 13.712 17.476 27.45% 130,325.6 2,277,589
Qualified XII (1.20) 13.701 17.453 27.38% 46,823.7 817,219
Qualified XII (1.25) 13.690 17.430 27.32% 10,441.4 181,995
Qualified XII (1.30) 13.679 17.407 27.25% 6,473.0 112,676
Qualified XII (1.40) 16.231 17.361 6.96% (4) 648.5 11,260
Qualified XII (1.50) 13.634 17.315 27.00% 23,084.7 399,722
Qualified XIII 16.800 21.455 27.71% 236,904.3 5,082,747
Qualified XV 16.773 21.419 27.70% 301,775.4 6,463,796
Qualified XVI 16.689 21.196 27.01% 182,950.6 3,877,864
Qualified XVII 16.720 21.288 27.32% 67,482.4 1,436,571
Qualified XVIII 18.779 23.910 27.32% 65,838.9 1,574,179
Annuity contracts in payment period 365,972
- ---------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund:
Qualified III 7.715 5.470 (29.10%) 745,855.7 4,094,455
- ---------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund:
Qualified III 14.403 11.433 (20.62%) 534,962.3 6,116,289
Qualified V 15.987 12.670 (20.75%) 2,110.3 26,737
Qualified VI 15.541 12.336 (20.62%) 755,983.9 9,325,791
Qualified VIII 13.472 10.693 (20.63%) 652.7 6,979
Qualified XI 15.633 12.446 (20.39%) 37,897.4 471,683
Qualified XII (0.40) 9.754 9.626 ( 1.31%) (11) 12,236.5 117,791
Qualified XII (0.75) 9.791 7.696 (21.40%) (6) 13,174.5 101,395
Qualified XII (0.80) 10.922 8.415 (22.95%) (5) 140,250.4 1,180,144
Qualified XII (0.85) 11.047 9.645 (12.69%) (1) 14,189.8 136,854
Qualified XII (0.95) 12.082 9.619 (20.39%) 51,076.6 491,310
Qualified XII (1.00) 12.072 9.606 (20.43%) 75,695.4 727,160
Qualified XII (1.05) 12.062 9.594 (20.46%) 2,960.6 28,403
Qualified XII (1.10) 8.980 9.581 6.69% (8) 31.3 300
Qualified XII (1.15) 12.042 9.568 (20.54%) 12,058.7 115,382
Qualified XII (1.20) 11.980 9.556 (20.23%) (6) 2,826.2 27,006
Qualified XII (1.25) 12.022 9.543 (20.62%) 52.7 503
Qualified XII (1.50) 11.973 9.480 (20.82%) 317.5 3,010
Qualified XIII 15.616 12.433 (20.38%) 16,413.6 204,067
Qualified XV 15.590 12.412 (20.38%) 38,283.4 475,178
Qualified XVI 15.512 12.283 (20.82%) 14,341.8 176,155
Qualified XVII 15.541 12.336 (20.62%) 745.1 9,190
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-21
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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>
MFS Funds:
Total Return Series:
Qualified III $10.182 $10.531 3.43% (5) 36,633.2 $385,767
- -------------------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Global Securities Fund:
Qualified III 10.077 10.303 2.24% (6) 20,547.5 211,700
Qualified VI 10.079 10.018 (0.61%) (5) 39,441.2 395,141
Qualified X (1.25) 9.865 10.018 1.55% (5) 11,129.0 111,496
Qualified XI 8.907 10.039 12.71% (10) 773.7 7,768
Qualified XII (0.40) 9.004 10.047 11.58% (11) 1,563.9 15,712
Qualified XII (0.50) 10.131 10.070 (0.60%) (7) 179.7 1,810
Qualified XII (0.75) 9.713 10.027 3.23% (6) 535.3 5,367
Qualified XII (0.80) 10.001 10.050 0.49% (7) 2,686.4 26,997
Qualified XII (0.85) 9.275 10.046 8.31% (8) 7,592.4 76,275
Qualified XII (0.95) 10.182 10.039 (1.40%) (7) 144.4 1,450
Qualified XII (1.00) 9.484 10.036 5.82% (8) 5,395.1 54,144
Qualified XII (1.05) 9.801 10.032 2.36% (6) 180.2 1,808
Qualified XII (1.10) 10.160 10.029 (1.29%) (7) 26.8 269
Qualified XII (1.15) 9.974 10.025 0.51% (7) 294.7 2,954
Qualified XII (1.30) 9.965 10.015 0.50% (12) 139.3 1,395
Qualified XII (1.40) 10.041 10.008 (0.33%) (7) 13.5 135
Qualified XIII 10.080 10.039 (0.41%) (5) 3,153.1 31,654
Qualified XV 10.042 10.039 (0.03%) (5) 381.8 3,833
Qualified XVI 9.728 10.001 2.81% (6) 152.2 1,522
Qualified XVII 8.115 10.018 23.45% (10) 2,464.5 24,691
- -------------------------------------------------------------------------------------------------------------------
Strategic Bond Fund:
Qualified III 10.055 9.935 (1.19%) (5) 100,555.4 999,000
Qualified VI 10.015 9.895 (1.20%) (5) 71,074.2 703,260
Qualified X (1.25) 9.988 9.895 (0.93%) (5) 13,884.9 137,388
Qualified XI 9.660 9.915 2.64% (10) 176.2 1,747
Qualified XII (0.40) 9.695 9.923 2.35% (11) 1,512.8 15,011
Qualified XII (0.45) 9.975 9.953 (0.22%) (12) 574.6 5,719
Qualified XII (0.50) 9.995 9.946 (0.49%) (5) 14.2 142
Qualified XII (0.75) 10.029 9.935 (0.94%) (7) 924.6 9,186
Qualified XII (0.80) 10.025 9.926 (0.99%) (6) 18,785.5 186,456
Qualified XII (0.85) 9.935 9.922 (0.13%) (8) 2,776.3 27,546
Qualified XII (0.95) 10.037 9.915 (1.22%) (7) 614.0 6,088
Qualified XII (1.00) 9.991 9.912 (0.79%) (5) 7,329.1 72,645
Qualified XII (1.05) 9.582 9.908 3.40% (10) 4.8 47
Qualified XII (1.10) 9.720 9.905 1.90% (9) 22.4 222
Qualified XII (1.15) 10.052 9.902 (1.49%) (7) 688.9 6,821
Qualified XII (1.20) 9.905 9.898 (0.07%) (12) 56.6 561
Qualified XII (1.50) 9.973 9.878 (0.95%) (5) 2.5 25
Qualified XIII 10.056 9.915 (1.40%) (7) 1,158.4 11,486
Qualified XV 9.992 9.915 (0.77%) (5) 5,937.8 58,874
Qualified XVI 9.666 9.878 2.19% (11) 11.1 110
Qualified XVIII 10.023 9.895 (1.28%) (6) 1,136.4 11,244
Annuity contracts in payment period 3,521
- -------------------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio:
Qualified III 15.046 19.268 28.06% 3,101,879.7 59,766,560
Qualified V 14.893 19.041 27.85% 4,324.5 82,342
Qualified VI 14.927 19.114 28.05% 11,377,408.3 217,471,707
Qualified VIII 15.638 20.023 28.04% 12,327.2 246,830
Qualified X (1.15) 14.991 19.216 28.18% 72,541.9 1,393,949
Qualified X (1.25) 14.927 19.114 28.05% 1,369,984.2 26,186,352
Qualified XI 15.015 19.285 28.44% 595,462.3 11,483,622
</TABLE>
S-22
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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>
PPI MFS Emerging Equities Portfolio (continued):
Qualified XII (0.40) $10.705 $12.776 19.35% (11) 339,956.1 $4,343,297
Qualified XII (0.45) 10.094 11.002 9.00% (12) 371.1 4,083
Qualified XII (0.50) 9.990 10.841 8.52% (4) 178,397.7 1,933,950
Qualified XII (0.75) 9.828 10.982 11.74% (6) 139,546.5 1,532,495
Qualified XII (0.80) 10.687 11.846 10.84% (5) 3,491,453.8 41,360,324
Qualified XII (0.85) 10.399 12.800 23.09% (1) 706,142.1 9,038,965
Qualified XII (0.90) 10.233 11.462 12.01% (6) 236.2 2,707
Qualified XII (0.95) 9.940 12.767 28.44% 626,638.0 8,000,073
Qualified XII (1.00) 9.932 12.750 28.37% 2,223,124.5 28,344,393
Qualified XII (1.05) 9.923 12.733 28.32% 102,952.0 1,310,884
Qualified XII (1.10) 9.915 12.716 28.25% 6,017.4 76,519
Qualified XII (1.15) 9.907 12.699 28.18% 196,772.2 2,498,884
Qualified XII (1.20) 11.093 12.683 14.33% (2) 88,260.5 1,119,370
Qualified XII (1.25) 9.891 12.666 28.06% 21,617.0 273,798
Qualified XII (1.30) 9.883 12.649 27.99% 5,461.9 69,088
Qualified XII (1.40) 11.707 12.616 7.76% (5) 928.1 11,708
Qualified XII (1.50) 9.850 12.582 27.74% 5,349.1 67,305
Qualified XIII 14.999 19.264 28.44% 289,624.8 5,579,409
Qualified XV 14.974 19.232 28.44% 398,717.2 7,668,212
Qualified XVI 14.899 19.032 27.74% 135,640.9 2,581,496
Qualified XVII 14.927 19.114 28.05% 40,139.8 767,246
Qualified XVIII 14.927 19.114 28.05% 49,217.5 940,762
Annuity contracts in payment period 27,431
- -----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio:
Qualified I 9.041 10.989 21.55% 603.1 6,627
Qualified III 11.960 14.528 21.47% 1,379,652.6 21,623,158
Qualified V 13.682 16.593 21.28% 8,235.9 136,659
Qualified VI 13.795 16.758 21.48% 8,758,122.7 146,764,601
Qualified VII 11.627 14.132 21.54% 50,979.3 720,451
Qualified VIII 11.636 14.134 21.47% 12,597.3 178,046
Qualified IX 11.436 13.926 21.77% 1,089.6 15,174
Qualified X (1.15) 13.852 16.844 21.60% 5,155.0 86,830
Qualified X (1.25) 13.795 16.758 21.48% 1,054,685.1 17,673,929
Qualified XI 13.877 16.907 21.83% 378,797.5 6,404,485
Qualified XII (0.40) 9.362 10.641 13.66% (11) 331,957.8 3,532,250
Qualified XII (0.45) 9.862 10.577 7.25% (12) 473.4 5,007
Qualified XII (0.50) 10.490 11.127 6.07% (4) 79,769.0 887,585
Qualified XII (0.75) 9.917 10.558 6.46% (6) 46,474.6 490,680
Qualified XII (0.80) 11.019 11.682 6.02% (5) 750,388.3 8,766,147
Qualified XII (0.85) 8.861 10.661 20.31% (1) 616,204.9 6,569,356
Qualified XII (0.90) 10.954 11.375 3.84% (4) 827.6 9,414
Qualified XII (0.95) 8.727 10.633 21.84% 237,867.2 2,529,201
Qualified XII (1.00) 8.720 10.619 21.78% 741,692.5 7,875,882
Qualified XII (1.05) 8.713 10.605 21.71% 40,973.9 434,517
Qualified XII (1.10) 10.008 10.591 5.83% (5) 121.2 1,283
Qualified XII (1.15) 8.698 10.577 21.60% 135,558.5 1,433,769
Qualified XII (1.20) 9.310 10.563 13.46% (2) 49,879.0 526,859
Qualified XII (1.25) 8.597 10.549 22.71% (1) 3,244.0 34,220
Qualified XII (1.30) 8.677 10.535 21.41% 5,146.2 54,215
Qualified XII (1.40) 9.977 10.507 5.31% (5) 219.8 2,309
Qualified XII (1.50) 8.649 10.479 21.16% 1,814.1 19,011
Qualified XIII 13.862 16.889 21.84% 158,866.2 2,683,093
Qualified XV 13.839 16.861 21.84% 431,603.1 7,277,219
Qualified XVI 13.770 16.685 21.17% 146,727.9 2,448,181
</TABLE>
S-23
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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>
PPI MFS Research Growth Portfolio (continued):
Qualified XVII $13.795 $16.758 21.48% 56,680.1 $949,819
Qualified XVIII 13.795 16.758 21.48% 75,738.1 1,269,184
Qualified XIX 9.041 10.989 21.55% 30,746.7 337,866
Qualified XX 11.960 14.528 21.47% 23,436.6 340,489
- ---------------------------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio:
Qualified III 23.440 29.339 25.17% 2,244,308.4 65,845,563
Qualified V 19.248 24.053 24.96% 6,631.6 159,509
Qualified VI 19.291 24.145 25.16% 2,186,996.3 52,805,949
Qualified VIII 16.585 20.756 25.15% 11,497.4 238,643
Qualified X (1.15) 9.473 10.502 10.86% (11) 12,126.4 127,350
Qualified X (1.25) 9.828 10.495 6.79% (5) 42,212.8 443,007
Qualified XI 19.405 24.361 25.54% 182,556.6 4,447,294
Qualified XII (0.40) 14.188 15.676 10.49% (11) 36,644.4 574,430
Qualified XII (0.45) 9.984 10.673 6.90% (12) 191.7 2,046
Qualified XII (0.50) 10.726 11.320 5.54% (4) 71,604.9 810,587
Qualified XII (0.75) 9.963 10.653 6.93% (6) 49,316.4 525,368
Qualified XII (0.80) 11.274 12.055 6.93% (5) 376,470.9 4,538,245
Qualified XII (0.85) 12.661 15.706 24.05% (1) 382,755.1 6,011,447
Qualified XII (0.90) 11.183 11.654 4.21% (4) 957.3 11,156
Qualified XII (0.95) 12.478 15.664 25.53% 103,316.6 1,618,377
Qualified XII (1.00) 12.467 15.644 25.48% 291,491.9 4,559,986
Qualified XII (1.05) 12.457 15.623 25.42% 25,784.2 402,826
Qualified XII (1.10) 14.846 15.602 5.09% (4) 1,487.6 23,210
Qualified XII (1.15) 12.437 15.582 25.29% 75,919.6 1,182,959
Qualified XII (1.20) 13.387 15.561 16.24% (2) 19,782.0 307,830
Qualified XII (1.25) 12.394 15.541 25.39% (1) 1,059.7 16,468
Qualified XII (1.30) 12.406 15.520 25.10% 1,073.5 16,661
Qualified XII (1.40) 14.631 15.479 5.80% (5) 45.6 706
Qualified XII (1.50) 12.365 15.438 24.85% 1,255.5 19,383
Qualified XIII 19.384 24.335 25.54% 48,710.8 1,185,364
Qualified XV 19.352 24.294 25.54% 171,101.9 4,156,785
Qualified XVI 19.256 24.041 24.85% 28,002.3 673,209
Qualified XVII 19.291 24.145 25.16% 5,459.7 131,826
Qualified XVIII 10.055 10.495 4.38% (5) 1,552.3 16,292
- ---------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio:
Qualified III 17.709 20.829 17.62% 2,962,630.7 61,707,422
Qualified V 16.782 19.707 17.43% 3,201.7 63,094
Qualified VI 16.986 19.978 17.61% 4,030,904.1 80,530,902
Qualified VIII 14.312 16.832 17.61% 21,064.0 354,542
Qualified X (1.15) 17.056 20.081 17.74% 27,591.3 554,056
Qualified X (1.25) 16.986 19.978 17.61% 467,483.6 9,339,562
Qualified XI 17.087 20.157 17.97% 273,684.1 5,516,618
Qualified XII (0.40) 12.570 13.602 8.21% (11) 168,912.2 2,297,502
Qualified XII (0.50) 10.711 10.797 0.80% (4) 113,510.7 1,225,536
Qualified XII (0.75) 10.009 9.781 (2.28%) (6) 34,687.8 339,267
Qualified XII (0.80) 11.338 11.041 (2.62%) (5) 850,743.3 9,392,885
Qualified XII (0.85) 11.868 13.628 14.83% (1) 434,053.9 5,915,156
Qualified XII (0.90) 10.020 11.029 10.07% (10) 9.8 108
Qualified XII (0.95) 11.522 13.592 17.97% 234,075.3 3,181,491
Qualified XII (1.00) 11.512 13.574 17.91% 715,388.6 9,710,570
Qualified XII (1.05) 11.503 13.556 17.85% 29,581.3 401,001
Qualified XII (1.10) 11.633 13.538 16.38% (1) 3,300.1 44,677
Qualified XII (1.15) 11.484 13.520 17.73% 88,163.2 1,191,979
Qualified XII (1.20) 12.274 13.502 10.00% (2) 13,604.4 183,691
Qualified XII (1.25) 11.465 13.485 17.62% 2,493.0 33,617
Qualified XII (1.30) 11.456 13.467 17.55% 312.5 4,208
</TABLE>
S-24
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (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>
PPI Scudder International Growth Portfolio (continued):
Qualified XII (1.40) $13.542 $13.431 (0.82%) (5) 125.4 $1,685
Qualified XII (1.50) 11.418 13.396 17.32% 3,207.5 42,967
Qualified XIII 17.068 20.135 17.97% 81,257.4 1,636,113
Qualified XV 17.040 20.102 17.97% 353,311.2 7,102,088
Qualified XVI 16.955 19.892 17.32% 45,319.7 901,506
Qualified XVII 16.986 19.978 17.61% 3,854.9 77,015
Qualified XVIII 16.986 19.978 17.61% 10,839.2 216,551
- ---------------------------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio:
Qualified III 16.608 20.929 26.02% 1,564,888.2 32,751,256
Qualified V 14.647 18.429 25.82% 1,068.6 19,693
Qualified VI 14.400 18.146 26.01% 6,541,818.7 118,710,603
Qualified VIII 14.701 18.525 26.01% 3,988.5 73,886
Qualified X (1.15) 16.172 20.400 26.14% 47,435.8 967,704
Qualified X (1.25) 16.131 20.328 26.02% 717,871.6 14,592,925
Qualified XI 14.485 18.309 26.40% 277,044.4 5,072,289
Qualified XII (0.40) 15.042 16.863 12.11% (11) 169,615.2 2,860,277
Qualified XII (0.45) 10.302 11.057 7.33% (12) 817.4 9,038
Qualified XII (0.50) 10.256 11.551 12.63% (4) 4,868.6 56,236
Qualified XII (0.75) 9.961 11.036 10.79% (6) 42,864.5 473,063
Qualified XII (0.80) 10.967 12.153 10.81% (5) 1,058,534.2 12,864,165
Qualified XII (0.85) 13.562 16.895 24.58% (1) 129,123.4 2,181,602
Qualified XII (0.90) 10.840 11.792 8.78% (4) 168.7 1,989
Qualified XII (0.95) 13.332 16.851 26.40% 197,937.5 3,335,428
Qualified XII (1.00) 13.321 16.829 26.33% 767,052.8 12,908,505
Qualified XII (1.05) 13.310 16.806 26.27% 51,411.7 864,048
Qualified XII (1.10) 14.258 16.784 17.72% (2) 2,769.4 46,482
Qualified XII (1.15) 13.288 16.762 26.14% 60,127.4 1,007,864
Qualified XII (1.20) 14.232 16.740 17.62% (2) 45,970.5 769,546
Qualified XII (1.25) 13.156 16.718 27.08% (1) 1,238.6 20,707
Qualified XII (1.30) 13.256 16.696 25.95% 2,748.4 45,888
Qualified XII (1.40) 15.190 16.652 9.62% (5) 1,524.7 25,389
Qualified XII (1.50) 13.212 16.608 25.70% 5,824.3 96,729
Qualified XIII 14.470 18.289 26.39% 84,841.6 1,551,639
Qualified XV 14.445 18.258 26.40% 109,122.7 1,992,390
Qualified XVI 14.374 18.068 25.70% 91,619.6 1,655,394
Qualified XVII 14.400 18.146 26.01% 29,383.6 533,207
Qualified XVIII 16.131 20.328 26.02% 18,939.4 385,001
Annuity contracts in payment period 56,047
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<S> <C>
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 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.
</TABLE>
S-25
<PAGE>
Variable Annuity Account C
Condensed Financial Information - Year Ended December 31, 1998 (continued):
<TABLE>
<S> <C>
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).
Qualified XVI Group AetnaPlus contracts issued in connection with
Deferred Compensation Plans having contract modifications
effective April 7, 1997.
Qualified XVII Group AetnaPlus contracts issued in connection with
Deferred Compensation Plans having contract modifications
effective May 29, 1997.
Qualified XVIII Group AetnaPlus contracts issued in connection with
Deferred Compensation Plans having contract modifications
effective May 29, 1997.
Qualified XIX Group AetnaPlus contracts issued in connection with
Deferred Compensation Plans having contract modifications
effective May 29, 1997.
Qualified XX 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 1998.
(2) - Reflects less than a full year of performance activity. Funds were
first received in this option during February 1998.
(3) - Reflects less than a full year of performance activity. Funds were
first received in this option during March 1998.
(4) - Reflects less than a full year of performance activity. Funds were
first received in this option during April 1998.
(5) - Reflects less than a full year of performance activity. Funds were
first received in this option during May 1998.
(6) - Reflects less than a full year of performance activity. Funds were
first received in this option during June 1998.
(7) - Reflects less than a full year of performance activity. Funds were
first received in this option during July 1998.
(8) - Reflects less than a full year of performance activity. Funds were
first received in this option during August 1998.
(9) - Reflects less than a full year of performance activity. Funds were
first received in this option during September 1998.
(10) - Reflects less than a full year of performance activity. Funds were
first received in this option during October 1998.
(11) - Reflects less than a full year of performance activity. Funds were
first received in this option during November 1998.
(12) - Reflects less than a full year of performance activity. Funds were
first received in this option during December 1998.
See Notes to Financial Statements
S-26
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1998
1. Summary of Significant Accounting Policies
Variable Annuity Account C (the "Account") is a separate account
established by Aetna Life Insurance and Annuity Company (the "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, 1998:
<TABLE>
<S> <C>
Aetna Ascent VP Fidelity Investments Variable Insurance Products
Aetna Balanced VP Fund II:
Aetna Bond VP o Asset Manager Portfolio
Aetna Crossroads VP o Contrafund Portfolio
Aetna GET Fund, Series B o Index 500 Portfolio
Aetna GET Fund, Series C Janus Aspen Series:
Aetna GET Fund, Series D o Aggressive Growth Portfolio
Aetna Growth and Income VP o Balanced Portfolio
Aetna Growth VP o Flexible Income Portfolio
Aetna High Yield VP o Growth Portfolio
Aetna Index Plus Bond VP o Worldwide Growth Portfolio
Aetna Index Plus Large Cap VP Lexington Emerging Markets Fund
Aetna Index Plus Mid Cap VP Lexington Natural Resources Trust Fund
Aetna Index Plus Small Cap VP MFS Funds:
Aetna International VP o Total Return Series
Aetna Legacy VP Oppenheimer Funds:
Aetna Money Market VP o Global Securities Fund
Aetna Real Estate Securities VP o Strategic Bond Fund
Aetna Small Company VP Portfolio Partners, Inc. (PPI):
Aetna Value Opportunity VP o PPI MFS Emerging Equities Portfolio
Calvert Social Balanced Portfolio o PPI MFS Research Growth Portfolio
Fidelity Investments Variable Insurance Products Fund: o PPI MFS Value Equity Portfolio
o Equity-Income Portfolio o PPI Scudder International Growth Portfolio
o Growth Portfolio o PPI T. Rowe Price Growth Equity Portfolio
o High Income Portfolio
o Overseas Portfolio
</TABLE>
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.
S-27
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1998 (continued):
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, 1998 and 1997
aggregated $3,304,244,413 and $2,443,668,181; $4,059,988,283 and
$2,013,561,413, respectively.
S-28
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Ascent VP: (1) $4,099,373 ($970,989) $11,412,260 $8,849,863 $2,562,397
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Balanced VP: (2) 164,981,369 (11,769,413) 170,317,767 127,614,543 42,703,224
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------------------------
Aetna Bond VP: (3) 22,962,206 (4,524,317) 60,705,518 60,183,593 521,925
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads VP: (4) 2,857,543 (807,577) 14,346,330 11,896,097 2,450,233
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series B: 17,006,590 (1,044,377) 35,975,652 24,014,822 11,960,830
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series C: 25,369,439 (3,371,574) 95,082,475 71,161,693 23,920,782
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Get Fund, Series D: 1,154,248 (337,762) 0 0 0
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Growth and Income VP: (5) 1,089,290,192 (73,720,169) 1,128,903,988 938,855,493 190,048,495
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------------------------
Aetna Growth VP: (6) 124,674 (348,321) 5,016,498 4,785,323 231,175
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------------------------
Aetna High Yield VP: (7) 121,758 (5,391) 1,502,593 1,551,979 (49,386)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Bond VP: 75,564 (3,850) 559,445 551,414 8,031
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Large Cap VP: (8) 10,603,464 (1,786,058) 13,329,755 11,362,468 1,967,287
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Mid Cap VP: (9) 198,320 (11,890) 1,297,593 1,306,891 (9,298)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Index Plus Small Cap VP: (10) 195,090 (14,898) 1,781,711 2,020,397 (238,686)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna International VP: (11) 101,318 (9,462) 1,561,383 1,739,124 (177,741)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
Aetna Legacy VP: (12) 2,324,968 (578,374) 11,247,035 10,271,411 975,624
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------------------------
Aetna Money Market VP: (13) 12,126,669 (3,036,771) 277,970,761 276,464,964 1,505,797
Annuity contracts in accumulation
Annuity contracts in payment period
- -------------------------------------------------------------------------------------------------------------------------
Aetna Real Estate Securities VP: (14) 77,295 (6,563) 418,128 466,072 (47,944)
Annuity contracts in accumulation
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-29
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
Net
Net Unrealized
Gain (Loss) Net Increase (Decrease) Net Assets
- ---------------------------------- Change in In 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>
$5,507,794 $1,897,575 ($3,610,219) $11,804,390
$72,115,304 $86,000,256
- -----------------------------------------------------------------------------------------------------------------
141,499,248 87,636,330 (53,862,918) (119,806,746)
968,354,403 982,574,403
21,193,276 29,218,792
- -----------------------------------------------------------------------------------------------------------------
(1,128,028) 4,484,663 5,612,691 (19,343,273)
372,629,553 377,693,504
6,218,756 6,384,037
- -----------------------------------------------------------------------------------------------------------------
2,614,303 598,907 (2,015,396) 21,876,020
49,739,310 74,028,644
0 71,489
- -----------------------------------------------------------------------------------------------------------------
22,946,346 6,591,127 (16,355,219) (31,539,579)
79,552,932 59,581,177
- -----------------------------------------------------------------------------------------------------------------
46,742,374 52,568,856 5,826,482 (90,386,869)
236,822,693 198,180,953
- -----------------------------------------------------------------------------------------------------------------
0 75,991 75,991 270,087,653
0 270,980,130
- -----------------------------------------------------------------------------------------------------------------
438,575,885 (10,415,627) (448,991,512) (952,072,750)
6,078,549,136 5,846,282,205
292,045,818 328,867,005
- -----------------------------------------------------------------------------------------------------------------
(237,223) 7,094,432 7,331,655 56,413,060
1,098,483 64,734,239
0 116,487
- -----------------------------------------------------------------------------------------------------------------
0 (104,129) (104,129) 1,281,526
0 1,244,378
- -----------------------------------------------------------------------------------------------------------------
0 (60,361) (60,361) 1,406,227
0 1,425,611
- -----------------------------------------------------------------------------------------------------------------
6,964,574 38,198,247 31,233,673 113,822,649
83,098,319 238,578,749
76,758 437,343
- -----------------------------------------------------------------------------------------------------------------
0 420,810 420,810 3,518,535
0 4,116,477
- -----------------------------------------------------------------------------------------------------------------
0 395,906 395,906 4,615,743
0 4,953,155
- -----------------------------------------------------------------------------------------------------------------
0 53,600 53,600 2,048,312
0 2,016,027
- -----------------------------------------------------------------------------------------------------------------
588,337 (120,205) (708,542) 18,514,701
32,749,254 53,070,226
53,658 261,063
- -----------------------------------------------------------------------------------------------------------------
5,712,842 5,409,256 (303,586) 8,301,664 240,346,197 258,856,854
0 83,117
- -----------------------------------------------------------------------------------------------------------------
0 (110,732) (110,732) 1,649,010
0 1,561,066
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
S-30
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Small Company VP: (15) $408,671 ($374,596) $12,808,646 $13,441,212 ($632,566)
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Value Opportunity VP: (16) 321,076 (248,765) 5,237,037 5,066,190 170,847
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 4,618,537 (706,037) 6,463,168 4,551,117 1,912,051
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 12,563,282 (2,635,293) 26,794,870 20,300,865 6,494,005
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 18,444,780 (2,023,269) 12,322,259 10,024,949 2,297,310
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
High Income Portfolio: 0 (5,690) 112,691 124,297 (11,606)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio: 1,074,038 (179,663) 7,836,104 7,260,256 575,848
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 2,980,690 (315,932) 2,910,017 2,416,750 493,267
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 15,297,373 (3,578,430) 26,959,224 18,010,395 8,948,829
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 2,402,321 (956,584) 3,863,355 2,441,761 1,421,594
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: 0 (2,715,064) 29,546,424 20,073,556 9,472,868
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 2,769,822 (716,695) 5,961,535 4,458,066 1,503,469
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 1,688,473 (284,556) 6,263,674 5,778,906 484,768
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 6,243,312 (1,192,652) 10,856,472 7,922,879 2,933,593
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 20,289,794 (6,298,518) 89,412,749 61,701,159 27,711,590
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
Lexington Emerging Markets Fund: 401,401 (60,257) 3,629,654 4,888,912 (1,259,258)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 1,725,445 (338,985) 20,532,500 19,980,740 551,760
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-31
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
Net
Net Unrealized
Gain (Loss) Net Increase (Decrease) Net Assets
- -------------------------------- Change in In 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>
($166,700) ($403,739) ($237,039) $43,856,203
$4,956,212 $47,966,985
0 9,901
- ---------------------------------------------------------------------------------------------------------
(274,002) 3,491,978 3,765,980 22,736,361
2,039,640 28,785,139
- ---------------------------------------------------------------------------------------------------------
7,196,636 9,585,862 2,389,226 1,243,219
54,444,411 63,901,407
- ---------------------------------------------------------------------------------------------------------
33,998,298 37,581,942 3,583,644 15,460,299
190,735,350 226,201,287
- ---------------------------------------------------------------------------------------------------------
22,394,599 60,197,198 37,802,599 45,629,738
128,257,345 230,408,503
- ---------------------------------------------------------------------------------------------------------
0 8,863 8,863 1,619,989
0 1,611,556
- ---------------------------------------------------------------------------------------------------------
225,478 253,388 27,910 (132,737)
13,449,206 14,814,602
- ---------------------------------------------------------------------------------------------------------
3,922,056 3,974,260 52,204 290,089
23,199,341 26,699,659
- ---------------------------------------------------------------------------------------------------------
50,217,979 106,134,557 55,916,578 26,948,171
256,548,805 360,081,326
- ---------------------------------------------------------------------------------------------------------
11,512,547 26,655,788 15,143,241 17,619,975
57,721,771 93,352,318
- ---------------------------------------------------------------------------------------------------------
36,485,267 99,893,644 63,408,377 11,462,457
210,600,444 292,229,082
- ---------------------------------------------------------------------------------------------------------
4,804,494 20,140,807 15,336,313 38,532,102
37,451,981 94,876,992
- ---------------------------------------------------------------------------------------------------------
381,113 175,498 (205,615) 16,062,139
14,756,039 32,501,248
- ---------------------------------------------------------------------------------------------------------
11,683,190 34,398,134 22,714,944 22,205,253
79,992,417 132,697,360
35,986 235,492
- ---------------------------------------------------------------------------------------------------------
62,504,868 137,641,800 75,136,932 70,151,913
429,093,163 615,835,740
116,838 365,972
- ---------------------------------------------------------------------------------------------------------
(968,279) (1,654,236) (685,957) (90,067)
5,788,593 4,094,455
- ---------------------------------------------------------------------------------------------------------
1,786,893 (6,226,325) (8,013,218) (17,149,400)
42,965,725 19,741,327
- ---------------------------------------------------------------------------------------------------------
</TABLE>
S-32
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1998
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
---------------- ------------------ ---------------- ----------------- --------------
<S> <C> <C> <C> <C> <C>
MFS Fund:
Total Return Series: $0 ($980) $12,895 $13,063 ($168)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Oppenheimer Funds:
Global Securities Fund: 0 (3,966) 1,212,566 1,238,363 (25,797)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Strategic Bond Fund: 0 (10,626) 961,012 980,672 (19,660)
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc. (PPI):
PPI MFS Emerging Equities Portfolio: 1,085,565 (4,502,863) 75,859,428 69,641,869 6,217,559
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 52,603 (2,749,051) 46,349,744 43,146,611 3,203,133
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 176,769 (1,585,851) 15,602,083 13,837,807 1,764,276
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
PPI Scudder International Growth Portfolio: 366,652 (2,452,299) 173,282,604 152,346,231 20,936,373
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
PPI T. Rowe Price Growth Equity Portfolio: 1,039,956 (2,274,233) 27,448,578 24,867,649 2,580,929
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------------
Total Variable Annuity Account C $1,447,620,640 ($138,558,611) $2,443,668,181 $2,067,610,422 $376,057,759
===================================================================================================================================
</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' name changed to Aetna Bond Fund
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's name changed to 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's name changed to 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-33
<PAGE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
- -------------------------------- Change in In 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>
$0 $21,009 $21,009 $365,906
$0 $385,767
- ---------------------------------------------------------------------------------------------------------------
0 90,591 90,591 915,293
0 976,121
- ---------------------------------------------------------------------------------------------------------------
0 23,736 23,736 2,263,649
0 2,253,578
- ---------------------------------------------------------------------------------------------------------------
0 3,521
- ---------------------------------------------------------------------------------------------------------------
(3,901,193) 87,984,814 91,886,007 (13,492,672)
352,966,999 434,156,330
- ---------------------------------------------------------------------------------------------------------------
23,166 27,431
(4,166,217) 40,672,835 44,839,052 (30,288,218)
227,029,997 242,087,516
- ---------------------------------------------------------------------------------------------------------------
1,637,084 30,665,227 29,028,143 5,182,435
116,286,704 150,852,476
- ---------------------------------------------------------------------------------------------------------------
3,033,630 18,451,441 15,417,811 (35,002,543)
202,699,815 201,965,809
- ---------------------------------------------------------------------------------------------------------------
3,371,568 45,568,978 42,197,410 2,934,376
169,450,553 215,872,943
0 56,047
- ---------------------------------------------------------------------------------------------------------------
$915,465,761 $949,942,696 $34,476,935 ($448,485,797) $11,155,254,351 $12,426,365,277
===============================================================================================================
</TABLE>
S-34
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Aetna Variable Fund: $1,291,034,822 ($68,500,273) $205,088,291 $150,120,010 $54,968,281
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Income Shares: 22,258,737 (4,263,839) 46,789,033 49,260,722 (2,471,689)
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Encore Fund: 9,635,587 (2,938,575) 206,958,669 210,166,945 (3,208,276)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Investment Advisers Fund, Inc.: 128,304,517 (10,844,018) 37,558,168 27,770,494 9,787,674
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series B: 13,341,021 (1,078,816) 7,648,728 4,940,723 2,708,005
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna GET Fund, Series C: 3,678,012 (3,257,441) 13,972,003 11,896,317 2,075,686
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Ascent Variable Portfolio: 4,541,482 (578,657) 498,613 380,091 118,522
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Crossroads Variable Portfolio: 3,316,159 (392,434) 409,248 325,568 83,680
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Legacy Variable Portfolio: 1,788,369 (229,584) 2,265,127 2,019,840 245,287
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Portfolios Inc:
Aetna Variable Capital Appreciation Portfolio: 312,433 (2,197) 123,165 113,851 9,314
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Growth Portfolio: 249,335 (1,093) 80,207 72,190 8,017
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Index Plus Portfolio: 3,327,658 (542,532) 29,980,862 29,823,433 157,429
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
Aetna Variable Small Company Portfolio: 269,004 (5,868) 478,457 428,319 50,138
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Alger American Funds:
Growth Portfolio: (1) 1,199,482 (1,526,918) 169,481,196 134,718,793 34,762,403
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------
Small Capitalization Portfolio: (7) 11,721,861 (3,575,543) 403,516,606 343,440,431 60,076,175
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-35
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Net
Net Unrealized
Gain (Loss) Net Increase (Decrease) Net Assets
- ----------------------------------- Change in In 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>
$327,744,944 $438,575,885 $110,830,941 $75,435,966
$4,694,078,344 $6,078,549,136
212,746,872 292,045,818
- ------------------------------------------------------------------------------------------------------------------
(9,314,233) (1,128,028) 8,186,205 (4,710,418)
354,233,289 372,629,553
5,616,023 6,218,756
- ------------------------------------------------------------------------------------------------------------------
(750,036) 5,712,842 6,462,878 (14,909,883)
245,304,466 240,346,197
- ------------------------------------------------------------------------------------------------------------------
97,219,569 141,499,248 44,279,679 2,724,400
800,532,626 968,354,403
14,762,802 21,193,276
- ------------------------------------------------------------------------------------------------------------------
17,286,695 22,946,346 5,659,651 (6,139,082)
65,062,153 79,552,932
- ------------------------------------------------------------------------------------------------------------------
2,983,885 46,742,374 43,758,489 (8,490,216)
199,058,163 236,822,693
- ------------------------------------------------------------------------------------------------------------------
1,716,824 5,507,794 3,790,970 42,582,396
21,660,591 72,115,304
- ------------------------------------------------------------------------------------------------------------------
838,329 2,614,303 1,775,974 30,197,010
14,758,921 49,739,310
- ------------------------------------------------------------------------------------------------------------------
112,482 588,337 475,855 21,455,983
9,067,002 32,749,254
0 53,658
- ------------------------------------------------------------------------------------------------------------------
0 (274,002) (274,002) 1,994,092
0 2,039,640
- ------------------------------------------------------------------------------------------------------------------
0 (237,223) (237,223) 1,079,447
0 1,098,483
- ------------------------------------------------------------------------------------------------------------------
80,325 6,964,574 6,884,249 62,694,836
10,653,437 83,098,319
0 76,758
- ------------------------------------------------------------------------------------------------------------------
0 (166,700) (166,700) 4,809,638
0 4,956,212
- ------------------------------------------------------------------------------------------------------------------
6,730,808 0 (6,730,808) (132,576,331)
104,872,172 0
- ------------------------------------------------------------------------------------------------------------------
39,364,541 0 (39,364,541) (352,729,122)
323,871,170 0
0 0
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
S-36
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
American Century Investments -
Capital Appreciation Fund: (2) $5,882,464 ($2,974,651) $347,378,690 $348,986,817 ($1,608,127)
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Calvert Social Balanced Portfolio: 3,787,208 (578,804) 1,767,421 1,342,657 424,764
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund:
Equity-Income Portfolio: 11,536,379 (1,844,101) 2,876,456 2,187,102 689,354
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 3,033,640 (1,277,878) 1,967,157 1,268,813 698,344
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Overseas Portfolio: 762,691 (144,474) 6,265,740 5,529,606 736,134
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Fidelity Investments Variable Insurance Products Fund II:
Asset Manager Portfolio: 2,134,313 (253,981) 1,353,806 1,132,813 220,993
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Contrafund Portfolio: 4,376,096 (2,382,593) 989,526 754,795 234,731
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Index 500 Portfolio: 890,215 (515,853) 2,042,782 1,517,607 525,175
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Franklin Government Securities Trust: (3) 1,578,341 (279,189) 35,001,358 34,302,739 698,619
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Janus Aspen Series:
Aggressive Growth Portfolio: 0 (2,188,842) 16,697,333 12,596,723 4,100,610
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Balanced Portfolio: 940,676 (329,511) 1,236,230 981,509 254,721
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Flexible Income Portfolio: 757,640 (131,213) 4,035,296 3,816,553 218,743
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Growth Portfolio: 1,871,919 (768,752) 1,933,431 1,461,183 472,248
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------------------------------------
Short-Term Bond Portfolio: (4) 64,108 (25,465) 5,452,797 5,400,161 52,636
Annuity contracts in accumulation
- ------------------------------------------------------------------------------------------------------------------------
Worldwide Growth Portfolio: 5,510,563 (4,109,527) 16,620,763 10,266,465 6,354,298
Annuity contracts in accumulation
Annuity contracts in payment period
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
S-37
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
Net
Net Unrealized
Gain (Loss) Net Increase (Decrease) Net Assets
- ------------------------------- Change in In 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>
$8,139,519 $0 ($8,139,519) ($339,404,560)
$346,244,393 $0
- -----------------------------------------------------------------------------------------------------------
2,963,927 7,196,636 4,232,709 6,589,199
39,989,335 54,444,411
- -----------------------------------------------------------------------------------------------------------
10,675,870 33,998,298 23,322,428 50,561,862
106,469,428 190,735,350
- -----------------------------------------------------------------------------------------------------------
5,256,264 22,394,599 17,138,335 28,222,857
80,442,047 128,257,345
- -----------------------------------------------------------------------------------------------------------
649,630 225,478 (424,152) 4,069,619
8,449,388 13,449,206
- -----------------------------------------------------------------------------------------------------------
2,502,591 3,922,056 1,419,465 2,575,422
17,103,129 23,199,341
- -----------------------------------------------------------------------------------------------------------
15,161,493 50,217,979 35,056,486 100,377,564
118,886,521 256,548,805
- -----------------------------------------------------------------------------------------------------------
2,304,865 11,512,547 9,207,682 26,383,649
21,230,903 57,721,771
- -----------------------------------------------------------------------------------------------------------
405,959 0 (405,959) (24,948,755)
23,356,943 0
- -----------------------------------------------------------------------------------------------------------
17,668,916 36,485,267 18,816,351 16,995,758
172,876,567 210,600,444
- -----------------------------------------------------------------------------------------------------------
751,567 4,804,494 4,052,927 17,251,901
15,281,267 37,451,981
- -----------------------------------------------------------------------------------------------------------
140,666 381,113 240,447 5,252,958
8,417,464 14,756,039
- -----------------------------------------------------------------------------------------------------------
2,192,571 11,683,190 9,490,619 28,161,560
40,800,809 79,992,417
0 35,986
- -----------------------------------------------------------------------------------------------------------
(6,468) 0 6,468 (1,788,353)
1,690,606 0
- -----------------------------------------------------------------------------------------------------------
16,710,390 62,504,868 45,794,478 203,261,915
172,398,274 429,093,163
0 116,838
- -----------------------------------------------------------------------------------------------------------
</TABLE>
S-38
<PAGE>
Variable Annuity Account C
Notes to Financial Statements - December 31, 1998 (continued):
5. Supplemental Information to Statements of Operations and Changes in Net
Assets (continued):
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Year Ended December 31, 1997
Valuation Proceeds Cost of Net
Period from Investments Realized
Dividends Deductions Sales Sold Gain (Loss)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Lexington Emerging Markets Fund: $4,375 ($79,412) $1,639,618 $1,424,729 $214,889
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Lexington Natural Resources Trust Fund: 1,239,038 (531,930) 14,866,827 11,618,994 3,247,833
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Neuberger and Berman Advisers Management Trust -
Growth Portfolio: (5) 8,158,940 (1,195,227) 128,039,479 103,983,767 24,055,712
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Portfolio Partners, Inc.:
PPI MFS Emerging Equities Portfolio: 0 (406,682) 3,797,005 3,880,012 (83,007)
Annuity contracts in accumulation
Annuity contracts in payment period
- -----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Research Growth Portfolio: 0 (262,081) 1,453,829 1,486,006 (32,177)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Value Equity Portfolio: 0 (133,426) 928,145 929,114 (969)
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
PPI MFS Scudder International Growth Portfolio: 0 (235,626) 13,091,485 12,881,912 209,573
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
PPI MFS T. Rowe Price Growth Equity Portfolio: 0 (193,734) 891,088 887,544 3,544
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Scudder Variable Life Investment Fund -
International Portfolio: (6) 4,599,123 (2,286,635) 278,386,778 238,895,623 39,491,155
Annuity contracts in accumulation
- -----------------------------------------------------------------------------------------------------------------------------------
Total Variable Annuity Account C $1,552,106,208 ($120,867,375) $2,013,561,413 $1,773,010,971 $240,550,442
===================================================================================================================================
</TABLE>
(1) Effective November 28, 1997, this funds assets were transferred to the PPI
T. Rowe Price Growth Equity Portfolio.
(2) Effective November 28, 1997, this funds assets were transferred to the PPI
MFS Research Growth Portfolio.
(3) Effective November 28, 1997, this funds assets were transferred to Aetna
Income Shares.
(4) Effective November 28, 1997, this funds assets were transferred to the
Aetna Variable Encore Fund.
(5) Effective November 28, 1997, this funds assets were transferred to the PPI
MFS Value Equity Portfolio.
(6) Effective November 28, 1997, this funds assets were transferred to the PPI
Scudder International Growth Portfolio.
(7) Effective November 28, 1997, this funds assets were transferred to the PPI
MFS Emerging Equities Portfolio.
S-39
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
Net Unrealized Net
Gain (Loss) Net Increase (Decrease) Net Assets
- ---------------------------------- Change in In 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>
$102,991 ($968,279) ($1,071,270) $1,874,530
$4,845,481 $5,788,593
- -------------------------------------------------------------------------------------------------------------------
3,997,171 1,786,893 (2,210,278) 17,376,715
23,844,347 42,965,725
- -------------------------------------------------------------------------------------------------------------------
9,459,521 0 (9,459,521) (116,641,588)
95,081,684 0
- -------------------------------------------------------------------------------------------------------------------
0 (3,901,193) (3,901,193) 357,381,047
0 352,966,999
0 23,166
- -------------------------------------------------------------------------------------------------------------------
0 (4,166,217) (4,166,217) 231,490,472
0 227,029,997
- -------------------------------------------------------------------------------------------------------------------
0 1,637,084 1,637,084 114,784,015
0 116,286,704
- -------------------------------------------------------------------------------------------------------------------
0 3,033,630 3,033,630 199,692,238
0 202,699,815
- -------------------------------------------------------------------------------------------------------------------
0 3,371,568 3,371,568 166,269,175
0 169,450,553
- -------------------------------------------------------------------------------------------------------------------
29,299,509 0 (29,299,509) (204,019,879)
191,515,746 0
- -------------------------------------------------------------------------------------------------------------------
$612,391,085 $915,465,761 $303,074,676 $615,188,037 $8,565,202,363 $11,155,254,351
===================================================================================================================
</TABLE>
S-40
<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, 1998, 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, 1998. 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 and condensed financial information. Our procedures
included confirmation of securities owned as of December 31, 1998, 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, 1998, the results of its operations and 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, 1998, in conformity with
generally accepted accounting principles.
/s/ KPMG LLP
Hartford, Connecticut
February 26, 1999
S-41
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARY
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, 1998,
1997 and 1996 F-3
Consolidated Balance Sheets as of December 31, 1998 and 1997 F-4
Consolidated Statements of Changes in Shareholder's Equity For the Years
Ended December 31, 1998, 1997 and 1996 F-5
Consolidated Statements of Cash Flows for the Years Ended December 31, 1998,
1997 and 1996 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 Subsidiary as of December 31, 1998 and 1997,
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, 1998. 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 Subsidiary at December 31, 1998 and 1997, and
the results of their operations and their cash flows for each of the years in
the three-year period ended December 31, 1998, in conformity with generally
accepted accounting principles.
/s/ KPMG LLP
Hartford, Connecticut
February 3, 1999
F-2
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARY
(A wholly owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Statements of Income
(millions)
<TABLE>
<CAPTION>
Years Ended December 31,
------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Revenue:
Premiums $79.4 $69.1 $84.9
Charges assessed against policyholders 324.3 262.0 197.0
Net investment income 877.6 878.8 852.6
Net realized capital gains 10.4 29.7 17.0
Other income 29.6 38.3 43.6
---------- ---------- ----------
Total revenue 1,321.3 1,277.9 1,195.1
---------- ---------- ----------
Benefits and expenses:
Current and future benefits 714.4 720.4 728.3
Operating expenses 313.2 286.5 275.8
Amortization of deferred policy acquisition costs 106.7 82.8 28.0
Severance and facilities charges -- -- 47.1
---------- ---------- ----------
Total benefits and expenses 1,134.3 1,089.7 1,079.2
---------- ---------- ----------
Income from continuing operations before
income taxes 187.0 188.2 115.9
Income taxes 47.4 50.7 30.7
---------- ---------- ----------
Income from continuing operations 139.6 137.5 85.2
Discontinued Operations, net of tax
Income from operations 61.8 67.8 55.9
Gain on sale 59.0 -- --
---------- ---------- ----------
Net income $260.4 $205.3 $141.1
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARY
(A wholly owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Balance Sheets
(millions, except share data)
<TABLE>
<CAPTION>
December 31, December 31,
1998 1997
------------ ------------
<S> <C> <C>
Assets
Investments:
Debt securities available for sale, at fair value,
(amortized cost: $11,570.3 and $12,912.2) $12,067.2 $13,463.8
Equity securities, at fair value,
Nonredeemable preferred stock (cost: $202.6 and $131.7) 203.3 147.6
Investment in affiliated mutual funds (cost: $96.8 and$78.1) 100.1 83.0
Common stock (cost: $1.0 and $0.2) 2.0 .6
Short-term investments 47.9 95.6
Mortgage loans 12.7 12.8
Policy loans 292.2 469.6
------------ ------------
Total investments 12,725.4 14,273.0
Cash and cash equivalents 608.4 565.4
Short-term investments under securities loan agreement 277.3 --
Accrued investment income 151.6 163.0
Premiums due and other receivables 46.7 51.9
Reinsurance recoverable 2,959.8 11.8
Deferred policy acquisition costs 864.0 1,654.6
Reinsurance loan to affiliate -- 397.2
Deferred tax asset 120.6 --
Other assets 66.6 46.8
Separate accounts assets 29,458.4 22,982.7
------------ ------------
Total assets $47,278.8 $40,146.4
============ ============
Liabilities and Shareholder's Equity
Liabilities:
Future policy benefits $3,815.9 $3,763.7
Unpaid claims and claim expenses 18.8 38.0
Policyholders' funds left with the Company 11,305.6 11,143.5
------------ ------------
Total insurance reserve liabilities 15,140.3 14,945.2
Payables under securities loan agreement 277.3 --
Other liabilities 793.2 312.8
Income taxes:
Current 279.8 12.4
Deferred -- 72.0
Separate accounts liabilities 29,430.2 22,970.0
------------ ------------
Total liabilities 45,920.8 38,312.4
------------ ------------
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 427.3 418.0
Accumulated other comprehensive income 104.8 92.9
Retained earnings 823.1 1,320.3
------------ ------------
Total shareholder's equity 1,358.0 1,834.0
------------ ------------
Total liabilities and shareholder's equity $47,278.8 $40,146.4
============ ============
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARY
(A wholly owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Statements of Changes in Shareholder's Equity
(millions)
<TABLE>
<CAPTION>
Years Ended December 31,
--------------------------------------
1998 1997 1996
---------- ---------- ----------
<S> <C> <C> <C>
Shareholder's equity, beginning of year $1,834.0 $1,609.5 $1,583.0
Comprehensive income
Net income 260.4 205.3 141.1
Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on securities
($18.2 million, $49.9 million and
$(110.6) million, pretax, respectively) 11.9 32.4 (72.0)
---------- ---------- ----------
Total comprehensive income 272.3 237.7 69.1
---------- ---------- ----------
Capital contributions 9.3 -- 10.4
Other changes 1.4 4.1 (49.5)
Common stock dividends (759.0) (17.3) (3.5)
---------- ---------- ----------
Shareholder's equity, end of year $1,358.0 $1,834.0 $1,609.5
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE>
AETNA LIFE INSURANCE AND ANNUITY COMPANY AND SUBSIDIARY
(A wholly owned subsidiary of Aetna Retirement Holdings, Inc.)
Consolidated Statements of Cash Flows
(millions)
<TABLE>
<CAPTION>
Years Ended December 31,
---------------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Cash Flows from Operating Activities:
Net income $260.4 $205.3 $141.1
Adjustments to reconcile net income to net cash provided by
(used for) operating activities:
Net accretion of discount on investments (29.5) (66.4) (68.0)
Gain on sale of discontinued operations (88.3) -- --
--------- --------- ---------
Cash flows provided by operating activities and net realized capital
gains before changes in assets and liabilities 142.6 138.9 73.1
Net realized capital gains (11.1) (36.0) (19.7)
--------- --------- ---------
Cash flows provided by operating activities before changes in assets
and liabilities 131.5 102.9 53.4
Changes in assets and liabilities:
Decrease (increase) in accrued investment income 11.4 (4.0) 16.5
(Increase) decrease in premiums due and other receivables (16.3) (33.3) 1.6
Decrease (increase) in policy loans 177.4 (70.3) (60.7)
Increase in deferred policy acquisition costs (117.3) (139.3) (174.0)
Decrease in reinsurance loan to affiliate 397.2 231.1 27.2
Net increase in universal life account balances 122.9 157.1 146.6
Decrease in other insurance reserve liabilities (41.8) (120.3) (114.9)
Net (decrease) increase in other liabilities and other assets (50.8) (41.7) 3.1
Increase (decrease) in income taxes 100.4 (31.4) (26.7)
Other, net -- -- 1.1
--------- --------- ---------
Net cash provided by (used for) operating activities 714.6 50.8 (126.8)
--------- --------- ---------
Cash Flows from Investing Activities:
Proceeds from sales of:
Debt securities available for sale 6,790.2 5,311.3 5,182.2
Equity securities 150.1 103.1 190.5
Mortgage loans 0.3 0.2 8.7
Life business 966.5 -- --
Investment maturities and collections of:
Debt securities available for sale 1,290.3 1,212.7 885.2
Short-term investments 129.9 89.3 35.0
Cost of investment purchases in:
Debt securities available for sale (6,701.4) (6,732.8) (6,534.3)
Equity securities (125.7) (113.3) (118.1)
Other investments (2,725.9) -- --
Short-term investments (81.9) (149.9) (54.7)
Other, net -- -- (17.6)
--------- --------- ---------
Net cash used for investing activities (307.6) (279.4) (423.1)
--------- --------- ---------
Cash Flows from Financing Activities:
Deposits and interest credited for investment contracts 1,571.1 1,621.2 1,579.5
Withdrawals of investment contracts (1,393.1) (1,256.3) (1,146.2)
Capital contribution to Separate Account -- (25.0) --
Return of capital from Separate Account 1.7 12.3 --
Capital contribution from HOLDCO 9.3 -- 10.4
Dividends paid to shareholder (553.0) (17.3) (3.5)
--------- --------- ---------
Net cash (used for) provided by financing activities (364.0) 334.9 440.2
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 43.0 106.3 (109.7)
Cash and cash equivalents, beginning of year 565.4 459.1 568.8
--------- --------- ---------
Cash and cash equivalents, end of year $608.4 $565.4 $459.1
========= ========= =========
Supplemental cash flow information:
Income taxes paid, net $48.4 $119.6 $85.5
========= ========== ==========
</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 and its wholly owned subsidiary
(collectively, the "Company") are providers of financial services in the
United States. Prior to the sale of the domestic individual life insurance
business on October 1, 1998, the Company had two business segments: financial
services and individual life insurance. On October 1, 1998, the Company sold
its domestic individual life insurance operations to Lincoln National
Corporation ("Lincoln") and accordingly they are now classified as
Discontinued Operations. (Refer to note 2)
Financial services 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,
and non-qualified annuity contracts. These contracts may be deferred or
immediate ("payout annuities"). Financial services also include investment
advisory services and pension plan administrative services.
Discontinued Operations include universal life, variable universal life,
traditional whole life and term insurance.
Basis of Presentation
---------------------
The consolidated financial statements include Aetna Life Insurance and
Annuity Company and its wholly owned subsidiary, Aetna Insurance Company of
America. Aetna Life Insurance and Annuity Company is a wholly owned
subsidiary of Aetna Retirement Holdings, Inc. ("HOLDCO"). HOLDCO is a wholly
owned subsidiary of Aetna Retirement Services, Inc. ("ARS"), whose ultimate
parent is Aetna Inc. ("Aetna").
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles. Certain reclassifications have been
made to 1997 and 1996 financial information to conform to the 1998
presentation.
New Accounting Standards
------------------------
Disclosures about Segments of an Enterprise and Related Information
As of December 31, 1998, the Company adopted Financial Accounting Standard
("FAS") No. 131, Disclosures about Segments of an Enterprise and Related
Information. This statement establishes standards for the reporting of
information relating to operating segments. This statement supersedes FAS No.
14, Financial Reporting for Segments of a Business Enterprise, which requires
reporting segment information by industry and geographic area (industry
approach). Under FAS No. 131, operating segments are defined as components of
a company for which separate financial information is available and is used
by management to allocate resources and assess performance (management
approach). The adoption of this statement did not change the composition or
the results of operations of any of the operating segments of the Company,
which are consistent with the management approach.
F-7
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Accounting for the Costs of Computer Software Developed and Obtained for
Internal Use
On January 1, 1998, the Company adopted Statement of Position ("SOP") 98-1,
Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use, issued by the American Institute of Certified Public
Accountants ("AICPA"). This statement requires that certain costs incurred in
developing internal use computer software (in process at, and subsequent to
the adoption date) be capitalized, and provides guidance for determining
whether computer software is considered to be for internal use. The Company
amortizes these costs over a period of 3 to 5 years. Previously, the Company
expensed the cost of internal-use computer software as incurred. The adoption
of this statement resulted in a net after-tax increase to the results of
operations of $6.5 million for the year ended December 31, 1998.
Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities
In June 1996, the Financial Accounting Standards Board ("FASB") issued FAS
No. 125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities, that provides accounting and reporting
standards for transfers of financial assets and extinguishments of
liabilities. FAS No. 125 was effective for 1997 financial statements;
however, certain provisions relating to accounting for repurchase agreements
and securities lending were not effective until January 1, 1998. The adoption
of those provisions effective in 1998 did not have a material effect on the
Company's financial position or results of operations.
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, with early adoption
permitted. The Company is currently evaluating the impact of the adoption of
this statement and the potential effect on its financial position and results
of operations.
Accounting for Derivative Instruments and Hedging Activities
In June 1998, the FASB issued 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. This standard is effective for the Company's financial
statements beginning January 1, 2000, with early adoption permitted. The
Company is currently evaluating the impact of adoption of this statement and
the potential effect on its financial position and results of operations.
F-8
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Accounting by Insurance and Other Enterprises for Insurance-Related
Assessments
In December 1997, the AICPA issued SOP 97-3, Accounting by Insurance and
Other Enterprises for Insurance-Related Assessments, which 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. This statement is effective for 1999
financial statements with early adoption permitted. The Company does not
expect adoption of this statement to have a material effect on its financial
position or 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 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. These securities are written down (as realized capital losses)
for other than temporary declines in value. Unrealized capital gains and
losses related to available-for-sale investments, other than amounts
allocable to experience-rated contractholders, are reflected in shareholder's
equity, net of related taxes.
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.
F-9
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
At December 31, 1998 and 1997, the Company loaned securities (which are
reflected as invested assets) with a fair value of approximately $277.3
million and $385.1 million, respectively.
Purchases and sales of debt and equity securities are recorded on the trade
date.
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.
Mortgage loans and policy loans are carried at unpaid principal balances, net
of impairment reserves. Sales of mortgage loans are recorded on the closing
date.
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 4.)
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.
Deferred Policy Acquisition Costs
---------------------------------
Certain costs of acquiring 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 fixed
ordinary life contracts (prior to the sale of the domestic individual life
insurance business to Lincoln on October 1, 1998, refer to Note 2), such
costs are amortized over expected premium-paying periods (up to 20 years).
For universal life (prior to the sale of the domestic individual life
insurance business to Lincoln on October 1, 1998, refer to Note 2), and
certain annuity contracts,
F-10
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
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 50 years for universal life and up to 20 years for certain annuity
contracts). 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 losses and expenses.
Insurance Reserve Liabilities
-----------------------------
Future policy benefits include reserves for universal life, immediate
annuities with life contingent payouts and traditional life insurance
contracts. Prior to the sale of the domestic individual life insurance
business on October 1, 1998, (refer to note 2), reserves for universal life
products were equal to cumulative deposits less withdrawals and charges plus
credited interest thereon, plus (less) net realized capital gains (losses)
(which were reflected through credited interest rates). These reserves also
included unrealized capital gains (losses) related to FAS No. 115. As a
result of the sale and transfer of assets supporting the business, reserves
for universal life products will no longer include net realized capital gains
(losses) and unrealized gains (losses) related to FAS No. 115 for the years
ended December 31, 1998 and beyond.
Reserves for immediate annuities with life contingent payouts and traditional
life insurance contracts are for immediate annuities with life
contingent-payouts and traditional life insurance 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
3.00% to 8.10% 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.
F-11
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Premiums, Charges Assessed Against Policyholders, Benefits and Expenses
-----------------------------------------------------------------------
For universal life (prior to the sale of the domestic individual life
insurance business to Lincoln on October 1, 1998, refer to Note 2) and
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 and are not recorded
as revenue. Life insurance premiums, other than premiums for universal life
(prior to the sale of the domestic individual life insurance business to
Lincoln on October 1, 1998, refer to Note 2) and certain annuity contracts,
are recorded as premium revenue when due. 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
-----------------
Assets held under variable universal life and variable annuity contracts are
segregated in Separate Accounts and are invested, as designated by the
contractholder or participant under a contract (who bears the investment risk
subject, in some cases, to minimum guaranteed rates) in shares of mutual
funds which are managed by an affiliate of the Company, or other selected
mutual funds not managed by the Company.
As of December 31, 1998, Separate Accounts assets are carried at fair value.
At December 31, 1998, unrealized gains of $10.0 million, after taxes, on
assets supporting a guaranteed interest option are reflected in shareholder's
equity. At December 31, 1997, Separate Account assets supporting the
guaranteed interest option were carried at an amortized cost of $658.6
million (fair value $668.7 million). 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 3.00% to 8.10%
in 1998 and 4.10% to 8.10% in 1997.
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.
F-12
<PAGE>
Notes to Consolidated Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
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 recoverables deemed probable of recovery are reflected
as assets on the Company's Consolidated Balance Sheets. The majority of the
reinsurance recoverable on the Consolidated Balance Sheets at December 31,
1998 is related to the reinsurance recoverable from Lincoln arising from the
sale of the domestic life insurance business. (Refer to Note 2)
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. 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. Insurance reserves ceded as of December 31, 1998 were $2.9
billion. Deferred policy acquisition costs related to the life policies of
$907.9 million were written off against the gain on the sale. Certain
invested assets related to and supporting the life policies were sold to
consummate the life sale, 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 $58 million will be deferred and
amortized over approximately 15 years (as profits in the book of business
sold emerge). The remaining portion of the gain was recognized immediately in
net income and was largely attributed to the sale of the domestic life
insurance business for access to the agency sales force and brokerage
distribution channel. The unamortized portion of the 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, $620.4 million
and $445.7 million for 1998, 1997 and 1996, respectively. Premiums ceded and
reinsurance recoveries made in 1998 totaled $153.4 million and $57.7 million,
respectively.
F-13
<PAGE>
Notes to Consolidated Financial Statements (continued)
3. Investments
Debt securities available for sale as of December 31, 1998 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 2,259.2 94.6 5.6 2,348.2
Transportation/capital goods 580.8 33.0 1.1 612.7
Health care/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 5,299.6 239.9 25.3 5,514.2
--------------------------------------------------------------------------------------------------------------
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 $11,570.3 $580.8 $83.9 $12,067.2
==============================================================================================================
</TABLE>
F-14
<PAGE>
Notes to Consolidated Financial Statements (continued)
3. Investments (continued)
Debt securities available for sale as of December 31, 1997 were as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
1997 (Millions) Cost Gains Losses Value
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
U.S. government and government agencies
and authorities $1,219.7 $74.0 $0.1 $1,293.6
States, municipalities and political subdivisions 0.3 -- -- 0.3
U.S. corporate securities:
Utilities 521.3 23.5 0.9 543.9
Financial 2,370.7 84.6 1.3 2,454.0
Transportation & capital goods 528.2 33.2 0.1 561.3
Healthcare & consumer products 728.5 27.0 2.6 752.9
Natural resources 143.5 5.5 -- 149.0
Other corporate securities 545.2 27.2 0.1 572.3
--------------------------------------------------------------------------------------------------------------
Total U.S. corporate securities 4,837.4 201.0 5.0 5,033.4
--------------------------------------------------------------------------------------------------------------
Foreign securities:
Government, including political subdivisions 612.5 36.7 23.6 625.6
Utilities 177.5 28.7 -- 206.2
Other 857.9 27.7 42.8 842.8
--------------------------------------------------------------------------------------------------------------
Total foreign securities 1,647.9 93.1 66.4 1,674.6
--------------------------------------------------------------------------------------------------------------
Residential mortgage-backed securities:
Pass-throughs 784.4 71.3 2.0 853.7
Collateralized mortgage obligations 2,280.5 137.4 2.0 2,415.9
--------------------------------------------------------------------------------------------------------------
Total residential mortgage-backed securities 3,064.9 208.7 4.0 3,269.6
--------------------------------------------------------------------------------------------------------------
Commercial/Multifamily mortgage-backed
securities 1,127.8 34.0 0.4 1,161.4
Other asset-backed securities 1,014.2 17.1 0.4 1,030.9
--------------------------------------------------------------------------------------------------------------
Total debt securities $12,912.2 $627.9 $76.3 $13,463.8
==============================================================================================================
</TABLE>
F-15
<PAGE>
Notes to Consolidated Financial Statements (continued)
3. Investments (continued)
At December 31, 1998 and 1997, net unrealized appreciation of $496.9 million
and $551.6 million, respectively, on available-for-sale debt securities
included $355.8 million and $429.3 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, 1998 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 $553.5 $554.6
After one year through five years 2,619.7 2,692.4
After five years through ten years 1,754.0 1,801.7
After ten years 2,257.4 2,453.7
Mortgage-backed securities 3,666.4 3,832.3
Other asset-backed securities 719.3 732.5
---------------------------------------------------------------
Total $11,570.3 $12,067.2
===============================================================
</TABLE>
At December 31, 1998 and 1997, debt securities carried at $8.8 million and
$8.2 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, 1998.
Included in the Company's debt securities were residential collateralized
mortgage obligations ("CMOs") supporting the following:
<TABLE>
<CAPTION>
1998 1997
----------------------- -----------------------
Fair Amortized Fair Amortized
(Millions) Value Cost Value Cost
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Total residential CMOs (1) $1,988.9 $1,879.6 $2,415.9 $2,280.5
=======================================================================================================
Percentage of total:
Supporting experience rated products 81.7% 81.6%
Supporting remaining products 18.3% 18.4%
- -------------------------------------------------------------------------------------------------------
100.0% 100.0%
=======================================================================================================
</TABLE>
(1) At December 31, 1998 and 1997, approximately 66% and 73%, 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)
3. Investments (continued)
There are various categories of CMOs which are subject to different degrees
of risk from changes in interest rates and, for nonagency-backed CMOs,
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, 1998 and 1997,
approximately 2% and 4%, 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) 1998 1997
-------------------------------------------------------
<S> <C> <C>
Amortized Cost $300.4 $210.0
Gross unrealized gains 13.1 21.3
Gross unrealized losses 8.1 .1
-------------------------------------------------------
Fair Value $305.4 $231.2
=======================================================
</TABLE>
4. Financial Instruments
Estimated Fair Value
--------------------
The carrying values and estimated fair values of certain of the Company's
financial instruments at December 31, 1998 and 1997 were as follows:
<TABLE>
<CAPTION>
1998 1997
--------------------- -----------------------
Carrying Fair Carrying Fair
(Millions) Value Value Value Value
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets:
Mortgage loans $12.7 $12.3 $12.8 $12.4
Liabilities:
Investment contract liabilities:
With a fixed maturity $1,063.9 $984.3 $1,030.3 $1,005.4
Without a fixed maturity 10,241.7 9,686.2 10,113.2 9,587.5
- -----------------------------------------------------------------------------------------
</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)
4. 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.
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.
Off-Balance-Sheet and Other Financial Instruments
-------------------------------------------------
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.
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, 1998
were $1.5 million, respectively. The carrying values and estimated fair
values as of December 31, 1997 were $.6 million, respectively.
F-18
<PAGE>
Notes to Consolidated Financial Statements (continued)
4. 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, 1998 was as follows:
<TABLE>
<CAPTION>
Amortized Fair
(Millions) Cost Value
-----------------------------------------------------------------------------
<S> <C> <C>
Residential collateralized mortgage obligations $1,879.6 $1,988.9
Principal-only strips (included above) 20.2 24.0
Interest-only strips (included above) 17.3 18.0
Other structured securities with derivative
characteristics (1) 87.3 80.6
-----------------------------------------------------------------------------
</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.
5. Net Investment Income
Sources of net investment income were as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities $798.8 $814.6 $805.3
Nonredeemable preferred stock 18.4 12.9 5.8
Investment in affiliated mutual funds 6.6 3.8 10.8
Mortgage loans 0.6 0.3 0.6
Policy loans 7.2 5.7 6.4
Reinsurance loan to affiliate 2.3 5.5 9.3
Cash equivalents 44.6 38.8 27.1
Other 16.7 9.5 1.8
-----------------------------------------------------------------------------
Gross investment income 895.2 891.1 867.1
Less: investment expenses (17.6) (12.3) (14.5)
-----------------------------------------------------------------------------
Net investment income $877.6 $878.8 $852.6
=============================================================================
</TABLE>
Net investment income includes amounts allocable to experience rated
contractholders of $655.6 million, $673.8 million and $649.5 million for the
years ended December 31, 1998, 1997 and 1996, respectively. Interest credited
to contractholders is included in current and future benefits.
F-19
<PAGE>
Notes to Consolidated Financial Statements (continued)
6. Dividend Restrictions and Shareholder's Equity
The Company paid $553.0 million and $17.3 million in cash dividends to HOLDCO
in 1998 and 1997, respectively. Additionally, at December 31, 1998, the
Company accrued $206.0 million in dividends. Of the $759.0 million dividends
paid and 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.
In January 1999, the accrued dividends of $206.0 million were paid by the
Company to HOLDCO. Further dividends to be paid by the Company to HOLDCO
during 1999 will need to be approved by the Insurance Department of the State
of Connecticut (the "Department") prior to payment.
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
$148.1 million, $80.5 million and $57.8 million for the years ended December
31, 1998, 1997 and 1996, respectively. Statutory capital and surplus was
$773.0 million and $778.7 million as of December 31, 1998 and 1997,
respectively.
As of December 31, 1998, 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.
7. 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 gains on investments were as follows:
<TABLE>
<CAPTION>
(Millions) 1998 1997 1996
----------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities $7.4 $21.1 $9.5
Equity securities 3.0 8.6 7.5
----------------------------------------------------------------------------
Pretax realized capital gains $10.4 $29.7 $17.0
============================================================================
After-tax realized capital gains $7.3 $19.2 $11.1
============================================================================
</TABLE>
Net realized capital gains of $15.0 million, $83.7 million and $52.5 million
for 1998, 1997 and 1996, 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 were $118.6 million and $120.1 million at December 31, 1998
and 1997, respectively.
F-20
<PAGE>
Notes to Consolidated Financial Statements (continued)
7. 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) 1998 1997 1996
----------------------------------------------------------------------------
<S> <C> <C> <C>
Proceeds on sales $6,790.2 $5,311.3 $5,182.2
Gross gains 98.8 23.8 22.1
Gross losses 91.4 2.7 12.6
----------------------------------------------------------------------------
</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) 1998 1997 1996
-----------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities $18.9 $44.3 $(100.1)
Equity securities (16.1) 5.6 (10.5)
Other 15.4 -- --
-----------------------------------------------------------------------------------
Subtotal 18.2 49.9 (110.6)
Increase (decrease) in deferred income taxes
(Refer to note 8) 6.3 17.5 (38.6)
-----------------------------------------------------------------------------------
Net changes in accumulated other
comprehensive income $11.9 $32.4 $(72.0)
===================================================================================
</TABLE>
Net unrealized capital gains allocable to experience-rated contracts of
$355.8 million at December 31, 1998 are reflected on the Consolidated Balance
Sheets in Policyholders' funds left with the Company and are not included in
shareholder's equity. At December 31, 1997, net unrealized capital gains of
$356.7 million and $72.6 million at December 31, 1997 are reflected on the
Consolidated Balance Sheets in policyholders' funds left with the Company and
future policy benefits, respectively, and are not included in shareholder's
equity.
F-21
<PAGE>
Notes to Consolidated Financial Statements (continued)
7. Capital Gains and Losses on Investment Operations (continued)
Shareholder's equity included the following accumulated other comprehensive
income, which are net of amounts allocable to experience-rated
contractholders, at December 31:
<TABLE>
<CAPTION>
(Millions) 1998 1997 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt securities:
Gross unrealized capital gains $157.3 $140.6 $101.7
Gross unrealized capital losses (16.2) (18.4) (23.8)
----------------------------------------------------------------------------------
141.1 122.2 77.9
----------------------------------------------------------------------------------
Equity securities:
Gross unrealized capital gains 13.1 21.2 16.3
Gross unrealized capital losses (8.1) (0.1) (0.8)
----------------------------------------------------------------------------------
5.0 21.1 15.5
----------------------------------------------------------------------------------
Other:
Gross unrealized capital gains 17.1 -- --
Gross unrealized capital losses (1.7) -- --
----------------------------------------------------------------------------------
15.4 -- --
----------------------------------------------------------------------------------
Deferred income taxes (Refer to note 8) 56.7 50.4 32.9
----------------------------------------------------------------------------------
Net accumulated other comprehensive income $104.8 $92.9 $60.5
==================================================================================
</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) 1998 1997 1996
----------------------------------------------------------------------------------
<S> <C> <C> <C>
Unrealized holding gains (losses) arising
during the year (1) $38.3 $98.8 $(14.8)
Less: reclassification adjustment for gains and
other items included in net income (2) 26.4 66.4 57.2
-----------------------------------------------------------------------------------
Net unrealized gains (losses) on securities $11.9 $32.4 $(72.0)
===================================================================================
</TABLE>
(1) Pretax unrealized holding gains (losses) arising during the year were
$58.8 million, $152.3 million and ($22.9) million for 1998, 1997 and
1996, respectively.
(2) Pretax reclassification adjustments for gains and other items included
in net income were $40.6 million, $102.4 million and $87.7 million for
1998, 1997 and 1996, respectively.
F-22
<PAGE>
Notes to Consolidated Financial Statements (continued)
8. Income Taxes
The Company is included in the consolidated federal income tax return, the
combined returns of Connecticut and New York, and the Illinois unitary state
income tax returns of Aetna. Aetna allocates to each member 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) 1998 1997 1996
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Current taxes (benefits):
Federal $246.4 $28.7 $30.0
State 1.3 2.0 2.3
Net realized capital gains 16.8 39.1 24.4
------------------------------------------------------------------------------
264.5 69.8 56.7
------------------------------------------------------------------------------
Deferred taxes (benefits):
Federal (203.2) 9.4 (7.6)
Net realized capital (losses) (13.9) (28.5) (18.4)
------------------------------------------------------------------------------
(217.1) (19.1) (26.0)
------------------------------------------------------------------------------
Total $47.4 $50.7 $30.7
==============================================================================
</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) 1998 1997 1996
------------------------------------------------------------------------------
<S> <C> <C> <C>
Income from continuing operations before
income taxes $187.0 $188.2 $115.9
Tax rate 35% 35% 35%
------------------------------------------------------------------------------
Application of the tax rate 65.5 65.9 40.6
Tax effect of:
State income tax, net of federal benefit 0.9 1.3 1.5
Excludable dividends (17.1) (15.6) (10.8)
Other, net (1.9) (0.9) (0.6)
------------------------------------------------------------------------------
Income taxes $47.4 $50.7 $30.7
==============================================================================
</TABLE>
F-23
<PAGE>
Notes to Consolidated Financial Statements (continued)
8. 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) 1998 1997
------------------------------------------------------------------------
<S> <C> <C>
Deferred tax assets:
Insurance reserves $324.1 $415.8
Unrealized gains allocable to experience
rated contracts 124.5 150.1
Investment (gains) losses (0.3) 6.6
Postretirement benefits other than pensions 26.0 26.3
Deferred compensation 38.6 31.2
Restructuring charge 2.9 9.5
Depreciation 1.7 3.9
Sale of individual life 48.9 -
Other 16.0 8.8
------------------------------------------------------------------------
Total gross assets 582.4 652.2
------------------------------------------------------------------------
Deferred tax liabilities:
Deferred policy acquisition costs 272.7 515.6
Market discount 4.5 5.1
Net unrealized capital gains 181.2 200.5
Pension 3.9 3.6
Other (0.5) (0.6)
------------------------------------------------------------------------
Total gross liabilities 461.8 724.2
------------------------------------------------------------------------
Net deferred tax (asset) liability $(120.6) $72.0
========================================================================
</TABLE>
Net unrealized capital gains and losses are presented in shareholder's equity
net of deferred taxes. As of December 31, 1998 and 1997, no valuation
allowances were required for unrealized capital gains and losses.
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, 1998. This amount would be
taxed only under certain conditions.
F-24
<PAGE>
Notes to Consolidated Financial Statements (continued)
8. Income Taxes (Continued)
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 1990.
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 1991 through 1994.
9. 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 (i.e., September 30), the
accumulated plan assets exceeded accumulated plan benefits. 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 $0.8 million,
$2.7 million and $4.3 million for the years ended December 31, 1998, 1997 and
1996, respectively.
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 50 with 15 years of service or at age 65 with 10 years of
service. There is a cap on the portion of the cost paid by the Company
relating to medical and dental benefits. Retirees are generally required to
contribute to the plans based on their years of service with Aetna. The costs
to the Company associated with the Aetna postretirement plans for 1998, 1997
and 1996 were $0.9 million, $2.7 million and $1.8 million, respectively.
As of December 31, 1996, Aetna transferred to the Company approximately $77.7
million of accrued liabilities, primarily related to the pension and
postretirement benefit plans described above, that had been previously
recorded by Aetna. The after-tax amount of this transfer (approximately $50.5
million) is reported as a reduction in retained earnings.
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 (i.e., September 30), the
accumulated plan assets exceeded accumulated plan benefits.
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 1998, 1997 and
1996 were $1.4 million, $0.6 million and $0.7 million, respectively.
Effective January 1, 1999, the Company, in conjunction with Aetna, changed
the formula for providing pension benefits from the existing final average
pay formula to a cash balance formula,
F-25
<PAGE>
Notes to Consolidated Financial Statements (continued)
9. Benefit Plans (continued)
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 will not have a material
effect on the Company's results of operations, liquidity or financial
condition.
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 $4.7 million, $4.4 million and $5.4
million in 1998, 1997 and 1996, 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 certain key employees. Executive and middle 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 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 1998, 1997
and 1996, were $4.1 million, $2.9 million and $8.1 million, respectively. As
of December 31, 1996, Aetna transferred to the Company approximately $1.1
million of deferred tax benefits related to stock options. This amount is
reported as an increase in retained earnings. In 1998, other changes in
shareholder's equity include an additional increase of $0.7 million
reflecting revisions to the allocation of the deferred tax benefit.
10. Related Party Transactions
Investment Advisory and Other Fees
----------------------------------
In February 1998 and May 1998, Aeltus Investment Management Inc. ("Aeltus"),
an affiliate of the Company, assumed investment advisory services for Aetna
managed mutual funds and variable funds (collectively, the Funds),
respectively. In connection with that assumption of duties, Aeltus entered
into participation agreements with the Company. Participation fees paid to
the Company, from Aeltus, included in charges assessed against policyholders
amounted to $26.9 million for 1998. Prior to assuming investment advisory
services, Aeltus served as subadvisor to the Funds. Since August 1996,
Aeltus has served as advisor for most of the Company's General Account
assets. Fees paid by the Company to Aeltus, included in both charges
assessed against policyholders and net investment income, on an annual
basis, range from 0.06% to 0.55% of the average daily net assets under
management. For the years ended December 31, 1998, 1997 and 1996, the
Company paid $21.7 million, $45.5 million and $16.0 million, respectively,
in such fees.
Prior to February 1998 and May 1998, the Company served as investment
advisor to the Funds. Under the advisory agreements, the funds paid the
Company a daily fee which, on an annual basis, ranged,
F-26
<PAGE>
Notes to Consolidated Financial Statements (continued)
10. Related Party Transactions (continued)
depending on the fund, from 0.25% to 0.85% 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, amounted to
$287.0 million, $271.2 million and $186.6 million in 1998, 1997 and 1996,
respectively.
Reinsurance Transactions
------------------------
Since 1981, all domestic individual non-participating life insurance of
Aetna and its subsidiaries has been issued by the Company. Effective
December 31, 1988, the Company entered into a reinsurance agreement with
Aetna Life Insurance Company ("Aetna Life") 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. A $6.1 million and a $108.0
million commission, paid by the Company to Aetna Life in 1996 and 1988,
respectively, was capitalized as deferred policy acquisition costs. In
consideration for the assumption of this business, a loan was established
relating to the assets held by Aetna Life which support the insurance
reserves. Effective January 1, 1997, this agreement was amended to
transition (based on underlying investment rollover in Aetna Life) from a
modified coinsurance to a coinsurance arrangement. As a result of this
change, reserves were ceded to the Company from Aetna Life as investment
rollover occurred and the loan previously established was reduced. The
Company maintained insurance reserves of $574.5 million ($397.2 million
relating to the modified coinsurance agreement and $177.3 million relating
to the coinsurance agreement) as of December 31, 1997 relating to the
business assumed. The fair value of the loan relating to assets held by
Aetna Life was $412.3 million as of December 31, 1997 and was based upon the
fair value of the underlying assets.
Effective October 1, 1998, this agreement was fully transitioned to a
coinsurance arrangement and this business along with the Company's direct
domestic individual non-participating life insurance business was sold to
Lincoln. (Refer to note 2).
The operating results of the domestic individual life business are presented
as Discontinued Operations. Premiums of $336.3 million, $176.7 million and
$25.3 million and current and future benefits of $341.1 million, $183.9
million and $39.5 million, were assumed in 1998, 1997 and 1996,
respectively. Investment income of $17.0 million, $37.5 million and $44.1
million was generated from the reinsurance loan to affiliate for the years
ended December 31, 1998, 1997 and 1996, 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 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, $5.9 million and $5.2 million for 1998, 1997
and 1996, 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
F-27
<PAGE>
Notes to Consolidated Financial Statements (continued)
10. Related Party Transactions (continued)
renewable term basis. Premium amounts related to this agreement were $4.4
million and $0.7 million in 1998 and 1997, respectively. 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 $87.8 million and $32.5
million were maintained for this contract as of December 31, 1998 and 1997,
respectively.
Capital Transactions
--------------------
The Company received a capital contribution of $9.3 million and $10.4
million in cash from HOLDCO in 1998 and 1996, respectively. The Company
received no capital contributions in 1997.
The Company paid $553.0 million, $17.3 million and 3.5 million in cash
dividends to HOLDCO in 1998, 1997 and 1996, respectively. Additionally, in
1998, the Company accrued $206.0 million in dividends. (Refer to Note 6)
Other
-----
Premiums due and other receivables include $1.6 million and $37.0 million
due from affiliates in 1998 and 1997, respectively. Other liabilities
include $2.2 million and $1.2 million due to affiliates for 1998 and 1997,
respectively.
As of December 31, 1998, Aetna transferred to the Company $0.7 million based
on its decision not to settle state tax liabilities for the years 1998 and
1997. The amount transferred as of December 31, 1997 was $2.5 million. This
amount has been reported as an other change 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.
11. 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 2)
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.
F-28
<PAGE>
Notes to Consolidated Financial Statements (continued)
11. Reinsurance (continued)
The following table includes premium amounts ceded/assumed to/from
affiliated companies as discussed in Note 10 above.
<TABLE>
<CAPTION>
Ceded to Assumed
Direct Other from Other Net
(Millions) Amount Companies Companies Amount
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
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
====================================================================================
1996
----
Premiums:
Discontinued Operations $34.6 $11.2 $25.3 $48.7
Accident and Health Insurance 6.3 6.3 -- --
Annuities 84.3 -- 0.6 84.9
------------------------------------------------------------------------------------
Total earned premiums $125.2 $17.5 $25.9 $133.6
====================================================================================
</TABLE>
F-29
<PAGE>
Notes to Consolidated Financial Statements (continued)
12. Segment Information
Prior to October 1, 1998, the Company's operations were reported through two
major business segments: Financial Services and Individual Life Insurance
(now Discontinued Operations). Summarized financial information for the
Company's principal operations was as follows:
<TABLE>
<CAPTION>
(4) (4)
Financial Discontinued
1998 (Millions) Services Operations Other Total
----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from external customers $433.3 -- -- $433.3
Net investment income 877.6 -- -- 877.6
----------------------------------------------------------------------------------------------------
Total revenue excluding realized
capital gains $1,310.9 -- -- $1,310.9
====================================================================================================
Amortization of deferred policy
acquisition costs $106.7 -- -- $106.7
----------------------------------------------------------------------------------------------------
Income taxes $57.7 $(10.3) $47.4
----------------------------------------------------------------------------------------------------
Operating earnings (1) $151.5 -- -- $151.5
Unusual items (2) -- -- $(19.2) (19.2)
Realized capital gains, net of tax 7.3 -- -- 7.3
----------------------------------------------------------------------------------------------------
Income from continuing operations $158.8 -- $(19.2) $139.6
Discontinued operations, net of tax:
Income from operations -- $61.8 -- 61.8
Gain on sale -- 59.0 -- 59.0
----------------------------------------------------------------------------------------------------
Net income $158.8 $120.8 $(19.2) $260.4
====================================================================================================
Segment assets $43,458.6 $3,820.2 -- $47,278.8
----------------------------------------------------------------------------------------------------
Expenditures for long-lived assets (3) -- -- $5.3 $5.3
----------------------------------------------------------------------------------------------------
</TABLE>
(1) Operating earnings are comprised of net income excluding net realized
capital gains and any unusual items.
(2) Unusual items excluded from operating earnings include an after-tax
severance benefit of $1.6 million and after-tax Year 2000 costs of
$20.8 million.
(3) Expenditures of long-lived assets represents additions to property and
equipment not allocable to business segments.
(4) Financial Services products include annuity contracts and Discontinued
Operations include life insurance products. (Refer to Note 1)
F-30
<PAGE>
Notes to Consolidated Financial Statements (continued)
12. Segment Information (Continued)
<TABLE>
<CAPTION>
(3) (3)
Financial Discontinued
1997 (Millions) Services Operations Other Total
----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from external customers $369.4 -- -- $369.4
Net investment income 878.8 -- -- 878.8
----------------------------------------------------------------------------------------------
Total revenue excluding realized
capital gains $1,248.2 -- -- $1,248.2
==============================================================================================
Amortization of deferred policy
acquisition costs $82.8 -- -- $82.8
----------------------------------------------------------------------------------------------
Income taxes $50.7 -- -- $50.7
----------------------------------------------------------------------------------------------
Operating earnings (1) $118.3 -- -- $118.3
Realized capital gains, net of tax 19.2 -- -- 19.2
----------------------------------------------------------------------------------------------
Income from continuing operations $137.5 -- -- $137.5
Discontinued Operations, net of tax:
Income from operations -- $67.8 -- 67.8
----------------------------------------------------------------------------------------------
Net Income $137.5 $67.8 -- $205.3
==============================================================================================
Segment assets $36,638.8 $3,507.6 -- $40,146.4
----------------------------------------------------------------------------------------------
Expenditures for long-lived assets (2) -- -- $9.6 $9.6
----------------------------------------------------------------------------------------------
</TABLE>
(1) Operating earnings are comprised of net income excluding net realized
capital gains and any unusual items.
(2) Expenditures for long-lived assets represents additions to property and
equipment not allocable to business segments.
(3) Financial Services products include annuity contracts and Discontinued
Operations include life insurance products. (Refer to Note 1)
F-31
<PAGE>
Notes to Consolidated Financial Statements (continued)
12. Segment Information (Continued)
<TABLE>
<CAPTION>
(3) (3)
Financial Discontinued
1996 (Millions) Services Operations Other Total
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from external customers $325.5 -- -- $325.5
Net investment income 852.6 -- -- 852.6
-----------------------------------------------------------------------------------------------------
Total revenue excluding realized capital
gains $1,178.1 -- -- $1,178.1
=====================================================================================================
Amortization of deferred policy acquisition
costs $28.0 -- -- $28.0
-----------------------------------------------------------------------------------------------------
Income taxes $35.6 -- $(4.9) $30.7
-----------------------------------------------------------------------------------------------------
Operating earnings (losses) (1) $83.2 -- -- $83.2
Unusual items (2) -- -- (9.1) (9.1)
Realized capital gains, net of tax: 11.1 -- -- 11.1
-----------------------------------------------------------------------------------------------------
Income from continuing operations $94.3 $(9.1) $85.2
Discontinued operations, net of tax
Income from operations -- $55.9 -- 55.9
-----------------------------------------------------------------------------------------------------
Net income (loss) $94.3 $55.9 $(9.1) $141.1
=====================================================================================================
</TABLE>
(1) Operating earnings are comprised of net income excluding net realized
capital gains and any unusual items.
(2) Unusual items excluded from operating earnings represent $9.1 million
after-tax corporate facilities and severance charges not directly
allocable to the business segments.
(3) Financial Services products include annuity contracts and Discontinued
Operations include life insurance products. (Refer to Note 1)
13. 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 and 1997,
the Company had commitments to purchase investments of $68.7 million and
$38.7 million, respectively. The fair value of the investments at December
31, 1998 and 1997 approximated $68.9 million and $39.0 million,
respectively.
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.01107-99 ALIAC Ed. May 1999
