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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 2000
REGISTRATION NOS. 2-32783/811-3240
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
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REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No. [ ]
Post Effective Amendment No. 54 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 66 [X]
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
(EXACT NAME OF REGISTRANT)
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(713) 526-5251
(DEPOSITOR'S TELEPHONE NUMBER, INCLUDING AREA CODE)
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PAULETTA P. COHN, ESQ.
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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It is proposed that this filing will become effective:
[ ] immediately upon filing pursuant to paragraph (b) of
Rule 485
[X] on May 1, 2000 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of
Rule 485
[ ] on [DATE] pursuant to paragraph (a)(1) of Rule 485
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TITLE OF SECURITIES BEING REGISTERED: Group
Variable Annuity Contracts
SEQUENTIAL NUMBER SYSTEM: PAGE OF PAGES
EXHIBIT INDEX ON SEQUENTIAL PAGE NUMBER
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[Momento Photo]
GUP and GTS-VA
Contract Sales
Separate Account A
Prospectus May 1, 2000
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
UNITS OF INTEREST UNDER GROUP UNIT PURCHASE AND
GROUP VARIABLE ANNUITY CONTRACTS
GUP AND GTS-VA
SEPARATE ACCOUNT A
May 1, 2000
PROSPECTUS
Group Unit Purchase Contracts, or GUP, and Group Variable Annuity Contracts, or
GTS-VA (the "Contracts"), consist of flexible and single Purchase Payment group
unit purchase variable annuity and group variable annuity contracts that are
offered by The Variable Annuity Life Insurance Company ("VALIC") to Participants
in certain employer sponsored retirement plans. The Contracts may be available
to you when you participate in a retirement program that qualifies for deferral
of federal income taxes. Non-qualified contracts are also available for certain
other employer sponsored plans. The Contracts described in this prospectus were
formerly offered through Separate Account One and Separate Account Two of VALIC.
The Contracts permit you to invest in and receive retirement benefits in the
Fixed Account Option and the Variable Account Option described in this
prospectus. The Variable Account Option invests in the Stock Index Fund, a
separate portfolio of American General Series Portfolio Company ("AGSPC").
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VALIC is a member of the Insurance Marketplace Standards Association ("IMSA").
IMSA is a voluntary membership organization created by the life insurance
industry to promote ethical market conduct for individual life insurance and
annuity products. VALIC's membership in IMSA applies to VALIC only and not to
its products or affiliates.
This prospectus provides you with information you should know before investing
in GUP or GTS-VA. This prospectus is accompanied by the current prospectus for
the mutual fund option described in this prospectus. Please read and retain each
of these prospectuses for future reference.
A Statement of Additional Information, dated May 1, 2000, contains additional
information about GUP and GTS-VA and is part of this prospectus. For a free
copy, call 1-800-44-VALIC. The Statement of Additional Information has been
filed with the Securities and Exchange Commission ("SEC") and is available along
with other related materials at the SEC's internet web site
(http://www.sec.gov).
INVESTMENT IN THE CONTRACTS IS SUBJECT TO RISK THAT MAY CAUSE THE VALUE OF THE
OWNER'S INVESTMENT TO FLUCTUATE, AND WHEN THE CONTRACTS ARE SURRENDERED, THE
VALUE MAY BE HIGHER OR LOWER THAN THE PURCHASE PAYMENTS.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THE PROSPECTUS............................... 1
FEE TABLE.......................................... 2
SUMMARY............................................ 3
SELECTED PURCHASE UNIT DATA........................ 4
GENERAL INFORMATION................................ 5
About the Contracts............................ 5
About VALIC.................................... 5
About VALIC Separate Account A................. 5
Units of Interests............................. 6
Distribution of the Contracts.................. 6
VARIABLE ACCOUNT OPTION............................ 6
Summary of the Fund............................ 6
PURCHASE PERIOD.................................... 6
Purchase Payments.............................. 6
Purchase Units................................. 7
Calculation of Purchase Unit Value............. 7
Choosing Investment Options.................... 7
Fixed Account Option...................... 7
Variable Account Option................... 8
Stopping Purchase Payments..................... 8
TRANSFERS BETWEEN INVESTMENT OPTIONS............... 8
During the Purchase Period..................... 8
During the Payout Period....................... 8
Communicating Transfer or Reallocation
Instructions................................. 9
Effective Date of Transfer..................... 9
Market Timing.................................. 9
FEES AND CHARGES................................... 9
Sales and Administrative Charge................ 9
Premium Tax Charge............................. 10
Separate Account Charges....................... 10
Fund Annual Expense Charges.................... 10
Other Tax Charges.............................. 10
Reduction from Total Expenses.................. 10
PAYOUT PERIOD...................................... 11
Fixed Payout................................... 11
Variable Payout................................ 12
Combination Fixed and Variable Payout.......... 12
Payout Date.................................... 12
Payout Options................................. 12
Enhancements to Payout Options................. 13
Level Payments Option.......................... 13
Payout Information............................. 13
SURRENDER OF ACCOUNT VALUE......................... 14
When Surrenders Are Allowed.................... 14
Amount That May Be Surrendered................. 14
Surrender Restrictions......................... 14
Partial Surrenders............................. 14
</TABLE>
<TABLE>
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PAGE
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<S> <C>
DEATH BENEFITS..................................... 15
Beneficiary Information........................ 15
During the Purchase Period..................... 15
During the Payout Period....................... 15
HOW TO REVIEW INVESTMENT PERFORMANCE OF SEPARATE
ACCOUNT DIVISIONS................................ 16
Types of Investment Performance Information
Advertised................................... 16
Total Return Performance Information......... 16
Standard Average Annual Total Return......... 16
Nonstandard Average Annual Total Return...... 16
Cumulative Total Return...................... 16
Annual Change in Purchase Unit Value......... 16
Cumulative Change in Purchase Unit Value..... 17
Total Return Based on Different Investment
Amounts................................... 17
An Assumed Account Value of $10,000.......... 17
Yield Performance Information.................. 17
Performance Information: Average Annual Total
Return, Cumulative Return and Annual and
Cumulative Change in Purchase Unit Value
Tables....................................... 17
OTHER CONTRACT FEATURES............................ 19
Changes That May Not Be Made................... 19
Change of Beneficiary.......................... 19
Cancellation -- The 10 Day "Free Look"......... 19
We Reserve Certain Rights...................... 19
Relationship to Employer's Plan................ 19
Assigning Your Contract........................ 19
VOTING RIGHTS...................................... 20
Who May Give Voting Instructions............... 20
Determination of Fund Shares Attributable to
Your Account................................. 20
During Purchase Period....................... 20
During Payout Period or after a Death Benefit
Has Been Paid............................. 20
How Fund Shares Are Voted...................... 20
FEDERAL TAX MATTERS................................ 20
Type of Plans.................................. 20
Tax Consequences in General.................... 21
Effect of Tax-Deferred Accumulations........... 21
The Power of Tax-Deferred Growth............... 21
YEAR 2000.......................................... 22
</TABLE>
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ABOUT THE PROSPECTUS
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Unless otherwise specified in this prospectus, the words we, our, Company, and
VALIC mean The Variable Annuity Life Insurance Company and the words "you" and
"your" mean the participant, contract owner, annuitant or beneficiary.
When we refer to the Contracts in this prospectus we mean the GUP Contracts and
the GTS-VA Contracts that have common provisions. We will state which one of the
Contracts we are talking about when the provisions between the Contracts are
different. Both the GUP Contracts and the GTS-VA Contracts may vary depending on
the plan in which they are offered in. We will note when such variations occur,
and what type of plan the Contract with the variations is being offered under.
Other specific terms that will be used in this prospectus are set forth below,
along with the page number where the term is defined.
<TABLE>
<CAPTION>
DEFINED TERMS PAGE NO.
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<S> <C>
Account Value................ 8
Annuitant.................... 15
Assumed Investment Rate...... 11
Beneficiary.................. 15
Contract Owner............... 1, 15
Divisions.................... 16
Fixed Account Options........ 15
Home Office.................. 9
Mutual Fund or Fund.......... 5
Participant.................. 1
Participant Year............. 9
Payout Period................ 9
Payout Unit.................. 11
Purchase Payments............ 6, 16
Purchase Period.............. 8
Purchase Unit................ 7
VALIC Separate Account A..... 20
Variable Account Option...... 6, 15
</TABLE>
This prospectus is being given to you to help you make decisions for selecting
various investment options and benefits to plan and save for your retirement. It
is intended to provide you with information about VALIC, the Contracts, and
saving for your retirement.
The purpose of the Variable Account Option and the Variable Payout Options is to
provide you investment returns which are greater than the effects of inflation.
We cannot, however, guarantee that this purpose will be achieved.
This prospectus describes contracts in which units of interest in VALIC's
Separate Account A are offered. The Contracts, formerly offered through VALIC's
Separate Account One and Separate Account Two, will allow you to accumulate
retirement dollars in a Fixed Account Option and/or a Variable Account Option.
This prospectus describes only the variable aspects of the Contracts except
where the Fixed Account Option is specifically mentioned.
For specific information about the Variable Account Option, you should refer to
the prospectus of AGSPC that you have been given with this document. You should
keep this prospectus to help answer any questions you may have in the future.
Following this introduction is a summary of the major features and options of
the Contracts. This summary is intended to provide you with a brief overview of
those sections discussed in more detail in this prospectus.
CONTRACT OWNER -- the
individual (in most
cases, your employer)
to whom the Contract
is issued.
PARTICIPANT -- the
individual, (in most
cases you are the
Participant) who makes
Purchase Payments or
for whom Purchase
Payments are made.
1
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FEE TABLE
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This Fee Table shows all charges and expenses which may be deducted from the
assets of VALIC Separate Account A and from the Stock Index Fund in which VALIC
Separate Account A invests. For a further description of these charges and
expenses, see "Fees and Charges" in this prospectus and the descriptions of fees
and charges in AGSPC's prospectus. Any and all limitations on total charges and
expenses are reflected in this Fee Table.
<TABLE>
<CAPTION>
GUP GTS-VA
CONTRACTS CONTRACTS
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<S> <C> <C>
CONTRACT OWNER/PARTICIPANT EXPENSES(1)
Maximum Sales and Administrative Charge (as a percentage
of Purchase Payments)(2)................................ 5.00%(3) 5.00%
SEPARATE ACCOUNT EXPENSES
(as a percentage of Separate Account net assets)
Mortality and Expense Risk................................ 1.00% 0.52%(4)
Total Separate Account Expenses(6)................. 1.00% 0.52%
FUND ANNUAL EXPENSES
(as a percentage of net assets):
</TABLE>
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FUND FEES EXPENSES(5) EXPENSES(6)
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<S> <C> <C> <C>
AGSPC Stock Index Fund...................................... .26% .06% .32%
</TABLE>
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(1) Premium taxes are not shown here, but may be charged by some states. See
"Premium Tax Charge" in this prospectus.
(2) Reductions in the Sales and Administrative Charge are available if certain
conditions are met. See "Fees and Charges" in this prospectus.
(3) Under certain groups, whose contracts are deposit administration contracts
not administered by VALIC, this charge may be higher. See "Fees and Charges"
in this prospectus.
(4) The Mortality and Expense Risk Fee may vary depending on the total assets
attributable to the GTS-VA Contracts. See the "Fees and Charges" section in
this prospectus.
(5) Other Expenses includes custody, accounting, reports to shareholders, audit,
legal, administrative and other miscellaneous expenses. See AGSPC's
prospectus for a detailed explanation of these fees.
(6) Reduction from Total Separate Account and Fund Expenses due to Permanent
Guaranteed Expense Limitations. The Company has agreed to reduce the Total
Separate Account and Fund Expenses by a percentage of average net assets, to
1.4157% on the first $359,065,787, 1.36% on the next $40,934,213 and 1.32%
of the excess over $400 million of total assets attributable to the GUP
Contracts and .6966% on the first $25,434,267, .5% on the next $74,565,733
and .25% of the excess over $100 million of the total assets attributable to
the GTS-VA Contracts. For the period ending December 31, 1999, the Reduction
from Total Separate Account and Fund Expenses were 0% and 0.23%, for the GUP
Contract and the GTS-VA Contract, respectively. This Reduction from Total
Separate Account and Fund Expenses reduced the Total Separate Account and
Fund Expenses to 1.32% and 0.61% for the GUP Contract and the GTS-VA
Contract, respectively. See "Reduction From Total Expenses" in the "Fees and
Charges" section, in this prospectus.
EXAMPLE -- Whether you surrender or do not surrender the Contract at the end of
the period shown or you receive Payout Payments under a Payout
Option:
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Total Expenses. You would pay the following expenses on a $1,000 investment
under a typical GUP Contract or GTS-VA Contract, invested in the AGSPC Stock
Index Fund as listed below, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
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<S> <C> <C> <C> <C>
GUP Contract $63 $90 $119 $202
GTS-VA Contract $56 $69 $ 83 $123
</TABLE>
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Note: These examples should not be considered representations of past or future
expenses for VALIC Separate Account A or for the Fund. Actual expenses may be
greater or less than those shown above. Similarly, the 5% annual rate of return
assumed in the examples is not an estimate or guarantee of future investment
performance. The purpose of the Fee Table above is to help Contract Owners and
Participants understand the various expenses of VALIC Separate Account A and the
Fund which are, in effect, passed on to the Contract Owners and Participants.
This Fee Table shows all charges and expenses which may be deducted from the
assets of VALIC Separate Account A and from the Fund in which VALIC Separate
Account A invests. For a further description of these charges and expenses, see
"Fees and Charges" in this prospectus and the descriptions of fees and charges
in the Fund's prospectus. Any and all limitations on total charges and expenses
are reflected in this Fee Table.
2
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SUMMARY
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A summary of the Contracts' major features is presented below. For a more
detailed discussion of the Contracts, please read the entire prospectus
carefully.
FIXED AND VARIABLE OPTIONS
The Contracts offer a choice of one Variable Account Option and one Fixed
Account Option.
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<TABLE>
<S> <C> <C> <C>
FIXED ACCOUNT
OPTION
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Fixed Account General Account assets of the Company --
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VARIABLE ACCOUNT INVESTMENT STRATEGY ADVISER
OPTION
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AGSPC Stock Index Fund Growth through investments tracking the VALIC
S&P 500(R) Index
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</TABLE>
A detailed description of the investment objective of the AGSPC Stock Index Fund
can be found in the section of the prospectus entitled "Variable Account
Option," and also in the current prospectus for AGSPC.
GUARANTEED DEATH BENEFIT
The Contracts offer a death benefit equal to the greater of Account Value or
Purchase Payments reduced by withdrawals upon death of the Annuitant during the
Purchase Period.
TRANSFERS
There is no charge to transfer your money between the Variable Account Option
and the Fixed Account Option during the Purchase Period.
Transfers can be made by calling VALIC's toll-free transfer service at
1-800-621-7792. For more information on account transfers, see the "Transfers
Between Investment Options" section in this prospectus.
FEES AND CHARGES
SALES AND ADMINISTRATIVE CHARGE
Generally, a Sales and Administrative Charge of up to 5.00% will be deducted
from Purchase Payments. See "Fees and Charges -- Sales and Administrative
Charge."
PREMIUM TAX CHARGE
Premium taxes ranging from zero to 3 1/2% are currently imposed by certain
states and municipalities on Purchase Payments made under the contract.
SEPARATE ACCOUNT CHARGES
If you choose the Variable Account Option you will incur a mortality and expense
risk fee computed at an aggregate annualized rate of 1.00% and 0.52% for the GUP
Contracts and GTS-VA Contracts, respectively, on the average daily net asset
value of VALIC Separate Account A.
STOCK INDEX FUND ANNUAL EXPENSE CHARGE
A daily charge based on a percentage of the Stock Index Fund's average daily net
asset value is payable by the Stock Index Fund to its investment adviser. In
addition to the management fees, the Stock Index Fund incurs other operating
expenses which may vary.
Since some of these fees may not apply to your contract, consult your VALIC
Retirement Plan Specialist to see how these provisions apply to you.
PAYOUT OPTIONS
When you withdraw your money, you can select from several payout options: an
annuity (which guarantees payment for as long as you live), periodic withdrawals
and systematic withdrawals. More information on payout options can be found in
the "Payout Period" section of this prospectus.
FEDERAL TAX INFORMATION
Although deferred annuity contracts such as GUP and GTS-VA can be purchased with
after-tax dollars, they are primarily used in connection with retirement
programs which receive favorable tax treatment under federal law.
More information on FEES
may be found in the
prospectus under the
headings "Fees and
Charges" and "Fee Table."
For a more detailed
discussion of these income
tax provisions, see the
"FEDERAL TAX MATTERS"
section of the prospectus and
of the Statement of Additional
Information.
For more information on
PURCHASE PAYMENTS, REFER
TO THE "PURCHASE PERIOD"
section of the prospectus.
3
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SUMMARY -- (CONTINUED)
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PURCHASE REQUIREMENTS
GUP CONTRACTS
Under the GUP Contracts, the minimum initial and subsequent Purchase Payments
per a Participant in a group is $25, if the entire Purchase Payment is allocated
to the Variable Account Option and $30 if the Purchase Payment is split between
the Variable Account Option and the Fixed Account Option. In certain group
plans, the minimum initial Purchase Payment must be at least $2,000, and
subsequent Purchase Payments must be at least $5,000. Under certain plans, the
minimum initial and subsequent Purchase Payment amounts for the GUP Contracts
may differ or may be waived. See "Purchase Period," in this prospectus.
GTS-VA CONTRACTS
Under the GTS-VA Contracts, the minimum initial and subsequent Purchase Payments
is $10,000 per year. This amount may vary depending on the type of plan that the
GTS-VA Contract is offered under. See "Purchase Period," in this prospectus.
SELECTED PURCHASE UNIT DATA
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<TABLE>
<CAPTION>
AGSPC STOCK INDEX AGSPC STOCK INDEX
DIVISION 10A (GUP CONTRACTS)(1) DIVISION 10B (GTS-VA CONTRACTS)(1)
------------------------------- ----------------------------------
<S> <C> <C>
DECEMBER 31, 1999
Purchase Units in Force 21,421,375 1,005,615
Purchase Unit Value $26.836368 $43.027665
DECEMBER 31, 1998
Purchase Units in Force 23,726,504 1,131,113
Purchase Unit Value $22.479709 $35.792019
DECEMBER 31, 1997
Purchase Units in Force 25,835,933 1,256,974
Purchase Unit Value $17.679054 $27.956410
DECEMBER 31, 1996
Purchase Units in Force 27,379,389 1,380,401
Purchase Unit Value $13.413891 $21.070956
DECEMBER 31, 1995
Purchase Units in Force 29,995,363 1,560,525
Purchase Unit Value $11.036946 $17.221812
DECEMBER 31, 1994
Purchase Units in Force 33,814,520 1,836,094
Purchase Unit Value $ 8.116786 $12.582568
DECEMBER 31, 1993
Purchase Units in Force 36,512,399 1,937,835
Purchase Unit Value $ 8.140393 $12.535147
DECEMBER 31, 1992
Purchase Units in Force 38,339,955 1,980,063
Purchase Unit Value $ 7.481645 $11.439143
DECEMBER 31, 1991
Purchase Units in Force 39,793,938 2,027,028
Purchase Unit Value $ 7.285058 $11.058834
DECEMBER 31, 1990
Purchase Units in Force 42,428,504 2,077,905
Purchase Unit Value $ 6.045955 $ 9.113417
</TABLE>
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(1) Effective with the merger of the AGSPC Quality Growth Fund into the AGSPC
Stock Index Fund on May 1, 1992, the Quality Growth Fund Divisions 9A and 9B
were merged into the Stock Index Fund Divisions 10A and 10B, respectively.
The merger of the Divisions was accomplished by an exchange of units of
Quality Growth Divisions 9A and 9B for units of Stock Index Divisions 10A
and 10B, respectively.
Financial statements of VALIC Separate Account A are included in the Statement
of Additional Information, which is available upon request. Purchase Units shown
are for a Purchase Unit outstanding throughout the year under a representative
contract of the type invested in each column shown. The unit value of the
Division of VALIC Separate Account A will not be the same on any given day as
the net asset value per share of the Stock Index Fund in which the Division
invests. This is because each unit value consists of the underlying share's net
asset value minus the charges to VALIC Separate Account A. In addition,
dividends declared by the Stock Index Fund are reinvested by the Division in
additional shares. These distributions have the effect of reducing the value of
each share of the Stock Index Fund and increasing the number of Stock Index Fund
shares outstanding. However, the total cash value in VALIC Separate Account A
does not change as a result of such distributions.
4
<PAGE> 10
GENERAL INFORMATION
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ABOUT THE CONTRACTS
The Contracts were developed to help you save money for your retirement. They
offer you a fixed and a variable investment option that you can invest in to
help you reach your retirement savings goals. Your contributions to the
Contracts can come from different sources, like payroll deductions or money
transfers. Your retirement savings process with the Contracts will involve two
stages: the Purchase Period and the Payout Period. The first is when you make
contributions into the Contracts called "Purchase Payments." The second is when
you receive your retirement payouts. For more information, see "Purchase Period"
and "Payout Period" in this prospectus.
You may choose, depending upon your retirement savings goals, your personal risk
tolerances, and your retirement plan, to invest in the Fixed Account Option
and/or the Variable Account Option described in this prospectus. When you decide
to retire, or otherwise withdraw your money, you can select from a wide array of
payout options including both fixed and variable payments. In addition, this
prospectus will describe for you all fees and charges that may apply to your
participation in the Contracts.
ABOUT VALIC
We were originally organized on December 21, 1955 as The Variable Annuity Life
Insurance Company of America, located in Washington, D.C. We re-organized in the
State of Texas on August 20, 1968, as The Variable Annuity Life Insurance
Company. Our main business is issuing and offering fixed and variable retirement
annuity contracts, like GUP and GTS-VA. Our principal offices are located at
2929 Allen Parkway, Houston, Texas 77019. We have Regional Offices throughout
the United States.
VALIC is a member of the American General Corporation group of companies.
Members of the American General Corporation group of companies operate in each
of the 50 states, the District of Columbia, and Canada and collectively provide
financial services with activities heavily weighted toward insurance.
VALIC is a member of the Insurance Marketplace Standards Association ("IMSA").
IMSA is a voluntary membership organization created by the life insurance
industry to promote ethical market conduct for individual life insurance and
annuity products. VALIC's membership in IMSA applies to VALIC only and not its
products or affiliates.
ABOUT VALIC SEPARATE ACCOUNT A
When you direct money to the Contracts' Variable Account Option, you will be
sending that money through VALIC's Separate Account A. You do not invest
directly in the Stock Index Fund. VALIC's Separate Account A invests in the
Stock Index Fund on behalf of your account. VALIC Separate Account A is made up
of what we call "Divisions."
On May 1, 1992, the AGSPC Quality Growth Fund merged into the AGSPC Stock Index
Fund. Effective with this merger, the Quality Growth Divisions 9A and 9B were
renamed Stock Index Divisions 10A and 10B, respectively. Divisions 10A and 10B,
which invest in a Mutual Fund called the AGSPC Stock Index Fund, are available
under the Contracts. Division 10A is the Variable Account Option for the GUP
Contracts and Division 10B is the Variable Account Option for the GTS-VA
Contracts. The earnings (or losses) of Divisions 10A and 10B are credited to (or
charged against) the assets of Divisions 10A and 10B.
VALIC established Separate Account A on July 25, 1979 under Texas insurance law.
VALIC Separate Account A is registered with the SEC as a unit investment trust
under the Investment Company Act of 1940 ("Act"). Units of interest in VALIC
Separate Account A are registered as securities under the Securities Act of
1933.
VALIC Separate Account A is administered and accounted for as part of VALIC's
business operations. However, the income, capital gains or capital losses,
whether or not realized, of each Division of VALIC Separate Account A are
credited to or charged against the assets held in that Division without regard
to the income, capital gains or capital losses of any other Division or arising
out of any other business the Company may conduct. In accordance with the terms
of the Contracts, VALIC Separate Account A may not be charged with the
liabilities of any other VALIC operation. As stated in the Contracts, the Texas
Insurance Code requires that the assets of VALIC Separate Account A attributable
to the Contracts be held exclusively for the benefit of the contract owner,
participants, annuitants, and beneficiaries of the Contracts. When we discuss
performance information in this prospectus, we mean the performance of a VALIC
Separate Account A Division.
All inquiries regarding
THE CONTRACTS
may be directed to your
VALIC Regional Office.
MUTUAL FUND OR FUND --
the investment portfolio(s)
of a registered open-end
management investment
company, which serves as
the underlying investment
vehicle for each Division
represented in VALIC
Separate Account A.
For more information about
VALIC, see the Statement
of Additional Information.
5
<PAGE> 11
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UNITS OF INTERESTS
Your investment in a Division of VALIC Separate Account A is represented by
units of interest issued by VALIC Separate Account A. On a daily basis, the
units of interest issued by VALIC Separate Account A are revalued to reflect
that day's performance of the underlying mutual fund minus any applicable fees
and charges to VALIC Separate Account A.
DISTRIBUTION OF THE CONTRACTS
American General Distributors, Inc. ("the Distributor"), an affiliate of VALIC,
acts as VALIC's Separate Account A distributor.
VALIC will pay the licensed agents who sell the Contracts a commission.
Currently, the commission paid by VALIC will range up to 6.0% of each Purchase
Payment. In addition, VALIC will pay managers who supervise the agents
overriding commissions ranging to 1% of each Purchase Payment. These various
commissions are paid by VALIC and do not result in any charge to Participants or
to the Separate Account.
VARIABLE ACCOUNT OPTION
- --------------------------------------------------------------------------------
The Contracts enable you to participate in a Division that represents a Variable
Account Option. Certain limitations may also apply. See "About VALIC Separate
Account A" in this prospectus.
The Division represents and invests, through VALIC's Separate Account A, in a
specific portfolio of AGSPC. AGSPC serves as the investment vehicle for the
Contracts.
AGSPC is registered as an open-end, management investment company and is
regulated under the Act. For complete information about the Stock Index Fund
option, including charges and expenses, you should refer to the prospectus of
AGSPC. Additional copies are available from VALIC or you may contact your VALIC
Regional Office.
SUMMARY OF THE FUND
A brief summary of the investment objective of the Stock Index Fund is shown
below.
STOCK INDEX FUND
Investment objective: Seeks long-term capital growth through investment in
common stocks that, as a group, are expected to provide investment results
closely corresponding to the performance of the S&P 500(R) Index.
PURCHASE PERIOD
- --------------------------------------------------------------------------------
The Purchase Period begins when your first Purchase Payment is made and
continues until you begin your Payout Period. The Purchase Period can also end
when an account under the Contracts is surrendered before the Payout Period. The
amount, number, and frequency of your Purchase Payments is determined by the
retirement plan for which your contract was purchased.
PURCHASE PAYMENTS
You may establish an account only through a VALIC representative. Initial
Purchase Payments must be received by VALIC either with, or after, a completed
application. Your employer is usually responsible for remitting Purchase
Payments to us. The employer is responsible for furnishing instructions to us as
to the amount being applied to your account.
Minimum initial and subsequent Purchase Payments are as follows:
<TABLE>
<CAPTION>
Initial Subsequent
Contract Type Payment Payment
- --------------------- -------------------------- --------------------------
<S> <C> <C>
GUP Contracts(1) $30 (with a $12 minimum $30 (with a $12 minimum
allocated to the Variable allocated to the Variable
Account Option) or $25 if Account Option) or $25 if
the entire Purchase the entire Purchase
Payment amount is to be Payment amount is to be
allocated to the Variable allocated to the Variable
Account Option only. Account Option only.
GTS-VA Contracts(2) $10,000 $10,000
</TABLE>
- ---------------
(1) The Minimum Initial and Subsequent Purchase Payments for GUP Contracts
issued under Section 401 of the Internal Revenue Code (the "Code") is $2,000
and $5,000, respectively. VALIC may from time-to-time waive the Minimum
Initial and Subsequent Purchase Payment amounts for group plans established
for employers with 500 or more employees.
(2) The $10,000 Minimum Initial and Subsequent Purchase Payment amount applies
only to GTS-VA Contracts issued under Sections 401 and 403(b) of the Code.
There are no Minimum Initial and Subsequent Purchase Payment requirements
for other GTS-VA Contracts.
THE DISTRIBUTOR'S
address is
2929 Allen Parkway,
Houston, Texas 77019.
For more information about THE
DISTRIBUTOR, see the Statement of
Additional Information.
VARIABLE ACCOUNT
OPTION -- investment
option that corresponds
to a Separate Account
Division offered by
the Contracts.
Investment returns on
the Variable Account
Option may be positive
or negative depending on
the investment
performance of the
Stock Index Fund.
PURCHASE PAYMENTS -- an
amount of money you or your
employer pay to VALIC to
receive the benefits of an
annuity Contract offered
under GUP or GTS-VA.
6
<PAGE> 12
- --------------------------------------------------------------------------------
Purchase Payment minimums apply to each Purchase Payment made.
Purchase Payments are received in VALIC's Home Office. When an initial Purchase
Payment is accompanied by an application, within 2 business days we will:
- - Accept the Application -- and issue a certificate. We will also establish your
account and apply your Purchase Payment by crediting the amount to the Fixed
Account Option or the Variable Account Option;
- - Reject the Application -- and return the Purchase Payment; or
- - Request Additional Information -- to correct or complete the application.
If we receive Purchase Payments from your employer before we receive your
completed application or enrollment form, we will not be able to establish a
permanent account for you. Under those circumstances, we will take one of the
following actions:
Return Purchase Payments. If we do not have your name, address or social
security number, we will return the Purchase Payment to your employer unless
this information is immediately provided to us.
Employer-Directed Account. If we have your name, address and social security
number and we have an Employer-Directed Account Agreement from your employer,
generally we will deposit your Purchase Payment in an "Employer-Directed"
account invested in the Fixed Account Option. You may not transfer these amounts
until VALIC has received a completed application or enrollment form.
PURCHASE UNITS
A Purchase Unit is a unit of interest owned by you in your Variable Account
Option. Purchase Units apply only to the Variable Account Option in your
account. Purchase Unit values are calculated at the close of regular trading of
the New York Stock Exchange (the "Exchange"), currently 4:00 p.m. New York time
(see "Calculation of Purchase Unit Value" below for more information). Once we
have established your account and have applied your initial Purchase Payment as
described above, any subsequent Purchase Payment that we receive at our Home
Office before the close of the Exchange will be credited the same business day.
If not, it will be calculated and credited the next business day. Purchase Unit
values will vary depending on the net investment results of each of the Variable
Account Options. This means the value of your Variable Account Option will
fluctuate.
CALCULATION OF PURCHASE UNIT VALUE
The Purchase Unit value for a Division is calculated as shown below:
Step 1: Calculate the gross investment rate:
Gross Investment Rate
= (EQUALS)
The Division's investment income and capital gains and losses (whether
realized or unrealized) on that day from the assets attributable to the
Division.
/ (DIVIDED BY)
The value of the Division for the immediately preceding day on which the
values are calculated.
We calculate the gross investment rate as of 4:00 p.m. New York time on each
business day when the Exchange is open.
Step 2: Calculate net investment rate for any day as follows:
Net Investment Rate
= (EQUALS)
Gross Investment Rate (calculated in Step 1)
- - (MINUS)
Separate Account charges and any income tax charges.
Step 3: Determine Purchase Unit Value for that day.
Purchase Unit Value for that day.
= (EQUALS)
Purchase Unit Value for immediate preceding day.
X (MULTIPLIED BY)
Net Investment Rate (as calculated in Step 2) plus 1.00.
CHOOSING INVESTMENT OPTIONS
There are 2 investment options offered in the Contracts. This includes 1 Fixed
Account Option and 1 Variable Account Option. The Fund that underlies the
Variable Account Option is registered as a separate portfolio of AGSPC. AGSPC is
registered as an investment company under the Act and is subject to regulation
of the Act. The Fixed Account Option is not subject to regulation under the Act
and is not required to be registered under the Securities Act of 1933. As a
result, the SEC has not reviewed data in this prospectus that relates to the
Fixed Account Option. However, federal securities law does require such data to
be accurate and complete.
FIXED ACCOUNT OPTION
The Fixed Account Option is part of the Company's general assets. You may
allocate all or a portion of your Purchase Payment to the Fixed Account Option
listed in the "Summary of the Contracts" appearing in this prospectus. Purchase
Payments you allocate to the Fixed Account Option are guaranteed to earn at
least a minimum rate of interest. Interest is paid on the Fixed Account Option
at a declared rate. We bear the entire investment risk for the Fixed Account
Option. All Purchase Payments and interest earned on such amounts in your Fixed
Account Option will be paid regardless of the investment results experienced by
the Company's general assets.
For more information as to
how PURCHASE UNIT VALUES
are calculated, see the
Statement of Additional
Information.
PURCHASE UNIT -- a
measuring unit used to
calculate your Account Value
during the Purchase Period.
The value of a Purchase Unit
will vary with the investment
experience of the Separate
Account Division.
7
<PAGE> 13
- --------------------------------------------------------------------------------
Here is how you may calculate the value of your Fixed Account Option during the
Purchase Period:
Value of Your Fixed Account Option
= (EQUALS)
All Purchase Payments made to the Fixed Account Option
+ (PLUS)
Amounts transferred from the Variable Account Option to the Fixed
Account Option
+ (PLUS)
All interest earned
- - (MINUS)
Amounts transferred or withdrawn from Fixed Account Option
(including applicable fees and charges)
VARIABLE ACCOUNT OPTION
You may allocate all or a portion of your Purchase Payments to the Variable
Account Option listed in this prospectus as permitted by your retirement
program. A complete discussion of the Variable Account Option may be found in
the "Variable Account Option" section in this prospectus. Based upon the
Variable Account Option's Purchase Unit Value your account will be credited with
the applicable number of Purchase Units. The Purchase Unit Value of the Variable
Account Option will change daily depending upon the investment performance of
the Stock Index Fund (which may be positive or negative) and the deduction of
VALIC Separate Account A charges. See the "Fees and Charges" section in this
prospectus. Because Purchase Unit Values change daily, the number of Purchase
Units your account will be credited with for subsequent Purchase Payments will
vary. The Variable Account Option bears its own investment risk. Therefore, the
value of your account may be worth more or less at retirement or withdrawal.
Here is how to calculate the value of the Variable Account Option in your
account during the Purchase Period:
Value of Your Variable Account Option
= (EQUALS)
Total Number of Purchase Units
X (MULTIPLIED BY)
Current Purchase Unit Value
STOPPING PURCHASE PAYMENTS
Purchase Payments may be stopped at any time. Purchase Payments may be resumed
at any time before your contract's account has been surrendered. The value of
the Purchase Units will continue to vary. Your Account Value will continue to be
subject to charges.
TRANSFERS BETWEEN INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
You may transfer all or part of your Account Value between the Fixed Account
Option and the Variable Account Option without a charge. Transfer instructions
may be made either in writing or by telephone as discussed below. Transfers may
be made during the Purchase Period or during the Payout Period. We reserve the
right to limit transfers as discussed below. Your employer's plan may also limit
your rights to transfer.
DURING THE PURCHASE PERIOD
During the Purchase Period, transfers may be made between the Fixed Account
Option and the Variable Account Option at any time.
If you make a transfer into the Fixed Account Option within 120 days of making a
transfer out of the Fixed Account Option, the interest rate earned on the
Account Value in the Fixed Account Option may be adversely affected.
Transfers are permitted during the Purchase Period, subject to the following
limitations:
<TABLE>
<CAPTION>
OTHER
ACCOUNT OPTION FREQUENCY RESTRICTIONS
- -------------- ----------- -------------------------------------
<S> <C> <C>
Variable At any time None(1)
Account
Option
Fixed Account At any time None(1)
Option
</TABLE>
- ---------------
(1) VALIC may limit transfers to the extent such a limitation is allowed under
your Contract.
DURING THE PAYOUT PERIOD
During the Payout Period, transfers may be made from the Contracts' investment
options subject to the following limitations:
<TABLE>
<CAPTION>
OTHER
ACCOUNT OPTION FREQUENCY RESTRICTIONS
- -------------- ---------- ------------------------------------
<S> <C> <C>
Variable Once every None
Account 365 days
Option:
Fixed Account Not --
Option: permitted
</TABLE>
ACCOUNT VALUE -- the total
sum of your Fixed Account
Option and/or Variable
Account Option that have
not yet been applied to
your Payout Payments.
PURCHASE PERIOD -- the time
between your first Purchase
Payment and your Payout
Period (or surrender).
8
<PAGE> 14
- --------------------------------------------------------------------------------
COMMUNICATING TRANSFER OR
REALLOCATION INSTRUCTIONS
A written instruction to transfer or reallocate all or part of your Account
Value between the investment options in the Contracts, should be sent to VALIC's
Home Office.
Instructions for transfers or reallocations may be made by calling
1-800-621-7792. Telephone transfers will be allowed unless we have been notified
not to accept such telephone instructions. In this event, we must receive
written instructions, in order to permit future telephone transfers to be made.
Before a transfer will be made by telephone, you must give us the requested
identifying information concerning your account(s).
Unless we have been instructed not to accept requests for telephone transfers,
anyone may effect a telephone transfer if they furnish the requested
information. You will bear any loss resulting from such instructions, whether
the caller was specifically authorized by you or not.
No one that we employ or that represents VALIC may give telephone instructions
on your behalf without VALIC's prior written permission. (This does not apply to
a contract with the immediate family of an employee or representative of VALIC.)
We will send you a confirmation of the completed transfer within 5 days from the
date of your instruction. When you receive your confirmation, it is your duty to
verify the information shown, and advise us of any errors within one business
day.
You will bear the risk of loss arising from instructions received by telephone.
We are not responsible for the authenticity of such instructions. Any telephone
instructions which we reasonably believe to be genuine will be your
responsibility. This includes losses from errors in communication. Telephone
transfer instruction may not be made during the Payout Period. We reserve the
right to stop telephone transfers at any time.
EFFECTIVE DATE OF TRANSFER
The effective date of a transfer will be:
- - The date of receipt, if received in our Home Office before the close of
regular trading of the Exchange on a day values are calculated; (Normally,
this will be 4:00 P.M. New York time); otherwise
- - The next date values are calculated.
MARKET TIMING
The Contracts are not designed for professional market timing organizations or
other entities using programmed and frequent transfers. We reserve the right at
any time and without prior notice to any party to terminate, suspend, or modify
our policies or procedures regarding transfer requests.
FEES AND CHARGES
- --------------------------------------------------------------------------------
By investing in the Contracts, you may be subject to five basic types of fees
and charges:
- - Sales and Administrative Charge
- - Premium Tax Charge
- - Separate Account Charges
- - Fund Annual Expense Charge
- - Other Tax Charges
These fees and charges are explained below. For additional information about
these fees and charges, see the Fee Table in this prospectus.
SALES AND ADMINISTRATIVE CHARGE
When you make a Purchase Payment to your account, you may be subject to a Sales
and Administrative Charge that will be deducted from the amount of your Purchase
Payment. The Sales and Administrative Charge will be deducted from the GUP
Contracts as follows:
<TABLE>
<CAPTION>
Deduction as Deduction as
Aggregate Gross a Percentage a Percentage of
Purchase of Purchase Net Purchase
Payments(1) Payments(2) Payments(3)
--------------- ---------------- ----------------
<S> <C> <C>
first $5,000 5.00% 5.26%
next $ 5,000 4.00% 4.17%
next $ 5,000 3.50% 3.63%
over $15,000 3.00% 3.09%
</TABLE>
- ---------------
(1) The Aggregate Gross Purchase Payments is the entire amount that you pay to
the Company under a contract.
(2) We will only deduct 2% (1.4% administrative expenses and 0.6% sales
expenses) from single one-time Purchase Payments, except when the single
one-time Purchase Payment is transferred from other Company annuity
contracts for which no deduction is made. Any subsequent Purchase Payments
made after a single one-time Purchase Payment will be subject to the
deduction as described above with the lump sum included in the Aggregate
Gross Purchase Payment.
(3) The Gross Purchase Payment amount minus the deduction for Sales and
Administrative Expenses is the amount of the Net Purchase Payment.
HOME OFFICE -- our
principal office at 2929 Allen
Parkway, Houston, Texas
77019.
PAYOUT PERIOD -- the time
that starts when you begin to
withdraw your money in a
steady stream of payments.
PARTICIPANT YEAR -- the first
twelve month period and
then each yearly anniversary
of that period following the
issue date of the contract or
certificate.
9
<PAGE> 15
- --------------------------------------------------------------------------------
Certain group plans use GUP Contracts that are not administered by VALIC. These
GUP Contracts are administered by professional actuarial consultants. This type
of contract is known as a deposit administration contract. The GUP Contracts
administered as deposit administration contracts have a different Sales and
Administrative Charge than the GUP Contracts not administered as deposit
administration contracts. A sales charge on the GUP deposit administration
contracts will be deducted annually on 5% of Purchase Payments received (5.26%
of Net Purchase Payments) after an administrative charge is deducted. The
administrative charge on the GUP deposit administration contracts is a dollar
amount calculated and deducted yearly based on the total contributions made by
the group from when the deposit administration contract began.
The administrative charge on the GUP deposit administration contracts will be
determined as follows:
<TABLE>
<CAPTION>
Total Group Amount
Contributions Deducted Per Year
- ------------------------ -----------------
<S> <C>
$0 - $99,999 $1,000
$100,000 - $199,999 $ 750
$200,000 - $299,999 $ 500
$300,000 - $399,999 $ 250
$400,000 and greater 0
</TABLE>
If your Contract is a GTS-VA Contract sold in a 403(b) plan, then your Sales and
Administrative Charge will be the same as for the GUP Contracts administered by
VALIC. However, one-time Purchase Payments received by the Company from amounts
that were accumulated in 403(b) plans not associated with VALIC shall be subject
to a charge of 2%. Any future Purchase Payments made will be subject to the same
Sales and Administrative Charge as the GUP Contracts administered by VALIC. In
addition, if, under a GTS-VA Contract, you make a one-time payment of amounts
accumulated in other VALIC contracts, then you will not be subject to the 2%
charge, but you will be subject to the same charge as the GUP Contracts
administered by VALIC.
If you are a full-time sales representative of VALIC, and have been employed by
VALIC for 90 days or more, then you may participate in a GUP Contract with no
Sales and Administrative Charge.
If your Contract is unallocated, then the Sales and Administrative Charge will
be 2% for each Purchase Payment.
PREMIUM TAX CHARGE
Taxes on Purchase Payments are imposed by some states, cities, and towns. The
rate will range from zero to 3 1/2%.
If the law of a state, city, or town requires premium taxes to be paid when
Purchase Payments are made, we will, of course, comply. Otherwise, such tax will
be deducted from the Payout Value when annuity payments are to begin. If you are
in a GUP deposit administration contract, then your premium taxes will be added
to payout rates when you are added to a group plan, and not deducted from
Purchase Payments.
If we deduct an amount for premium taxes, but later find the tax was not due, we
will:
- - Adjust the amount deducted in error to reflect investment experience from the
date of the deduction to the date we determined the tax was not due; and
- - Apply the excess amount, as adjusted, to increase the number of Pay-in or
Payout Units.
SEPARATE ACCOUNT CHARGES
There will be a mortality and expense risk fee applied to VALIC Separate Account
A. For GUP Contracts, this is a daily charge at an annualized rate of 1.00% on
the average daily net asset value of VALIC Separate Account A. For GTS-VA
Contracts, this a daily charge at an annualized rate of .85% on the first
$10,000,000 in your group's plan, .425% on the next $90,000,000 in your group's
plan and .21% on assets over $100,000,000 in your group's plan, on the average
daily net asset value of VALIC Separate Account A. This charge is guaranteed and
cannot be increased by the Company. The mortality and expense risk fee is to
compensate the Company for assuming mortality and expense risks under the
Contracts. The mortality risk that the Company assumes is the obligation to
provide payments during the Payout Period for your life no matter how long that
might be. In addition, the Company assumes the obligation to pay during the
Purchase Period a death benefit which may be higher than your Account Value. For
more information about the death benefit see the "Death Benefit" section of this
prospectus. The expense risk is our obligation to cover the cost of issuing and
administering the Contracts, no matter how large the cost may be.
The Company may make a profit on the mortality and expense risk fee.
For more information about the mortality and expense risk fee, see the Fee Table
in this prospectus.
10
<PAGE> 16
- --------------------------------------------------------------------------------
FUND ANNUAL EXPENSE CHARGES
Investment management charges based on a percentage of the Fund's average daily
net assets are payable by the Stock Index Fund. The charges will be paid by the
Fund to its investment adviser. These charges and other Fund charges and
expenses are fully described in the AGSPC prospectus. These charges indirectly
cost you because they lower your return.
OTHER TAX CHARGES
We reserve the right to charge for certain taxes (other than premium taxes) that
we may have to pay. This could include federal income taxes. Currently, no such
charges are being made.
REDUCTION FROM TOTAL EXPENSES
When the Company reorganized its separate accounts, merging VALIC Separate
Account One and VALIC Separate Account Two into VALIC Separate Account A, the
Company guaranteed that the fees and charges would not be greater as a result of
the Reorganization. Endorsements added to the Contracts provide that certain
Fund Annual Expense Charges and the Separate Account Charges will not be higher
on the Contracts funded by VALIC Separate Account A, than they were when the
Contracts were funded by VALIC Separate Account One and VALIC Separate Account
Two.
The Company, for VALIC Separate Account One and VALIC Separate Account Two,
determined the ratio of certain Fund Annual Expense Charges and Separate Account
Annual Expense Charges to the total net assets of VALIC Separate Account One and
VALIC Separate Account Two, called the Expense Ratio. On April 1, 1987, the
Expense Ratio was calculated, to determine the Maximum Expense Ratio. The
Company guarantees that the amount of the Expense Ratio will never exceed the
amount of the Maximum Expense Ratio. The Maximum Expense Ratio for the GUP and
GTS-VA Contracts is 1.4157% and .6966%, respectively.
The Maximum Expense Ratio does not apply to extraordinary and non-recurring Fund
Annual Expenses. These expenses may include certain liabilities and litigation
associated with indemnification payments of AGSPC failing to qualify as a
Regulated Investment Company under the Code. The Company believes that such
expenses and liabilities, although possible, are unlikely to occur.
We may, as described below, determine that the Sales and Administrative Charge
for the Contracts may be reduced or waived. We may reduce or waive these charges
if we determine that your retirement program will allow us to reduce or
eliminate administrative or sales expenses that we usually incur for such
programs and arrangements. There are a number of factors we will review in
determining whether your retirement program will allow us to reduce or eliminate
these administrative or sales expenses:
- - The type of retirement program.
Certain types of retirement programs because of their stability can result in
lower administrative costs.
- - The nature of your retirement program.
Certain types of retirement programs, due to the types of employees who
participate, experience fewer account surrenders thus reducing administrative
costs.
- - Other factors of which we are not presently aware which could reduce
administrative costs.
PAYOUT PERIOD
- --------------------------------------------------------------------------------
The Payout Period (Annuity Period) begins when you decide to retire or otherwise
withdraw your money in a steady stream of payments. If your employer's plan
permits, you may apply any portion of your Account Value to one of the types of
Payout Options listed below. You may choose to have your Payout Option on either
a fixed, a variable, or a combination payout basis. When you choose to have your
Payout Option on a variable basis, you may keep the same Variable Account
Options in which your Purchase Payments were made, or transfer to different
ones.
FIXED PAYOUT
Under Fixed Payout, you will receive monthly payments from the Company. These
payments are fixed and guaranteed by the Company. The amount of these payments
will depend on:
- Type and duration of Payout Option chosen;
- Your age or your age and the age of your survivor(1);
- Your sex or your sex and the sex of your survivor(1) (IRAs and certain
nonqualified contracts);
- The portion of your Account Value being applied; and
PAYOUT UNIT -- a measuring
unit used to calculate Payout
Payments from your Variable
Account Option. Payout Unit
values will vary with the
investment experience of the
VALIC Separate Account A
Division.
ASSUMED INVESTMENT
RATE -- the rate used to
determine your first monthly
Payout Payment per
thousand dollars of Account
Value in your Variable
Account Option.
11
<PAGE> 17
- --------------------------------------------------------------------------------
- The payout rate being applied and the frequency of the payments.
(1) This applies only to joint and survivor payouts.
If the benefit would be greater, the amount of your payments will be based on
the current payout rate the Company uses for immediate annuity contracts.
VARIABLE PAYOUT
With a Variable Payout, you select your existing Variable Account Option. Your
payments will vary accordingly. This is due to the varying investment results
that will be experienced by the Variable Account Option. The Payout Unit Value
is calculated just like the Purchase Unit Value for the Variable Account Option
except that the Payout Unit Value includes a factor for the Assumed Investment
Rate you select. For additional information on how Payout Payments and Payout
Unit Values are calculated, see the Statement of Additional Information.
In determining your first Payout Payment, an Assumed Investment Rate of 3 1/2%
is used (unless you select a higher rate as allowed by state law) for all
Contracts, except GTS-VA Contracts that are not sold under Section 403(b), which
have an Assumed Investment Rate of 3% (unless you select a higher rate as
allowed by state law). If the net investment experience of the Variable Account
Option exceeds your Assumed Investment Rate, your next payment will be greater
than your first payment. If the investment experience of the Variable Account
Option is lower than your Assumed Investment Rate, your next payment will be
less than your first payment.
COMBINATION FIXED AND VARIABLE
PAYOUT
With a Combination Fixed and Variable Payout, you may divide your Payout
Payments between a Fixed Payout (payment is fixed and guaranteed) and a Variable
Payout from the Variable Account Option (payments will vary).
PAYOUT DATE
The Payout Date is the date selected by you on which your payout (annuity)
payments will start. The date selected must be the first of any month provided
30 days advance notice has been given to VALIC. Your account will be valued ten
days prior to the end of the month preceding the Payout Date. A request to start
payments must be sent to our Home Office on a form approved by VALIC. Generally,
for qualified contracts, the Payout Date may begin when you attain age 59 1/2 or
separate from service, but must begin no later than April 1 following the
calendar year you reach age 70 1/2 or the calendar year in which you retire. For
nonqualified contracts, the Payout Date may begin after the Annuitant's 50th
birthday but prior to the Annuitant's 75th birthday. For additional information
on the minimum distribution rules that apply to payments under
403(b), 401, 403(a) and 457 plans or simplified employee plans ("SEPs"), see
"Federal Tax Matters" in this prospectus and in the Statement of Additional
Information.
PAYOUT OPTIONS
You may specify the manner in which your Payout Payments are made. You may
select one of the following options (depending on the terms of your contract):
- LIFE ONLY -- payments are made only to you during your lifetime. Under this
option there is no provision for a death benefit for the beneficiary. For
example, it would be possible under this option for the Annuitant to receive
only one payout payment if he died prior to the date of the second payment,
two if he died before the third payment.
- LIFE WITH GUARANTEED PERIOD -- payments are made to you during your
lifetime; but if you die before the guaranteed period has expired, your
beneficiary will receive payments for the rest of your guaranteed period.
Under the GTS-VA Contracts, the payout payments must be at least $25 each.
- LIFE WITH CASH OR UNIT REFUND -- payments are made to you during your
lifetime. Upon your death, your beneficiary will receive a lump sum payment
equal to the remaining Payout Value.
- JOINT AND SURVIVOR LIFE -- payments are made to you during the joint
lifetime of you and your beneficiary. Upon the death of one, payments
continue during the lifetime of the survivor. This option is designed
primarily for couples who require maximum possible variable payouts during
their joint lives and are not concerned with providing for beneficiaries at
death of the last survivor. For example, it would be possible under this
option for the Joint Annuitants to receive only one payment if both
Annuitants died prior to the date of the second payment, or for the Joint
Annuitants to receive only one payment and the surviving Annuitant to
receive only one payment if one Annuitant died prior to the date of the
second payment and the surviving Annuitant dies prior to the date of the
third payment.
12
<PAGE> 18
- --------------------------------------------------------------------------------
- PAYMENT FOR A DESIGNATED PERIOD -- payments are made to you for a select
number of years between three and thirty. Upon your death, payments will
continue to your beneficiary until the designated period is completed.
- PAYMENT OF A SPECIFIED AMOUNT -- payments in equal annual, semi-annual,
quarterly or monthly installments are made to you of a specified dollar
amount until the remaining balance is less than the specified dollar
amount, at which time, the remaining balance will be paid to you.
- PAYMENT OF INVESTMENT INCOME -- payments are made to you, out of your
Account Value placed in the Fixed Account Option, on an annual,
semi-annual, quarterly or monthly basis. Payments are calculated by the net
investment rate for the period multiplied by the remaining Account Value.
Upon your death, payments will continue to your beneficiary until the
remaining balance is paid out. At any time, you may elect to receive a lump
sum payment equal to the remaining Account Value.
Each Payout Option, except Payment for a Designated Period, is available as a
Fixed and Variable Payout. Payment for a Designated Period is available as a
Fixed Payout Option only.
You may elect a different Payout Option if we agree.
ENHANCEMENTS TO PAYOUT OPTIONS
You may be able to select enhancements to the Payout Options described above.
These enhancements include partial annuitization, flexible payments of varying
amounts and inflation protection payments. Additionally, certain options may be
available with a one to twenty year guaranteed period. The Joint and Survivor
Life Option may be available with a one to twenty year guaranteed period option.
Not all of the enhancements are available under each option.
LEVEL PAYMENTS OPTION
The level payments enhancement is an option that can only be used if you have a
GUP Contract and if you selected one of the first four Payout Options above.
Under the level payments option, payments are made once each month during each
payout year at a certain level determined for that year based on the investment
performance of the Separate Account. The amount of the payments will be
determined by dividing the payment amount by the current Payout Unit Value to
determine the number of Payout Units in each subsequent annual payment.
PAYOUT INFORMATION
Once your Payout Payments have begun, the option you have chosen may not be
stopped or changed. The Variable Account Option may result in your receiving
unequal payments during your life expectancy. If payments begin before age
59 1/2, you may suffer unfavorable tax consequences, in the form of an excise
tax, if you do not meet an exception under federal tax law. See "Federal Tax
Matters" in this prospectus.
Your Payment Option should be selected at least 30 days before your Payout Date.
If such selection is not made:
- Payments will be made under the Life with Guaranteed Period Option,
- The payments will be guaranteed for a 10 year period,
- The payments will be based on the allocation used for your Purchase
Payments,
- Fixed Account Option will be used to distribute payments to you on a Fixed
Payout basis, and
- Variable Account Option will be used to distribute payments to you on a
Variable Payout basis.
Under certain retirement plans, federal pension law may require that payments be
made under the Joint and Survivor Life Payout Option.
Most Payout Payments are made monthly. If the amount of your payment is less
than $25, we reserve the right to reduce the number of payments made each year
so each of your payments are at least $25, subject to any limitations under the
contract or the plan. Also, if your annual payment is less than $100, we reserve
the right to make a lump sum payment of the remaining annuity value.
For more information about
PAYOUT OPTIONS OR
ENHANCEMENTS of those
Payout Options available
under the Contract,
see the "Statement of
Additional Information".
13
<PAGE> 19
SURRENDER OF ACCOUNT VALUE
- --------------------------------------------------------------------------------
WHEN SURRENDERS ARE ALLOWED
You may withdraw all or part of your Account Value at any time before the Payout
Period begins if:
- allowed under federal and state law; and
- allowed under your employer's plan.
AMOUNT THAT MAY BE SURRENDERED
The amount that may be surrendered at any time can be determined as follows:
<TABLE>
<S> <C> <C>
Allowed Your
Surrender = (EQUALS) Account
Value Value(1)
</TABLE>
(1) Equals the Account Value next computed after your properly completed
request for surrender is received in our Home Office.
There is no guarantee that the Surrender Value in the Variable Account Option
will ever equal or exceed the total amount of your Purchase Payments received by
us.
We will mail to you the Surrender Value within 7 calendar days after we receive
your properly completed surrender request at our Home Office. However, we may be
required to suspend or postpone payments if redemption of the underlying Fund's
shares have been suspended or postponed. See your AGSPC prospectus for a
discussion of the reasons why the redemption of shares may be suspended or
postponed.
We may receive a surrender for a Purchase Payment which has not cleared the
banking system. We may delay payment of that portion of your Surrender Value
until the check clears. The rest of the Surrender Value will be processed as
usual.
SURRENDER RESTRICTIONS
Generally, Internal Revenue Code Section 403(b)(11) permits total or partial
distributions from a 403(b) contract only on account of hardship (employee
contributions only without accrued interest), attainment of age 59 1/2,
separation from service, death or disability.
Under the TEXAS STATE OPTIONAL RETIREMENT PROGRAM, no surrender or partial
surrender will be allowed except attainment of age 70 1/2, retirement, or other
termination of employment or death.
Under the FLORIDA STATE OPTIONAL RETIREMENT PROGRAM, no surrender or partial
surrender of Purchase Payments made by the employer will be allowed except for
termination of employment, retirement or death. Benefit payments based on
payments from the employer may not be paid in a lump sum or for a period
certain, but must be paid under a life contingency option, except for:
- death benefits; and
- certain small amounts approved by the State of Florida.
Under the LOUISIANA OPTIONAL RETIREMENT PLAN retirement benefits must be paid in
the form of a lifetime income, and except for death benefits, single sum
surrenders and partial surrenders out of the plan are not permitted.
You may, upon termination of participation in your group's plan, elect to have
your Account Value applied to the purchase of an individual variable annuity
contract offered by VALIC. There will be no charge for this election, but there
may be certain adverse tax consequences, depending on your plan and the terms of
your contract.
Under the GUP Contracts, if you change employers and your new employer is the
owner of a similar GUP Contract, you may have your Account Value transferred to
such other GUP Contract free of charge.
Other employer-sponsored plans may also impose restrictions on the timing and
form of surrenders from the Contracts.
PARTIAL SURRENDERS
You may request a partial surrender of your Account Value at any time, subject
to any applicable surrender restrictions. A partial surrender will reduce your
Account Value. Partial surrenders will be paid from the Fixed Account Option and
the Variable Account Option for the payment of Account Value.
The reduction in the number of Purchase Units credited to your Account Value
will equal:
<TABLE>
<S> <C> <C>
Your Purchase
Units next
computed after
The amount the written
surrendered / (DIVIDED BY) request for
surrender is
received at our
Home Office
</TABLE>
14
<PAGE> 20
DEATH BENEFITS
- --------------------------------------------------------------------------------
The Contracts will pay death benefits during either the Purchase Period or the
Payout Period. How these death benefits will be paid are discussed below. The
death benefit provisions in the Contracts may vary from state to state.
BENEFICIARY INFORMATION
The Beneficiary may receive death benefits:
- - In a lump sum; or
- - In the form of an annuity under any of the Payout Options stated in the Payout
Period section of this prospectus subject to the restrictions of that Payout
Option.
Payment of any death benefits must be within the time limits set by federal tax
law and by the plan, if any.
Beneficiaries Other Than Spouses.
If the Beneficiary is not the spouse of the Annuitant, death benefits must be
paid.
- - In full within 5 years after the Annuitant's death; or
- - By payments beginning within 1 year after the Annuitant's death under:
- A life annuity;
- A life annuity with payments certain; or
- An annuity for a designated period not exceeding the Beneficiary's life
expectancy.
If the Annuitant dies before the Annuity Date, the Beneficiary as named by you
may receive the payout.
Payments certain or payments for a designated period cannot be for a greater
period of time than the Beneficiary's life expectancy. After choosing a payment
option, a Beneficiary may exercise many of the investment options and other
rights that the Participant or Contract Owner had under the Contracts.
DURING THE PURCHASE PERIOD
If death occurs during the Purchase Period, the death benefit will be the
greater of:
Your Account Value on the Date Proof of Death is Received by VALIC
OR
100% of Purchase Payment (to the Fixed and/or the Variable Account Option)
- (MINUS)
Amount of all Prior Withdrawals and any portion of Account Value applied
under a Payout Option
DURING THE PAYOUT PERIOD
If death occurs during the Payout Period, your Beneficiary may receive a death
benefit depending on the Payout Option selected. The amount of death benefits
will also depend on the Payout Option that you selected. The Payout Options
available in the Contracts are described in the "Payout Period" section of this
prospectus.
- - If the Life Only Option or Joint and Last Survivor Life Option were chosen,
there will be no death benefit.
- - If the Life With Guaranteed Period Option, Life with Cash or Unit Refund
Option or Payment for a Designated Period Option were chosen, and the entire
amount guaranteed has not been paid, the Beneficiary may choose one of the
following within 60 days after death benefits are payable:
- Receive the present value of any remaining payments in a lump sum; or
- Receive the remaining payments under the same terms of the option chosen by
the deceased Participant and be entitled to elect anytime thereafter to
receive the present value of any remaining payments in a lump sum; or
- Receive the present value of any remaining payments applied under the
Payment for a Designated Period Option for a period equal to or shorter than
the period remaining. Spouse beneficiaries may be entitled to more favorable
treatment under federal tax law.
Death Benefits will not be provided during the Payout Period for certain
unallocated GUP and GTS-VA Contracts.
BENEFICIARY -- the person
designated to receive Payout
Payments upon the death of
an Annuitant.
ANNUITANT -- the individual,
(in most cases this person is
you) to whom Payout
Payments will be paid.
CONTRACT OWNER -- either
your employer or organization
in the case of a group
contract or the Annuitant in
the case of an individual
contract. If the contract is an
individual non-qualified type,
this is generally the Annuitant
but is not required to be. Also,
a Contingent Contract
Owner may be designated.
FIXED ACCOUNT OPTION -- a
particular subaccount into
which your Purchase
Payments and Account Value
may be allocated to fixed
investment options. The option
is guaranteed to earn at
least a minimum rate of
interest.
VARIABLE ACCOUNT
OPTION -- investment
options that correspond to
VALIC Separate Account A
Divisions offered by the
Contracts. Investment returns
on the Variable Account Option
will be positive or negative
depending on the investment
performance of the
Stock Index Fund
on the date VALIC
receives proof of death.
15
<PAGE> 21
HOW TO REVIEW INVESTMENT PERFORMANCE
OF SEPARATE ACCOUNT DIVISIONS
- --------------------------------------------------------------------------------
We will advertise information about the investment performance of VALIC Separate
Account A Divisions. Our advertising of past investment performance results does
not mean that future performance will be the same. The performance information
will not predict what your actual investment experience will be in that Division
or show past performance under an actual contract. We may also show how the
Divisions rank on the basis of data compiled by independent ranking services.
TYPES OF INVESTMENT PERFORMANCE
INFORMATION ADVERTISED
We may advertise the Division's Total Return Performance information and Yield
Performance information.
TOTAL RETURN PERFORMANCE INFORMATION
Total Return Performance Information is based on the overall dollar or
percentage change in value of an assumed investment in a Division over a given
period of time.
There are seven ways Total Return Performance Information may be advertised:
- Standard Average Annual Total Return
- Nonstandard Average Annual Total Return
- Cumulative Total Return
- Annual Change in Purchase Unit Value
- Cumulative Change in Purchase Unit Value
- Total Return Based on Different Investment Amounts
- An Assumed Account Value of $10,000
Each of these is described below.
STANDARD AVERAGE ANNUAL TOTAL RETURN
Standard Average Annual Total Return shows the average percentage change in the
value of an investment in the Division from the beginning to the end of a given
historical period. The results shown are after all charges and fees have been
applied against the Division. Premium taxes are not deducted. This information
is calculated for the Division based on how an initial assumed payment of $1,000
performed at the end of 1, 5 and 10 year periods.
The return for periods of more than one year are annualized to obtain the
average annual percentage increase (or decrease) during the period.
Annualization assumes that the application of a single rate of return each year
during the period will produce the ending value, taking into account the effect
of compounding.
NONSTANDARD AVERAGE ANNUAL TOTAL RETURN
Nonstandard Average Annual Total Return is calculated in the same manner as the
Standard Average Annual Total Return. However, Nonstandard Average Annual Total
Return shows only the historic investment results of the Division. The
Nonstandard Average Annual Total Return does not show the charges and fees
applied against the Division.
CUMULATIVE TOTAL RETURN
The Cumulative Total Return will be calculated for 1, 5 and 10 year periods. It
is based on an assumed initial investment of $10,000. The Cumulative Return will
be calculated without deduction for any charges and fees against the Division.
ANNUAL CHANGE IN PURCHASE UNIT VALUE
Annual Change in Purchase Unit Value is a percentage change during a one year
period. This is calculated as follows:
- The Purchase Unit Value at the start of the year is subtracted from the
Purchase Unit Value at the end of the year;
- The difference is divided by the Purchase Unit Value at the start of the
year.
Fees and charges against the Division are not deducted. The effect of these
charges, if deducted, would reduce the Division's Annual Change in Purchase Unit
Value.
DIVISION -- subaccount of
VALIC Separate Account A
which represent the Variable
Account Option in the Contracts.
The Division invests in the
Stock Index Fund.
PURCHASE PAYMENTS -- an
amount of money you pay to
VALIC to receive the benefits
of an annuity Contract offered
under GUP or GTS-VA.
For more information on how
TOTAL RETURN PERFORMANCE
INFORMATION is calculated,
see the Statement of
Additional Information.
16
<PAGE> 22
- --------------------------------------------------------------------------------
CUMULATIVE CHANGE IN PURCHASE UNIT VALUE
Cumulative Change in Purchase Unit Value is a percentage change from the
beginning to the end of a period usually greater than one year. Otherwise, it is
calculated in the same way as the Annual Change in Purchase Unit Value.
TOTAL RETURN BASED ON DIFFERENT
INVESTMENT AMOUNTS
We may show total return information based on different investment amounts. For
example, we may show $200 a month for 10 years, or $100 a month to age 65. Fees
may or may not be included. Each performance illustration will explain the
Contracts' charges and fees imposed on the Division.
AN ASSUMED ACCOUNT VALUE OF $10,000
We may show annual values based on an initial investment of $10,000. This will
not reflect any deduction for charges and fees imposed on the Division.
YIELD PERFORMANCE INFORMATION
We may advertise Yield Performance, at a given point in time. A Division's yield
is one way of showing the rate of income the Division is earning as a percentage
of the Division's Purchase Unit Value.
We may advertise the standardized yield performance for the Division. The yield
for each of these Divisions will be determined as follows:
We will divide the average daily net investment income per Purchase Unit by the
Purchase Unit Value on the last day of the period; and
We will annualize the result.
PERFORMANCE INFORMATION:
AVERAGE ANNUAL TOTAL RETURN, CUMULATIVE RETURN AND ANNUAL AND CUMULATIVE CHANGE
IN PURCHASE UNIT VALUE TABLES.
In the sections above we have described a number of ways we may advertise
information about the investment performance of VALIC Separate Account A
Divisions. Certain performance information for each VALIC Separate Account A
Division is printed in the tables below.
The information presented does not reflect the advantage under the Contracts of
deferring federal income tax on increases in Account Value due to earnings
attributable to Purchase Payments (see "Federal Tax Matters" in the prospectus
and in the Statement of Additional Information.) The information presented also
does not reflect the advantage under Qualified Contracts of deferring federal
income tax on Purchase Payments.
The performance results shown in the following tables are not an estimate or
guarantee of future investment performance, and do not represent the actual
experience of amounts invested by a particular Participant.
TABLE I
AVERAGE ANNUAL TOTAL RETURN
WITH SALES AND ADMINISTRATIVE CHARGE IMPOSED*
(FROM SEPARATE ACCOUNT DIVISION INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
DIVISION
INCEPTION
FUND AND DIVISION DATE 10 YEARS 5 YEARS 1 YEAR
----------------- --------- -------- ------- ------
<S> <C> <C> <C> <C>
AGSPC Stock Index Fund (Division 10A -- GUP Contracts)...... 04/20/87** 14.94% 25.72% 13.41%
AGSPC Stock Index Fund (Division 10B -- GTS-VA Contracts)... 04/20/87*** 15.74 26.57 14.21
</TABLE>
- ---------------
* The performance figures in the Table reflect the investment performance for
the Division for the stated periods and should not be used to infer that
future performance will be the same.
** On May 1, 1992, the Quality Growth Fund merged into the Stock Index Fund and
Quality Growth Division 9A was renamed Stock Index Division 10A.
*** On May 1, 1992, the Quality Growth Fund merged into the Stock Index Fund and
Quality Growth Division 9B was renamed Stock Index Division 10B.
17
<PAGE> 23
TABLE II
AVERAGE ANNUAL TOTAL RETURN
WITH NO SALES AND ADMINISTRATIVE CHARGE IMPOSED*
(FROM SEPARATE ACCOUNT DIVISION INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
DIVISION
INCEPTION
FUND AND DIVISION DATE 10 YEARS 5 YEARS 1 YEAR
----------------- --------- -------- ------- ------
<S> <C> <C> <C> <C>
AGSPC Stock Index Fund (Division 10A -- GUP Contracts)...... 04/20/87** 15.53% 27.02% 19.38%
AGSPC Stock Index Fund (Division 10B -- GTS-VA Contracts)... 04/20/87*** 16.33 27.88 20.22
</TABLE>
TABLE III
CUMULATIVE RETURN
WITH NO SALES AND ADMINISTRATIVE CHARGE IMPOSED*
(FROM SEPARATE ACCOUNT DIVISION INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
DIVISION
INCEPTION
FUND AND DIVISION DATE 10 YEARS 5 YEARS 1 YEAR
----------------- --------- -------- ------- ------
<S> <C> <C> <C> <C>
AGSPC Stock Index Fund (Division 10A -- GUP Contracts)...... 04/20/87** 323.75% 230.63% 19.38%
AGSPC Stock Index Fund (Division 10B -- GTS-VA Contracts)... 04/20/87*** 354.01 241.96 20.22
</TABLE>
TABLE IV
ANNUAL AND CUMULATIVE CHANGE IN PURCHASE UNIT VALUE
WITH NO SALES AND ADMINISTRATIVE CHARGE IMPOSED
(PERIOD FROM SEPARATE ACCOUNT DIVISION INCEPTION)
ANNUAL CHANGE IN PURCHASE UNIT VALUE FOR THE 12 MONTHS ENDED DECEMBER 31*
<TABLE>
<CAPTION>
FUND AND DIVISION 1999 1998 1997 1996 1995 1994 1993 1992 1991 1990
----------------- ------ ------ ------ ------ ----- ----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
AGSPC Stock Index Fund (Division
10A -- GUP Contracts)**............. 19.38% 27.15% 31.80% 21.54% 35.98% (0.29)% 8.80% 2.70% 20.49% (4.53)%
AGSPC Stock Index Fund (Division
10B -- GTS-VA Contracts)***......... 20.22 28.03 32.68 22.35 36.87 0.38 9.58 3.44 21.35 (3.84)
CUMULATIVE CHANGE IN PURCHASE UNIT VALUE FOR EACH PERIOD END SINCE DECEMBER 31, 1989*
AGSPC Stock Index Fund (Division
10A -- GUP Contracts)**............. 323.75% 254.96% 179.16% 111.81% 74.28% 28.17% 28.54% 18.14% 15.03% (4.53)%
AGSPC Stock Index Fund (Division
10B -- GTS-VA Contracts)***......... 354.01 277.66 194.99 122.33 81.72 32.77 32.27 20.70 16.69 (3.84)
</TABLE>
- ---------------
* The performance figures in the Table reflect the investment performance for
the Divisions for the stated periods and should not be used to infer that
future performance will be the same.
** On May 1, 1992, the Quality Growth Fund merged into the Stock Index Fund and
Quality Growth Division 9A was renamed Stock Index Division 10A.
*** On May 1, 1992, the Quality Growth Fund merged into the Stock Index Fund and
Quality Growth Division 9B was renamed Stock Index Division 10B.
18
<PAGE> 24
OTHER CONTRACT FEATURES
- --------------------------------------------------------------------------------
CHANGES THAT MAY NOT BE MADE
The following terms in the Contracts may not be changed once your account has
been established:
- The Contract Owner;
- The Participant; and
- The Annuitant.
CHANGE OF BENEFICIARY
The Beneficiary (if not irrevocable) may usually be changed at any time.
Under some retirement programs, the right to name or change a Beneficiary is
subject to approval by the spouse. Also, the right to name a Beneficiary other
than the spouse may be subject to certain tax laws and regulations.
If the Annuitant dies, and there is no Beneficiary, any death benefit will be
payable to the Annuitant's estate.
If a Beneficiary dies while receiving payments, and there is no co-Beneficiary
to continue to receive payments, any amount still due will be paid to the
Beneficiary's estate.
CANCELLATION -- THE 10 DAY "FREE LOOK"
The Contract Owner may cancel an individual contract by returning it to the
Company within 10 days after delivery. (A longer period will be allowed if
required under state law.) A refund will be made to the Contract Owner within 7
days after receipt of the Contract within the required period. The amount of the
refund will be equal to all Purchase Payments received or the amount required
under state law, if larger.
WE RESERVE CERTAIN RIGHTS
We reserve the right to:
- Amend the Contract to conform with substitutions of investments;
- Amend the Contract to comply with tax or other laws;
- Operate VALIC Separate Account A as a management investment company under
the Act, in consideration of an investment management fee or in any other
form permitted by law;
- Deregister VALIC Separate Account A under the Act, if registration is no
longer required;
- Amend the GUP Contracts to increase all charges and annuity purchase rates
(such change will not affect Participants already invested in a GUP
Contract);
- Amend the GUP Contracts (except where prohibited by the Act) for
Participants whose total Purchase Payments are greater than 200% of the
amount of first-year Purchase Payment(s) made on his/her behalf;
- Amend GUP contracts issued under GUP contract form GVA-SA1 after five years
of your participation in the Contract to change any terms of the Contract
upon 90 days written notice to you (except where prohibited by the Act);
- Amend GTS-VA Contracts issued under GTS-VA contract form GVA-SA2 in
connection with certain 403(b) and 401 plans for self-employed individuals
to increase the deduction for Sales and Administrative Charge after the end
of the first year of the Contract. Contract amendments may affect rates and
Fund Annual Expenses adversely applicable to Participants for Purchase
Payments at an annual rate of up to 200% of the first year Purchase Payment
made for each such Participant;
- Amend the Payout rate applicable to Purchase Payments after the tenth year
of the Contract.
RELATIONSHIP TO EMPLOYER'S PLAN
If the Contract is being offered as a retirement plan through your employer, you
should always refer to the terms and conditions in your employer's plan when
reviewing the descriptions of GUP or GTS-VA in this prospectus.
ASSIGNING YOUR CONTRACT
For most Contracts issued under qualified retirement plans or eligible deferred
compensation plans of government employers, you will not be permitted to assign,
sell or pledge your Contract to any person or organization, other than the
Company, unless your contract is owned by a trustee or custodian and the trust
or custodial accounts comply with applicable nontransferable requirements. GUP
Contracts not issued under GUP contract form GVA-SA1 and GTS-VA Contracts that
are issued under GTS-VA contract form GVA-SA2 are not assignable unless
permitted under applicable law. GUP Contracts that are issued under GUP contract
form GVA-SA1 are not assignable.
19
<PAGE> 25
VOTING RIGHTS
- --------------------------------------------------------------------------------
As discussed in the "About VALIC Separate Account A" section of this prospectus,
VALIC Separate Account A holds on your behalf shares of the Stock Index Fund
which comprises the Variable Account Option. From time to time the Stock Index
Fund is required to hold a shareholder meeting to obtain approval from its
shareholders for certain matters. As a Participant, you may be entitled to give
voting instructions to us as to how VALIC Separate Account A should vote its
Fund shares on these matters. Those persons entitled to give voting instructions
will be determined before the shareholders meeting is held. For more information
about these shareholder meetings and when they may be held, see the AGSPC
prospectus.
WHO MAY GIVE VOTING INSTRUCTIONS
In most cases during the Purchase Period, you will have the right to give voting
instructions for the shareholder meetings. This will be true in most cases even
if your employer is the Contract Owner. Contract Owners will instruct VALIC
Separate Account A in accordance with your instructions. You will receive proxy
material and a form on which voting instructions may be given before the
shareholder meeting is held.
You will not have the right to give voting instructions if the Contracts were
issued in connection with a nonqualified and unfunded deferred compensation
plan.
DETERMINATION OF FUND SHARES
ATTRIBUTABLE TO YOUR ACCOUNT
During Purchase Period
The number of Fund shares attributable to your account will be determined on the
basis of the Purchase Units credited to your account on the record date set for
the Fund shareholder meeting.
During Payout Period or after a Death
Benefit Has Been Paid
The number of Fund shares attributable to your account will be based on the
liability for future variable annuity payments to your payees on the record date
set for the Fund shareholder meeting. At such time, the Annuitant, or the
Beneficiary after the Annuitant's death, will be entitled to give voting
instructions for shareholder meetings.
HOW FUND SHARES ARE VOTED
The Stock Index Fund which comprises the Variable Account Option in the
Contracts may have a number of shareholders including VALIC Separate Account A,
VALIC's other affiliated insurance company separate accounts and retirement
plans within the American General group of companies.
VALIC Separate Account A will vote all of the shares of the Stock Index Fund it
holds based on, and in the same proportion as, the instructions given by all
Participant Accounts invested in Stock Index Fund entitled to give instructions
at that shareholder meeting. VALIC Separate Account A will vote the shares of
the Stock Index Fund it holds for which it receives no voting instruction in the
same proportion as the shares for which voting instructions have been received.
In the future, we may decide how to vote the shares of VALIC Separate Account A
in a different manner if permitted at that time under federal securities law.
FEDERAL TAX MATTERS
- --------------------------------------------------------------------------------
The Contracts provide tax-deferred accumulation over time, but are subject to
federal income and excise taxes, mentioned briefly below. You should refer to
the Statement of Additional Information for further details. Section references
are to the Internal Revenue Code ("Code"). We do not attempt to describe any
potential estate or gift tax, or any applicable state, local or foreign tax law
other than possible premium taxes mentioned under "Premium Tax Charge." Remember
that future legislation could modify the rules discussed below, and always
consult your personal tax adviser regarding how the current rules apply to your
specific situation.
TYPE OF PLANS
Tax rules vary, depending on whether the Contract is offered under your
employer's tax-qualified retirement program, as a Section 408(b) Individual
Retirement Annuity ("IRA"), or is instead a nonqualified Contract. The Contracts
are used under the following types of retirement arrangements:
- Section 403(b) annuities for employees
of public schools and Section 501(c)(3) tax-exempt organizations;
- Section 401(a) 403(a), and 401(k) qualified plans of for-profit employers
and
VALIC SEPARATE
ACCOUNT A -- a segregated
asset account established by
VALIC under the Texas
Insurance Code. The purpose
of VALIC Separate Account A
is to receive and invest your
Purchase Payments and
Account Value in the Variable
Account Options you have
selected.
20
<PAGE> 26
- --------------------------------------------------------------------------------
other employers (including self-employed individuals);
- Section 457 deferred compensation plans of governmental and tax-exempt
employers;
The foregoing Contracts are "Qualified Contracts."
Note that the specific terms of the governing employer plan may limit rights and
options otherwise available under a Contract.
In addition, the Contracts are also available through "Non-Qualified Contracts"
issued under unfunded, nonqualified deferred compensation plans of corporate
employers.
TAX CONSEQUENCES IN GENERAL
Purchase Payments, distributions, withdrawals, transfers and surrender of a
Contract can each have a tax effect, which varies with the governing retirement
arrangement. Please refer to the detailed explanation in the Statement of
Additional Information, the documents (if any) controlling the retirement
arrangement through which the contract is offered, and your personal tax
adviser.
Purchase Payments under the Contracts can be made as contributions by employers,
or as pre-tax or after-tax contributions by employees, depending on the type of
retirement program. After-tax employee contributions constitute "investment in
the Contract." All Qualified Contracts receive deferral of tax on the inside
build-up of earnings on invested Purchase Payments, until a distribution occurs.
See the Statement of Additional Information for special rules, including those
applicable to taxable, non-natural owners of Non-Qualified Contracts.
Distributions are taxed differently depending on the program through which the
Contracts are offered and the previous tax characterization of the contributions
to which the distribution relates. Generally, the portion of a distribution
which is not considered a return of investment in the Contract is subject to
income tax. For annuity payments, investment in the contract is recovered
ratably over the expected payout period. Special recovery rules might apply in
certain situations.
Amounts subject to income tax may also incur excise or penalty taxes, under the
circumstances described in the Statement of Additional Information. A
distribution that is eligible for rollover often will also be subject to some
form of federal income tax withholding unless rolled into another tax-deferred
vehicle. Required withholding will vary according to type of program, type of
payment and your tax status. In addition, amounts received under all Contracts
may be subject to state income tax withholding requirements.
Investment earnings on contributions to Non-Qualified Contracts which are not
owned by (or, generally, for the benefit of) natural persons will be taxed
currently to the owner and such contracts will not be treated as annuities for
certain federal income tax purposes.
EFFECT OF TAX-DEFERRED ACCUMULATIONS
The chart below compares the results from Premium Payments made to:
- A Contract issued to a tax favored retirement program purchased with pre-tax
premium payments;
- A non-qualified Contract purchased with after-tax Premium Payments and;
- Conventional savings vehicles such as savings accounts.
THE POWER OF TAX-DEFERRED GROWTH
[BAR GRAPH]
This hypothetical chart compares the results of (1) contributing $100 per month
to a conventional, non-tax deferred plan, (2) contributing $100 to a
nonqualified, tax-deferred annuity, and (3) contributing $100 per month ($138.89
since contributions are made before tax) to a qualified tax-deferred plan. The
chart assumes a 28% tax rate and an 8% fixed rate of return. Variable options
incur mortality and expense risk fee charges and may also incur account Sales
and Administrative Charges. The chart does not reflect the deduction of any such
fees. An additional 10% tax penalty may apply to withdrawals before age 59 1/2.
This information is for illustrative purposes only and is not a guarantee of
future return.
Unlike savings accounts, Premium Payments made to tax-favored retirement
programs and Non-Qualified Contracts generally provide tax deferred treatment on
earnings. In addition, Premium Payments made to tax-favored retirement programs
ordinarily are not subject to income tax until withdrawn. As shown above,
investing in a tax-favored program increases the
21
<PAGE> 27
- --------------------------------------------------------------------------------
accumulation power of savings over time. The more taxes saved and reinvested in
the program, the more the accumulation power effectively grows over the years.
To further illustrate the advantages of tax deferred savings using a 28% Federal
tax bracket, an annual fixed yield (BEFORE THE DEDUCTION OF ANY FEES OR CHARGES)
of 8% under a tax-favored retirement program in which tax savings were
reinvested has an equivalent after-tax annual fixed yield of 5.76% under a
conventional savings program. THE 8% YIELD ON THE TAX-FAVORED PROGRAM WILL BE
REDUCED BY THE IMPACT OF INCOME TAXES UPON WITHDRAWAL. The yield will vary
depending upon the timing of withdrawals. The previous chart represents (without
factoring in fees and charges) after-tax amounts that would be received.
By taking into account the current deferral of taxes, contributions to
tax-favored retirement programs increase the amount available for savings by
decreasing the relative current out-of-pocket cost (referring to the effect on
annual net take-home pay) of the investment. The chart below illustrates this
principle by comparing a pre-tax contribution to a tax-favored retirement plan
with an after-tax contribution to a conventional savings account:
PAYCHECK COMPARISON
<TABLE>
<CAPTION>
TAX-FAVORED CONVENTIONAL
RETIREMENT SAVINGS
PROGRAM ACCOUNT
----------- ------------
<S> <C> <C>
Annual amount available
for savings before
federal taxes......... $2,500 $2,500
Current federal income
tax due on Purchase
Payments.............. 0 (700)
Net retirement plan
Purchase Payments..... $2,500 $1,800
</TABLE>
This chart assumes a 28% federal income tax rate. The $700 which is paid toward
current federal income taxes reduces the actual amount saved in the conventional
savings account to $1,800 while the full $2,500 is contributed to the
tax-qualified program, subject to being taxed upon withdrawal. Stated otherwise,
to reach an annual retirement savings goal of $2,500, the contribution to a tax-
qualified retirement program results in a current out-of-pocket expense of
$1,800 while the contribution to a conventional savings account requires the
full $2,500 out-of-pocket expense. The tax-qualified retirement program
represented in this chart is a plan type, such as one under Section 403(b) of
the Code, which allows participants to exclude contributions (within limits)
from gross income.
YEAR 2000
- --------------------------------------------------------------------------------
YEAR 2000 RISKS
As of March 10, 2000, all of our ultimate parent, American General Corporation's
("AGC") major technology systems, programs, and applications, including those
which rely on third parties, are operating smoothly following our transition
into 2000. We have experienced no interruptions to normal business operations,
including the processing of customer account data and transactions. We will
continue to monitor our technology systems, including critical third party
dependencies, as necessary to maintain our Year 2000 readiness. We do not expect
any future disruptions, if they occur, to have a material effect on the
company's results of operations, liquidity, or financial condition.
Through December 31, 1999, AGC incurred and expensed pretax costs of $98 million
related to Year 2000 readiness, including $18 million in 1999 and $65 million in
1998. In 1999, Year 2000 readiness expenses were included in division earnings,
consistent with the manner in which we reviewed division results. In addition,
we accelerated the planned replacement of certain systems as part of our Year
2000 plans. The cost of these replacement systems was immaterial. We do not
anticipate incurring any significant costs in the future to maintain Year 2000
readiness.
22
<PAGE> 28
- --------------------------------------------------------------------------------
CONTENTS OF STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information............................. 3
Marketing Information....................... 3
Types of Variable Annuity Contracts......... 4
Federal Tax Matters............................. 4
General..................................... 4
Taxes Payable by Participants and
Annuitants............................... 4
Section 403(b) Annuities for Employees of
Certain Tax-Exempt Organizations or
Public Educational Institutions.......... 4
Section 401 Qualified Pension,
Profit-Sharing or Annuity Plans.......... 5
Section 457 Eligible Deferred Compensation
Plans of Public Employers................ 6
Private Employer Unfunded Deferred
Compensation Plans....................... 6
Fund Diversification........................
Purchase Unit Value............................. 7
Illustration of Calculation of Purchase
Units Value.............................. 7
Illustration of Purchase of Purchase
Units.................................... 7
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Performance Calculations........................ 8
Calculation of Average Annual Total Return...... 8
Performance Information......................... 8
Performance Compared to Market Index........ 8
Stock Index Division 10A (GUP Contracts)
Performance Compared to S&P 500 Index.... 10
Stock Index Division 10B (GTS-VA Contracts)
Performance Compared to S&P 500 Index.... 11
Payout Payments................................. 12
Assumed Investment Rate..................... 12
Amount of Payout Payments................... 12
Payout Unit Value........................... 13
Illustration of Calculation of Payout Unit
Value.................................... 13
Illustration of Payout Payments............. 13
Distribution of Variable Annuity Contracts...... 13
Experts......................................... 14
Comments on Financial Statements................ 14
</TABLE>
<PAGE> 29
- --------------------------------------------------------------------------------
REVOCATION OF TELEPHONE ASSET TRANSFER AUTHORITY
Participant/Contract Owner Name:
- --------------------------------------------------------------------------------
Social Security Number:
- --------------------------------------------------------------------------------
Birth Date:
- --------------------------------------------------------------------------------
I am the Participant under or Contract Owner of one or more variable annuity
contracts issued by The Variable Annuity Life Insurance Company ("VALIC"). I
hereby instruct VALIC not to accept any telephone instructions to transfer
Accumulation Values among investment options or change the allocation of future
Purchase Payments from me, anyone representing me or anyone representing himself
or herself to be me. I understand as a result of executing this form that the
transfer of Accumulation Values or Annuity Values among investment options or
changes in the allocation of future Purchase Payments may only be effected upon
the receipt by VALIC of my written instructions.
<TABLE>
<S> <C>
- ------------------------------------------------------------ --------------------------
Participant/Contract Owner Signature Date
</TABLE>
Mail this form to any Regional Office or to the Home Office at the following
address: VALIC, Customer Service A3-01, 2929 Allen Parkway, Houston, TX 77019.
<PAGE> 30
- --------------------------------------------------------------------------------
Please tear off, complete and return the form below to one of our Regional
Offices. A Statement of Additional Information may also be ordered by calling
1-800-44-VALIC.
...............................................................................
GUP AND GTS-VA CONTRACTS
Please send me a free copy of the Statement of Additional Information for The
Variable Annuity Life Insurance Company Separate Account A.
(Please Print or Type)
<TABLE>
<S> <C>
Name: ---------------------------------------------------- G.A. # ---------------------------------------------------
Address: -------------------------------------------------- Policy # --------------------------------------------------
- -----------------------------------------------------------
Social Security Number: --------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(This page intentionally left blank)
<PAGE> 31
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
2929 ALLEN PARKWAY, HOUSTON, TEXAS 77019
1-800-44-VALIC
FOR UNIT VALUE INFORMATION CALL: 1-800-42-VALIC & TDD 1-800-24-VALIC
FOR ASSET TRANSFERS BY TELEPHONE CALL: 1-800-621-7792
TDD 1-800-35-VALIC
EASYACCESS 1-800-42-VALIC
TDD EASYACCESS 1-800-24-VALIC
[AMERICAN GENERAL LOGO]
The Variable Annuity Life Insurance Company
is a member of American General Financial Group.
American General Financial Group is the marketing
name for American General Corporation and its subsidiaries.
PRINTED MATTER
PRINTED IN U.S.A. VA 1019 REV 5/00
(C)The Variable Annuity Life Insurance Company, Houston, Texas
Recycled Paper (LOGO)
<PAGE> 32
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
UNITS OF INTEREST UNDER
GROUP UNIT PURCHASE AND
GROUP VARIABLE ANNUITY CONTRACTS
(GUP AND GTS-VA CONTRACTS)
--------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
--------------------------------------------------------------------
FORM N-4 PART B
MAY 1, 2000
This Statement of Additional Information is not a prospectus but contains
information in addition to that set forth in the Prospectus for the GUP and
GTS-VA Contracts dated May 1, 2000 (the "Contracts") and should be read in
conjunction with the Prospectus. The terms used in this Statement of Additional
Information have the same meaning as those set forth in the Prospectus. A
Prospectus may be obtained by calling or writing the Company, or American
General Distributors, Inc. ("the Distributor") at 2929 Allen Parkway, Houston,
Texas 77019 or 1-800-44-VALIC. Prospectuses are also available from regional
sales offices of the Distributor or from its registered sales representatives.
<PAGE> 33
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
General Information............................. 3
Marketing Information....................... 3
Types of Variable Annuity Contracts......... 4
Federal Tax Matters............................. 4
General..................................... 4
Taxes Payable by Participants and
Annuitants............................... 4
Section 403(b) Annuities for Employees of
Certain Tax-Exempt Organizations or
Public Educational Institutions.......... 4
Section 401 Qualified Pension,
Profit-Sharing or Annuity Plans.......... 5
Section 457 Eligible Deferred Compensation
Plans of Public Employers................ 6
Private Employer Unfunded Deferred
Compensation Plans....................... 6
Fund Diversification........................ 7
Purchase Unit Value............................. 7
Illustration of Calculation of Purchase
Units Value.............................. 7
Illustration of Purchase of Purchase
Units.................................... 7
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Performance Calculations........................ 8
Calculation of Average Annual Total Return...... 8
Performance Information......................... 8
Performance Compared to Market Index........ 8
Stock Index Division 10A (GUP Contracts)
Performance Compared to S&P 500 Index.... 10
Stock Index Division 10B (GTS-VA Contracts)
Performance Compared to S&P 500 Index.... 11
Payout Payments................................. 12
Assumed Investment Rate..................... 12
Amount of Payout Payments................... 12
Payout Unit Value........................... 13
Illustration of Calculation of Payout Unit
Value.................................... 13
Illustration of Payout Payments............. 13
Distribution of Variable Annuity Contracts...... 13
Experts......................................... 14
Comments on Financial Statements................ 14
</TABLE>
2
<PAGE> 34
GENERAL INFORMATION
MARKETING INFORMATION
The Company has targeted not-for-profit organizations as the central focus
of its marketing efforts for the Contracts. The Company has utilized as its
general marketing theme the concept that the Company is "America's Retirement
Plan Specialists." Specifically, the Company's marketing thrust is aimed at
individuals and groups associated with public and private schools, colleges and
universities, not-for-profit health care organizations, state and local
governments and other not-for-profit organizations.
This marketing concept has proven to be successful. In the aggregate,
premium deposits with the Company have grown from $37,000 in 1956 to more than
$4.2 billion as of December 31, 1999. The number of aggregate participant
accounts has increased from 155,000 accounts in 1980 to more than 2,191,033
accounts as of December 31, 1999. As of December 31, 1999, the Company was
ranked in the top 1 percent of all U.S. life insurance companies with regard to
asset size. As of December 31, 1999 the Company's assets totaled more than $47
billion.
The Company's growth can also be reviewed by examining the growth in each
market segment that the Company targets.
The Company's growth can also be reviewed by examining certain milestones,
the number of participant accounts and cash values amongst the various market
segments or groups the Company targets. These markets include, but are not
limited to, public, primary and secondary schools, colleges, universities, state
and local government groups and healthcare markets.
The Company, in its marketing efforts to each of the market segments, may
from time to time design sales literature and material specifically for its
particular market segments. The sales literature and material may address
specifically the group's contract and retirement plan.
The Company has utilized as the central focus in its marketing to college
and university faculty and staff members the theme that the Company is the
"Alternative of Choice."
The Company, in its marketing efforts to each of the market segments, may
from time to time design sales literature and material specifically for that
market segment, e.g., the health care segment of the not-for-profit organization
market. This sales literature and material may also be specific to a certain
group. For example, sales literature and material may be designed for a specific
hospital. The sales literature and material would address specifically the
group's contract and retirement plan.
From time to time the Company may refer to the diversifying process of
asset allocation based on the Modern Portfolio Theory developed by Nobel Prize
winning economist Harry Markowitz.
When presenting the asset allocation process the Company may outline the
process of personal and investment risk analysis including determining
individual risk tolerances and a discussion of the different types of investment
risk. The Company may classify investors into five categories based on their
risk tolerance and will quote various industry experts on which types of
investments are best suited to each of the five risk categories. The industry
experts quoted may include Ibbotson Associates, CDA Investment Technologies,
Lipper Analytical Services, Inc. ("Lipper"), VARDS Report, Wilson Associates,
Morningstar, Inc. ("Morningstar"), and any other expert which has been deemed by
the Company to be appropriate. The Company may also provide a historical
overview of the performance of a variety of investment market indexes, the
performance of these indexes over time, and the performance of different asset
categories, such as stocks, bonds, cash equivalents, etc. The Company may also
discuss investment volatility (standard deviation) including the range of
returns for different asset categories and classes over different time horizons,
and the correlation between the returns of different asset categories and
classes. The Company may also discuss the basis of portfolio optimization
including the required inputs and the construction of efficient portfolios using
sophisticated computer-based techniques. Finally, the Company may describe
various investment strategies and methods of implementation such as the use of
index funds versus actively managed funds, the use of dollar cost averaging
techniques, the tax status of contributions, and the periodic rebalancing of
diversified portfolios.
3
<PAGE> 35
TYPES OF VARIABLE ANNUITY
CONTRACTS
Flexible payment deferred annuity Contracts are offered in connection with
the Prospectus to which this Statement of Additional Information relates.
Under flexible payment deferred annuity Contracts, Purchase Payments
generally are made until retirement age is reached. However, no Purchase
Payments are required to be made after the first Payment. Purchase Payments are
subject to any minimum payment requirements under the Contract.
The Contracts are non-participating and will not share in any of the
profits of the Company.
FEDERAL TAX MATTERS
GENERAL
Major changes in federal income tax laws in the past several years may
affect the tax treatment of investments in the Contracts. It is not feasible to
comment on all of these changes, and Contract owners should consult a qualified
tax advisor for more complete information. Contract owners should also be aware
that future legislation may change some of the rules discussed in the following
materials.
TAXES PAYABLE BY PARTICIPANTS
AND ANNUITANTS
The Contracts offered in connection with this prospectus are primarily used
with retirement programs which receive favorable tax deferred treatment under
federal income tax law, although deferred annuity contracts may be purchased
with after tax dollars.
Annuity payments or other amounts received under all Contracts generally
are subject to some form of federal income tax withholding. The withholding
requirement will vary among recipients depending on the type of program, the tax
status of the individual and the type of payments from which taxes are withheld.
Additionally, annuity payments or other amounts received under all Contracts may
be subject to state income tax withholding requirements.
SECTION 403(b) ANNUITIES FOR EMPLOYEES OF CERTAIN TAX-EXEMPT ORGANIZATIONS OR
PUBLIC EDUCATIONAL INSTITUTIONS
Purchase Payments. Under section 403(b) of the Code, payments made by
certain employers (i.e., tax-exempt organizations meeting the requirements of
section 501(c)(3) of the Code and public educational institutions) to purchase
annuity Contracts for their employees are excludable from the gross income of
employees to the extent that the aggregate Purchase Payments do not exceed the
limitations prescribed by section 402(g), section 403(b)(2) and section 415 of
the Code. This gross income exclusion applies to employer contributions and
voluntary salary reduction contributions.
An individual's voluntary salary reduction contributions under section
403(b) are generally limited to $10,500 ($9,500 before 1998; $10,000 in 1998 and
1999); additional catch-up contributions are permitted under certain
circumstances. Combined employer and salary reduction contributions are
generally limited to the smallest of: $30,000; approximately 25 percent of
salary; or, an exclusion allowance which takes into account a number of factors.
In addition, for plan years beginning after December 31, 1988, employer
contributions must comply with various nondiscrimination rules; these rules may
have the effect of further limiting the rate of employer contributions for
highly compensated employees.
Taxation of Distributions. Distributions of voluntary salary reduction
amounts are restricted. The restrictions apply to amounts accumulated after
December 31, 1988 (including voluntary contributions after that date and
earnings on prior and current voluntary contributions). These restrictions
require that no distributions will be permitted prior to one of the following
events: (1) attainment of age 59 1/2, (2) separation from service, (3) death,
(4) disability, or (5) hardship (hardship distributions will be limited to the
amount of salary reduction contributions exclusive of earnings thereon). Similar
restrictions will apply to all amounts transferred from a Section 403(b)(7)
custodial account other than rollover contributions.
Distributions from a section 403(b) annuity Contract are taxed as ordinary
income to the recipient in accordance with section 72 of the Code. Distributions
received before the recipient attains age 59 1/2 generally are subject to a 10%
penalty tax
4
<PAGE> 36
in addition to regular income tax. Certain distributions are excepted from this
penalty tax, including distributions following (1) death, (2) disability, (3)
separation from service during or after the year the participant reaches age 55,
(4) separation from service at any age if the distribution is in the form of
substantially equal periodic payments over the life (or life expectancy) of the
Participant (or the Participant and Beneficiary), and (5) distributions for
medical expenses, to the extent deductible.
Required Distributions. Generally, distributions from section 403(b)
annuities must commence no later than April 1 of the calendar year following the
later of the calendar year in which the Participant attains age 70 1/2 or the
calendar year in which the Participant retires. Such distributions must be made
over a period that does not exceed the life expectancy of the Participant (or
joint life expectancy of the Participant and Beneficiary). Following the death
of the Participant, the distribution requirements are generally the same as
those described with respect to Non-Qualified Contracts. However, amounts
accumulated under a Contract on December 31, 1986, are not subject to these
minimum distribution requirements. Pre-January 1, 1987 amounts may be paid in a
manner that meets the above rule or (i) must begin to be paid when the
Participant attains age 75; and (ii) the present value of payments expected to
be made over the life of the Participant under the option chosen must exceed 50%
of the present value of all payments expected to be made (the "50% rule".) The
50% rule will not apply to joint Annuitant if a Participant's spouse is the
joint Annuitant. Notwithstanding these rules for pre-January 1, 1987 amounts
held under 403(b) Contracts, the entire Contract balance must meet the minimum
distribution incidental benefit requirement of Section 403(b)(10). A penalty tax
of 50% will be imposed on the amount by which the minimum required distribution
in any year exceeds the amount actually distributed in that year.
Tax-Free Transfers and Rollovers. The IRS has ruled (Revenue Ruling 90-24)
that total or partial amounts may be transferred tax free between section 403(b)
annuity contracts and/or 403(b)(7) custodial accounts under certain
circumstances. In addition, section 403(b)(8) of the Code permits tax-free
rollovers from section 403(b) programs to IRAs or other section 403(b) programs
under certain circumstances. Such a rollover must be completed within 60 days of
receipt of the distribution. The portion of any distribution which is eligible
to be rolled over to an IRA or another 403(b) program is subject to 20% federal
income tax withholding unless the Participant elects a direct rollover of such
distribution to an IRA or other section 403(b) program.
SECTION 401 QUALIFIED PENSION, PROFIT-SHARING
OR ANNUITY PLANS
Purchase Payments. Purchase Payments made by an employer (or a
self-employed individual) under a pension, profit-sharing or annuity plan
qualified under section 401(a) or section 403(a) of the Code are excluded from
the gross income of the employee for Federal income tax purposes. Payments made
by an employee generally are made on an after-tax basis unless they are made on
a pre-tax basis by reason of sections 401(k) or 414(h) of the Code.
Taxation of Distributions. Distributions from Contracts purchased under
qualified plans are taxable as ordinary income, except to the extent allocable
to an employee's after-tax contributions (which constitute "investment in the
Contract"). However, if an employee or the Beneficiary receives a lump sum
distribution, as defined in the Code, from an exempt employees' trust, the
taxable portion of the distribution may be subject to special tax treatment. For
most individuals receiving lump sum distributions after attainment of age
59 1/2, the rate of tax may be determined under a special 5-year income
averaging provision; however, 5-year forward averaging has been repealed for
distributions occurring after December 31, 1999. Those who attained age 50 by
January 1, 1986 may instead elect to use a 10-year income averaging provision
based on the income tax rates in effect for 1986. In addition, individuals who
attained age 50 by January 1, 1986 may elect capital gains treatment (at a 20%
rate) for the taxable portion of a lump sum distribution attributable to years
of service before 1974; such capital gains treatment has otherwise been
repealed. Taxable distributions received under a Contract purchased under a
qualified plan prior to attainment of age 59 1/2 are subject to the same 10%
penalty tax (and the same exceptions) as described with respect to section
403(b) annuity Contracts.
Required Distributions. The minimum distribution requirements for qualified
plans are generally the same as described with respect to section 403(b) annuity
Contracts, except that no
5
<PAGE> 37
amounts are exempted from the minimum distribution requirements.
Tax-Free Rollovers. The taxable portion of certain distributions from a
plan qualified under section 401 or 403(a) may be transferred in a tax-free
rollover to an individual retirement account or annuity or to another such plan.
Such a rollover must be completed within 60 days of receipt of the qualifying
distribution. The portion of any distribution which is eligible to be rolled
over to an IRA or another section 401(a) or 403(a) plan is subject to 20%
federal income tax withholding unless the Participant elects a direct rollover
of such distribution to an IRA or other section 401(a) or 403(a) plan.
SECTION 457 ELIGIBLE DEFERRED COMPENSATION
PLANS OF PUBLIC EMPLOYERS
Purchase Payments. Under section 457 of the Code, individuals who perform
services for a unit of a state or local government may participate in a deferred
compensation program. Tax-exempt employers may establish deferred compensation
plans under section 457 only for a select group of management or highly
compensated employees and/or independent contractors.
This type of program allows individuals to defer the receipt of
compensation which would otherwise be presently payable and to therefore defer
the payment of federal income taxes on the amounts. Assuming that the program
meets the requirements to be considered an eligible deferred compensation plan
(an "EDCP"), an individual may contribute (and thereby defer from current income
for tax purposes) the lesser of $8,000 (indexed for inflation) or 33 1/3% of the
individual's includible compensation. (Includible compensation means
compensation from the employer which is currently includible in gross income for
federal tax purposes.) During the last three years before an individual attains
normal retirement age, additional catch-up deferrals are permitted.
The amounts which are deferred may be used by the employer to purchase the
Contracts offered by this prospectus. For EDCPs of private tax exempt employees,
the Contract is an asset of the employer or other owner. The employee has no
present right or vested interest in the Contract and is only entitled to payment
in accordance with the EDCP. For EDCPs maintained by a unit of a state or local
government, the Contract is generally held for the exclusive benefit of plan
participants, although Contracts under some such plans may have been subject to
the claims of the employer's creditors until January 1, 1999. In such plans the
employee has no present rights to a distribution from the Contract until
distribution requirements under the Contract and the Plan have been satisfied,
and is only entitled to payment in accordance with the EDCP provisions.
Taxation of Distributions. Amounts received by an individual from an EDCP
are includible in gross income for the taxable year in which such amounts are
paid or otherwise made available.
Distributions Before Separation from Service. Distributions generally are
not permitted under an EDCP prior to separation from service except for
unforeseeable emergencies or in amounts under $5,000 for certain inactive
Participants. These distributions are includible in the gross income of the
individual in the year in which paid.
Required Distributions. Beginning January 1, 1989, the minimum distribution
requirements for EDCP's are generally the same as those for qualified plans and
section 403(b) annuity Contracts, except that no amounts are exempted from
minimum distribution requirements.
Tax Free Transfers and Rollovers. Federal income tax law permits the tax
free transfer of EDCP amounts to another EDCP, but not to an IRA or other type
of plan.
PRIVATE EMPLOYER UNFUNDED DEFERRED
COMPENSATION PLANS
Purchase Payments. Private taxable employers may establish unfunded and
non-qualified deferred compensation plans for a select group of management or
highly compensated employees and/or for independent contractors.
Certain arrangements of nonprofit employers entered into prior to August
16, 1986, and not subsequently modified, are subject to the rules for private
taxable employer deferred compensation plans discussed below.
Deferred compensation plans represent a bare contractual promise on the
part of the employer to pay current wages at some future time. The Contract is
owned by the employer and is subject to the claims of the employer's creditors.
The individual has no present right or vested interest in the Contract and is
only entitled to payment in accordance with plan provisions. Private taxable
employers that are not natural persons, however, are currently taxable on any
increase in the Accumulation Value
6
<PAGE> 38
attributable to Purchase Payments made to such Contracts after February 28,
1986.
Taxation of Distributions. Amounts received by an individual from a private
employer deferred compensation plan are includible in gross income for the
taxable year in which such amounts are paid or otherwise made available.
Tax Free Transfers and Rollovers. Federal income tax law does not allow tax
free transfers or rollovers for amounts accumulated in a private employer
deferred compensation plan.
FUND DIVERSIFICATION
Separate Account investments must be adequately diversified in order for
the increase in the value of Non-Qualified Contracts to receive tax-deferred
treatment. In order to be adequately diversified, each portfolio of the Fund
must, as of the end of each calendar quarter or within 30 days thereafter, have
no more than 55% of its assets invested in any one investment, 70% in any two
investments, 80% in any three investments and 90% in any four investments.
Failure of a Fund portfolio to meet the diversification requirements could
result in tax liability to Non-Qualified Contract Owners.
Each of the portfolios of the Fund expects to meet the diversification
requirements above and assure tax deferred treatment for holders of any
Non-Qualified Contracts.
The investment opportunities of the Fund could conceivably be limited by
adhering to the above diversification requirements. This would affect all
Contract Owners, including those owners of Qualified Contracts for whom
diversification is not a requirement for tax-deferred treatment.
PURCHASE UNIT VALUE
The calculation of Purchase Unit value is discussed in the Prospectus under
"Purchase Period." The following illustrations show a calculation of new Unit
value and the purchase of Purchase Units (using hypothetical examples):
ILLUSTRATION OF CALCULATION OF PURCHASE UNIT VALUE
<TABLE>
<S> <C>
1. Purchase Unit value, beginning of
period............................... $ 1.800000
2. Value of Fund share, beginning of
period............................... 21.200000
3. Change in value of Fund share........ .500000
4. Gross investment return (3)/(2)...... .023585
5. Daily separate account fee........... $ .000027
----------
6. Net investment return (4)-(5)........ .023558
----------
7. Net investment factor 1.000000+(6)... $ 1.023558
----------
8. Purchase Unit value, end of period
(1)X(7).............................. $ 1.842404
----------
</TABLE>
ILLUSTRATION OF PURCHASE OF PURCHASE UNITS (ASSUMING NO STATE PREMIUM TAX)
<TABLE>
<S> <C>
1. First Periodic Purchase Payment...... $ 100.00
2. Purchase Unit value on effective date
of purchase (see Example 3).......... $1.800000
3. Number of Purchase Units purchased
(1)/(2).............................. 55.556
4. Purchase Unit value for valuation
date following purchase (See Example
3)................................... $1.842404
---------
5. Value of Purchase Units in account
for valuation date following purchase
(3)X(4).............................. $ 102.36
---------
</TABLE>
7
<PAGE> 39
PERFORMANCE CALCULATIONS
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN
Average Annual Total Return quotations for the 1, 5, and 10 year periods
ended December 31, 1999, the date of the most recent balance sheet included in
this registration statement, are computed by finding the average annual
compounded rates of return over the 1, 5, and 10 year periods that would equate
the initial amount invested to the ending redeemable value, according to the
following formula:
P (1 + T)(n) = ERV
Where:
<TABLE>
<S> <C> <C>
P = a hypothetical initial Purchase Payment of $1,000
T = average annual total return
n = number of years
ERV = redeemable value at the end of the 1, 5, or 10 year periods
of a hypothetical $1,000 Purchase Payment made at the
beginning of the 1, 5, or 10 year periods (or fractional
portion thereof)
</TABLE>
We may advertise standardized average annual total return which includes
the surrender charge of up to 5% of Purchase Payments received during the most
recent 60 months as well as non-standardized average annual total returns which
does not include a surrender charge or account maintenance fee.
There is no sales charge for reinvested dividends. All recurring fees have
been deducted. For fees which vary with the account size, an account size equal
to that of the median account size has been assumed. Ending redeemable value has
been determined assuming a complete redemption at the end of the 1, 5 or 10 year
period and deduction of all nonrecurring charges at the end of each such period.
PERFORMANCE INFORMATION
PERFORMANCE COMPARED TO MARKET INDEX
The following tables show the Hypothetical $10,000 Account Value and
Cumulative Return of Divisions 10A and 10B as compared to the benchmarks shown.
These performance calculations for Divisions 10A and 10B and the methods
used for calculating them are described in the Prospectus. (See "How to Review
Investment Performance of Separate Account Division").
These tables compare hypothetical investment performance and percentage
changes in Contract Purchase Unit values with the results of a benchmark,
representing an unmanaged market index. The comparisons should be considered in
light of the investment policies and objectives of the Fund. Rates of return for
Division 10A and 10B include reinvestment of investment income, including
capital gains, interest and dividends. The rate of return on the market index
also has been adjusted to reflect reinvestment of interest and dividends.
Price returns for the market indices are calculated by subtracting the
price level at the beginning of the year from the price level at the end of the
year and dividing the difference by the price level at the beginning of the
year. To calculate dollar values for the indices' Hypothetical $10,000 Account
Value presentation, price index values were substituted for Purchase Unit Values
in the calculation described in the Prospectus, and where applicable, dividend
yields were then added to determine the total returns applied in the dollar
value calculations. Similarly, to calculate Cumulative Return for the indices,
the Cumulative Return calculation described in the Prospectus for Unit values of
the Divisions is used, substituting the Hypothetical $10,000 Account Value at
the end of each year for
8
<PAGE> 40
the Purchase Unit Value. No sales load, administrative charges, or any other
expenses have been deducted from the index calculations. THE PERFORMANCE RESULTS
SHOWN IN THIS SECTION ARE NOT AN ESTIMATE OR GUARANTEE OF FUTURE INVESTMENT
PERFORMANCE, AND DO NOT REPRESENT THE ACTUAL EXPERIENCE OF AMOUNTS INVESTED BY A
PARTICULAR PARTICIPANT.
The performance of Stock Index Divisions 10A and 10B may be compared to the
record of the Standard & Poor's(R) Corporation Composite Stock Price Index ("S&P
500(R)")*. The S&P 500 is a well known measure of the price performance of 500
leading larger domestic stocks which represent approximately 73% of the market
capitalization of the United States equity market. The index is an unmanaged
weighted index of 500 industrial, transportation, utility and financial
companies. This benchmark is not subject to any charges for investment advisory
fees or other expenses of the type charged at either the Separate Account or the
fund level. Therefore, the comparison with this benchmark is of limited use.
- ---------------
* "Standard & Poor's(R)", S&P(R), and "S&P 500(R)" are trademarks of Standard
and Poor's Corporation. The Stock Index Fund is not sponsored, endorsed, sold
or promoted by S&P and S&P makes no representation regarding the advisability
of investing in this Fund.
9
<PAGE> 41
STOCK INDEX DIVISION 10A (GUP CONTRACTS) PERFORMANCE COMPARED TO S&P 500 INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE JANUARY 1, 1990
<TABLE>
<CAPTION>
STOCK INDEX S&P 500
DIVISION 10A INDEX
------------ -------
<S> <C> <C>
01/01/90................................................ $10,000 $10,000
------- -------
12/31/90................................................ 9,547 9,689
------- -------
12/31/91................................................ 11,503 12,642
------- -------
12/31/92................................................ 11,814 13,605
------- -------
12/31/93................................................ 12,854 14,976
------- -------
12/31/94................................................ 12,817 15,174
------- -------
12/31/95................................................ 17,428 20,876
------- -------
12/31/96................................................ 21,181 25,671
------- -------
12/31/97................................................ 27,916 34,234
------- -------
12/31/98................................................ 35,496 44,018
------- -------
12/31/99................................................ 42,375 53,283
------- -------
</TABLE>
CUMULATIVE RETURN COMPARED TO MARKET INDEX
(PERIOD ENDED DECEMBER 31, 1999)
<TABLE>
<CAPTION>
10 YEARS 5 YEARS 1 YEAR
-------- ------- ------
<S> <C> <C> <C>
Investment Division
Stock Index Division 10A*............................ 323.75% 230.63% 19.38%
------ ------ ------
Benchmark Comparison
S&P 500 Index........................... 432.83% 251.15% 21.05%
------ ------ ------
</TABLE>
- ---------------
* The Division was initiated on April 20, 1987. On May 1, 1992, the Quality
Growth Fund merged into the Stock Index Fund and Quality Growth Division 9A
was renamed Stock Index Division 10A.
10
<PAGE> 42
STOCK INDEX DIVISION 10B (GTS-VA CONTRACTS) PERFORMANCE COMPARED TO S&P 500
INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE JANUARY 1, 1990
<TABLE>
<CAPTION>
STOCK INDEX S&P 500
DIVISION 10B INDEX
------------ -------
<S> <C> <C>
01/01/90.................................................... $10,000 $10,000
12/31/90.................................................... 9,616 9,689
12/31/91.................................................... 11,669 12,642
12/31/92.................................................... 12,070 13,605
12/31/93.................................................... 13,227 14,976
12/31/94.................................................... 13,277 15,174
12/31/95.................................................... 18,172 20,876
12/31/96.................................................... 22,233 25,671
12/31/97.................................................... 29,499 34,234
12/31/98.................................................... 37,766 44,018
12/31/99.................................................... 45,401 53,283
</TABLE>
CUMULATIVE RETURN COMPARED TO MARKET INDEX
(PERIOD ENDED DECEMBER 31, 1999)
<TABLE>
<CAPTION>
10 YEARS 5 YEARS 1 YEAR
-------- ------- ------
<S> <C> <C> <C>
Investment Division
Stock Index Division 10B*................................ 354.01% 241.96% 20.22%
------ ------ -----
Benchmark Comparison
S&P 500 Index............................... 432.83% 251.15% 21.05%
------ ------ -----
</TABLE>
- ---------------
* The Division was initiated on April 20, 1987. On May 1, 1992, the Quality
Growth Fund merged into the Stock Index Fund and Quality Growth Division 9B
was renamed Stock Index Division 10B.
11
<PAGE> 43
PAYOUT PAYMENTS
ASSUMED INVESTMENT RATE
The discussion concerning the amount of payout payments which follows this
section is based on an Assumed Investment Rate of 3 1/2% per annum (3% for
GTS-VA Contracts sold in connection with section 403(b) plans). However, the
Company will permit each Annuitant choosing a variable payout option to select
an Assumed Investment Rate permitted by state law or regulations other than the
3 1/2% (or 3%) rate described in the Prospectus. The foregoing Assumed
Investment Rates are used merely in order to determine the first monthly payment
per thousand dollars of value. It should not be inferred that such rates will
bear any relationship to the actual net investment experience of VALIC Separate
Account A.
AMOUNT OF PAYOUT PAYMENTS
The amount of the first variable payout payment to the Annuitant will
depend on the amount of the Account Value applied to effect the variable payout
as of the tenth day immediately preceding the date payout payments commence, the
amount of any premium tax owed, the payout option selected, and the age of the
Annuitant.
The Contracts contain tables indicating the dollar amount of the first
payout payment under each payout option for each $1,000 of Account Value (after
the deduction for any premium tax) at various ages. These tables are based upon
the Progressive Annuity Tables for GUP Contracts. GTS-VA Contracts use the 1949
male annuity mortality tables at 3% for Contracts sold in connection with
section 403(b) plans and the Progressive Annuity Table (assuming all births in
1915) at 3.5% for all other Contracts.
The portion of the first monthly variable payout payment derived from a
Division of VALIC Separate Account A is divided by the Payout Unit Value for
that Division (calculated ten days prior to the date of the first monthly
payment) to determine the number of Payout Units in each Division represented by
the payment. The number of such units will remain fixed during the Payout
Period, assuming the Annuitant makes no transfers of Payout Units to provide
Payout Units under another Division or to provide a fixed payout payment.
The dollar amount of each subsequent variable payout payment is determined
by multiplying the number of Payout Units in the Participant Account by the
applicable Payout Unit value on the tenth day preceding the due date of such
payment. The Payout Unit value will increase or decrease in proportion to the
net investment factor for the Contract since the date of the previous payout
payment, less an adjustment to neutralize the Assumed Investment Rate referred
to above. For example, a factor of .999919 is applied to Contracts containing a
3% Assumed Investment Rate and a factor of .999906 is applied to Contracts
containing a 3.5% Assumed Investment Rate. (Calculation of the net investment
factor is discussed in the Prospectus under "Purchase Period -- Purchase Unit
Value.") This is true for all annuity options except the sixth payout option
described in the Prospectus (see "Payout Period"). Under the sixth payout
option, the amount of subsequent payments remains fixed, but the number of
payments varies with the experience of Divisions 10A and 10B for GUP and GTS-VA,
respectively.
Therefore, the dollar amount of variable payout payments after the first
year will vary with the amount by which the net investment return is greater or
less than 3 1/2% per annum. For example, if a Division has a cumulative net
investment return of 5% over a one year period, the first payout payment in the
next year will be approximately 1 1/2 percentage points greater than the payment
on the same date in the preceding year, and subsequent payments will continue to
vary with the investment experience of the Division. If such net investment
return is 1% over a one year period, the first payout payment in the next year
will be approximately 2 1/2 percentage points less than the payment on the same
date in the preceding year, and subsequent payments will continue to vary with
the investment experience of the applicable Division.
Each deferred Contract provides that, when fixed payout payments are to be
made under one of the first four payout options, the monthly payment to the
Annuitant will not be less than the monthly payment produced by the then current
settlement option rates, which will not be less than the rates used for a
currently issued single payment immediate annuity contract. The purpose of this
provision is to assure the Annuitant that, at retirement, if the fixed payout
purchase rates then required by the
12
<PAGE> 44
Company for new single payment immediate annuity contracts are significantly
more favorable than the annuity rates guaranteed by a Contract, the Annuitant
will be given the benefit of the new annuity rates.
PAYOUT UNIT VALUE
The value of a Payout Unit is calculated at the same time that the value of
an Purchase Unit is calculated and is based on the same values for Fund shares
and other assets and liabilities. (See "Purchase Period" in the prospectus.)
The Payout Unit value for any period is determined by multiplying the
Payout Unit value for the immediately preceding period by the net investment
factor for the date for which the Payout Unit value is being calculated. (The
net investment factor used is the net investment factor used to calculate the
Purchase Unit value described in the Prospectus under "Purchase Period.") In
order to avoid the crediting of "double interest," the result is then multiplied
by a factor to neutralize the Assumed Investment Rate built into the annuity
table contained in the Contract. For example, a factor of .999919 is applied to
Contracts containing a 3% Assumed Investment Rate, and a factor of .999906 is
applied to Contracts containing a 3.5% rate.
The following illustrations show, by use of hypothetical examples, the
method of determining the Payout Unit value and the amount of variable annuity
payments.
ILLUSTRATION OF CALCULATION OF PAYOUT UNIT VALUE
<TABLE>
<S> <C>
1. Payout Unit value, beginning of period.................. $ 1.000000
2. Net investment factor for period (see Example 1)........ 1.019991
3. Daily adjustment for 3.5% Assumed Investment Rate....... .999906
4. (2)X(3)................................................. 1.019895
5. Payout Unit value, end of period (1)X(4)................ $ 1.019895
</TABLE>
ILLUSTRATION OF PAYOUT PAYMENTS
Any Annuitant age 65, Life Annuity with 120 Payments Certain
<TABLE>
<S> <C>
1. Number of Purchase Units at Payout Date................. 10,000.00
2. Purchase Unit value (see Example 1)..................... $ 1.000000
3. Purchase Value of Contract (1)X(2)...................... $10,000.00
4. First monthly annuity payment per $1,000 of Accumulation
Value................................................... $ 5.63
5. First monthly annuity payment (3)X(4)/1,000............. $ 56.30
6. Payout Unit value (see Example 6)....................... $ 1.000000
7. Number of Payout Units (5)/(6).......................... 56.30
8. Assume Payout Unit value for second month equal to...... $ .997000
9. Second monthly Payout Payment (7)X(8)................... $ 56.13
10. Assume Payout Unit value for third month equal to....... $ .980000
11. Third monthly Payout Payment (7)X(10)................... $ 55.17
</TABLE>
DISTRIBUTION OF VARIABLE ANNUITY CONTRACTS
The Company has qualified or intends to qualify the Contracts for sale in
all fifty states and the District of Columbia and will commence offering the
Contracts promptly upon qualification in each such jurisdiction.
The Contracts are sold in a continuous offering by licensed insurance
agents who are registered representatives of broker-dealers which are members of
the National Association of Securities Dealers, Inc. (the "NASD"). The principal
underwriter for the Separate Account is the Distributor, an affiliate of VALIC.
The Distributor's address is 2929 Allen Parkway, Houston, Texas 77019. The
Distributor is a Delaware corporation organized in 1994 and is a member of the
NASD.
13
<PAGE> 45
The licensed agents who sell the Contracts will be compensated for such
sales by commissions ranging up to 6.0% of each Purchase payment. Managers who
supervise the agents will receive overriding commissions ranging to 1% of
Purchase payments. (These various commissions are paid by the Company and do not
result in any charge to Contract Owners or to the Separate Account in addition
to the charges described under "Charges Under Variable Annuity Contracts.")
Pursuant to its underwriting agreement with the Distributor and the
Separate Account, the Company reimburses the Distributor for reasonable sales
expenses, including overhead expenses. Prior to May 1, 1999, The Variable
Annuity Marketing Company ("VAMCO") was the principal underwriter for VALIC
Separate Account A. Sales commissions paid for 1999 were $29,986, and the
Distributor retained $0 in commissions.
EXPERTS
The consolidated financial statements of the Company at December 31, 1999
and 1998, and for each of the three years in the period ended December 31, 1999,
and the financial statements of the Company's Separate Account A at December 31,
1999 and for each of the two years in the period then ended, appearing in this
Statement of Additional Information have been audited by Ernst & Young LLP,
independent auditors, as set forth in their reports thereon appearing elsewhere
herein, and are included in reliance upon such reports given upon the authority
of such firm as experts in accounting and auditing.
COMMENTS ON FINANCIAL STATEMENTS
The financial statements of The Variable Annuity Life Insurance Company
should be considered only as bearing upon the ability of the Company to meet its
obligations under the Contracts, which include death benefits, and its
assumption of the mortality and expense risks.
Divisions 10A and 10B are the only Divisions available under the Contracts
described in the Prospectus. The Separate Account financial statements contained
herein reflect the composition of the Separate Account as of December 31, 1999.
14
<PAGE> 46
AMERICAN GENERAL LOGO]
The Variable Annuity Life Insurance Company
is a member of American General Financial
Group.
American General Financial Group is the
marketing
name for American General Corporation and
its subsidiaries.
PRINTED MATTER
PRINTED IN U.S.A. VA 1019-1 REV 5/00
(C)The Variable Annuity Life Insurance Company, Houston, Texas
Recycled Paper --RECYCLED PAPER LOGO--
<PAGE> 47
TABLE OF CONTENTS
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A - ANNUAL REPORT
DECEMBER 31, 1999
Report of Independent Auditors........................................... 1
Summary of Financial Statements.......................................... 3
Statements of Net Assets................................................. 4
Statements of Operations................................................. 8
Statements of Changes in Net Assets...................................... 14
Notes to Financial Statements............................................ 34
Supplemental Information................................................. 39
<PAGE> 48
REPORT OF INDEPENDENT AUDITORS 1
TO THE BOARD OF THE VARIABLE ANNUITY LIFE INSURANCE COMPANY AND
CONTRACT OWNERS OF THE VARIABLE ANNUITY LIFE INSURANCE COMPANY -
SEPARATE ACCOUNT A
We have audited the accompanying statements of net assets of The Variable
Annuity Life Insurance Company Separate Account A ("the Separate Account") and
each of the divisions (1, 2, 4, 5, 6, 7, 8, 10A, 10B, 10C, 10D, 11 through 44
inclusive, and 48 through 60 inclusive) comprising the Separate Account as of
December 31, 1999. We have also audited the related statements of operations
for the year then ended and the statements of changes in net assets for each of
the two years in the period then ended of the Separate Account and each of its
divisions except for divisions 33 through 50, inclusive, and divisions 58
through 60, inclusive, for which we have audited the statements of changes in
net assets for the year ended December 31, 1999, and for the period from August
26, 1998 (inception) to December 31, 1998; except for divisions 51 through 54,
inclusive, for which we have audited the statements of changes in net assets
for the year ended December 31, 1999, and for the period from September 22,
1998 (inception) to December 31, 1998; and except for divisions 55 through 57,
inclusive, for which we have audited the statements of operations and changes
in net assets for the period from January 4, 1999 (inception) to December 31,
1999. These financial statements are the responsibility of the Separate
Account's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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. Our procedures included confirmation of securities owned as of
December 31, 1999, by correspondence with the transfer agents. 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 referred to above present fairly, in
all material respects, the financial position of the Separate Account and each
of the divisions comprising the Separate Account at December 31, 1999, and the
results of their operations and changes in their net assets for each of the
periods identified above, in conformity with accounting principles generally
accepted in the United States.
/s/ ERNST & YOUNG LLP
-------------------------
ERNST & YOUNG LLP
Houston, Texas
February 22, 2000
<PAGE> 49
SUMMARY OF FINANCIAL STATEMENTS 3
STATEMENT OF NET ASSETS
December 31, 1999
<TABLE>
<CAPTION>
ALL DIVISIONS
----------------
ASSETS:
<S> <C>
Total investment in shares of mutual funds, at market (cost $15,133,600,700) ........... $ 21,292,842,069
Balance due from VALIC general account, net ............................................ 17,655,894
Payable for mutual fund purchases, net ................................................. (4,388,902)
----------------
NET ASSETS ............................................................................. $ 21,306,109,061
----------------
Contract Owner Reserves and Capital Surplus:
Reserves for redeemable annuity contracts
(Net of applicable contract loans - partial withdrawals with right of
reinvestment) ....................................................................... $ 21,173,161,490
Reserves for annuity contracts on benefit .............................................. 27,942,008
Capital surplus (Note C) ............................................................... 105,005,563
----------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS ...................................... $ 21,306,109,061
----------------
</TABLE>
STATEMENT OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
ALL DIVISIONS
----------------
<S> <C>
INVESTMENT INCOME:
Dividends from mutual funds ............................................................ $ 200,790,831
----------------
EXPENSES:
Mortality and expense risk charge ...................................................... 182,974,740
Reimbursement of expenses (Note C) ..................................................... (10,256,222)
----------------
Total expenses ...................................................................... 172,718,518
----------------
NET INVESTMENT INCOME .................................................................. 28,072,313
----------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ....................................................... 492,418,714
Capital gains distributions from mutual funds .......................................... 1,237,635,279
Net unrealized appreciation of investments during the period ........................... 2,750,587,412
----------------
Net realized and unrealized gain on investments ..................................... 4,480,641,405
----------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ....................................... $ 4,508,713,718
----------------
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ALL DIVISIONS
----------------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
----------------- ----------------
<S> <C> <C>
OPERATIONS:
Net investment income................................................................... $ 28,072,313 $ 32,906,355
Net realized gain on investments........................................................ 492,418,714 256,062,773
Capital gains distributions from mutual funds........................................... 1,237,635,279 599,950,396
Net unrealized appreciation of investments during the period............................ 2,750,587,412 1,171,591,212
----------------- ----------------
Increase in net assets resulting from operations .................................... 4,508,713,718 2,060,510,736
----------------- ----------------
PRINCIPAL TRANSACTIONS:
Purchase payments ...................................................................... 2,904,038,286 2,363,611,667
Surrenders of accumulation units by terminations, withdrawals, and maintenance fees .... (1,008,041,123) (576,063,916)
Annuity benefit payments ............................................................... (3,151,245) (2,688,910)
Amounts transferred from VALIC general account, net..................................... 312,589,668 419,275,772
----------------- ----------------
Increase in net assets resulting from principal transactions ........................ 2,205,435,586 2,204,134,613
----------------- ----------------
Total increase in net assets............................................................ 6,714,149,304 4,264,645,349
NET ASSETS:
Beginning of period..................................................................... 14,591,959,757 10,327,314,408
----------------- ----------------
End of period........................................................................... $ 21,306,109,061 $ 14,591,959,757
----------------- ----------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 50
4 FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AGSPC AGSPC AGSPC
STATEMENTS OF NET ASSETS INTERNATIONAL MIDCAP SMALL CAP
December 31, 1999 EQUITIES INDEX INDEX
FUND - FUND - FUND -
DIVISION 11 DIVISION 4 DIVISION 14 DIVISION 10A
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market .......... $ 175,007,894 $ 876,866,818 $ 241,145,168 $ 590,443,067
Balance due from (to) VALIC general account .............. 2,029,474 9,382 27,128 (319,779)
Receivable (payable) for mutual fund sales (purchases) ... -- -- -- --
-------------- -------------- -------------- --------------
NET ASSETS ............................................... $ 177,037,368 $ 876,876,200 $ 241,172,296 $ 590,123,288
-------------- -------------- -------------- --------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of
applicable contract loans - partial withdrawals with
right of reinvestment) ................................. $ 176,828,231 $ 876,371,622 $ 241,010,780 $ 574,871,892
Reserves for annuity contracts on benefit ................ 209,137 504,578 161,516 15,251,396
Capital surplus (Note C) ................................ -- -- -- --
-------------- -------------- -------------- --------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS ........ $ 177,037,368 $ 876,876,200 $ 241,172,296 $ 590,123,288
-------------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
AMERICAN AMERICAN AMERICAN AMERICAN
STATEMENTS OF NET ASSETS GENERAL GENERAL GENERAL GENERAL
December 31, 1999 INTERNATIONAL LARGE CAP LARGE CAP MID CAP
VALUE FUND - GROWTH FUND - VALUE FUND - GROWTH FUND
DIVISION 34 DIVISION 39 DIVISION 40 DIVISION 37
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market .......... $ 8,096,689 $ 21,699,827 $ 4,473,480 $ 7,065,815
Balance due from (to) VALIC general account .............. 2,758 81,423 3,679 5,305
Receivable (payable) for mutual fund sales (purchases) ... -- -- -- --
-------------- -------------- -------------- --------------
NET ASSETS ............................................... $ 8,099,447 $ 21,781,250 $ 4,477,159 $ 7,071,120
-------------- -------------- -------------- --------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of
applicable contract loans - partial withdrawals with
right of reinvestment) ................................. $ 1,126,250 $ 16,976,274 $ 657,997 $ 1,243,896
Reserves for annuity contracts on benefit ................ -- -- -- --
Capital surplus (Note C) ................................ 6,973,197 4,804,976 3,819,162 5,827,224
-------------- -------------- -------------- --------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS ........ $ 8,099,447 $ 21,781,250 $ 4,477,159 $ 7,071,120
-------------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
DREYFUS NEUBERGER PUTNAM PUTNAM
STATEMENTS OF NET ASSETS FOUNDERS BERMAN GLOBAL NEW
December 31, 1999 GROWTH GUARDIAN GROWTH OPPORTUNITIES
FUND - TRUST - FUND - FUND -
DIVISION 30 DIVISION 29 DIVISION 28 DIVISION 26
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market .......... $ 874,457,709 $ 59,467,223 $ 495,732,851 $1,014,850,850
Balance due from (to) VALIC general account .............. 1,861,813 50,794 2,263,104 3,449,185
Receivable (payable) for mutual fund sales (purchases) ... (830,550) (21,490) (1,135,006) (1,827,956)
-------------- -------------- -------------- --------------
NET ASSETS ............................................... $ 875,488,972 $ 59,496,527 $ 496,860,949 $1,016,472,079
-------------- -------------- -------------- --------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of
applicable contract loans - partial withdrawals with
right of reinvestment) ................................. $ 875,377,940 $ 59,482,061 $ 496,733,062 $1,016,427,721
Reserves for annuity contracts on benefit ................ 111,032 14,466 127,887 44,358
Capital surplus (Note C) ................................ -- -- -- --
-------------- -------------- -------------- --------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS ........ $ 875,488,972 $ 59,496,527 $ 496,860,949 $1,016,472,079
-------------- -------------- -------------- --------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 51
SEPARATE ACCOUNT A 5
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
December 31, 1999 AGSPC STOCK INDEX FUND
--------------------------------------------------
DIVISION 10B DIVISION 10C DIVISION 10D
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market .......... $ 45,355,666 $4,551,706,741 $ 59,387,213
Balance due from (to) VALIC general account .............. (37,562) 1,396,109 4,396
Receivable (payable) for mutual fund sales (purchases) ... -- -- --
-------------- -------------- --------------
NET ASSETS ............................................... $ 45,318,104 $4,553,102,850 $ 59,391,609
-------------- -------------- --------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of
applicable contract loans - partial withdrawals with
right of reinvestment) ................................. $ 43,269,244 $4,548,703,203 $ 59,146,967
Reserves for annuity contracts on benefit ................ 2,048,860 4,399,647 244,642
Capital surplus (Note C) ................................ -- -- --
-------------- -------------- --------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS ........ $ 45,318,104 $4,553,102,850 $ 59,391,609
-------------- -------------- --------------
<CAPTION>
AGSPC AMERICAN AMERICAN
STATEMENTS OF NET ASSETS AGSPC GROWTH & CENTURY GENERAL
December 31, 1999 GROWTH INCOME ULTRA INTERNATIONAL
FUND - FUND - FUND - GROWTH FUND -
DIVISION 15 DIVISION 16 DIVISION 31 DIVISION 33
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market .......... $1,218,557,601 $ 336,589,500 $1,023,333,380 $ 6,847,182
Balance due from (to) VALIC general account .............. 104,803 34,010 3,260,572 11,199
Receivable (payable) for mutual fund sales (purchases) ... -- -- (1,172,899) --
-------------- -------------- -------------- --------------
NET ASSETS ............................................... $1,218,662,404 $ 336,623,510 $1,025,421,053 $ 6,858,381
-------------- -------------- -------------- --------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of
applicable contract loans - partial withdrawals with
right of reinvestment) ................................. $1,217,972,085 $ 336,543,298 $1,024,997,082 $ 824,550
Reserves for annuity contracts on benefit ................ 690,319 80,212 423,971 --
Capital surplus (Note C) ................................ -- -- -- 6,033,831
-------------- -------------- -------------- --------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS ........ $1,218,662,404 $ 336,623,510 $1,025,421,053 $ 6,858,381
-------------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
December 31, 1999
AMERICAN AMERICAN AMERICAN
GENERAL GENERAL GENERAL
MID CAP SMALL CAP SMALL CAP
VALUE FUND GROWTH FUND - VALUE FUND -
DIVISION 38 DIVISION 35 DIVISION 36
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market .......... $ 8,329,863 $ 16,642,631 $ 4,470,644
Balance due from (to) VALIC general account .............. 11,302 71,324 1,032
Receivable (payable) for mutual fund sales (purchases) ... -- -- --
-------------- -------------- --------------
NET ASSETS ............................................... $ 8,341,165 $ 16,713,955 $ 4,471,676
-------------- -------------- --------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of
applicable contract loans - partial withdrawals with
right of reinvestment) ................................. $ 2,264,145 $ 7,749,930 $ 267,346
Reserves for annuity contracts on benefit ................ -- -- --
Capital surplus (Note C) ................................ 6,077,020 8,964,025 4,204,330
-------------- -------------- --------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS ........ $ 8,341,165 $ 16,713,955 $ 4,471,676
-------------- -------------- --------------
<CAPTION>
STATEMENTS OF NET ASSETS
December 31, 1999
DREYFUS VARIABLE EVERGREEN EVERGREEN
INVESTMENT FUND - GROWTH AND SMALL CAP EVERGREEN
SMALL CAP INCOME VALUE VALUE
PORTFOLIO FUND - FUND - FUND -
DIVISION 18 DIVISION 56 DIVISION 55 DIVISION 57
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market .......... $ 779,491,073 $ 6,220 $ 243 $ 4,388
Balance due from (to) VALIC general account .............. (127,757) 24 (1) (3)
Receivable (payable) for mutual fund sales (purchases) ... 242,882 -- -- --
-------------- -------------- -------------- --------------
NET ASSETS ............................................... $ 779,606,198 $ 6,244 $ 242 $ 4,385
-------------- -------------- -------------- --------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of
applicable contract loans - partial withdrawals with
right of reinvestment) ................................. $ 779,288,796 $ 6,244 $ 242 $ 4,385
Reserves for annuity contracts on benefit ................ 317,402 -- -- --
Capital surplus (Note C) ................................ -- -- -- --
-------------- -------------- -------------- --------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS ........ $ 779,606,198 $ 6,244 $ 242 $ 4,385
-------------- -------------- -------------- --------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
December 31, 1999
PUTNAM OTC & SCUDDER
EMERGING GROWTH AND T. ROWE PRICE
GROWTH INCOME SMALL-CAP STOCK
FUND - FUND - FUND -
DIVISION 27 DIVISION 21 DIVISION 51
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market .......... $ 431,252,004 $ 246,635,934 $ 8,738,757
Balance due from (to) VALIC general account .............. 1,081,239 293,361 18,110
Receivable (payable) for mutual fund sales (purchases) ... (671,496) (20,902) 1,147
-------------- -------------- --------------
NET ASSETS ............................................... $ 431,661,747 $ 246,908,393 $ 8,758,014
-------------- -------------- --------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of
applicable contract loans - partial withdrawals with
right of reinvestment) ................................. $ 431,575,216 $ 246,812,922 $ 8,758,014
Reserves for annuity contracts on benefit ................ 86,531 95,471 --
Capital surplus (Note C) ................................ -- -- --
-------------- -------------- --------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS ........ $ 431,661,747 $ 246,908,393 $ 8,758,014
-------------- -------------- --------------
<CAPTION>
STATEMENTS OF NET ASSETS
December 31, 1999
AMERICAN
TEMPLETON TEMPLETON VANGUARD GENERAL
FOREIGN INTERNATIONAL WINDSOR II BALANCED
FUND - FUND - FUND - FUND -
DIVISION 32 DIVISION 20 DIVISION 24 DIVISION 42
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market .......... $ 336,480,225 $ 817,303,148 $ 732,870,656 $ 9,953,676
Balance due from (to) VALIC general account .............. (232,426) 1,784,124 243,278 13,511
Receivable (payable) for mutual fund sales (purchases) ... 2,067,517 65,094 (258,676) --
-------------- -------------- -------------- --------------
NET ASSETS ............................................... $ 338,315,316 $ 819,152,366 $ 732,855,258 $ 9,967,187
-------------- -------------- -------------- --------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of
applicable contract loans - partial withdrawals with
right of reinvestment) ................................. $ 338,261,796 $ 818,845,742 $ 732,691,320 $ 3,280,905
Reserves for annuity contracts on benefit ................ 53,520 306,624 163,938 --
Capital surplus (Note C) ................................ -- -- -- 6,686,282
-------------- -------------- -------------- --------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS ........ $ 338,315,316 $ 819,152,366 $ 732,855,258 $ 9,967,187
-------------- -------------- -------------- --------------
</TABLE>
<PAGE> 52
6 FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
AGSPC
STATEMENTS OF NET ASSETS VANGUARD GOVERNMENT
December 31, 1999 WELLINGTON AGSPC CAPITAL CONSERVATION FUND - SECURITIES
FUND - --------------------------------- FUND -
DIVISION 25 DIVISION 1 DIVISION 7 DIVISION 8
------------- ---------------- --------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market ...................... $569,864,636 $ 5,194,143 $ 51,502,808 $ 93,312,643
Balance due from (to) VALIC general account .......................... (85,749) 9,160 21,200 (7,864)
Receivable (payable) for mutual fund sales (purchases) ............... 265,989 -- -- --
------------ ----------- ------------ ------------
NET ASSETS ........................................................... $570,044,876 $ 5,203,303 $ 51,524,008 $ 93,304,779
------------ ----------- ------------ ------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of applicable
contract loans - partial withdrawals with right of reinvestment) ... $569,823,378 $ 5,199,068 $ 51,524,008 $ 93,304,779
Reserves for annuity contracts on benefit ............................ 221,498 4,235 -- --
Capital surplus (Note C) ............................................. -- -- -- --
------------ ----------- ------------ ------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS .................... $570,044,876 $ 5,203,303 $ 51,524,008 $ 93,304,779
------------ ----------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS AGSPC AGSPC AMERICAN
December 31, 1999 SCIENCE & SOCIAL GENERAL SOCIALLY
TECHNOLOGY AWARENESS RESPONSIBLE AGSPC MONEY
FUND - FUND - FUND - MARKET FUND -
DIVISION 17 DIVISION 12 DIVISION 41 DIVISION 2
-------------- ------------ ---------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market ...................... $3,406,706,628 $618,968,226 $12,225,981 $4,167,220
Balance due from (to) VALIC general account .......................... 4,735,467 (46,958) 12,104 11,866
Receivable (payable) for mutual fund sales (purchases) ............... -- -- -- --
-------------- ------------ ----------- ----------
NET ASSETS ........................................................... $3,411,442,095 $618,921,268 $12,238,085 $4,179,086
-------------- ------------ ----------- ----------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of applicable
contract loans - partial withdrawals with right of reinvestment) ... $3,410,138,310 $618,575,740 $ 4,669,512 $4,179,086
Reserves for annuity contracts on benefit ............................ 1,303,785 345,528 -- --
Capital surplus (Note C) ............................................. -- -- 7,568,573 --
-------------- ------------ ----------- ----------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS .................... $3,411,442,095 $618,921,268 $12,238,085 $4,179,086
-------------- ------------ ----------- ----------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS VANGUARD AGSPC
December 31, 1999 LIFESTRATEGY ASSET TEMPLETON
MODERATE ALLOCATION ALLOCATION
GROWTH FUND - FUND - FUND -
DIVISION 53 DIVISION 5 DIVISION 19
------------- ------------- -------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market ...................... $ 32,046,248 $ 260,891,195 $ 323,940,365
Balance due from (to) VALIC general account .......................... 132,784 162,943 (130,432)
Receivable (payable) for mutual fund sales (purchases) ............... (110,319) -- (131,537)
------------- ------------- -------------
NET ASSETS ........................................................... $ 32,068,713 $ 261,054,138 $ 323,678,396
------------- ------------- -------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of applicable
contract loans - partial withdrawals with right of reinvestment) ... $ 32,068,713 $ 260,830,021 $ 323,294,066
Reserves for annuity contracts on benefit ............................ -- 224,117 384,330
Capital surplus (Note C) ............................................. -- -- --
------------- ------------- -------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS .................... $ 32,068,713 $ 261,054,138 $ 323,678,396
------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 53
SEPARATE ACCOUNT A 7
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS
December 31, 1999 AGSPC AMERICAN AMERICAN AMERICAN
INTERNATIONAL GENERAL GENERAL GENERAL
GOVERNMENT CORE DOMESTIC HIGH YIELD
BOND FUND - BOND FUND - BOND FUND - BOND FUND -
DIVISION 13 DIVISION 58 DIVISION 43 DIVISION 60
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market ...................... $ 149,120,828 $ 5,168,278 $ 1,830,628 $ 5,587,119
Balance due from (to) VALIC general account .......................... (1,784,215) 103 2,420 234
Receivable (payable) for mutual fund sales (purchases) ............... -- -- -- --
------------- ------------- ------------- -------------
NET ASSETS ........................................................... $ 147,336,613 $ 5,168,381 $ 1,833,048 $ 5,587,353
------------- ------------- ------------- -------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of applicable
contract loans - partial withdrawals with right of reinvestment) ... $ 147,282,364 $ 65,708 $ 563,854 $ 149,820
Reserves for annuity contracts on benefit ............................ 54,249 -- -- --
Capital surplus (Note C) ............................................. -- 5,102,673 1,269,194 5,437,533
------------- ------------- ------------- -------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS .................... $ 147,336,613 $ 5,168,381 $ 1,833,048 $ 5,587,353
------------- ------------- ------------- -------------
<CAPTION>
STATEMENTS OF NET ASSETS
December 31, 1999 AMERICAN
GENERAL VANGUARD VANGUARD
STRATEGIC LONG-TERM LONG-TERM
BOND FUND - CORPORATE FUND - TREASURY FUND -
DIVISION 59 DIVISION 22 DIVISION 23
------------- ---------------- ---------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market ...................... $ 5,506,171 $ 68,263,542 $ 141,856,062
Balance due from (to) VALIC general account .......................... 335 186,923 834,134
Receivable (payable) for mutual fund sales (purchases) ............... -- (11,709) (371,585)
------------- ------------- -------------
NET ASSETS ........................................................... $ 5,506,506 $ 68,438,756 $ 142,318,611
------------- ------------- -------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of applicable
contract loans - partial withdrawals with right of reinvestment) ... $ 38,482 $ 68,397,606 $ 142,307,011
Reserves for annuity contracts on benefit ............................ -- 41,150 11,600
Capital surplus (Note C) ............................................. 5,468,024 -- --
------------- ------------- -------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS .................... $ 5,506,506 $ 68,438,756 $ 142,318,611
------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF NET ASSETS AMERICAN AMERICAN
December 31, 1999 GENERAL GENERAL
AGSPC MONEY MONEY MARKET CONSERVATIVE GROWTH
MARKET FUND - FUND - LIFESTYLE FUND -
DIVISION 6 DIVISION 44 DIVISION 50
------------- ------------- -------------------
<S> <C> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market ...................... $ 459,787,520 $ 11,553,720 $ 8,699,095
Balance due from (to) VALIC general account .......................... (4,431,676) 28,543 19,787
Receivable (payable) for mutual fund sales (purchases) ............... -- -- --
------------- ------------- -------------
NET ASSETS ........................................................... $ 455,355,844 $ 11,582,263 $ 8,718,882
------------- ------------ --------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of applicable
contract loans - partial withdrawals with right of reinvestment) ... $ 455,339,835 $ 6,257,572 $ 2,113,653
Reserves for annuity contracts on benefit ............................ 16,009 -- --
Capital surplus (Note C) ............................................. -- 5,324,691 6,605,229
------------- ------------- -------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS .................... $ 455,355,844 $ 11,582,263 $ 8,718,882
------------- ------------ --------------
<CAPTION>
STATEMENTS OF NET ASSETS AMERICAN AMERICAN
December 31, 1999 GENERAL GENERAL
GROWTH MODERATE GROWTH
LIFESTYLE FUND - LIFESTYLE FUND -
DIVISION 48 DIVISION 49
---------------- ----------------
<S> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market ...................... $ 10,625,442 $ 12,526,733
Balance due from (to) VALIC general account .......................... 25,237 42,928
Receivable (payable) for mutual fund sales (purchases) ............... -- --
------------- -------------
NET ASSETS ........................................................... $ 10,650,679 $ 12,569,661
------------- -------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of applicable
contract loans - partial withdrawals with right of reinvestment) ... $ 2,875,158 $ 5,505,583
Reserves for annuity contracts on benefit ............................ -- --
Capital surplus (Note C) ............................................. 7,775,521 7,064,078
------------- -------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS .................... $ 10,650,679 $ 12,569,661
------------- -------------
<CAPTION>
STATEMENTS OF NET ASSETS VANGUARD
December 31, 1999 LIFESTRATEGY VANGUARD
CONSERVATIVE LIFESTRATEGY
GROWTH FUND - GROWTH FUND -
DIVISION 54 DIVISION 52
-------------- --------------
<S> <C> <C>
ASSETS:
Investment in shares of mutual funds, at market ...................... $ 5,319,180 $ 24,913,522
Balance due from (to) VALIC general account .......................... 195,040 326,669
Receivable (payable) for mutual fund sales (purchases) ............... (189,439) (277,967)
------------- -------------
NET ASSETS ........................................................... $ 5,324,781 $ 24,962,224
------------- -------------
CONTRACT OWNER RESERVES AND CAPITAL SURPLUS:
Reserves for redeemable annuity contracts (Net of applicable
contract loans - partial withdrawals with right of reinvestment) ... $ 5,324,781 $ 24,962,224
Reserves for annuity contracts on benefit ............................ -- --
Capital surplus (Note C) ............................................. -- --
------------- -------------
TOTAL CONTRACT OWNER RESERVES AND CAPITAL SURPLUS .................... $ 5,324,781 $ 24,962,224
------------- -------------
</TABLE>
<PAGE> 54
8 FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
AGSPC AGSPC AGSPC
INTERNATIONAL MIDCAP SMALL CAP
EQUITIES INDEX INDEX
FUND - FUND - FUND -
DIVISION 11 DIVISION 4 DIVISION 14 DIVISION 10A
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ............................ $ 1,788,128 $ 6,878,578 $ 2,414,127 $ 5,674,702
------------- ------------- ------------- -------------
EXPENSES:
Mortality and expense risk charge ...................... 1,510,709 8,083,887 2,143,563 5,630,338
Reimbursement of expenses .............................. -- -- -- --
------------- ------------- ------------- -------------
Total expenses ...................................... 1,510,709 8,083,887 2,143,563 5,630,338
------------- ------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) ........................... 277,419 (1,205,309) 270,564 44,364
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments ....................... 10,094,468 54,717,361 15,168,549 50,306,023
Capital gains distributions from mutual funds .......... 8,117,049 194,003,989 21,011,129 4,737,369
Net unrealized appreciation (depreciation)
of investments during the period .................... 20,902,728 (141,415,147) 4,167,711 45,440,162
------------- ------------- ------------- -------------
Net realized and unrealized gain on investments ........ 39,114,245 107,306,203 40,347,389 100,483,554
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ........................... $ 39,391,664 $ 106,100,894 $ 40,617,953 $ 100,527,918
------------- ------------- ------------- -------------
</TABLE>
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
AMERICAN AMERICAN AMERICAN AMERICAN
GENERAL GENERAL GENERAL GENERAL
INTERNATIONAL LARGE CAP LARGE CAP MID CAP
VALUE FUND - GROWTH FUND - VALUE FUND - GROWTH FUND -
DIVISION 34 DIVISION 39 DIVISION 40 DIVISION 37
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ............................ $ 72,614 $ 8,826 $ 47,885 $ --
------------- ------------- ------------- -------------
EXPENSES:
Mortality and expense risk charge ...................... 2,951 55,394 3,021 4,606
Reimbursement of expenses .............................. (813) (22,462) (988) (1,410)
------------- ------------- ------------- -------------
Total expenses ...................................... 2,138 32,932 2,033 3,196
------------- ------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) ........................... 70,476 (24,106) 45,852 (3,196)
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments ....................... 50,532 196,164 63,723 21,955
Capital gains distributions from mutual funds .......... 358,216 634,398 650,214 710,827
Net unrealized appreciation (depreciation)
of investments during the period .................... 2,597,347 3,810,394 (552,152) (258,735)
------------- ------------- ------------- -------------
Net realized and unrealized gain (loss)on investments .. 3,006,095 4,640,956 161,785 474,047
------------- ------------- ------------- -------------
INCREASE (DECREASE)IN NET ASSETS
RESULTING FROM OPERATIONS ........................... $ 3,076,571 $ 4,616,850 $ 207,637 $ 470,851
------------- ------------- ------------- -------------
</TABLE>
(*)Since inception January 4, 1999.
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 55
SEPARATE ACCOUNT A 9
<TABLE>
<CAPTION>
AGSPC
AGSPC STOCK INDEX FUND - GROWTH
------------------------------------------------ FUND -
DIVISION 10B DIVISION 10C DIVISION 10D DIVISION 15
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ............................... $ 438,856 $ 39,607,878 $ 576,997 $ --
----------- ------------- ------------ -------------
EXPENSES:
Mortality and expense risk charge ......................... 223,569 38,759,190 572,435 11,859,802
Reimbursement of expenses ................................. (94,122) -- -- --
----------- ------------- ------------ -------------
Total expenses ........................................... 129,447 38,759,190 572,435 11,859,802
----------- ------------- ------------ -------------
NET INVESTMENT INCOME (LOSS) .............................. 309,409 848,688 4,562 (11,859,802)
----------- ------------- ------------ -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments .......................... 5,087,126 58,888,546 6,938,320 65,180,424
Capital gains distributions from mutual funds ............. 362,359 36,367,266 471,902 50,296,770
Net unrealized appreciation (depreciation)
of investments during the period ....................... 2,257,759 612,628,344 2,683,181 (29,390,145)
----------- ------------- ------------ -------------
Net realized and unrealized gain on investments ........... 7,707,244 707,884,156 10,093,403 86,087,049
----------- ------------- ------------ -------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ 8,016,653 $ 708,732,844 $ 10,097,965 $ 74,227,247
----------- ------------- ------------ -------------
<CAPTION>
AGSPC AMERICAN
GROWTH & AMERICAN CENTURY GENERAL
INCOME ULTRA INTERNATIONAL
FUND - FUND - GROWTH FUND -
DIVISION 16 DIVISION 31 DIVISION 33
------------ ------------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ............................... $ 1,240,444 $ -- $ 84,670
------------ ------------- -----------
EXPENSES:
Mortality and expense risk charge ......................... 3,039,334 7,951,342 1,814
Reimbursement of expenses ................................. -- (1,545,916) (630)
------------ ------------- -----------
Total expenses ........................................... 3,039,334 6,405,426 1,184
------------ ------------- -----------
NET INVESTMENT INCOME (LOSS) .............................. (1,798,890) (6,405,426) 83,486
------------ ------------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments .......................... 14,837,619 5,962,303 12,371
Capital gains distributions from mutual funds ............. 33,787,657 29,663,737 179,573
Net unrealized appreciation (depreciation)
of investments during the period ....................... 13,472,567 227,838,963 2,105,762
------------ ------------- -----------
Net realized and unrealized gain on investments ........... 62,097,843 263,465,003 2,297,706
------------ ------------- -----------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ 60,298,953 $ 257,059,577 $ 2,381,192
------------ ------------- -----------
</TABLE>
<TABLE>
<CAPTION>
AMERICAN AMERICAN AMERICAN DREYFUS VARIABLE
GENERAL GENERAL GENERAL INVESTMENT FUND-
MID CAP SMALL CAP SMALL CAP SMALL CAP
VALUE FUND - GROWTH FUND - VALUE FUND - PORTFOLIO -
DIVISION 38 DIVISION 35 DIVISION 36 DIVISION 18
----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ............................... $ 39,296 $ -- $ 56,427 $ 550,577
----------- ------------- ------------ -------------
EXPENSES:
Mortality and expense risk charge ......................... 8,195 17,485 1,592 9,073,382
Reimbursement of expenses ................................. (3,000) (6,824) (445) (1,114,672)
----------- ------------- ------------ -------------
Total expenses ............................................ 5,195 10,661 1,147 7,958,710
----------- ------------- ------------ -------------
NET INVESTMENT INCOME (LOSS) .............................. 34,101 (10,661) 55,280 (7,408,133)
----------- ------------- ------------ -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments .......................... 156,954 128,821 6,489 63,772,555
Capital gains distributions from mutual funds ............. 1,894,986 1,115,791 145,670 --
Net unrealized appreciation (depreciation)
of investments during the period ....................... (764,242) 4,835,156 (493,258) 89,787,753
----------- ------------- ------------ -------------
Net realized and unrealized gain (loss)on investments ..... 1,287,698 6,079,768 (341,099) 153,560,308
----------- ------------- ------------ -------------
INCREASE (DECREASE)IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ 1,321,799 $ 6,069,107 $ (285,819) $ 146,152,175
----------- ------------- ------------ -------------
<CAPTION>
EVERGREEN EVERGREEN
GROWTH SMALL CAP EVERGREEN
AND INCOME VALUE VALUE
FUND - FUND - FUND -
DIVISION 56(*) DIVISION 55(*) DIVISION 57(*)
------------ ------------- -----------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ............................... $ -- $ -- $ 11
------------ ------------- -----------
EXPENSES:
Mortality and expense risk charge ......................... 5 -- 9
Reimbursement of expenses ................................. -- -- (2)
------------ ------------- -----------
Total expenses ............................................ 5 -- 7
------------ ------------- -----------
NET INVESTMENT INCOME (LOSS) .............................. (5) -- 4
------------ ------------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain on investments .......................... 31 -- --
Capital gains distributions from mutual funds ............. 7 -- 262
Net unrealized appreciation (depreciation)
of investments during the period ....................... 370 -- (319)
------------ ------------- -----------
Net realized and unrealized gain (loss)on investments ..... 408 -- (57)
------------ ------------- -----------
INCREASE (DECREASE)IN NET ASSETS
RESULTING FROM OPERATIONS .............................. $ 403 $ -- $ (53)
------------ ------------- -----------
</TABLE>
<PAGE> 56
10 FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
DREYFUS NEUBERGER PUTNAM PUTNAM
FOUNDERS BERMAN GLOBAL NEW
GROWTH GUARDIAN GROWTH OPPORTUNITIES
FUND - TRUST - FUND - FUND -
DIVISION 30 DIVISION 29 DIVISION 28 DIVISION 26
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................................ $ -- $ 461,168 $ -- $ --
------------- ------------- ------------- -------------
EXPENSES:
Mortality and expense risk charge .......................... 7,395,427 763,578 3,336,299 7,275,209
Reimbursement of expenses .................................. (1,510,809) (153,822) (678,613) (1,481,777)
------------- ------------- ------------- -------------
Total expenses .......................................... 5,884,618 609,756 2,657,686 5,793,432
------------- ------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) ............................... (5,884,618) (148,588) (2,657,686) (5,793,432)
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments .................... 4,207,339 232,115 4,532,574 5,405,004
Capital gains distributions from mutual funds .............. 127,949,776 10,764,888 43,772,448 73,606,083
Net unrealized appreciation (depreciation)
of investments during the period ........................ 95,948,371 (6,452,929) 131,823,273 313,953,044
------------- ------------- ------------- -------------
Net realized and unrealized gain (loss) on investments ..... 228,105,486 4,544,074 180,128,295 392,964,131
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 222,220,868 $ 4,395,486 $ 177,470,609 $ 387,170,699
------------- ------------- ------------- -------------
</TABLE>
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
VANGUARD AGSPC
WELLINGTON AGSPC CAPITAL CONSERVATION FUND - GOVERNMENT
FUND - --------------------------------- SECURITIES FUND -
DIVISION 25 DIVISION 1 DIVISION 7 DIVISION 8
------------- --------------- -------------- -----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................................ $ 20,439,202 $ 372,745 $ 3,588,581 $ 5,630,206
------------- ------------- ------------- -------------
EXPENSES:
Mortality and expense risk charge .......................... 6,330,047 58,712 562,336 1,043,310
Reimbursement of expenses .................................. -- -- -- --
------------- ------------- ------------- -------------
Total expenses .......................................... 6,330,047 58,712 562,336 1,043,310
------------- ------------- ------------- -------------
NET INVESTMENT INCOME ...................................... 14,109,155 314,033 3,026,245 4,586,896
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments .................... 1,861,183 (76,164) 8,827 661,487
Capital gains distributions from mutual funds .............. 28,847,888 -- -- --
Net unrealized depreciation
of investments during the period ........................ (30,879,706) (326,155) (3,853,099) (9,319,026)
------------- ------------- ------------- -------------
Net realized and unrealized loss on investments ............ (170,635) (402,319) (3,844,272) (8,657,539)
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 13,938,520 $ (88,286) $ (818,027) $ (4,070,643)
------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 57
SEPARATE ACCOUNT A 11
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS PUTNAM OTC & SCUDDER
For the Year Ended December 31, 1999 EMERGING GROWTH AND T. ROWE PRICE TEMPLETON
GROWTH INCOME SMALL-CAP FOREIGN
FUND - FUND - STOCK FUND - FUND -
DIVISION 27 DIVISION 21 DIVISION 51 DIVISION 32
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................................ $ -- $ 4,675,796 $ 28,773 $ 8,916,410
------------- ------------- ------------- -------------
EXPENSES:
Mortality and expense risk charge .......................... 2,422,441 3,097,648 49,327 3,329,351
Reimbursement of expenses .................................. (488,210) (624,445) -- (1,967,750)
------------- ------------- ------------- -------------
Total expenses .......................................... 1,934,231 2,473,203 49,327 1,361,601
------------- ------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) ............................... (1,934,231) 2,202,593 (20,554) 7,554,809
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments .................... 9,704,876 3,895,314 40,991 (2,951,879)
Capital gains distributions from mutual funds .............. 20,649,440 6,380,872 320,107 2,706,922
Net unrealized appreciation (depreciation)
of investments during the period ........................ 182,753,857 (283,526) 1,008,645 80,764,072
------------- ------------- ------------- -------------
Net realized and unrealized gain (loss) on investments ..... 213,108,173 9,992,660 1,369,743 80,519,115
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 211,173,942 $ 12,195,253 $ 1,349,189 $ 88,073,924
------------- ------------- ------------- -------------
<CAPTION>
STATEMENTS OF OPERATIONS TEMPLETON VANGUARD AMERICAN
For the Year Ended December 31, 1999 INTERNATIONAL WINDSOR II GENERAL
FUND - FUND - BALANCED FUND -
DIVISION 20 DIVISION 24 DIVISION 42
------------- ------------- ---------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................................ $ 20,611,275 $ 17,860,760 $ 196,132
------------- ------------- -------------
EXPENSES:
Mortality and expense risk charge .......................... 9,363,281 9,472,517 12,085
Reimbursement of expenses .................................. -- -- (4,448)
------------- ------------- -------------
Total expenses .......................................... 9,363,281 9,472,517 7,637
------------- ------------- -------------
NET INVESTMENT INCOME (LOSS) ............................... 11,247,994 8,388,243 188,495
------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments .................... 48,058,679 6,166,843 30,618
Capital gains distributions from mutual funds .............. 71,597,060 67,184,211 432,947
Net unrealized appreciation (depreciation)
of investments during the period ........................ 22,890,344 (144,035,946) 350,211
------------- ------------- -------------
Net realized and unrealized gain (loss) on investments ..... 142,546,083 (70,684,892) 813,776
------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 153,794,077 $ (62,296,649) $ 1,002,271
------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS AGSPC AMERICAN AMERICAN AMERICAN
For the Year Ended December 31, 1999 INTERNATIONAL GENERAL GENERAL GENERAL
GOVERNMENT CORE DOMESTIC HIGH YIELD
BOND FUND - BOND FUND - BOND FUND - BOND FUND -
DIVISION 13 DIVISION 58 DIVISION 43 DIVISION 60
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................................ $ 5,352,492 $ 321,342 $ 100,593 $ 491,864
------------- ------------- ------------- -------------
EXPENSES:
Mortality and expense risk charge .......................... 1,576,167 483 2,594 937
Reimbursement of expenses .................................. -- (123) (907) (234)
------------- ------------- ------------- -------------
Total expenses .......................................... 1,576,167 360 1,687 703
------------- ------------- ------------- -------------
NET INVESTMENT INCOME ...................................... 3,776,325 320,982 98,906 491,161
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments .................... 1,059,581 (446) (7,296) (357)
Capital gains distributions from mutual funds .............. 103,421 -- 36 --
Net unrealized depreciation
of investments during the period ........................ (16,515,559) (380,782) (139,402) (333,976)
------------- ------------- ------------- -------------
Net realized and unrealized loss on investments ............ (15,352,557) (381,228) (146,662) (334,333)
------------- ------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ (11,576,232) $ (60,246) $ (47,756) $ 156,828
------------- ------------- ------------- -------------
<CAPTION>
STATEMENTS OF OPERATIONS AMERICAN
For the Year Ended December 31, 1999 GENERAL VANGUARD VANGUARD
STRATEGIC LONG-TERM LONG-TERM
BOND FUND - CORPORATE FUND - TREASURY FUND -
DIVISION 59 DIVISION 22 DIVISION 23
------------- ---------------- --------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................................ $ 414,269 $ 4,408,788 $ 8,420,055
------------- ------------- -------------
EXPENSES:
Mortality and expense risk charge .......................... 118 825,583 1,766,917
Reimbursement of expenses .................................. (47) (168,423) (354,616)
------------- ------------- -------------
Total expenses .......................................... 71 657,160 1,412,301
------------- ------------- -------------
NET INVESTMENT INCOME ...................................... 414,198 3,751,628 7,007,754
------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments .................... 7 (398,632) (687,054)
Capital gains distributions from mutual funds .............. -- 410,483 1,589,174
Net unrealized depreciation
of investments during the period ........................ (211,104) (8,721,370) (21,800,390)
------------- ------------- -------------
Net realized and unrealized loss on investments ............ (211,097) (8,709,519) (20,898,270)
------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 203,101 $ (4,957,891) $ (13,890,516)
------------- ------------- -------------
</TABLE>
<PAGE> 58
12 FINANCIAL STATEMENTS
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
AGSPC AGSPC AMERICAN
SCIENCE & SOCIAL GENERAL SOCIALLY
TECHNOLOGY AWARENESS RESPONSIBLE AGSPC MONEY
FUND - FUND - FUND - MARKET FUND -
DIVISION 17 DIVISION 12 DIVISION 41 DIVISION 2
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................................ $ -- $ 4,238,975 $ 89,881 $ 206,849
--------------- --------------- --------------- ---------------
EXPENSES:
Mortality and expense risk charge .......................... 19,907,095 5,292,189 16,648 44,475
Reimbursement of expenses .................................. -- -- (6,574) --
--------------- --------------- --------------- ---------------
Total expenses .......................................... 19,907,095 5,292,189 10,074 44,475
--------------- --------------- --------------- ---------------
NET INVESTMENT INCOME (LOSS) ............................... (19,907,095) (1,053,214) 79,807 162,374
--------------- --------------- --------------- ---------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments .................... 30,613,817 8,179,859 64,508 --
Capital gains distributions from mutual funds .............. 328,749,980 22,439,556 391,925 --
Net unrealized appreciation (depreciation)
of investments during the period ........................ 1,226,217,782 57,407,741 1,103,235 --
--------------- --------------- --------------- ---------------
Net realized and unrealized gain on investments ............ 1,585,581,579 88,027,156 1,559,668 --
--------------- --------------- --------------- ---------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 1,565,674,484 $ 86,973,942 $ 1,639,475 $ 162,374
--------------- --------------- --------------- ---------------
</TABLE>
STATEMENTS OF OPERATIONS
For the Year Ended December 31, 1999
<TABLE>
<CAPTION>
VANGUARD
LIFESTRATEGY AGSPC TEMPLETON
MODERATE ASSET ALLOCATION ASSET ALLOCATION
GROWTH FUND - FUND - FUND -
DIVISION 53 DIVISION 5 DIVISION 19
--------------- --------------- -----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................................ $ 770,171 $ 6,836,435 $ 6,944,378
--------------- --------------- ---------------
EXPENSES:
Mortality and expense risk charge .......................... 159,058 2,472,653 3,749,394
Reimbursement of expenses .................................. -- -- --
--------------- --------------- ---------------
Total expenses .......................................... 159,058 2,472,653 3,749,394
--------------- --------------- ---------------
NET INVESTMENT INCOME ...................................... 611,113 4,363,782 3,194,984
--------------- --------------- ---------------
REALIZED AND UNREALIZED GAIN
ON INVESTMENTS:
Net realized gain on investments ........................... 29,492 4,428,516 14,669,025
Capital gains distributions from mutual funds .............. 218,753 4,417,585 38,640,994
Net unrealized appreciation
of investments during the period ........................ 1,470,942 11,930,044 4,197,098
--------------- --------------- ---------------
Net realized and unrealized gain on investments ............ 1,719,187 20,776,145 57,507,117
--------------- --------------- ---------------
INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ............................... $ 2,330,300 $ 25,139,927 $ 60,702,101
--------------- --------------- ---------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 59
SEPARATE ACCOUNT A 13
<TABLE>
<CAPTION>
AMERICAN
AMERICAN GENERAL AMERICAN
GENERAL CONSERVATIVE GENERAL
AGSPC MONEY MONEY GROWTH GROWTH
MARKET FUND - MARKET FUND - LIFESTYLE FUND - LIFESTYLE FUND -
DIVISION 6 DIVISION 44 DIVISION 50 DIVISION 48
------------- ------------- ---------------- ----------------
<S> <C> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................................ $ 16,641,083 $ 411,008 $ 607,373 $ 749,801
------------- ------------- ------------- -------------
EXPENSES:
Mortality and expense risk charge .......................... 3,483,010 34,077 8,112 9,678
Reimbursement of expenses .................................. -- (9,035) (3,080) (3,858)
------------- ------------- ------------- -------------
Total expenses .......................................... 3,483,010 25,042 5,032 5,820
------------- ------------- ------------- -------------
NET INVESTMENT INCOME (LOSS)................................ 13,158,073 385,966 602,341 743,981
------------- ------------- ------------- -------------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS:
Net realized gain (loss) on investments .................... -- -- 895,570 63,773
Capital gains distributions from mutual funds .............. -- -- 1,025,645 323,571
Net unrealized appreciation (depreciation)
of investments during the period ........................ -- -- (1,418,604) 1,217,409
------------- ------------- ------------- -------------
Net realized and unrealized gain on investments ............ -- -- 502,611 1,604,753
------------- ------------- ------------- -------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........... $ 13,158,073 $ 385,966 $ 1,104,952 $ 2,348,734
------------- ------------- ------------- -------------
<CAPTION>
AMERICAN
GENERAL VANGUARD
MODERATE LIFESTRATEGY VANGUARD
GROWTH CONSERVATIVE LIFESTRATEGY
LIFESTYLE FUND - GROWTH FUND - GROWTH FUND -
DIVISION 49 DIVISION 54 DIVISION 52
---------------- ------------- -------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Dividends from mutual funds ................................ $ 932,507 $ 159,968 $ 431,935
------------- ------------- -------------
EXPENSES:
Mortality and expense risk charge .......................... 20,370 27,564 123,427
Reimbursement of expenses .................................. (8,167) -- --
------------- ------------- -------------
Total expenses .......................................... 12,203 27,564 123,427
------------- ------------- -------------
NET INVESTMENT INCOME ...................................... 920,304 132,404 308,508
------------- ------------- -------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investments ........................... 83,407 (924) 57,727
Capital gains distributions from mutual funds .............. 389,591 35,147 177,605
Net unrealized appreciation
of investments during the period ........................ 497,038 68,926 2,002,755
------------- ------------- -------------
Net realized and unrealized gain on investments ............ 970,036 103,149 2,238,087
------------- ------------- -------------
INCREASE IN NET ASSETS RESULTING FROM OPERATIONS ........... $ 1,890,340 $ 235,553 $ 2,546,595
------------- ------------- -------------
</TABLE>
<PAGE> 60
14 FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AGSPC
INTERNATIONAL EQUITIES AGSPC MIDCAP INDEX
FUND - DIVISION 11 FUND - DIVISION 4
----------------------------- ------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER, 31 DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ..................................... $ 277,419 $ 1,608,036 $ (1,205,309) $ (689,428)
Net realized gain on investments ................................. 10,094,468 4,716,155 54,717,361 26,826,443
Capital gains distributions from mutual funds .................... 8,117,049 11,021,627 194,003,989 69,472,796
Net unrealized appreciation (depreciation)
of investments during the period ................................ 20,902,728 7,346,991 (141,415,147) 30,964,965
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting from operations .... 39,391,664 24,692,809 106,100,894 126,574,776
------------- ------------- ------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ................................................ 11,942,025 14,604,832 63,479,375 71,049,146
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................... (9,905,756) (9,033,065) (51,522,548) (37,639,412)
Annuity.benefit payments ......................................... (18,915) (17,602) (30,425) (23,570)
Amounts transferred interdivision, and from (to)
VALIC general account ........................................... (12,646,032) (33,973,374) (91,656,730) (40,068,991)
------------- ------------- ------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ......................... (10,628,678) (28,419,209) (79,730,328) (6,682,827)
------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .......................... 28,762,986 (3,726,400) 26,370,566 119,891,949
NET ASSETS:
Beginning of period .............................................. 148,274,382 152,000,782 850,505,634 730,613,685
------------- ------------- ------------- -------------
End of period .................................................... $ 177,037,368 $ 148,274,382 $ 876,876,200 $ 850,505,634
------------- ------------- ------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ........................... 101,811,751 122,716,744 169,039,887 171,065,657
Purchase payments ................................................ 7,577,362 10,549,627 12,121,341 16,010,438
Surrenders ....................................................... (6,375,893) (6,694,955) (9,823,005) (8,724,789)
Transfers - interdivision and from (to) VALIC general account .... (7,974,390) (24,759,665) (18,280,774) (9,311,419)
------------- ------------- ------------- -------------
Total units outstanding, end of period ........................... 95,038,830 101,811,751 153,057,449 169,039,887
------------- ------------ ------------- -------------
Units outstanding, by class:
Standard units .................................................. 94,415,343 101,811,751 151,288,816 169,039,887
Enhanced units:
20 bp.reduced .................................................. 348,851 -- 523,908 --
40 bp.reduced .................................................. 274,636 -- 1,244,725 --
------------- ------------ ------------- -------------
Accumulation units end of period ................................. 95,038,830 101,811,751 153,057,449 169,039,887
------------- ------------ ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................... $ 1.860227 $ 1.454644 $ 5.721920 $ 5.029093
Enhanced unit:
20 bp.reduced .................................................. 1.898106 -- 5.908866 --
40 bp.reduced .................................................. 1.937488 -- 6.116544 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 61
SEPARATE ACCOUNT A 15
<TABLE>
<CAPTION>
AGSPC STOCK INDEX FUND -
AGSPC SMALL CAP -----------------------------
INDEX FUND - DIVISION 14 DIVISION 10A
----------------------------- -----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ..................................... 270,564 $ 322,094 $ 44,364 $ 1,035,631
Net realized gain on investments ................................. 15,168,549 8,661,321 50,306,023 36,292,713
Capital gains distributions from mutual funds .................... 21,011,129 18,436,501 4,737,369 2,140,138
Net unrealized appreciation (depreciation)
of investments during the period ................................ 4,167,711 (34,899,835) 45,440,162 82,035,996
------------ ------------- ------------ ------------
Increase (decrease) in net assets resulting from operations .... 40,617,953 (7,479,919) 100,527,918 121,504,478
------------ ------------- ------------ ------------
PRINCIPAL TRANSACTIONS:
Purchase payments ................................................ 23,105,395 28,153,952 2,842,259 4,116,842
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................... (13,990,673) (11,145,100) (40,751,241) (30,874,894)
Annuity benefit payments ......................................... (8,736) (7,293) (2,202,048) (1,996,857)
Amounts transferred interdivision, and from (to)
VALIC general account ........................................... (34,222,314) (13,919,719) (18,047,475) (14,779,077)
------------ ------------- ------------ ------------
Increase (decrease) in net assets
resulting from principal transactions ........................ (25,116,328) 3,081,840 (58,158,505) (43,533,986)
------------ ------------- ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS .......................... 15,501,625 (4,398,079) 42,369,413 77,970,492
NET ASSETS:
Beginning of period .............................................. 225,670,671 230,068,750 547,753,875 469,783,383
------------ ------------- ------------ ------------
End of period .................................................... 241,172,296 $ 225,670,671 $590,123,288 $547,753,875
------------ ------------- ------------ ------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ........................... 107,379,840 106,279,077 23,726,504 25,835,933
Purchase payments ................................................ 10,679,162 13,084,095 117,449 206,729
Surrenders ....................................................... (6,306,665) (5,229,338) (1,676,844) (1,549,859)
Transfers - interdivision and from (to) VALIC general account..... (16,249,038) (6,753,994) (745,734) (766,299)
------------ ------------- ------------ ------------
Total units outstanding, end of period ........................... 95,503,299 107,379,840 21,421,375 23,726,504
------------ ------------- ------------ ------------
Units outstanding, by class:
Standard units .................................................. 94,031,183 107,321,015 21,421,375 23,726,504
Enhanced units:
20 bp reduced .................................................. 522,127 58,825 -- --
40 bp reduced .................................................. 949,989 -- -- --
------------ ------------- ------------ ------------
Accumulation units end of period ................................. 95,503,299 107,379,840 21,421,375 23,726,504
------------ ------------- ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
AGSPC STOCK INDEX FUND -
--------------------------------
DIVISION 10B
--------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
----------- -----------
<S> <C> <C>
OPERATIONS:
Net investment income (loss) ............................................ $ 309,409 $ 358,014
Net realized gain on investments ........................................ 5,087,126 2,895,173
Capital gains distributions from mutual funds ........................... 362,359 166,018
Net unrealized appreciation (depreciation)
of investments during the period ....................................... 2,257,759 6,394,969
----------- -----------
Increase (decrease) in net assets resulting from operations ........... 8,016,653 9,814,174
----------- -----------
PRINCIPAL TRANSACTIONS:
Purchase payments ....................................................... 152,691 204,507
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ....................................... (4,474,719) (2,153,577)
Annuity benefit payments ................................................ (371,146) (327,696)
Amounts transferred interdivision, and from (to)
VALIC general account .................................................. (554,251) (1,934,563)
----------- -----------
Increase (decrease) in net assets
resulting from principal transactions ................................ (5,247,425) (4,211,329)
----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ................................. 2,769,228 5,602,845
NET ASSETS:
Beginning of period ..................................................... 42,548,876 36,946,031
----------- -----------
End of period ........................................................... $45,318,104 $42,548,876
----------- -----------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .................................. 1,131,113 1,256,974
Purchase payments ....................................................... 3,915 6,328
Surrenders .............................................................. (115,209) (68,344)
Transfers - interdivision and from (to) VALIC general account............ (14,204) (63,845)
----------- -----------
Total units outstanding, end of period .................................. 1,005,615 1,131,113
----------- -----------
Units outstanding, by class:
Standard units ......................................................... 1,005,615 1,131,113
Enhanced units:
20 bp reduced ......................................................... -- --
40 bp reduced ......................................................... -- --
----------- -----------
Accumulation units end of period ........................................ 1,005,615 1,131,113
----------- -----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998 1999 1998
------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ...................... $2.522643 $2.100506 $26.836368 $22.479709 $43.027665 $35.792019
Enhanced unit:
20 bp reduced ...................... 2.558263 2.125983 -- -- -- --
40 bp reduced ...................... 2.597863 -- -- -- -- --
</TABLE>
<PAGE> 62
16 FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AGSPC STOCK INDEX FUND -
---------------------------------------------------------------
DIVISION 10C DIVISION 10D
-------------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................... $ 848,688 $ 5,965,482 $ 4,562 $ 105,740
Net realized gain on investments ................................ 58,888,546 21,789,375 6,938,320 4,368,980
Capital gains distributions from mutual funds ................... 36,367,266 13,033,369 471,902 219,975
Net unrealized appreciation (depreciation)
of investments during the period .............................. 612,628,344 631,036,013 2,683,181 7,900,957
-------------- -------------- ----------- -----------
Increase in net assets resulting from operations ............ 708,732,844 671,824,239 10,097,965 12,595,652
-------------- -------------- ----------- -----------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 544,822,404 372,858,039 535,672 654,342
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. (226,510,857) (130,840,043) (4,345,956) (3,879,247)
Annuity benefit payments ........................................ (262,614) (164,035) (18,611) (15,905)
Amounts transferred interdivision, and from (to)
VALIC general account ......................................... 189,528,934 112,786,439 (3,390,505) (2,514,825)
-------------- -------------- ----------- -----------
Increase (decrease) in net assets
resulting from principal transactions ...................... 507,577,867 354,640,400 (7,219,400) (5,755,635)
-------------- -------------- ----------- -----------
TOTAL INCREASE IN NET ASSETS .................................... 1,216,310,711 1,026,464,639 2,878,565 6,840,017
NET ASSETS:
Beginning of period ............................................. 3,336,792,139 2,310,327,500 56,513,044 49,673,027
-------------- -------------- ----------- -----------
End of period ................................................... 4,553,102,850 3,336,792,139 $59,391,609 $56,513,044
-------------- -------------- ----------- -----------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... 698,570,695 615,053,124 6,655,796 7,438,537
Purchase payments ............................................... 102,379,268 85,764,962 65,246 88,428
Surrenders ...................................................... (41,417,044) (29,978,801) (477,997) (521,941)
Transfers - interdivision and from (to) VALIC general account ... 37,936,626 27,731,410 (384,522) (349,228)
-------------- -------------- ----------- -----------
Total units outstanding, end of period .......................... 797,469,545 698,570,695 5,858,523 6,655,796
-------------- -------------- ----------- -----------
Units outstanding, by class:
Standard units ................................................ 766,975,696 691,680,049 5,858,523 6,655,796
Enhanced units:
20 bp reduced ............................................... 18,855,858 6,859,835 -- --
40 bp reduced ............................................... 11,637,991 30,811 -- --
-------------- -------------- ----------- -----------
Accumulation units end of period ................................ 797,469,545 698,570,695 5,858,523 6,655,796
-------------- -------------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................. 5.696582 $ 4.772052 $10.095883 $ 8.457722
Enhanced unit:
20 bp reduced ............................................... 5.830950 4.875028 -- --
40 bp reduced ............................................... 5.981762 4.991135 -- --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 63
SEPARATE ACCOUNT A 17
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AGSPC GROWTH AGSPC GROWTH & INCOME
FUND - DIVISION 15 FUND - DIVISION 16
-------------------------------- ----------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- -------------- ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................................... $ (11,859,802) $ (10,623,737) $ (1,798,890) $ (1,424,066)
Net realized gain on investments ............................... 65,180,424 11,720,556 14,837,619 10,494,295
Capital gains distributions from mutual funds .................. 50,296,770 51,517,534 33,787,657 20,275,426
Net unrealized appreciation (depreciation)
of investments during the period ............................. (29,390,145) 114,925,718 13,472,567 3,996,252
-------------- -------------- ------------ ------------
Increase in net assets resulting from operations ........... 74,227,247 167,540,071 60,298,953 33,341,907
-------------- -------------- ------------ ------------
PRINCIPAL TRANSACTIONS:
Purchase payments .............................................. 161,308,154 183,983,180 32,568,050 39,532,854
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................ (68,528,954) (45,145,966) (19,456,775) (11,951,930)
Annuity benefit payments ....................................... (35,876) (23,099) (6,042) (3,597)
Amounts transferred interdivision, and from (to)
VALIC general account ........................................ (161,568,773) (34,517,049) (22,008,587) (32,787,298)
-------------- -------------- ------------ ------------
Increase (decrease) in net assets
resulting from principal transactions ..................... (68,825,449) 104,297,066 (8,903,354) (5,209,971)
-------------- -------------- ------------ ------------
TOTAL INCREASE IN NET ASSETS ................................... 5,401,798 271,837,137 51,395,599 28,131,936
NET ASSETS:
Beginning of period ............................................ 1,213,260,606 941,423,469 285,227,911 257,095,975
-------------- -------------- ------------ ------------
End of period .................................................. $1,218,662,404 $1,213,260,606 $336,623,510 $285,227,911
-------------- -------------- ------------ ------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ......................... 499,326,366 453,172,490 129,550,695 132,434,555
Purchase payments .............................................. 65,108,607 82,864,073 13,413,749 19,715,398
Surrenders ..................................................... (27,017,879) (20,670,419) (7,982,974) (6,142,924)
Transfers - interdivision and from (to) VALIC general account .. (65,896,980) (16,039,778) (9,286,745) (16,456,334)
-------------- -------------- ------------ ------------
Total units outstanding, end of period ......................... 471,520,114 499,326,366 125,694,725 129,550,695
-------------- -------------- ------------ ------------
Units outstanding, by class:
Standard units ............................................... 460,108,285 494,997,997 124,329,201 129,550,695
Enhanced units:
20 bp reduced .............................................. 8,377,232 4,324,799 660,621 --
40 bp reduced .............................................. 3,034,597 3,570 704,903 --
-------------- -------------- ------------ ------------
Accumulation units end of period ............................... 471,520,114 499,326,366 125,694,725 129,550,695
-------------- -------------- ------------ ------------
<CAPTION>
AMERICAN CENTURY AMERICAN GENERAL INTERNATIONAL
ULTRA FUND - DIVISION 31 GROWTH FUND - DIVISION 33
------------------------------ ------------------------------
FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 26, 1998
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
-------------- ------------ ------------ ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ................................... $ (6,405,426) $ (2,282,917) $ 83,486 $ --
Net realized gain on investments ............................... 5,962,303 473,963 12,371 --
Capital gains distributions from mutual funds .................. 29,663,737 30,532,354 179,573 --
Net unrealized appreciation (depreciation)
of investments during the period ............................. 227,838,963 39,033,600 2,105,762 200,750
-------------- ------------ ----------- -----------
Increase in net assets resulting from operations ........... 257,059,577 67,757,000 2,381,192 200,750
-------------- ------------ ----------- -----------
PRINCIPAL TRANSACTIONS:
Purchase payments .............................................. 209,997,538 95,865,928 407,427 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................ (30,465,801) (6,987,387) (14,716) --
Annuity benefit payments ....................................... (8,296) (1,933) -- --
Amounts transferred interdivision, and from (to)
VALIC general account ........................................ 221,997,706 86,438,332 233,728 3,650,000
-------------- ------------ ----------- -----------
Increase (decrease) in net assets
resulting from principal transactions ..................... 401,521,147 175,314,940 626,439 3,650,000
-------------- ------------ ----------- -----------
TOTAL INCREASE IN NET ASSETS ................................... 658,580,724 243,071,940 3,007,631 3,850,750
NET ASSETS:
Beginning of period ............................................ 366,840,329 123,768,389 3,850,750 --
-------------- ------------ ----------- -----------
End of period .................................................. $1,025,421,053 $366,840,329 $ 6,858,381 $ 3,850,750
-------------- ------------ ----------- -----------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ......................... 217,361,127 97,745,282 -- --
Purchase payments .............................................. 109,879,713 63,913,168 349,422 --
Surrenders ..................................................... (15,131,159) (4,133,151) (32,064) --
Transfers - interdivision and from (to) VALIC general account .. 121,450,593 59,835,828 185,196 --
-------------- ------------ ----------- -----------
Total units outstanding, end of period ......................... 433,560,274 217,361,127 502,554 --
-------------- ------------ ----------- -----------
Units outstanding, by class:
Standard units ............................................... 411,119,880 209,221,513 167,387 --
Enhanced units:
20 bp reduced .............................................. 20,827,045 8,116,612 5,641 --
40 bp reduced .............................................. 1,613,349 23,002 329,526 --
-------------- ------------ ----------- -----------
Accumulation units end of period ............................... 433,560,274 217,361,127 502,554 --
-------------- ------------ ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................ $ 2.582249 $ 2.428587 2.676995 2.201234
Enhanced unit:
20 bp reduced .............................................. 2.608476 2.448443 2.704358 --
40 bp reduced .............................................. 2.638280 2.471473 2.735261 --
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................ 2.359768 $ 1.685503 $ 1.634943 $ --
Enhanced unit:
20 bp reduced .............................................. 2.437771 1.737734 1.639279 --
40 bp reduced .............................................. 2.527648 1.798208 1.643677 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 64
18 FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AMERICAN GENERAL INTERNATIONAL AMERICAN GENERAL LARGE CAP
VALUE FUND - DIVISION 34 GROWTH FUND - DIVISION 39
------------------------------- -----------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE PERIOD
YEAR ENDED AUGUST 26, 1998 YEAR ENDED AUGUST 26, 1998
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
------------ --------------- ------------ ----------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ..................................... $ 70,476 $ 5,760 $ (24,106) $ 2,093
Net realized gain on investments ................................. 50,532 -- 196,164 --
Capital gains distributions from mutual funds .................... 358,216 -- 634,398 --
Net unrealized appreciation (depreciation)
of investments during the period ................................ 2,597,347 547,276 3,810,394 695,540
------------ -------------- ------------ --------------
Increase in net assets resulting from operations ............... 3,076,571 553,036 4,616,850 697,633
------------ -------------- ------------ --------------
PRINCIPAL TRANSACTIONS:
Purchase payments ................................................ 555,334 -- 9,704,453 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ........ ...................... (15,637) -- (287,336) --
Annuity benefit payments ......................................... -- -- -- --
Amounts transferred interdivision, and from (to)
VALIC general account ........................................... 330,143 3,600,000 4,199,650 2,850,000
------------ -------------- ------------ --------------
Increase in net assets
resulting from principal transactions ......................... 869,840 3,600,000 13,616,767 2,850,000
------------ -------------- ------------ --------------
TOTAL INCREASE IN NET ASSETS ..................................... 3,946,411 4,153,036 18,233,617 3,547,633
NET ASSETS:
Beginning of period .............................................. 4,153,036 -- 3,547,633 --
------------ -------------- ------------ --------------
End of period .................................................... $ 8,099,447 $ 4,153,036 $ 21,781,250 $ 3,547,633
------------ -------------- ------------ --------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ........................... -- -- -- --
Purchase payments ................................................ 390,550 -- 7,178,778 --
Surrenders ....................................................... (16,250) -- (231,027) --
Transfers - interdivision and from (to) VALIC general account .... 212,767 -- 3,181,787 --
------------ -------------- ------------ --------------
Total units outstanding, end of period ........................... 587,067 -- 10,129,538 --
------------ -------------- ------------ --------------
Units outstanding, by class:
Standard units .................................................. 337,242 -- 519,825 --
Enhanced units:
20 bp reduced .................................................. 177,255 -- 95,862 --
40 bp reduced .................................................. 72,570 -- 9,513,851 --
------------ -------------- ------------ --------------
Accumulation units end of period ................................. 587,067 -- 10,129,538 --
------------ -------------- ------------ --------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ -------------- ------------ --------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................... $ 1.915641 $ -- $ 1.667518 $ --
Enhanced unit:
20 bp reduced .................................................. 1.920710 -- 1.671932 --
40 bp reduced .................................................. 1.925869 -- 1.676417 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 65
SEPARATE ACCOUNT A 19
<TABLE>
<CAPTION>
AMERICAN GENERAL LARGE CAP AMERICAN GENERAL MID CAP GROWTH
VALUE FUND - DIVISION 40 FUND - DIVISION 37
------------------------------ ------------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE PERIOD
YEAR ENDED AUGUST 26, 1998 YEAR ENDED AUGUST 26, 1998
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................... $ 45,852 $ 10,224 $ (3,196) $ --
Net realized gain on investments ................................ 63,723 -- 21,955 --
Capital gains distributions from mutual funds ................... 650,214 -- 710,827 --
Net unrealized appreciation (depreciation)
of investments during the period ............................... (552,152) 716,526 (258,735) 1,425,600
------------ --------------- ------------ ---------------
Increase in net assets resulting from operations .............. 207,637 726,750 470,851 1,425,600
------------ --------------- ------------ ---------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 554,240 -- 1,017,137 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees .............................. (26,803) -- (14,137) --
Annuity benefit payments ........................................ -- -- -- --
Amounts transferred interdivision, and from (to)
VALIC general account........................................... 115,335 2,900,000 121,669 4,050,000
------------ --------------- ------------ ---------------
Increase in net assets
resulting from principal transactions ........................ 642,772 2,900,000 1,124,669 4,050,000
------------ --------------- ------------ ---------------
TOTAL INCREASE IN NET ASSETS..................................... 850,409 3,626,750 1,595,520 5,475,600
NET ASSETS:
Beginning of period ............................................. 3,626,750 -- 5,475,600 --
------------ --------------- ------------ ---------------
End of period ................................................... $ 4,477,159 $ 3,626,750 $ 7,071,120 $ 5,475,600
------------ --------------- ------------ ---------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... -- -- -- --
Purchase payments ............................................... 439,688 -- 801,847 --
Surrenders ...................................................... (29,042) -- (24,159) --
Transfers - interdivision and from (to) VALIC general account ... 92,844 -- 94,239 --
------------ --------------- ------------ ---------------
Total units outstanding, end of period .......................... 503,490 -- 871,927 --
------------ --------------- ------------ ---------------
Units outstanding, by class:
Standard units ................................................. 216,072 -- 477,094 --
Enhanced units:
20 bp reduced ................................................. 221 -- 1,244 --
40 bp reduced ................................................. 287,197 -- 393,589 --
------------ --------------- ------------ ---------------
Accumulation units end of period ................................ 503,490 -- 871,927 --
------------ --------------- ------------ ---------------
<CAPTION>
AMERICAN GENERAL MID CAP VALUE AMERICAN GENERAL SMALL CAP
FUND - DIVISION 38 GROWTH FUND - DIVISION 35
------------------------------ ------------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE PERIOD
YEAR ENDED AUGUST 26, 1998 YEAR ENDED AUGUST 26, 1998
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
------------ --------------- ------------ ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................... $ 34,101 $ 10,079 $ (10,661) $ --
Net realized gain on investments ................................ 156,954 -- 128,821 --
Capital gains distributions from mutual funds ................... 1,894,986 115,562 1,115,791 18,373
Net unrealized appreciation (depreciation)
of investments during the period ............................... (764,242) 896,569 4,835,156 1,361,100
------------ --------------- ------------ ---------------
Increase in net assets resulting from operations .............. 1,321,799 1,022,210 6,069,107 1,379,473
------------ --------------- ------------ ---------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 1,350,999 -- 2,566,013 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees .............................. (22,598) -- (102,973) --
Annuity benefit payments ........................................ -- -- -- --
Amounts transferred interdivision, and from (to)
VALIC general account........................................... 718,756 3,949,999 2,902,335 3,900,000
Increase in net assets ------------ --------------- ------------ ---------------
resulting from principal transactions ......................... 2,047,157 3,949,999 5,365,375 3,900,000
------------ --------------- ------------ ---------------
TOTAL INCREASE IN NET ASSETS...................................... 3,368,956 4,972,209 11,434,482 5,279,473
NET ASSETS:
Beginning of period ............................................. 4,972,209 -- 5,279,473 --
------------ --------------- ------------ ---------------
End of period ................................................... $ 8,341,165 $ 4,972,209 $ 16,713,955 $ 5,279,473
------------ --------------- ------------ ---------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... -- -- -- --
Purchase payments ............................................... 982,289 -- 1,718,837 --
Surrenders ...................................................... (28,013) -- (83,425) --
Transfers - interdivision and from (to) VALIC general account ... 527,305 -- 1,758,419 --
------------ --------------- ------------ ---------------
Total units outstanding, end of period .......................... 1,481,581 -- 3,393,831 --
------------ --------------- ------------ ---------------
Units outstanding, by class:
Standard units ................................................. 223,437 -- 298,665 --
Enhanced units:
20 bp reduced ................................................. 142,103 -- 119,661 --
40 bp reduced ................................................. 1,116,041 -- 2,975,505 --
------------ --------------- ------------ ---------------
Accumulation units end of period ................................ 1,481,581 -- 3,393,831 --
------------ --------------- ------------ ---------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998 1999
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit $ 1.302905 $ -- $ 1.423173 $ -- $ 1.521699
Enhanced unit:
20 bp reduced 1.306351 -- 1.426935 -- 1.525696
40 bp reduced 1.309860 -- 1.430763 -- 1.529814
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1999 1998
--------------- ------------ ------------
<S> <C> <C> <C>
Accumulation value per unit:
Standard unit $ -- $ 2.272711 $ --
Enhanced unit:
20 bp reduced -- 2.278700 --
40 bp reduced -- 2.284815 --
</TABLE>
<PAGE> 66
20 FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
DREYFUS VARIABLE INVESTMENT FUND-
AMERICAN GENERAL SMALL CAP SMALL CAP PORTFOLIO-
VALUE FUND - DIVISION 36 DIVISION 18
---------------------------- ---------------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE
YEAR ENDED AUGUST 26, 1998 YEAR ENDED YEAR ENDED
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
----------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................... $ 55,280 $ 13,079 $ (7,408,133) $ (9,100,355)
Net realized gain on investments ................................ 6,489 -- 63,772,555 19,673,784
Capital gains distributions from mutual funds ................... 145,670 51,644 -- 15,549,964
Net unrealized appreciation (depreciation)
of investments during the period .............................. (493,258) 585,384 89,787,753 (67,338,458)
----------- ----------- ------------- -------------
Increase (decrease) in net assets
resulting from operations ................................ (285,819) 650,107 146,152,175 (41,215,065)
----------- ----------- ------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 204,028 -- 80,558,331 136,010,701
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. (1,545) -- (48,924,631) (37,151,392)
Annuity benefit payments ........................................ -- -- (17,577) (12,769)
Amounts transferred interdivision, and from (to)
VALIC general account ......................................... 54,906 3,849,999 (200,169,015) (105,448,868)
----------- ----------- ------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ..................... 257,389 3,849,999 (168,552,892) (6,602,328)
----------- ----------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ......................... (28,430) 4,500,106 (22,400,717) (47,817,393)
NET ASSETS:
Beginning of period ............................................. 4,500,106 -- 802,006,915 849,824,308
----------- ----------- ------------- -------------
End of period ................................................... $ 4,471,676 $ 4,500,106 $ 779,606,198 $ 802,006,915
----------- ----------- ------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... -- -- 474,215,229 479,851,525
Purchase payments ............................................... 206,905 -- 45,083,201 78,837,263
Surrenders ...................................................... (12,171) -- (28,155,056) (22,827,377)
Transfers - interdivision and from (to) VALIC general account ... 52,250 -- (113,572,602) (61,646,182)
----------- ----------- ------------- -------------
Total units outstanding, end of period .......................... 246,984 -- 377,570,772 474,215,229
----------- ----------- ------------- -------------
Units outstanding, by class:
Standard units ................................................ 166,013 -- 351,855,473 474,215,229
Enhanced units:
20 bp reduced ............................................... 232 -- 2,046,085 --
40 bp reduced ............................................... 80,739 -- 23,669,214 --
----------- ----------- ------------- -------------
Accumulation units end of period ................................ 246,984 -- 377,570,772 474,215,229
----------- ----------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
----------- --------------- ------------ -------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................ $1.080558 $ -- $ 2.059431 $ 1.690786
Enhanced unit:
20 bp reduced .............................................. 1.083393 -- 2.089527 --
40 bp reduced .............................................. 1.086316 -- 2.128984 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 67
SEPARATE ACCOUNT A 21
<TABLE>
<CAPTION>
EVERGREEN GROWTH AND INCOME EVERGREEN SMALL CAP VALUE
FUND-DIVISION 56 FUND-DIVISION 55
------------------------------- -----------------------------
FOR THE PERIOD FOR THE FOR THE PERIOD FOR THE
JANUARY 4, 1999 YEAR ENDED JANUARY 4, 1999 YEAR ENDED
TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................... $ (5) $ -- $ -- $ --
Net realized gain on investments ................................ 31 -- -- --
Capital gains distributions from mutual funds ................... 7 -- -- --
Net unrealized appreciation (depreciation)
of investments during the period .............................. 370 -- --
--------------- ------------- --------------- -------------
Increase (decrease) in net assets
resulting from operations ... ............................ 403 -- -- --
--------------- ------------- --------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 5,841 -- 242 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. -- -- -- --
Annuity benefit payments ........................................ -- -- -- --
Amounts transferred interdivision, and from (to)
VALIC general account ......................................... -- -- -- --
--------------- ------------- --------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ..................... 5,841 -- 242 --
--------------- ------------- --------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ......................... 6,244 -- 242 --
NET ASSETS:
Beginning of period ............................................. -- -- -- --
--------------- ------------- --------------- -------------
End of period ................................................... $ 6,244 $ -- $ 242 $ --
--------------- ------------- --------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... -- -- -- --
Purchase payments ............................................... 5,510 -- 244 --
Surrenders ...................................................... -- -- -- --
Transfers - interdivision and from (to) VALIC general account ... (9) -- -- --
--------------- ------------- --------------- -------------
Total units outstanding, end of period .......................... 5,501 -- 244 --
--------------- ------------- --------------- -------------
Units outstanding, by class:
Standard units ................................................ 175 -- 244 --
Enhanced units:
20 bp reduced ............................................... 5,326 -- -- --
40 bp reduced ............................................... -- -- -- --
--------------- ------------- --------------- -------------
Accumulation units end of period ................................ 5,501 -- 244 --
--------------- ------------- --------------- -------------
</TABLE>
<TABLE>
<CAPTION>
EVERGREEN VALUE DREYFUS FOUNDERS GROWTH
FUND-DIVISION 57 FUND-DIVISION 30
------------------------------- -------------------------------
FOR THE PERIOD FOR THE FOR THE FOR THE
JANUARY 4, 1999 YEAR ENDED YEAR ENDED YEAR ENDED
TO DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................... $ 4 $ -- $ (5,884,618) $ (2,702,478)
Net realized gain on investments ................................ -- -- 4,207,339 669,679
Capital gains distributions from mutual funds ................... 262 -- 127,949,776 21,151,616
Net unrealized appreciation (depreciation)
of investments during the period .............................. (319) -- 95,948,371 42,627,883
--------------- ------------- --------------- -------------
Increase (decrease) in net assets
resulting from operations ................................ (53) -- 222,220,868 61,746,700
--------------- ------------- --------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 4,435 -- 179,626,688 117,393,497
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. -- -- (27,384,768) (9,478,330)
Annuity benefit payments ........................................ -- -- (2,237) (1,096)
Amounts transferred interdivision, and from (to)
VALIC general account ......................................... 3 -- 88,107,501 72,791,918
--------------- ------------- --------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ..................... 4,438 -- 240,347,184 180,705,989
--------------- ------------- --------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ......................... 4,385 -- 462,568,052 242,452,689
NET ASSETS:
Beginning of period ............................................. -- -- 412,920,920 170,468,231
--------------- ------------- --------------- -------------
End of period ................................................... $ 4,385 $ -- $ 875,488,972 $ 412,920,920
--------------- ------------- --------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... -- -- 258,511,009 132,167,162
Purchase payments ............................................... 4,240 -- 100,769,102 80,460,723
Surrenders ...................................................... -- -- (14,640,042) (6,588,832)
Transfers - interdivision and from (to) VALIC general account ... -- -- 52,174,839 52,471,956
--------------- ------------- --------------- -------------
Total units outstanding, end of period .......................... 4,240 -- 396,814,908 258,511,009
--------------- ------------- --------------- -------------
Units outstanding, by class:
Standard units ................................................ 4,240 -- 357,129,398 250,777,959
Enhanced units:
20 bp reduced ............................................... -- -- 16,160,159 7,720,189
40 bp reduced ............................................... -- -- 23,525,351 12,861
--------------- ------------- --------------- -------------
Accumulation units end of period ................................ 4,240 -- 396,814,908 258,511,009
--------------- ------------- --------------- -------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................. $ 1.132919 $ -- $ 0.995515 $ --
Enhanced unit:
20 bp reduced ............................................... 1.135195 -- -- --
40 bp reduced ............................................... -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................. $ 1.034113 $ -- $ 2.196620 $ 1.595913
Enhanced unit:
20 bp reduced ............................................... -- -- 2.252548 1.633282
40 bp reduced ............................................... -- -- 2.316600 1.676366
</TABLE>
<PAGE> 68
22 FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
NEUBERGER BERMAN PUTNAM GLOBAL GROWTH
GUARDIAN TRUST-DIVISION 29 FUND - DIVISION 28
---------------------------- ------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................. $ (148,588) $ (316,186) $ (2,657,686) $ (417,807)
Net realized gain (loss) on investments ....................... 232,115 447,267 4,532,574 107,190
Capital gains distributions from mutual funds ................. 10,764,888 5,112,104 43,772,448 4,089,731
Net unrealized appreciation (depreciation)
of investments during the period ............................ (6,452,929) (5,621,588) 131,823,273 21,600,190
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting from
operations. ........................................... 4,395,486 (378,403) 177,470,609 25,379,304
------------- ------------- ------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................. 12,562,405 18,727,026 77,466,315 45,226,423
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ........................... (3,739,131) (1,971,281) (10,501,490) (3,310,436)
Annuity benefit payments ...................................... (67) -- (4,995) (2,617)
Amounts transferred interdivision, and from (to)
VALIC general account ........................................ (15,092,015) (1,314,316) 89,335,469 36,967,959
------------- ------------- ------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ................. (6,268,808) 15,441,429 156,295,299 78,881,329
------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ....................... (1,873,322) 15,063,026 333,765,908 104,260,633
NET ASSETS:
Beginning of period ........................................... 61,369,849 46,306,823 163,095,041 58,834,408
------------- ------------- ------------- -------------
End of period ................................................. $ 59,496,527 $ 61,369,849 $ 496,860,949 $ 163,095,041
============= ============= ============= =============
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ........................ 46,274,070 35,406,663 107,627,792 49,548,732
Purchase payments ............................................. 8,823,454 13,737,161 45,014,503 32,447,084
Surrenders .................................................... (2,554,943) (1,683,029) (5,810,559) (2,408,897)
Transfers-interdivision and from (to) VALIC general account.... (10,782,486) (1,186,725) 53,893,181 28,040,873
------------- ------------- ------------- -------------
Total units outstanding, end of period ........................ 41,760,095 46,274,070 200,724,917 107,627,792
============= ============= ============= =============
Units outstanding, by class:
Standard units .............................................. 40,241,067 45,261,146 181,916,991 101,468,260
Enhanced units:
20 bp reduced ............................................. 1,406,229 1,012,671 11,313,375 6,153,771
40 bp reduced ............................................. 112,799 253 7,494,551 5,761
------------- ------------- ------------- -------------
Accumulation units end of period .............................. 41,760,095 46,274,070 200,724,917 107,627,792
============= ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ............................................... $ 1.422424 $ 1.324970 $ 2.465895 $ 1.512865
Enhanced unit:
20 bp reduced ............................................. 1.471857 1.368269 2.530785 1.549587
40 bp reduced ............................................. 1.528673 1.418252 2.603644 1.591007
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 69
SEPARATE ACCOUNT A 23
<TABLE>
<CAPTION>
PUTNAM NEW OPPORTUNITIES FUND- PUTNAM OTC & EMERGING GROWTH
DIVISION 26 FUND - DIVISION 27
------------------------------- ------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................. $ (5,793,432) $ (2,691,328) $ (1,934,231) $ 3,286,141
Net realized gain (loss) on investments ....................... 5,405,004 872,455 9,704,876 (332,944)
Capital gains distributions from mutual funds ................. 73,606,083 12,546,729 20,649,440 --
Net unrealized appreciation (depreciation)
of investments during the period ............................ 313,953,044 53,605,222 182,753,857 9,278,020
--------------- --------------- -------------- -------------
Increase (decrease) in net assets resulting from
operations ............................................ 387,170,699 64,333,078 211,173,942 12,231,217
--------------- --------------- -------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................. 156,130,519 108,017,017 40,430,971 36,165,527
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ........................... (25,813,365) (8,784,234) (8,888,544) (4,499,407)
Annuity benefit payments ...................................... (896) (575) (2,730) (2,072)
Amounts transferred interdivision, and from (to)
VALIC general account ........................................ 86,572,168 84,011,090 46,636,113 960,600
--------------- --------------- -------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ................. 216,888,426 183,243,298 78,175,810 32,624,648
--------------- --------------- -------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ....................... 604,059,125 247,576,376 289,349,752 44,855,865
NET ASSETS:
Beginning of period ........................................... 412,412,954 164,836,578 142,311,995 97,456,130
--------------- --------------- -------------- -------------
End of period ................................................. $ 1,016,472,079 $ 412,412,954 $ 431,661,747 $ 142,311,995
=============== =============== ============== =============
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ........................ 291,260,021 143,395,066 132,559,704 99,785,041
Purchase payments ............................................. 96,163,717 85,839,361 28,703,809 36,257,228
Surrenders .................................................... (15,044,221) (6,337,162) (6,296,909) (4,704,400)
Transfers-interdivision and from (to) VALIC general account ... 54,303,091 68,362,756 23,934,549 1,221,835
--------------- --------------- -------------- -------------
Total units outstanding, end of period ........................ 426,682,608 291,260,021 178,901,153 132,559,704
=============== =============== ============== =============
Units outstanding, by class:
Standard units .............................................. 386,064,440 280,523,297 170,725,977 129,463,792
Enhanced units:
20 bp reduced ............................................. 19,231,737 10,725,927 6,570,152 3,092,839
40 bp reduced ............................................. 21,386,431 10,797 1,605,024 3,073
--------------- --------------- -------------- -------------
Accumulation units end of period .............................. 426,682,608 291,260,021 178,901,153 132,559,704
=============== =============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
SCUDDER GROWTH AND T. ROWE PRICE SMALL-CAP
INCOME FUND - DIVISION 21 STOCK FUND - DIVISION 51
------------------------------- -------------------------------
FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED OCTOBER 22, 1998
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
-------------- ------------- ------------ ----------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) .................................. $ 2,202,593 $ 2,680,972 $ (20,554) $ --
Net realized gain (loss) on investments ....................... 3,895,314 1,067,960 40,991 --
Capital gains distributions from mutual funds ................. 6,380,872 17,737,903 320,107 --
Net unrealized appreciation (depreciation)
of investments during the period ............................ (283,526) (15,926,329) 1,008,645 --
--------------- --------------- -------------- -------------
Increase (decrease) in net assets resulting from
operations ............................................ 12,195,253 5,560,506 1,349,189 --
--------------- --------------- -------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................. 54,245,118 79,800,185 5,952,689 139
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ........................... (13,753,656) (7,670,739) (196,858) --
Annuity benefit payments ...................................... (4,562) (3,718) -- --
Amounts transferred interdivision, and from (to)
VALIC general account ........................................ (53,742,268) 34,897,873 1,652,855 --
--------------- --------------- -------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ................. (13,255,368) 107,023,601 7,408,686 139
--------------- --------------- -------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ....................... (1,060,115) 112,584,107 8,757,875 139
=============== =============== ============== =============
NET ASSETS:
Beginning of period ........................................... 247,968,508 135,384,401 139 --
--------------- --------------- -------------- -------------
End of period ................................................. $ 246,908,393 $ 247,968,508 $ 8,758,014 $ 139
=============== =============== ============== =============
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ........................ 164,312,979 94,225,984 122 --
Purchase payments ............................................. 34,048,172 51,892,138 5,428,689 122
Surrenders .................................................... (8,263,310) (5,008,156) (169,605) --
Transfers-interdivision and from (to) VALIC general account ... (34,611,633) 23,203,013 1,484,376 --
--------------- --------------- -------------- -------------
Total units outstanding, end of period ........................ 155,486,208 164,312,979 6,743,582 122
=============== =============== ============== =============
Units outstanding, by class:
Standard units .............................................. 146,888,390 159,815,811 821,977 122
Enhanced units:
20 bp reduced .............................................. 6,367,461 4,494,004 249,245 --
40 bp reduced .............................................. 2,230,357 3,164 5,672,360 --
--------------- --------------- -------------- -------------
Accumulation units end of period .............................. 155,486,208 164,312,979 6,743,582 122
=============== =============== ============== =============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ............................................... $ 2.376261 $ 1.415175 $ 2.408872 $ 1.072660
Enhanced unit:
20 bp reduced ............................................. 2.414279 1.434946 2.471391 1.098295
40 bp reduced ............................................. 2.459834 1.459115 2.542500 1.127653
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ............................................... $ 1.584519 $ 1.507724 $ 1.293095 $ 1.141049
Enhanced unit:
20 bp reduced ............................................. 1.623952 1.542160 1.296356 --
40 bp reduced ............................................. 1.670148 1.582856 1.299637 --
</TABLE>
<PAGE> 70
24 FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
TEMPLETON FOREIGN TEMPLETON INTERNATIONAL
FUND - DIVISION 32 FUND - DIVISION 20
------------------------------ ------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ........................................... $ 7,554,809 $ 3,763,468 $ 11,247,994 $ 7,944,373
Net realized gain (loss) on investments ......................... (2,951,879) (1,076,896) 48,058,679 52,533,310
Capital gains distributions from mutual funds ................... 2,706,922 17,280,633 71,597,060 31,903,839
Net unrealized appreciation (depreciation)
of investments during the period .............................. 80,764,072 (34,315,820) 22,890,344 (37,039,574)
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting from
operations ................................................ 88,073,924 (14,348,615) 153,794,077 55,341,948
------------- ------------- ------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 56,633,360 72,575,285 86,045,632 114,632,129
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. (13,184,454) (7,939,318) (46,576,624) (35,093,007)
Annuity benefit payments ........................................ (2,321) (1,991) (11,559) (9,179)
Amounts transferred interdivision, and from (to)
VALIC general account ......................................... (11,673,466) (12,669,089) (143,595,363) (95,114,875)
------------- ------------- ------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ..................... 31,773,119 51,964,887 (104,137,914) (15,584,932)
------------- ------------- ------------- -------------
TOTAL INCREASE IN NET ASSETS .................................... 119,847,043 37,616,272 49,656,163 39,757,016
NET ASSETS:
Beginning of period ............................................. 218,468,273 180,852,001 769,496,203 729,739,187
------------- ------------- ------------- -------------
End of period ................................................... $ 338,315,316 $ 218,468,273 $ 819,152,366 $ 769,496,203
------------- ------------- ------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... 204,065,916 159,201,107 452,419,089 463,174,350
Purchase payments ............................................... 44,888,381 63,265,244 46,775,532 65,837,726
Surrenders ...................................................... (9,883,393) (7,600,467) (25,556,432) (21,321,029)
Transfers - interdivision and from (to) VALIC general account ... (10,739,081) (10,799,968) (79,846,982) (55,271,958)
------------- ------------- ------------- -------------
Total units outstanding, end of period .......................... 228,331,823 204,065,916 393,791,207 452,419,089
------------- ------------- ------------- -------------
Units outstanding, by class:
Standard units ................................................ 219,168,378 198,626,024 372,176,780 452,419,089
Enhanced units:
20 bp reduced ............................................... 8,660,425 5,437,288 2,084,490 --
40 bp reduced ............................................... 503,020 2,604 19,529,937 --
------------- ------------- ------------- -------------
Accumulation units end of period ................................ 228,331,823 204,065,916 393,791,207 452,419,089
------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................. $ 1.479830 $ 1.069704 $ 2.076148 $ 1.700398
Enhanced unit:
20 bp reduced ............................................... 1.517785 1.094954 2.105759 --
40 bp reduced ............................................... 1.560956 1.123840 2.138370 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 71
SEPARATE ACCOUNT A 25
<TABLE>
<CAPTION>
VANGUARD WINDSOR II AMERICAN GENERAL BALANCED
FUND - DIVISION 24 FUND - DIVISION 42
------------------------------ -------------------------------
FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 26, 1998
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ........................................... $ 8,388,243 $ 5,622,515 $ 188,495 $ 29,084
Net realized gain (loss) on investments ......................... 6,166,843 1,366,076 30,618 --
Capital gains distributions from mutual funds ................... 67,184,211 51,898,120 432,947 34,051
Net unrealized appreciation (depreciation)
of investments during the period .............................. (144,035,946) 278,987 350,211 805,536
------------- ------------- ------------- -------------
Increase (decrease) in net assets resulting from operations.. (62,296,649) 59,165,698 1,002,271 868,671
------------- ------------- ------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 213,954,582 172,075,011 1,574,236 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. (40,354,240) (18,029,126) (60,039) --
Annuity benefit payments ........................................ (9,743) (6,802) -- --
Amounts transferred interdivision, and from (to)
VALIC general account ......................................... (29,853,674) 162,813,002 1,582,048 5,000,000
------------- ------------- ------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ..................... 143,736,925 316,852,085 3,096,245 5,000,000
------------- ------------- ------------- -------------
TOTAL INCREASE IN NET ASSETS .................................... 81,440,276 376,017,783 4,098,516 5,868,671
NET ASSETS:
Beginning of period ............................................. 651,414,982 275,397,199 5,868,671 --
------------- ------------- ------------- -------------
End of period ................................................... $ 732,855,258 $ 651,414,982 $ 9,967,187 $ 5,868,671
------------- ------------- ------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... 386,567,704 187,929,868 -- --
Purchase payments ............................................... 122,755,122 105,145,249 1,250,285 --
Surrenders ...................................................... (22,363,367) (10,145,505) (58,555) --
Transfers - interdivision and from (to) VALIC general account ... (20,680,140) 103,638,092 1,277,373 --
------------- ------------- ------------- -------------
Total units outstanding, end of period .......................... 466,279,319 386,567,704 2,469,103 --
------------- ------------- ------------- -------------
Units outstanding, by class:
Standard units ................................................ 426,529,299 372,737,595 461,870 --
Enhanced units:
20 bp reduced ............................................... 20,846,053 13,800,156 38,339 --
40 bp reduced ............................................... 18,903,967 29,953 1,968,894 --
------------- ------------- ------------- -------------
Accumulation units end of period ................................ 466,279,319 386,567,704 2,469,103 --
------------- ------------- ------------- ---------------
</TABLE>
<TABLE>
<CAPTION>
VANGUARD WELLINGTON
FUND-DIVISION 25
------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income ........................................... $ 14,109,155 $ 8,146,899
Net realized gain (loss) on investments ......................... 1,861,183 453,710
Capital gains distributions from mutual funds ................... 28,847,888 30,281,535
Net unrealized appreciation (depreciation)
of investments during the period .............................. (30,879,706) (13,016,167)
------------- -------------
Increase (decrease) in net assets resulting from ............ 13,938,520 25,865,977
------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 149,843,118 128,896,516
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. (29,503,291) (11,075,983)
Annuity benefit payments ........................................ (4,939) (1,770)
Amounts transferred interdivision, and from (to)
VALIC general account ......................................... 29,260,803 106,781,378
------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ..................... 149,595,691 224,600,141
------------- -------------
TOTAL INCREASE IN NET ASSETS .................................... 163,534,211 250,466,118
NET ASSETS:
Beginning of period ............................................. 406,510,665 156,044,547
------------- -------------
End of period ................................................... $ 570,044,876 $ 406,510,665
------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... 273,485,784 116,429,781
Purchase payments ............................................... 96,236,923 87,356,196
Surrenders ...................................................... (18,147,782) (6,659,976)
Transfers - interdivision and from (to) VALIC general account ... 19,135,718 76,359,783
------------- -------------
Total units outstanding, end of period .......................... 370,710,643 273,485,784
------------- -------------
Units outstanding, by class:
Standard units ................................................ 328,701,408 253,840,498
Enhanced units:
20 bp reduced ............................................... 28,195,817 19,636,072
40 bp reduced ............................................... 13,813,418 9,214
------------- -------------
Accumulation units end of period ................................ 370,710,643 273,485,784
------------- -------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................. $ 1.566008 $ 1.683226 $ 1.323103 $ --
Enhanced unit:
20 bp reduced ............................................... 1.606241 1.723020 1.326598 --
40 bp reduced ............................................... 1.653581 1.770257 1.330160 --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
Accumulation value per unit:
Standard unit ................................................. $ 1.528992 $ 1.482836
Enhanced unit:
20 bp reduced ............................................... 1.580569 1.529797
40 bp reduced ............................................... 1.641601 1.585688
</TABLE>
<PAGE> 72
26 FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS AGSPC CAPITAL CONSERVATION FUND -
--------------------------------------------------------
DIVISION 1 DIVISION 7
--------------------------- ---------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income .............................................. $ 314,033 $ 338,175 $ 3,026,245 $ 3,124,808
Net realized gain (loss) on investments ............................ (76,164) 12,194 8,827 413,199
Capital gains distributions from mutual funds ...................... -- -- -- --
Net unrealized appreciation (depreciation)
of investments during the period ................................. (326,155) 35,832 (3,853,099) (35,856)
----------- ----------- ----------- -----------
Increase (decrease) in net assets resulting from operations .... (88,286) 386,201 (818,027) 3,502,151
----------- ----------- ----------- -----------
PRINCIPAL TRANSACTIONS:
Purchase payments .................................................. 28,773 146,532 5,665,099 7,027,648
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ................................ (602,665) (562,370) (5,161,343) (3,833,561)
Annuity benefit payments ........................................... (539) (455) -- --
Amounts transferred interdivision, and from (to)
VALIC general account ............................................ (433,773) (97,641) (8,133,261) (2,143,426)
----------- ----------- ----------- -----------
Increase (decrease) in net assets
resulting from principal transactions ........................ (1,008,204) (513,934) (7,629,505) 1,050,661
----------- ----------- ----------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............................ (1,096,490) (127,733) (8,447,532) 4,552,812
NET ASSETS:
Beginning of period ................................................ 6,299,793 6,427,526 59,971,540 55,418,728
----------- ----------- ----------- -----------
End of period ...................................................... $ 5,203,303 $ 6,299,793 $51,524,008 $59,971,540
----------- ----------- ----------- -----------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ............................. 1,689,443 1,831,961 28,751,662 28,242,598
Purchase payments .................................................. 7,625 40,472 2,709,678 3,402,874
Surrenders ......................................................... (163,729) (155,629) (2,465,503) (1,879,505)
Transfers - interdivision and from (to) VALIC general account ...... (117,926) (27,361) (3,955,874) (1,014,305)
----------- ----------- ----------- -----------
Total units outstanding, end of period ............................. 1,415,413 1,689,443 25,039,963 28,751,662
----------- ----------- ----------- -----------
Units outstanding, by class:
Standard units ................................................... 1,415,413 1,689,443 24,749,727 28,751,662
Enhanced units:
20 bp reduced .................................................. -- -- 95,480 --
40 bp reduced .................................................. -- -- 194,756 --
----------- ----------- ----------- -----------
Accumulation units end of period ................................... 1,415,413 1,689,443 25,039,963 28,751,662
----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit .................................................... $3.673180 $3.726168 $2.056559 $2.085846
Enhanced unit:
20 bp reduced .................................................. -- -- 2.112183 --
40 bp reduced .................................................. -- -- 2.172271 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 73
SEPARATE ACCOUNT A 27
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
AGSPC GOVERNMENT SECURITIES
FUND - DIVISION 8
------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income .............................................. $ 4,586,896 $ 4,468,159
Net realized gain (loss) on investments ............................ 661,487 1,352,903
Capital gains distributions from mutual funds ...................... -- --
Net unrealized appreciation (depreciation)
of investments during the period ................................. (9,319,026) 1,437,930
------------- -------------
Increase (decrease) in net assets resulting from operations .... (4,070,643) 7,258,992
------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments .................................................. 11,734,225 12,902,909
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ................................ (9,010,978) (5,395,424)
Annuity benefit payments ........................................... -- --
Amounts transferred interdivision, and from (to)
VALIC general account ............................................ (18,810,222) 10,528,632
------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ........................ (16,086,975) 18,036,117
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............................ (20,157,618) 25,295,109
NET ASSETS:
Beginning of period ................................................ 113,462,397 88,167,288
------------- -------------
End of period ...................................................... $ 93,304,779 $ 113,462,397
------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ............................. 53,729,671 45,034,894
Purchase payments .................................................. 5,561,118 6,558,071
Surrenders ......................................................... (4,281,237) (2,679,928)
Transfers - interdivision and from (to) VALIC general account ...... (9,134,505) 4,816,634
------------- -------------
Total units outstanding, end of period ............................. 45,875,047 53,729,671
------------- -------------
Units outstanding, by class:
Standard units ................................................... 45,292,728 53,729,671
Enhanced units:
20 bp reduced .................................................. 243,537 --
40 bp reduced .................................................. 338,782 --
------------- -------------
Accumulation units end of period ................................... 45,875,047 53,729,671
------------- -------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS AGSPC INTERNATIONAL
GOVERNMENT BOND
FUND - DIVISION 13
------------------------------
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income .............................................. $ 3,776,325 $ 1,997,004
Net realized gain (loss) on investments ............................ 1,059,581 (1,068,211)
Capital gains distributions from mutual funds ...................... 103,421 872,765
Net unrealized appreciation (depreciation)
of investments during the period ................................. (16,515,559) 21,926,900
------------- -------------
Increase (decrease) in net assets resulting from operations .... (11,576,232) 23,728,458
------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments .................................................. 21,815,358 25,413,792
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ................................ (9,363,283) (7,785,118)
Annuity benefit payments ........................................... (3,034) (2,691)
Amounts transferred interdivision, and from (to)
VALIC general account ............................................ (22,744,405) (38,345,989)
------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ........................ (10,295,364) (20,720,006)
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............................ (21,871,596) 3,008,452
NET ASSETS:
Beginning of period ................................................ 169,208,209 166,199,757
------------- -------------
End of period ...................................................... $ 147,336,613 $ 169,208,209
------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ............................. 97,883,538 111,480,591
Purchase payments .................................................. 13,082,135 16,433,799
Surrenders ......................................................... (5,520,000) (5,105,973)
Transfers - interdivision and from (to) VALIC general account ...... (13,941,554) (24,924,879)
------------- -------------
Total units outstanding, end of period ............................. 91,504,119 97,883,538
------------- -------------
Units outstanding, by class:
Standard units ................................................... 90,136,603 97,473,851
Enhanced units:
20 bp reduced .................................................. 1,058,856 408,156
40 bp reduced .................................................. 308,660 1,531
------------- -------------
Accumulation units end of period ................................... 91,504,119 97,883,538
------------- -------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
AMERICAN GENERAL CORE BOND
FUND - DIVISION 58
-------------------------------
FOR THE FOR THE PERIOD
YEAR ENDED AUGUST 26, 1998
DECEMBER 31, TO DECEMBER 31,
1999 1998
------------- -------------
<S> <C> <C>
OPERATIONS:
Net investment income .............................................. $ 320,982 $ 50,247
Net realized gain (loss) on investments ............................ (446) --
Capital gains distributions from mutual funds ...................... -- 16,291
Net unrealized appreciation (depreciation)
of investments during the period ................................. (380,782) 95,397
------------- -------------
Increase (decrease) in net assets resulting from operations .... (60,246) 161,935
------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments .................................................. 64,222 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ................................ (8) --
Annuity benefit payments ........................................... -- --
Amounts transferred interdivision, and from (to)
VALIC general account ............................................ 2,477 5,000,001
------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ........................ 66,691 5,000,001
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............................ 6,445 5,161,936
NET ASSETS:
Beginning of period ................................................ 5,161,936 --
------------- -------------
End of period ...................................................... $ 5,168,381 $ 5,161,936
------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ............................. -- --
Purchase payments .................................................. 62,747 --
Surrenders ......................................................... (8) --
Transfers - interdivision and from (to) VALIC general account ...... 2,310 --
------------- -------------
Total units outstanding, end of period ............................. 65,049 --
------------- -------------
Units outstanding, by class:
Standard units ................................................... 54,349 --
Enhanced units:
20 bp reduced .................................................. 10,700 --
40 bp reduced .................................................. -- --
------------- -------------
Accumulation units end of period ................................... 65,049 --
------------- -------------
</TABLE>
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
AMERICAN GENERAL DOMESTIC BOND
FUND - DIVISION 43
------------------------------
FOR THE FOR THE PERIOD
YEAR ENDED AUGUST 26, 1998
DECEMBER 31, TO DECEMBER 31,
1999 1998
------------- ---------------
<S> <C> <C>
OPERATIONS:
Net investment income .............................................. $ 98,906 $ 14,978
Net realized gain (loss) on investments ............................ (7,296) --
Capital gains distributions from mutual funds ...................... 36 15,898
Net unrealized appreciation (depreciation)
of investments during the period ................................. (139,402) 28,692
------------- -------------
Increase (decrease) in net assets resulting from operations .... (47,756) 59,568
------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments .................................................. 623,941 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ................................ (1,682) --
Annuity benefit payments ........................................... -- --
Amounts transferred interdivision, and from (to)
VALIC general account ............................................ (51,023) 1,250,000
------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ........................ 571,236 1,250,000
------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ............................ 523,480 1,309,568
NET ASSETS:
Beginning of period ................................................ 1,309,568 --
------------- -------------
End of period ...................................................... $ 1,833,048 $ 1,309,568
------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ............................. -- --
Purchase payments .................................................. 637,229 --
Surrenders ......................................................... (29,632) --
Transfers - interdivision and from (to) VALIC general account ...... (48,322) --
------------- -------------
Total units outstanding, end of period ............................. 559,275 --
------------- -------------
Units outstanding, by class:
Standard units ................................................... 188,580 --
Enhanced units:
20 bp reduced .................................................. -- --
40 bp reduced .................................................. 370,695 --
------------- -------------
Accumulation units end of period ................................... 559,275 --
------------- -------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................... $ 2.032753 $ 2.111727 $ 1.609098 $ 1.728006
Enhanced unit:
20 bp reduced ................. 2.087744 -- 1.634588 1.751922
40 bp reduced ................. 2.147126 -- 1.661837 1.777571
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ----------- ------------ ------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................... $ 1.009692 $ -- $ 1.004631 $ --
Enhanced unit:
20 bp reduced ................. 1.012353 -- -- --
40 bp reduced ................. -- -- 1.009996 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 74
28 FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AMERICAN GENERAL
HIGH YIELD BOND AMERICAN GENERAL STRATEGIC BOND
FUND - DIVISION 60 FUND - DIVISION 59
---------------------------- ----------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE PERIOD
YEAR ENDED AUGUST 26, 1998 YEAR ENDED AUGUST 26, 1998
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ....................................... $ 491,161 $ 92,262 $ 414,198 $ 69,000
Net realized gain (loss) on investments ............................ (357) -- 7 --
Capital gains distributions from mutual funds ...................... -- -- -- 11,064
Net unrealized appreciation (depreciation)
of investments during the period ................................. (333,976) 189,911 (211,104) 185,469
----------- ----------- ----------- -----------
Increase (decrease) in net assets resulting from operations ... 156,828 282,173 203,101 265,533
----------- ----------- ----------- -----------
PRINCIPAL TRANSACTIONS:
Purchase payments .................................................. 173,814 -- 33,916 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ................................ (1,458) -- (134) --
Annuity benefit payments ........................................... -- -- -- --
Amounts transferred interdivision, and from (to)
VALIC general account ........................................... (24,004) 5,000,000 4,091 4,999,999
----------- ----------- ----------- -----------
Increase in net assets
resulting from principal transactions ....................... 148,352 5,000,000 37,873 4,999,999
----------- ----------- ----------- -----------
TOTAL INCREASE IN NET ASSETS ....................................... 305,180 5,282,173 240,974 5,265,532
NET ASSETS:
Beginning of period ................................................ 5,282,173 -- 5,265,532 --
----------- ----------- ----------- -----------
End of period ...................................................... $ 5,587,353 $ 5,282,173 $ 5,506,506 $ 5,265,532
----------- ----------- ----------- -----------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ............................. -- -- -- --
Purchase payments .................................................. 163,306 -- 31,684 --
Surrenders ......................................................... (1,372) -- (125) --
Transfers - interdivision and from (to) VALIC general account ...... (22,704) -- 3,831 --
----------- ----------- ----------- -----------
Total units outstanding, end of period ............................. 139,230 -- 35,390 --
----------- ----------- ----------- -----------
Units outstanding, by class:
Standard units .................................................. 136,423 -- 2,324 --
Enhanced units:
20 bp reduced ................................................. 2,397 -- -- --
40 bp reduced ................................................. 410 -- 33,066 --
----------- ----------- ----------- -----------
Accumulation units end of period ................................... 139,230 -- 35,390 --
----------- ----------- ----------- -----------
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................... $ 1.075994 $ -- $ 1.081981 $ --
Enhanced unit:
20 bp reduced
40 bp reduced ................................................. 1.078842 -- -- --
1.081775 -- 1.087771 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 75
SEPARATE ACCOUNT A 29
<TABLE>
<CAPTION>
VANGUARD LONG-TERM VANGUARD LONG-TERM
CORPORATE FUND - DIVISION 22 TREASURY FUND - DIVISION 23
---------------------------------- ----------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ......................... $ 3,751,628 $ 2,052,614 $ 7,007,754 $ 2,857,159
Net realized gain (loss) on investments .............. (398,632) 136,212 (687,054) 1,195,397
Capital gains distributions from mutual funds ........ 410,483 1,044,043 1,589,174 --
Net unrealized appreciation (depreciation)
of investments during the period ................... (8,721,370) (64,200) (21,800,390) 2,611,560
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets resulting
from operations ............................... (4,957,891) 3,168,669 (13,890,516) 6,664,116
--------------- --------------- --------------- ---------------
PRINCIPAL TRANSACTIONS:
Purchase payments .................................... 20,898,993 18,953,737 46,110,281 30,970,739
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees .................. (3,914,976) (1,608,861) (8,715,834) (2,748,295)
Annuity benefit payments ............................. (2,439) -- (761) (813)
Amounts transferred interdivision, and from (to)
VALIC general account ............................. (3,549,583) 19,011,058 (436,765) 60,728,245
--------------- --------------- --------------- ---------------
Increase in net assets
resulting from principal transactions ......... 13,431,995 36,355,934 36,956,921 88,949,876
--------------- --------------- --------------- ---------------
TOTAL INCREASE IN NET ASSETS ......................... 8,474,104 39,524,603 23,066,405 95,613,992
NET ASSETS:
Beginning of period .................................. 59,964,652 20,440,049 119,252,206 23,638,214
--------------- --------------- --------------- ---------------
End of period ........................................ $ 68,438,756 $ 59,964,652 $ 142,318,611 $ 119,252,206
--------------- --------------- --------------- ---------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ............... 47,072,573 17,371,407 90,363,929 20,041,920
Purchase payments .................................... 16,695,613 15,098,601 35,729,706 23,916,542
Surrenders ........................................... (3,079,946) (1,333,865) (6,580,094) (1,937,227)
Transfers - interdivision and from (to) VALIC
general account ................................... (3,137,264) 15,936,430 (365,799) 48,342,694
--------------- --------------- --------------- ---------------
Total units outstanding, end of period ............... 57,550,976 47,072,573 119,147,742 90,363,929
--------------- --------------- --------------- ---------------
Units outstanding, by class:
Standard units .................................... 49,616,245 44,122,646 110,102,115 86,673,300
Enhanced units:
20 bp reduced ................................... 4,060,325 2,949,044 7,578,682 3,682,809
40 bp reduced ................................... 3,874,406 883 1,466,945 7,820
--------------- --------------- --------------- ---------------
Accumulation units end of period ..................... 57,550,976 47,072,573 119,147,742 90,363,929
--------------- --------------- --------------- ---------------
<CAPTION>
AGSPC SCIENCE & TECHNOLOGY AGSPC SOCIAL AWARENESS
FUND - DIVISION 17 FUND - DIVISION 12
---------------------------------- ----------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income (loss) ......................... $ (19,907,095) $ (10,381,062) $ (1,053,214) $ 190,273
Net realized gain (loss) on investments .............. 30,613,817 34,745,563 8,179,859 2,220,138
Capital gains distributions from mutual funds ........ 328,749,980 113,616,462 22,439,556 37,003,617
Net unrealized appreciation (depreciation)
of investments during the period ................... 1,226,217,782 250,423,659 57,407,741 38,477,902
--------------- --------------- --------------- ---------------
Increase (decrease) in net assets resulting
from operations ............................... 1,565,674,484 388,404,622 86,973,942 77,891,930
--------------- --------------- --------------- ---------------
PRINCIPAL TRANSACTIONS:
Purchase payments .................................... 279,006,916 195,575,628 94,842,943 72,710,322
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees .................. (99,642,197) (44,292,549) (25,298,865) (13,355,087)
Annuity benefit payments ............................. (48,492) (17,543) (24,585) (9,481)
Amounts transferred interdivision, and from (to)
VALIC general account ............................. 309,209,056 (92,089,284) 27,286,374 54,323,803
--------------- --------------- --------------- ---------------
Increase in net assets
resulting from principal transactions ......... 488,525,283 59,176,252 96,805,867 113,669,557
--------------- --------------- --------------- ---------------
TOTAL INCREASE IN NET ASSETS ......................... 2,054,199,767 447,580,874 183,779,809 191,561,487
NET ASSETS:
Beginning of period .................................. 1,357,242,328 909,661,454 435,141,459 243,579,972
--------------- --------------- --------------- ---------------
End of period ........................................ $ 3,411,442,095 $ 1,357,242,328 $ 618,921,268 $ 435,141,459
--------------- --------------- --------------- ---------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ............... 421,835,835 397,842,959 115,602,816 81,577,104
Purchase payments .................................... 64,052,931 77,332,989 23,030,880 21,359,028
Surrenders ........................................... (22,853,729) (17,946,718) (5,886,018) (3,889,138)
Transfers - interdivision and from (to) VALIC
general account ................................... 69,695,056 (35,393,395) 7,138,854 16,555,822
--------------- --------------- --------------- ---------------
Total units outstanding, end of period ............... 532,730,093 421,835,835 139,886,532 115,602,816
--------------- --------------- --------------- ---------------
Units outstanding, by class:
Standard units .................................... 517,699,561 418,601,069 136,226,993 114,382,494
Enhanced units:
20 bp reduced ................................... 11,744,052 3,228,389 3,028,346 1,218,871
40 bp reduced ................................... 3,286,480 6,377 631,193 1,451
--------------- --------------- --------------- ---------------
Accumulation units end of period ..................... 532,730,093 421,835,835 139,886,532 115,602,816
--------------- --------------- --------------- ---------------
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Accumulation value per unit: $ 1.179657 $ 1.271278 $ 1.191635 $ 1.318263
Standard unit ...................................................
Enhanced unit:
20 bp reduced 1.220562 1.312731 1.222216 1.349397
40 bp reduced ................................................. 1.267698 1.360696 1.256142 1.384079
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Accumulation value per unit: $ 6.398997 $ 3.216190 $ 4.419383 $ 3.762308
Standard unit ...................................................
Enhanced unit:
20 bp reduced 6.462689 3.241847 4.502622 3.825649
40 bp reduced ................................................. 6.536543 3.272354 4.596034 3.897214
</TABLE>
<PAGE> 76
30 FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AGSPC
AMERICAN GENERAL SOCIALLY MONEY MARKET FUND -
RESPONSIBLE FUND - DIVISION 41 DIVISION 2
------------------------------ -----------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE
YEAR ENDED AUGUST 26, 1998 YEAR ENDED YEAR ENDED
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ............................................. $ 79,807 $ 23,760 $ 162,374 $ 184,017
Net realized gain on investments .................................. 64,508 -- -- --
Capital gains distributions from mutual funds ..................... 391,925 285,733 -- --
Net unrealized appreciation (depreciation)
of investments during the period ................................ 1,103,235 1,099,673 -- --
------------ ------------ ------------ ------------
Increase in net assets resulting from operations ............. 1,639,475 1,409,166 162,374 184,017
------------ ------------ ------------ ------------
PRINCIPAL TRANSACTIONS:
Purchase payments ................................................. 2,903,630 -- 139,686 90,884
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................... (20,548) -- (275,980) (292,611)
Annuity benefit payments .......................................... -- -- -- --
Amounts transferred interdivision, and from (to)
VALIC general account .......................................... 1,306,362 5,000,000 (44,481) (364,560)
------------ ------------ ------------ ------------
Increase (decrease) in net assets
resulting from principal transactions .................... 4,189,444 5,000,000 (180,775) (566,287)
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ........................... 5,828,919 6,409,166 (18,401) (382,270)
NET ASSETS:
Beginning of period ............................................... 6,409,166 -- 4,197,487 4,579,757
------------ ------------ ------------ ------------
End of period ..................................................... $ 12,238,085 $ 6,409,166 $ 4,179,086 $ 4,197,487
------------ ------------ ------------ ------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ............................ -- -- 1,700,333 1,931,439
Purchase payments ................................................. 2,155,410 -- 56,091 37,542
Surrenders ........................................................ (35,215) -- (110,243) (120,614)
Transfers - interdivision and from (to) VALIC general account ..... 983,523 -- (13,712) (148,034)
------------ ------------ ------------ ------------
Total units outstanding, end of period ............................ 3,103,718 -- 1,632,469 1,700,333
------------ ------------ ------------ ------------
Units outstanding, by class:
Standard units ................................................. 282,396 -- 1,632,469 1,700,333
Enhanced units:
20 bp reduced ................................................ 106,148 -- -- --
40 bp reduced ................................................ 2,715,174 -- -- --
------------ ------------ ------------ ------------
Accumulation units end of period .................................. 3,103,718 -- 1,632,469 1,700,333
------------ ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit .................................................. $ 1.497374 $ -- $ 2.559979 $ 2.468627
Enhanced unit:
20 bp reduced ................................................ 1.501310 -- -- --
40 bp reduced ................................................ 1.505354 -- -- --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 77
SEPARATE ACCOUNT A 31
<TABLE>
<CAPTION>
AGSPC
MONEY MARKET FUND - AMERICAN GENERAL MONEY MARKET
DIVISION 6 FUND - DIVISION 44
-------------------------------- --------------------------------
FOR THE FOR THE FOR THE FOR THE PERIOD
YEAR ENDED YEAR ENDED YEAR ENDED AUGUST 26, 1998
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
OPERATIONS: <S> <C> <C> <C>
Net investment income .......................................... $ 13,158,073 $ 7,849,963 $ 385,966 $ 82,478
Net realized gain on investments ............................... -- -- -- --
Capital gains distributions from mutual funds .................. -- -- -- --
Net unrealized appreciation (depreciation)
of investments during the period .............................
------------- ------------- ------------- -------------
Increase in net assets resulting from operations .......... 13,158,073 7,849,963 385,966 82,478
------------- ------------- ------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments .............................................. 119,148,566 87,624,322 6,681,738 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................ (66,195,806) (33,439,890) (641,200) --
Annuity benefit payments ....................................... (1,607) (1,603) -- --
Amounts transferred interdivision, and from (to)
VALIC general account ....................................... 122,595,014 63,714,230 73,281 5,000,000
------------- ------------- ------------- -------------
Increase (decrease) in net assets
resulting from principal transactions ................. 175,546,167 117,897,059 6,113,819 5,000,000
------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ........................ 188,704,240 125,747,022 6,499,785 5,082,478
NET ASSETS:
Beginning of period ............................................ 266,651,604 140,904,582 5,082,478 --
------------- ------------- ------------- -------------
End of period .................................................. $ 455,355,844 $ 266,651,604 $ 11,582,263 $ 5,082,478
------------- ------------- ------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period ......................... 152,873,642 84,182,521 -- --
Purchase payments .............................................. 77,648,415 56,361,872 6,540,439 --
Surrenders ..................................................... (47,665,211) (17,562,213) (663,577) --
Transfers - interdivision and from (to) VALIC general account .. 68,384,107 29,891,462 57,361 --
------------- ------------- ------------- -------------
Total units outstanding, end of period ......................... 251,240,953 152,873,642 5,934,223 --
------------- ------------- ------------- -------------
Units outstanding, by class:
Standard units .............................................. 233,940,123 147,547,688 4,089,393 --
Enhanced units:
20 bp reduced ............................................. 9,613,663 5,325,479 1,844,830 --
40 bp reduced ............................................. 7,687,167 475 -- --
------------- ------------- ------------- -------------
Accumulation units end of period ............................... 251,240,953 152,873,642 5,934,223 --
------------- ------------- ------------- -------------
<CAPTION>
AMERICAN GENERAL
CONSERVATIVE GROWTH LIFESTYLE AMERICAN GENERAL GROWTH LIFESTYLE
FUND - DIVISION 50 FUND - DIVISION 48
------------------------------- --------------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE PERIOD
YEAR ENDED AUGUST 26, 1998 YEAR ENDED AUGUST 26, 1998
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C>
OPERATIONS:
Net investment income ...........................................$ 602,341 $ 27,772 $ 743,981 $ 11,226
Net realized gain on investments ................................ 895,570 -- 63,773 --
Capital gains distributions from mutual funds ................... 1,025,645 -- 323,571 --
Net unrealized appreciation (depreciation)
of investments during the period .............................. (1,418,604) 800,941 1,217,409 970,379
------------- ------------- ------------- -------------
Increase in net assets resulting from operations ........... 1,104,952 828,713 2,348,734 981,605
------------- ------------- ------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 1,836,447 -- 2,368,603 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. (50,904) -- (49,197) --
Annuity benefit payments ........................................ -- -- -- --
Amounts transferred interdivision, and from (to)
VALIC general account ........................................ (326) 5,000,000 934 5,000,000
------------- ------------- ------------- -------------
Increase (decrease) in net assets
resulting from principal transactions .................. 1,785,217 5,000,000 2,320,340 5,000,000
------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ......................... 2,890,169 5,828,713 4,669,074 5,981,605
NET ASSETS:
Beginning of period ............................................. 5,828,713 -- 5,981,605 --
------------- ------------- ------------- -------------
End of period ...................................................$ 8,718,882 $ 5,828,713 $ 10,650,679 $ 5,981,605
------------- ------------- ------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... -- -- -- --
Purchase payments ............................................... 1,654,793 -- 1,895,721 --
Surrenders ...................................................... (41,867) -- (36,221) --
Transfers - interdivision and from (to) VALIC general account ... (2,450) -- 604 --
------------- ------------- ------------- -------------
Total units outstanding, end of period .......................... 1,610,476 -- 1,860,104 --
------------- ------------- ------------- -------------
Units outstanding, by class:
Standard units ............................................... 203,221 -- 139,443 --
Enhanced units:
20 bp reduced .............................................. 246,969 -- 46,149 --
40 bp reduced .............................................. 1,160,286 -- 1,674,512 --
------------- ------------- ------------- -------------
Accumulation units end of period ................................ 1,610,476 -- 1,860,104 --
------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................. $ 1.807351 $ 1.742617 $ 1.053624 $ --
Enhanced unit:
20 bp reduced ............................... 1.856681 1.786658 1.056406 --
40 bp reduced ............................... 1.909470 1.833793 -- --
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................. $ 1.306897 $ -- $ 1.538200 $ --
Enhanced unit:
20 bp reduced ............................... 1.310337 -- 1.542278 --
40 bp reduced ............................... 1.313858 -- 1.546416 --
</TABLE>
<PAGE> 78
32 FINANCIAL STATEMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
AMERICAN GENERAL VANGUARD LIFESTRATEGY
MODERATE GROWTH LIFESTYLE CONSERVATIVE GROWTH FUND -
FUND - DIVISION 49 DIVISION 54
----------------------------- --------------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE PERIOD
YEAR ENDED AUGUST 26, 1998 YEAR ENDED SEPTEMBER 22, 1998
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
------------ --------------- ------------ ------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ........................................... $ 920,304 $ 19,912 $ 132,404 $ --
Net realized gain (loss) on investments ......................... 83,407 -- (924) --
Capital gains distributions from mutual funds ................... 389,591 -- 35,147 --
Net unrealized appreciation (depreciation)
of investments during the period .............................. 497,038 925,696 68,926 --
------------ ------------ ------------ ------------
Increase in net assets resulting from operations ........... 1,890,340 945,608 235,553 --
------------ ------------ ------------ ------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 4,916,637 -- 3,578,560 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. (119,332) -- (181,467) --
Annuity benefit payments ........................................ -- -- -- --
Amounts transferred interdivision, and from (to)
VALIC general account ........................................ (63,592) 5,000,000 1,692,135 --
------------ ------------ ------------ ------------
Increase (decrease) in net assets
resulting from principal transactions .................... 4,733,713 5,000,000 5,089,228 --
------------ ------------ ------------ ------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ......................... 6,624,053 5,945,608 5,324,781 --
NET ASSETS:
Beginning of period ............................................. 5,945,608 -- -- --
------------ ------------ ------------ ------------
End of period ................................................... $ 12,569,661 $ 5,945,608 $ 5,324,781 $ --
------------ ------------ ------------ ------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... -- -- -- --
Purchase payments ............................................... 4,077,444 -- 3,221,062 --
Surrenders ...................................................... (102,891) -- (162,437) --
Transfers - interdivision and from (to) VALIC general account ... (54,577) -- 1,536,786 --
------------ ------------ ------------ ------------
Total units outstanding, end of period .......................... 3,919,976 -- 4,595,411 --
------------ ------------ ------------ ------------
Units outstanding, by class:
Standard units ............................................... 215,575 -- 554,101 --
Enhanced units:
20 bp reduced .............................................. 213,355 -- 375,819 --
40 bp reduced .............................................. 3,491,046 -- 3,665,491 --
------------ ------------ ------------ ------------
Accumulation units end of period ................................ 3,919,976 -- 4,595,411 --
------------ ------------ ------------ ------------
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Accumulation value per unit:
Standard unit ................................................ $ 1.397661 $ -- $ 1.153827 $ --
Enhanced unit:
20 bp reduced .............................................. 1.401340 -- 1.156739 --
40 bp reduced .............................................. 1.405109 -- 1.159659 --
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE> 79
SEPARATE ACCOUNT A 33
<TABLE>
<CAPTION>
VANGUARD LIFESTRATEGY VANGUARD LIFESTRATEGY
GROWTH FUND - MODERATE GROWTH FUND -
DIVISION 52 DIVISION 53
-------------------------------- --------------------------------
FOR THE FOR THE PERIOD FOR THE FOR THE PERIOD
YEAR ENDED SEPTEMBER 22, 1998 YEAR ENDED SEPTEMBER 22, 1998
DECEMBER 31, TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1999 1998 1999 1998
------------- ------------------ ------------- ------------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ........................................... $ 308,508 $ -- $ 611,113 $ --
Net realized gain (loss) on investments ......................... 57,727 -- 29,492 --
Capital gains distributions from mutual funds ................... 177,605 -- 218,753 --
Net unrealized appreciation (depreciation)
of investments during the period .............................. 2,002,755 -- 1,470,942 --
------------- ----------- ------------- -----------
Increase in net assets resulting from operations ........... 2,546,595 -- 2,330,300 --
------------- ----------- ------------- -----------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 16,026,935 -- 25,276,661 --
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. (202,105) -- (684,329) --
Annuity benefit payments ........................................ -- -- -- --
Amounts transferred interdivision, and from (to)
VALIC general account ........................................ 6,590,799 -- 5,146,081 --
------------- ----------- ------------- -----------
Increase (decrease) in net assets
resulting from principal transactions .................... 22,415,629 -- 29,738,413 --
------------- ----------- ------------- -----------
TOTAL INCREASE (DECREASE) IN NET ASSETS ......................... 24,962,224 -- 32,068,713 --
NET ASSETS:
Beginning of period ............................................. -- -- -- --
------------- ----------- ------------- -----------
End of period ................................................... $ 24,962,224 $ -- $ 32,068,713 $ --
------------- ----------- ------------- -----------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... -- -- -- --
Purchase payments ............................................... 13,077,473 -- 21,705,063 --
Surrenders ...................................................... (161,106) -- (580,717) --
Transfers - interdivision and from (to) VALIC general account ... 5,453,813 -- 4,517,365 --
------------- ----------- ------------- -----------
Total units outstanding, end of period .......................... 18,370,180 -- 25,641,711 --
------------- ----------- ------------- -----------
Units outstanding, by class:
Standard units ............................................... 1,591,689 -- 1,354,406 --
Enhanced units:
20 bp reduced .............................................. 1,468,333 -- 2,152,244 --
40 bp reduced .............................................. 15,310,158 -- 22,135,061 --
------------- ----------- ------------- -----------
Accumulation units end of period ................................ 18,370,180 -- 25,641,711 --
------------- ----------- ------------- -----------
</TABLE>
<TABLE>
<CAPTION>
AGSPC ASSET ALLOCATION TEMPLETON ASSET
FUND - DIVISION 5 ALLOCATION FUND - DIVISION 19
---------------------------- ------------------------------
FOR THE FOR THE FOR THE FOR THE
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
OPERATIONS:
Net investment income ........................................... $ 4,363,782 $ 3,873,507 $ 3,194,984 $ 5,298,721
Net realized gain (loss) on investments ......................... 4,428,516 2,520,862 14,669,025 10,513,951
Capital gains distributions from mutual funds ................... 4,417,585 12,936,405 38,640,994 9,560,576~
Net unrealized appreciation (depreciation)
of investments during the period .............................. 11,930,044 13,072,376 4,197,098 (10,693,322)
------------- ------------- ------------- -------------
Increase in net assets resulting from operations ........... 25,139,927 32,403,150 60,702,101 14,679,926
------------- ------------- ------------- -------------
PRINCIPAL TRANSACTIONS:
Purchase payments ............................................... 21,853,335 16,199,430 36,161,331 55,452,646
Surrenders of accumulation units by terminations,
withdrawals, and maintenance fees ............................. (17,081,242) (12,309,318) (21,505,474) (15,786,958)
Annuity benefit payments ........................................ (19,764) (9,811) (25,689) (22,337)
Amounts transferred interdivision, and from (to)
VALIC general account ........................................ 3,626,725 6,673,714 (75,781,880) (47,069,555)
------------- ------------- ------------- -------------
Increase (decrease) in net assets
resulting from principal transactions .................... 8,379,054 10,554,015 (61,151,712) (7,426,204)
------------- ------------- ------------- -------------
TOTAL INCREASE (DECREASE) IN NET ASSETS ......................... 33,518,981 42,957,165 (449,611) 7,253,722
NET ASSETS:
Beginning of period ............................................. 227,535,157 184,577,992 324,128,007 316,874,285
------------- ------------- ------------- -------------
End of period ................................................... $ 261,054,138 $ 227,535,157 $ 323,678,396 $ 324,128,007
------------- ------------- ------------- -------------
CHANGE IN UNITS OUTSTANDING:
Accumulation units beginning of period .......................... 60,269,168 57,307,351 190,963,707 196,150,946
Purchase payments ............................................... 5,389,575 4,579,044 19,274,982 32,881,580
Surrenders ...................................................... (4,241,930) (3,567,970) (12,264,078) (10,222,721)
Transfers - interdivision and from (to) VALIC general account ... 1,013,569 1,950,743 (41,733,088) (27,846,098)
------------- ------------- ------------- -------------
Total units outstanding, end of period .......................... 62,430,382 60,269,168 156,241,523 190,963,707
------------- ------------- ------------- -------------
Units outstanding, by class:
Standard units ............................................... 61,240,667 60,237,818 137,266,658 190,963,707
Enhanced units:
20 bp reduced .............................................. 673,135 31,350 485,669 --
40 bp reduced .............................................. 516,580 -- 18,489,196 --
------------- ------------- ------------- -------------
Accumulation units end of period ................................ 62,430,382 60,269,168 156,241,523 190,963,707
------------- ------------- ------------- -------------
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ----------- ------------ ------------
<S> <C> <C> <C> <C>
Accumulation value per unit: $ 1.352880 $ -- $ 1.244955 $ --
Standard unit ................................................
Enhanced unit:
20 bp reduced .............................................. 1.356289 -- 1.248092 --
40 bp reduced .............................................. 1.359710 -- 1.251243 --
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1999 1998
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Accumulation value per unit: $ 4.174280 $ 3.772519 $ 2.058095 $ 1.695764
Standard unit ................................................
Enhanced unit:
20 bp reduced .............................................. 4.303891 3.882024 2.102090 --
40 bp reduced .............................................. 4.446999 -- 2.150733 --
</TABLE>
<PAGE> 80
34 NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION
Separate Account A (the "Separate Account"), established by The Variable
Annuity Life Insurance Company ('VALIC") on April 18, 1979, is registered under
the Investment Company Act of 1940 as a unit investment trust. The Separate
Account is comprised of fifty-eight subaccounts or "divisions." Each division,
which represents a variable investment vehicle available only through a VALIC
annuity contract, invests in one of the following mutual funds:
<TABLE>
<S> <C>
American General Series Portfolio Company ("AGSPC"): American Century Ultra Fund (Division 31) (formerly known as
AGSPC Asset Allocation Fund (Division 5) American Century-Twentieth Century Ultra Fund)
AGSPC Capital Conservation Fund (Divisions 1 and 7) Dreyfus Variable Investment Fund - Small Cap
AGSPC Government Securities Fund (Division 8) Portfolio (Division 18)
AGSPC Growth Fund (Division 15) Evergreen Growth and Income Fund - (Division 56)
AGSPC Growth & Income Fund (Division 16) Evergreen Small Cap Value Fund (Division 55) (formerly known as
AGSPC International Equities Fund (Division 11) Evergreen Small Cap Equity Income Fund)
AGSPC International Government Bond Fund (Division 13) Evergreen Value Fund - (Division 57)
AGSPC MidCap Index Fund (Division 4) Dreyfus Founders Growth Fund (Division 30) (formerly known as
AGSPC Money Market Fund (Divisions 2 and 6) Founders Growth Fund)
AGSPC Science & Technology Fund (Division 17) Neuberger Berman Guardian Trust (Division 29)
AGSPC Small Cap Index Fund (Division 14) Putnam Global Growth Fund (Division 28)
AGSPC Social Awareness Fund (Division 12) Putnam New Opportunities Fund (Division 26)
AGSPC Stock Index Fund (Divisions 10A, B, C, and D) Putnam OTC & Emerging Growth Fund (Division 27)
Scudder Growth and Income Fund (Division 21)
American General Series Portfolio Company 3 ("AGSPC 3"): Templeton Foreign Fund (Division 32)
American General Balanced Fund (Division 42) Templeton Variable Products Series Fund:
American General Conservative Growth Templeton Asset Allocation Fund (Division 19)
Lifestyle Fund (Division 50) Templeton International Fund (Division 20)
American General Core Bond Fund (Division 58) T. Rowe Price Small-Cap Stock Fund (Division 51)
American General Domestic Bond Fund (Division 43) Vanguard LifeStrategy Conservative Growth Fund (Division 54)
American General Growth Lifestyle Fund (Division 48) Vanguard LifeStrategy Growth Fund (Division 52)
American General High Yield Bond Fund (Division 60) Vanguard LifeStrategy Moderate Growth Fund (Division 53)
American General International Growth Fund (Division 33) Vanguard Long-Term Corporate Fund (Division 22)
American General International Value Fund (Division 34) Vanguard Long-Term Treasury Fund (Division 23)
American General Large Cap Growth Fund (Division 39) Vanguard Wellington Fund (Division 25)
American General Large Cap Value Fund (Division 40) Vanguard Windsor II Fund (Division 24)
American General Mid Cap Growth Fund (Division 37)
American General Mid Cap Value Fund (Division 38)
American General Moderate Growth Lifestyle Fund (Division 49)
American General Money Market Fund (Division 44)
American General Small Cap Growth Fund (Division 35)
American General Small Cap Value Fund (Division 36)
American General Socially Responsible Fund (Division 41)
American General Strategic Bond Fund (Division 59)
</TABLE>
Divisions 33 through 54 and 58 through 60 became available to contract
holders of the Separate Account effective September 22, 1998. Divisions 55
through 57 became available to contract holders of the Separate Account
effective January 4, 1999.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The assets of the Separate Account are segregated from VALIC's other
assets. The operations of the Separate Account are part of VALIC. The following
is a summary of significant accounting policies consistently followed by the
Separate Account in the preparation of its financial statements.
USE OF ESTIMATES. The financial statements have been prepared in conformity
with accounting principles generally accepted in the United States. The
preparation of financial statements requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
disclosure of contingent assets and liabilities. Ultimate results could differ
from these estimates.
INVESTMENT VALUATION. Investments in mutual funds (the "Funds") are valued
at the net asset (market) value per share at the close of each business day as
reported by each Fund.
<PAGE> 81
NOTES TO FINANCIAL STATEMENTS 35
INVESTMENT TRANSACTIONS. Investment transactions are accounted for on the
trade date. Realized gains and losses on investments are determined on the basis
of identified cost. Capital gain distributions from mutual funds are recorded on
the ex-dividend date and reinvested upon receipt.
INVESTMENT INCOME. Dividend income from mutual funds is recorded on the
ex-dividend date and reinvested upon receipt.
ANNUITY RESERVES. Net purchase payments made by variable annuity contract
owners are accumulated based on the performance of the investments of the
Separate Account until the date the contract owners select to commence annuity
payments. Reserves for annuities on which benefits are currently payable are
provided for based upon estimated mortality and other assumptions, including
provisions for the risk of adverse deviation from assumptions, which were
appropriate at the time the contracts were issued. The 1983(a) Individual
Mortality Table, the Annuity 2000 Mortality Table, and the 1994 Group Annuity
Reserve Mortality Table have been used in the computation of annuity reserves
for currently payable contracts. Participants are able to elect assumed
investment rates between 3.0% and 6.0%, as regulated by the applicable state
laws.
ACCUMULATION UNITS. VALIC offers both standard and enhanced contracts.
These contracts may have different Separate Account charges.
NOTE C -- TRANSACTIONS WITH AFFILIATES
VALIC serves as investment adviser (the "Adviser"), transfer agent, and
accounting services agent to AGSPC 1 and AGSPC 3. American General Investment
Management, L.P., an affiliate of the Adviser, serves as investment sub-adviser
to certain AGSPC 3 mutual funds.
The Separate Account is charged for mortality and expense risk assumed by
VALIC and for distribution and administrative services provided by VALIC. The
standard charge, based on the daily net assets of each division, is assessed
daily based on the following annual rates:
<TABLE>
<CAPTION>
DIVISIONS STANDARD CHARGE
------------------------------------------------------------------------
<S> <C>
10B 0.85% on the first $10 million
0.425% on the next $90 million
0.21% on the excess over $100 million
------------------------------------------------------------------------
1, 2, 4 through 8,
10A, 10C and 10D,
11 through 17, 1.00%
33 through 44,
48 through 50 and
58 through 60
------------------------------------------------------------------------
18 through 32
51 through 57 1.25%
------------------------------------------------------------------------
</TABLE>
Certain mutual funds reimburse VALIC for a portion of the distribution or
administrative costs associated with offering their funds through a VALIC
annuity contract. VALIC, in turn, reduces the Separate Account charge to that
division by the amount of the reimbursement. The expense reduction is credited
daily based on the following annual rates:
<TABLE>
<CAPTION>
DIVISIONS EXPENSE REDUCTION
------------------------------------------------------------------------
<S> <C>
21 through 23,
26 through 30,
32 through 44, 0.25%
48 through 50,
55 through 60
------------------------------------------------------------------------
31 0.20% on the first $75 million
0.25% on the excess over $75 million
------------------------------------------------------------------------
18 0.15%
------------------------------------------------------------------------
</TABLE>
Separate Account charges may be reduced if contracts are issued to certain
types of plans that are expected to result in lower costs to VALIC.
Consequently, each division may offer separate "classes" of units of beneficial
interest reflecting reductions in Separate Account charges.
<PAGE> 82
36 NOTES TO FINANCIAL STATEMENTS
Expenses of VALIC Separate Account A Divisions 10A and 10B, (as defined to
include underlying mutual fund expenses) are limited to the following rates
based on average daily net assets:
<TABLE>
<CAPTION>
DIVISIONS EXPENSE LIMITATIONS
---------------------------------------------------------------------------------
<S> <C>
10A 1.4157% on the first $359,065,787
1.36% on the next $40,934,213
1.32% on the excess over $400 million
---------------------------------------------------------------------------------
10B 0.6966% on the first $25,434,267
0.50% on the next $74,565,733
0.25% on the excess over $100 million
---------------------------------------------------------------------------------
</TABLE>
Accordingly, during the years ended December 31, 1999 and 1998, VALIC
reduced expenses of Division 10B by $94,122 and $82,027, respectively.
A portion of the annual contract maintenance charge is assessed on each
contract (except those relating to Divisions 10A and 10B) by VALIC on the last
day of the calendar quarter in which VALIC receives the first purchase payment,
and in quarterly installments thereafter during the accumulation period.
Maintenance charges assessed totaled $6,506,341 and $5,575,601 for the years
ended December 31, 1999 and 1998, respectively.
VALIC received surrender charges of $6,181,873 and $4,581,641 for the years
ended December 31, 1999 and 1998, respectively. In addition, VALIC received
$46,011 and $4,147 for the year ended December 31, 1999, in sales load on
variable annuity purchase payments for Divisions 10A and 10B, respectively.
VALIC received $53,171 and $6,156 for the year ended December 31, 1998, in sales
load on variable annuity purchase payments for Divisions 10A and 10B,
respectively.
VALIC contributed to the Separate Account $100,000 and $74,900,000 on August
26, 1998 and September 1, 1998, respectively, in order to provide initial
funding for the AGSPC 3 mutual funds. Capital surplus amounts reflected in the
Statements of Net Assets for Divisions 33 through 44, 48 through 50 and 58
through 60 are not subject to contract holder charges since they do not
represent reserves for annuity contracts issued.
NOTE D -- INVESTMENTS
The cost of fund shares is the same for financial reporting and federal
income tax purposes. The following is a summary of fund shares owned as of
December 31, 1999:
<TABLE>
<CAPTION>
UNREALIZED
MARKET APPRECIATION
UNDERLYING FUND DIVISION SHARES PRICE MARKET COST (DEPRECIATION
- ---------------------------------------------- ---------- ----------- -------- ------------- ------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
AGSPC International Equities Fund............. 11 12,681,732 $13.80 $175,007,894 $153,864,816 $ 21,143,078
AGSPC MidCap Index Fund....................... 4 39,427,464 22.24 876,866,818 761,782,279 115,084,539
AGSPC Small Cap Index Fund.................... 14 14,526,817 16.60 241,145,168 228,085,714 13,059,454
AGSPC Stock Index Fund........................ 10A,B,C,D 118,066,893 44.44 5,246,892,687 2,621,261,506 2,625,631,181
AGSPC Growth Fund............................. 15 51,853,516 23.50 1,218,557,601 902,850,565 315,707,036
AGSPC Growth & Income Fund.................... 16 15,306,480 21.99 336,589,500 252,817,396 83,772,104
American Century Ultra Fund................... 31 22,353,284 45.78 1,023,333,380 773,447,526 249,885,854
American General International Growth Fund.... 33 431,454 15.87 6,847,182 4,540,670 2,306,512
American General International Value Fund..... 34 443,411 18.26 8,096,689 4,952,066 3,144,623
American General Large Cap Growth Fund........ 39 1,329,646 16.32 21,699,827 17,193,893 4,505,934
American General Large Cap Value Fund......... 40 405,206 11.04 4,473,480 4,309,106 164,374
American General Mid Cap Growth Fund.......... 37 548,588 12.88 7,065,815 5,898,950 1,166,865
American General Mid Cap Value Fund........... 38 734,556 11.34 8,329,863 8,197,536 132,327
American General Small Cap Growth Fund........ 35 783,183 21.25 16,642,631 10,446,375 6,196,256
American General Small Cap Value Fund......... 36 435,735 10.26 4,470,644 4,378,518 92,126
Dreyfus Variable Investment Fund --
Small Cap Portfolio......................... 18 11,749,941 66.34 779,491,073 597,305,985 182,185,088
Evergreen Growth and Income Fund.............. 56 193 32.23 6,220 5,850 370
Evergreen Small Cap Value Fund................ 55 16 14.77 243 243 -
Evergreen Value Fund.......................... 57 212 20.69 4,388 4,707 (319)
</TABLE>
<PAGE> 83
NOTES TO FINANCIAL STATEMENTS 37
<TABLE>
<CAPTION>
UNREALIZED
MARKET APPRECIATION
UNDERLYING FUND DIVISION SHARES PRICE MARKET COST (DEPRECIATION)
- --------------------------------------------- -------- ---------- ------- --------------- --------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Dreyfus Founders Growth Fund ................ 30 36,634,173 $ 23.87 $ 874,457,709 $ 744,045,046 $ 130,412,663
Neuberger Berman Guardian Trust ............. 29 4,205,603 14.14 59,467,223 72,768,026 (13,300,803)
Putnam Global Growth Fund ................... 28 26,666,641 18.59 495,732,851 350,405,108 145,327,743
Putnam New Opportunities Fund ............... 26 11,157,111 90.96 1,014,850,850 630,466,495 384,384,355
Putnam OTC & Emerging Growth Fund ........... 27 11,652,311 37.01 431,252,004 234,928,422 196,323,582
Scudder Growth and Income Fund .............. 21 9,240,762 26.69 246,635,934 258,757,360 (12,121,426)
T. Rowe Price Small-Cap Stock Fund .......... 51 383,280 22.80 8,738,757 7,730,112 1,008,645
Templeton Foreign Fund ...................... 32 29,989,326 11.22 336,480,225 305,197,182 31,283,043
Templeton International Fund ................ 20 36,732,726 22.25 817,303,148 697,567,268 119,735,880
Vanguard Windsor II Fund .................... 24 29,350,047 24.97 732,870,656 860,734,104 (127,863,448)
American General Balanced Fund .............. 42 806,619 12.34 9,953,676 8,797,929 1,155,747
Vanguard Wellington Fund .................... 25 20,381,425 27.96 569,864,636 610,206,190 (40,341,554)
AGSPC Capital Conservation Fund ............. 1 & 7 6,271,787 9.04 56,696,951 59,937,282 (3,240,331)
AGSPC Government Securities Fund ............ 8 9,791,463 9.53 93,312,643 99,573,538 (6,260,895)
AGSPC International ~Government Bond Fund ... 13 12,944,516 11.52 149,120,828 154,526,420 (5,405,592)
American General Core Bond Fund ............. 58 546,329 9.46 5,168,278 5,453,662 (285,384)
American General Domestic Bond Fund ......... 43 196,208 9.33 1,830,628 1,941,338 (110,710)
American General High Yield Bond Fund ....... 60 573,040 9.75 5,587,119 5,731,184 (144,065)
American General Strategic Bond Fund ........ 59 552,828 9.96 5,506,171 5,531,806 (25,635)
Vanguard Fixed Income Securities Fund:
Long-Term Corporate Fund .................. 22 8,417,206 8.11 68,263,542 76,417,392 (8,153,850)
Long-Term Treasury Fund ................... 23 14,669,704 9.67 141,856,062 159,944,453 (18,088,391)
AGSPC Science & Technology Fund ............. 17 72,283,188 47.13 3,406,706,628 1,882,063,789 1,524,642,83
AGSPC Social Awareness Fund ................. 12 23,981,721 25.81 618,968,226 477,460,805 141,507,421
American General Socially
Responsible Fund .......................... 41 885,926 13.80 12,225,981 10,023,073 2,202,908
AGSPC Money Market Fund ..................... 2 & 6 463,954,740 1.00 463,954,740 463,954,740 --
American General Money Market Fund .......... 44 11,553,720 1.00 11,553,720 11,553,720 --
American General Conservative
Growth Lifestyle Fund ...................... 50 809,972 10.74 8,699,095 9,316,758 (617,663)
American General Growth Lifestyle Fund ...... 48 761,135 13.96 10,625,442 8,437,654 2,187,788
American General Moderate
Growth Lifestyle Fund ..................... 49 994,186 12.60 12,526,733 11,103,999 1,422,734
Vanguard LifeStrategy
Conservative Growth Fund ................. 54 352,263 15.10 5,319,180 5,250,254 68,926
Vanguard LifeStrategy Growth Fund ........... 52 1,163,639 21.41 24,913,522 22,910,767 2,002,755
Vanguard LifeStrategy
Moderate Growth Fund ..................... 53 1,762,720 18.18 32,046,248 30,575,306 1,470,942
AGSPC Asset Allocation Fund ................. 5 17,289,012 15.09 260,891,195 212,925,934 47,965,261
Templeton Asset Allocation Fund ............. 19 13,861,377 23.37 323,940,365 286,019,883 37,920,482
------------- ----- --------------- --------------- --------------
Total .................................... 1,171,895,031 $21,292,842,069 $15,133,600,700 $6,159,241,369
============= ===== =============== =============== ==============
</TABLE>
NOTE E -- FEDERAL INCOME TAXES
VALIC is taxed as a life insurance company under the Internal Revenue Code
and includes the operations of the Separate Account in determining its federal
income tax liability. Under current federal income tax law, the investment
income and capital gains from sales of investments realized by the Separate
Account are not taxable. Therefore, no federal income tax provision has been
made.
<PAGE> 84
38 NOTES TO FINANCIAL STATEMENTS
NOTE F -- SECURITY PURCHASES AND SALES
For the year ended December 31, 1999, the aggregate cost of purchases and
proceeds from sales of investments were:
<TABLE>
<CAPTION>
PURCHASES SALES
-------------- --------------
<S> <C> <C>
AGSPC International Equities Fund Division 11.................................... $ 134,677,751 $ 139,385,819
AGSPC MidCap Index Fund Division 4............................................... 235,122,234 121,903,304
AGSPC Small Cap Index Fund Division 14........................................... 54,587,283 58,450,240
AGSPC Stock Index Fund:..........................................................
Division 10A.................................................................. 24,080,573 77,479,615
Division 10B.................................................................. 3,046,671 7,574,316
Division 10C.................................................................. 626,807,392 82,339,542
Division 10D.................................................................. 4,099,962 10,844,842
AGSPC Growth Fund Division 15.................................................... 88,504,403 118,778,430
AGSPC Growth & Income Fund Division 16........................................... 52,289,506 29,123,818
American Century Ultra Fund Division 31.......................................... 444,783,914 21,596,564
American General International Growth Fund Division 33........................... 946,472 70,990
American General International Value Fund Division 34 ........................... 1,433,853 138,079
American General Large Cap Growth Fund Division 39............................... 14,803,088 658,862
American General Large Cap Value Fund Division 40................................ 1,603,370 268,211
American General Mid Cap Growth Fund Division 37................................. 1,915,167 88,442
American General Mid Cap Value Fund Division 38.................................. 4,571,598 606,656
American General Small Cap Growth Fund Division 35............................... 6,687,388 288,207
American General Small Cap Value Fund Division 36................................ 599,894 142,588
Dreyfus Variable Investment Fund - Small Cap Portfolio Division 18............... 21,111,378 196,910,062
Evergreen Growth and Income Fund Division 56..................................... 11,440 5,621
Evergreen Small Cap Value Fund Division 55....................................... 243 --
Evergreen Value Fund Division 57................................................. 4,708 --
Dreyfus Founders Growth Fund Division 30......................................... 377,694,422 15,816,982
Neuberger Berman Guardian Trust Division 29...................................... 16,757,237 12,416,328
Putnam Global Growth Fund Division 28............................................ 211,644,710 15,117,798
Putnam New Opportunities Fund Division 26........................................ 296,792,660 13,090,798
Putnam OTC & Emerging Growth Fund Division 27.................................... 137,306,910 40,666,703
Scudder Growth and Income Fund Division 21....................................... 31,899,301 36,629,775
T. Rowe Price Small-Cap Stock Fund Division 51 .................................. 8,924,589 1,235,607
Templeton Foreign Fund Division 32............................................... 101,740,948 61,364,564
Templeton International Fund Division 20......................................... 189,502,177 212,566,145
Vanguard Windsor II Fund Division 24............................................. 269,298,579 49,634,770
American General Balanced Fund Division 42 ...................................... 3,866,126 161,950
Vanguard Wellington Fund Division 25............................................. 213,879,566 21,573,138
AGSPC Capital Conservation Fund:
Division 1.................................................................... 539,820 1,229,647
Division 7.................................................................... 8,884,731 13,555,587
AGSPC Government Securities Fund Division 8...................................... 43,737,807 55,270,473
AGSPC International Government Bond Fund Division 13............................. 110,344,428 114,909,023
American General Core Bond Fund Division 58...................................... 397,138 9,568
American General Domestic Bond Fund Division 43.................................. 902,534 234,776
American General High Yield Bond Fund Division 60................................ 669,191 29,912
American General Strategic Bond Fund Division 59 453,036 1,300
Vanguard Long-Term Corporate Fund Division 22.................................... 26,914,873 9,374,775
Vanguard Long-Term Treasury Fund Division 23..................................... 65,677,636 20,627,370
AGSPC Science & Technology Fund Division 17...................................... 858,454,770 65,588,109
AGSPC Social Awareness Fund Division 12.......................................... 133,894,631 15,404,062
American General Socially Responsible Fund Division 41........................... 4,913,557 264,485
AGSPC Money Market Fund:
Division 2.................................................................... 3,989,984 4,006,915
Division 6.................................................................... 533,688,517 340,162,602
American General Money Market Fund Division 44................................... 8,345,963 1,874,721
American General Conservative Growth Lifestyle Fund Division 50.................. 8,807,869 5,415,651
American General Growth Lifestyle Fund Division 48............................... 3,618,201 265,479
American General Moderate Growth Lifestyle Fund Division 49...................... 6,430,264 434,004
Vanguard LifeStrategy Conservative Growth Fund Division 54....................... 5,949,918 698,740
Vanguard LifeStrategy Growth Fund Division 52 ................................... 24,674,642 1,821,602
Vanguard LifeStrategy Moderate Growth Fund Division 53 .......................... 31,808,062 1,262,248
AGSPC Asset Allocation Fund Division 5........................................... 35,282,084 18,243,130
Templeton Asset Allocation Fund Division 19...................................... 62,685,987 81,750,675
-------------- --------------
Total ........................................................................... $5,562,061,156 $2,099,363,620
============== ==============
</TABLE>
<PAGE> 85
SUPPLEMENTAL INFORMATION 39
<TABLE>
<CAPTION>
GROUP PORTFOLIO
UNIT INDEPENDENCE DIRECTOR
PURCHASE IMPACT PLUS 1
DIVISION DIVISION DIVISION DIVISION
-------- -------- ------------ ---------
<S> <C> <C> <C> <C>
INDEX EQUITY FUNDS
AGSPC International Equities Fund .................... -- -- 11 11
AGSPC MidCap Index Fund .............................. -- 4 4 4
AGSPC Small Cap Index Fund ........................... -- -- 14 14
AGSPC Stock Index Fund ............................... 10A, 10B 10D 10C 10C
ACTIVELY MANAGED EQUITY FUNDS
AGSPC Growth Fund .................................... -- -- -- 15
AGSPC Growth & Income Fund ........................... -- -- -- 16
American Century Ultra Fund (formerly known as
American Century-Twentieth Century Ultra Fund) ..... -- -- -- --
American General International Growth Fund ........... -- -- -- --
American General International Value Fund ............ -- -- -- --
American General Large Cap Growth Fund ............... -- -- -- --
American General Large Cap Value Fund ................ -- -- -- --
American General Mid Cap Growth Fund ................. -- -- -- --
American General Mid Cap Value Fund .................. -- -- -- --
American General Small Cap Growth Fund ............... -- -- -- --
American General Small Cap Value Fund ................ -- -- -- --
Dreyfus Variable Investment Fund -
Small Cap Portfolio .............................. -- -- -- 18
Evergreen Growth and Income Fund ..................... -- -- -- --
Evergreen Small Cap Value Fund
(formerly known as the Evergreen Small
Cap Equity Income Fund) .......................... -- -- -- --
Evergreen Value Fund ................................. -- -- -- --
Dreyfus Founders Growth Fund
(formerly known as Founders Growth) .............. -- -- -- --
Neuberger Berman Guardian Trust ...................... -- -- -- --
Putnam Global Growth Fund ............................ -- -- -- --
Putnam New Opportunities Fund ........................ -- -- -- --
Putnam OTC & Emerging Growth Fund .................... -- -- -- --
Scudder Growth and Income Fund ....................... -- -- -- --
T. Rowe Price Small-Cap Stock Fund ................... -- -- -- --
Templeton Foreign Fund ............................... -- -- -- --
Templeton International Fund ......................... -- -- -- 20
Vanguard Windsor II Fund ............................. -- -- -- --
BALANCED FUNDS
American General Balanced Fund ....................... -- -- -- --
Vanguard Wellington Fund ............................. -- -- -- --
</TABLE>
<TABLE>
<CAPTION>
YEAR TO DATE
TOTAL RETURN
PORTFOLIO PORTFOLIO FOR YEAR ENDING
DIRECTOR DIRECTOR DECEMBER 31,
2 PLUS -------------------------
DIVISION DIVISION 1999 1998
--------- ---------- -------- -------
<S> <C> <C> <C> <C>
INDEX EQUITY FUNDS
AGSPC International Equities Fund .................... -- 11 27.88% 17.57%
AGSPC MidCap Index Fund .............................. -- 4 13.78 17.80
AGSPC Small Cap Index Fund ........................... -- 14 20.10 (2.92)
AGSPC Stock Index Fund ............................... 10C 10C 19.37 27.14
ACTIVELY MANAGED EQUITY FUNDS
AGSPC Growth Fund .................................... 15 15 6.33 16.96
AGSPC Growth & Income Fund ........................... -- 16 21.61 13.41
American Century Ultra Fund (formerly known as
American Century-Twentieth Century Ultra Fund) ..... 31 31 40.00 33.14
American General International Growth Fund ........... -- 33 55.45 5.17(a)
American General International Value Fund ............ -- 34 66.59 14.99(a)
American General Large Cap Growth Fund ............... -- 39 34.39 24.08(a)
American General Large Cap Value Fund ................ -- 40 4.52 24.66(a)
American General Mid Cap Growth Fund ................. -- 37 5.60 34.77(a)
American General Mid Cap Value Fund .................. -- 38 21.28 25.47(a)
American General Small Cap Growth Fund ............... -- 35 68.43 34.94(a)
American General Small Cap Value Fund ................ -- 36 (7.27) 16.53(a)
Dreyfus Variable Investment Fund -
Small Cap Portfolio .............................. -- 18 21.80 (4.51)
Evergreen Growth and Income Fund ..................... -- 56 13.29 n/a(c)
Evergreen Small Cap Value Fund
(formerly known as the Evergreen Small
Cap Equity Income Fund) .......................... -- 55 (0.45) n/a(c)
Evergreen Value Fund ................................. -- 57 3.41 n/a(c)
Dreyfus Founders Growth Fund
(formerly known as Founders Growth) .............. 30 30 37.64 23.76
Neuberger Berman Guardian Trust ...................... 29 29 7.36 1.34
Putnam Global Growth Fund ............................ 28 28 63.00 27.48
Putnam New Opportunities Fund ........................ 26 26 67.91 23.12
Putnam OTC & Emerging Growth Fund .................... 27 27 124.57 9.87
Scudder Growth and Income Fund ....................... 21 21 5.09 4.99
T. Rowe Price Small-Cap Stock Fund ................... -- 51 13.33 14.10(b)
Templeton Foreign Fund ............................... 32 32 38.34 (5.82)
Templeton International Fund ......................... -- 20 22.10 7.95
Vanguard Windsor II Fund ............................. 24 24 (6.96) 14.90
BALANCED FUNDS
American General Balanced Fund ....................... -- 42 13.07 17.01(a)
Vanguard Wellington Fund ............................. 25 25 3.11 10.65
</TABLE>
(a) Since August 26, 1998, initial capitalization of the Division. See Note C
to financial statements.
(b) Since September 22, 1998, inception of the Division.
(c) Since January 4, 1999, inception of the Division.
The total returns displayed show value after all management, administration fees
and fund expenses and do not include potential sales charges or maintenance
fees, if applicable. For total return information over a longer period, see the
Portfolio Director Plus prospectus. The performance shown represents past
performance. The principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Past performance does not guarantee future returns.
<PAGE> 86
40 SUPPLEMENTAL INFORMATION
<TABLE>
<CAPTION>
GROUP PORTFOLIO PORTFOLIO PORTFOLIO
UNIT INDEPENDENCE DIRECTOR DIRECTOR DIRECTOR
PURCHASE IMPACT PLUS 1 2 PLUS
DIVISION DIVISION DIVISION DIVISION DIVISION DIVISION
-------- -------- ------------ --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
INCOME FUNDS
AGSPC Capital Conservation Fund ....................... -- 1 7 7 -- 7
AGSPC Government Securities Fund ...................... -- -- 8 8 -- 8
AGSPC International Government Bond Fund .............. -- -- 13 13 13 13
American General Core Bond Fund ....................... -- -- -- -- -- 58
American General Domestic Bond Fund ................... -- -- -- -- -- 43
American General High Yield Bond Fund ................. -- -- -- -- -- 60
American General Strategic Bond Fund .................. -- -- -- -- -- 59
Vanguard Long-Term Corporate Fund (formerly
known as Vanguard Fixed Income Securities
Fund - Long-Term Corporate Fund) .................... -- -- -- -- 22 22
Vanguard Long-Term Treasury Fund (formerly
known as Vanguard Fixed Income Securities
Fund - Long-Term U.S. Treasury Portfolio) ........... -- -- -- -- 23 23
SPECIALTY FUNDS
AGSPC Science & Technology Fund ....................... -- -- -- 17 17 17
AGSPC Social Awareness Fund ........................... -- -- 12 12 12 12
American General Socially Responsible Fund ............ -- -- -- -- -- 41
MONEY MARKET FUNDS
AGSPC Money Market Fund ............................... -- 2 6 6 6 6
American General Money Market Fund .................... -- -- -- -- -- 44
LIFESTYLE FUNDS
American General Conservative Growth Lifestyle Fund ... -- -- -- -- -- 50
American General Growth Lifestyle Fund ................ -- -- -- -- -- 48
American General Moderate Growth Lifestyle Fund ....... -- -- -- -- -- 49
Vanguard LifeStrategy Conservative Growth Fund ........ -- -- -- -- -- 54
Vanguard LifeStrategy Growth Fund ..................... -- -- -- -- -- 52
Vanguard LifeStrategy Moderate Growth Fund ............ -- -- -- -- -- 53
ASSET ALLOCATION FUNDS
AGSPC Asset Allocation Fund ........................... -- 5 5 5 -- 5
Templeton Asset Allocation Fund ....................... -- -- -- 19 -- 19
</TABLE>
<TABLE>
<CAPTION>
YEAR TO DATE
TOTAL RETURN
FOR YEAR ENDING
DECEMBER 31,
-------------------------
1999 1998
----- -----
<S> <C> <C>
INCOME FUNDS
AGSPC Capital Conservation Fund ....................... (1.40)% 6.30%
AGSPC Government Securities Fund ...................... (3.74) 7.86
AGSPC International Government Bond Fund .............. (6.88) 15.92
American General Core Bond Fund ....................... (1.89) 2.92(a)
American General Domestic Bond Fund ................... (3.81) 4.44(a)
American General High Yield Bond Fund ................. 2.17 5.31(a)
American General Strategic Bond Fund .................. 3.06 4.99(a)
Vanguard Long-Term Corporate Fund (formerly
known as Vanguard Fixed Income Securities
Fund - Long-Term Corporate Fund) .................... (7.21) 8.04
Vanguard Long-Term Treasury Fund (formerly
known as Vanguard Fixed Income Securities
Fund - Long-Term U.S. Treasury Portfolio) ........... (9.61) 11.82
SPECIALTY FUNDS 98.96 40.71
AGSPC Science & Technology Fund ....................... 17.46 26.03
AGSPC Social Awareness Fund ........................... 17.19 27.78(a)
American General Socially Responsible Fund ............
MONEY MARKET FUNDS
AGSPC Money Market Fund ............................... 3.71 4.12
American General Money Market Fund .................... 3.98 1.33(a)
LIFESTYLE FUNDS
American General Conservative Growth Lifestyle Fund ... 12.47 16.20(a)
American General Growth Lifestyle Fund ................ 28.99 19.25(a)
American General Moderate Growth Lifestyle Fund .......
Vanguard LifeStrategy Conservative Growth Fund ........ 17.90 18.54(a)
Vanguard LifeStrategy Growth Fund ..................... 6.44 8.40(b)
Vanguard LifeStrategy Moderate Growth Fund ............ 15.82 16.81(b)
10.57 12.59(b)
ASSET ALLOCATION FUNDS
AGSPC Asset Allocation Fund ........................... 10.65 17.19
Templeton Asset Allocation Fund ....................... 21.37 5.07
</TABLE>
(a) Since August 26, 1998, initial capitalization of the Division. See Note C to
financial statements.
(b) Since September 22, 1998, inception of the Division.
The total returns displayed show value after all management, administration
fees and fund expenses and do not include potential sales charges or maintenance
fees, if applicable. For total return information over a longer period, see the
Portfolio Director Plus prospectus. The performance shown represents past
performance. The principal value of an investment will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Past performance does not guarantee future returns.
<PAGE> 87
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- -------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
To the Board of Directors
The Variable Annuity Life Insurance Company
We have audited the accompanying consolidated balance sheets of The
Variable Annuity Life Insurance Company and Subsidiaries as of December 31, 1999
and 1998, and the related consolidated statements of income, changes in
stockholder's equity, comprehensive income, and cash flows for each of the three
years in the period ended December 31, 1999. These financial statements are the
responsibility of the company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. 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
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of The Variable
Annuity Life Insurance Company and Subsidiaries at December 31, 1999 and 1998,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1999, in conformity with
accounting principles generally accepted in the United States.
/s/ ERNST & YOUNG LLP
----------------------------------------
ERNST & YOUNG LLP
Houston, Texas
February 14, 2000
<PAGE> 88
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
CONSOLIDATED BALANCE SHEET
At December 31
In millions, except per share data
<TABLE>
<CAPTION>
1999 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS Investments - Notes 2, 7, 8, 9:
Fixed maturity securities
(amortized cost: $21,797 in 1999 and $21,733 in 1998) $ 21,258 $ 22,878
Equity securities (cost: $182 in 1999 and $176 in 1998) 220 194
Mortgage loans on real estate 1,478 1,213
Real estate 25 21
Policy loans 849 789
Other long-term invested assets 95 59
Short-term investments 94 164
--------------------------------------------------------------------------------------------------
Total investments 24,019 25,318
--------------------------------------------------------------------------------------------------
Investment income receivable 387 370
Cash 26 105
Receivable for securities sold 13 22
Deferred policy acquisition costs - Note 3 1,301 665
Cost of insurance purchased - Note 4 19 22
Due from reinsurer, net 12 13
Other assets 156 120
Assets held in Separate Accounts 21,390 14,712
--------------------------------------------------------------------------------------------------
Total assets $ 47,323 $ 41,347
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES Policy reserves for fixed annuity investment contracts $ 23,441 $ 23,219
Payable for securities purchased -- 41
Remittances not allocated 50 96
Commissions, general expenses and taxes (other than income taxes) 55 38
Other liabilities 140 193
Income tax liabilities - Note 5 284 542
Liabilities related to Separate Accounts 21,390 14,712
--------------------------------------------------------------------------------------------------
Total liabilities 45,360 38,841
- -----------------------------------------------------------------------------------------------------------------
STOCKHOLDER'S Common stock, 5,000,000 shares authorized and 3,575,000 issued
EQUITY and outstanding in 1999 and 1998 - Note 6 4 4
Additional paid-in capital 851 833
Retained earnings 1,395 1,142
Accumulated other comprehensive income (loss) - Note 2 (287) 527
--------------------------------------------------------------------------------------------------
Total stockholder's equity 1,963 2,506
--------------------------------------------------------------------------------------------------
Total liabilities and stockholder's equity $ 47,323 $ 41,347
--------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
2
<PAGE> 89
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME
For the years ended December 31,
In millions
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
REVENUES Premium and other considerations $ 19 $ -- $ --
Surrender charges 15 15 12
Mortality charges 184 135 94
Expense charges 8 7 6
Net investment income - Note 2 1,834 1,811 1,730
Realized investment gains (losses) - Note 2 5 (28) 20
Other income 28 19 17
--------------------------------------------------------------------------------------------------------------
Total revenues 2,093 1,959 1,879
- -------------------------------------------------------------------------------------------------------------------------------
BENEFITS AND Insurance policy benefits 19 -- --
EXPENSES Increase in policy reserves for fixed annuity contracts 1,213 1,296 1,286
Expenses:
Commissions 149 124 111
Salaries 94 71 59
Data processing 63 29 15
Postage and telephone 22 15 12
Sales promotion 11 10 10
Depreciation expense on furniture and equipment 16 10 9
Rent 12 10 8
Taxes, licenses and fees 10 8 7
Printing and supplies 8 7 5
Other expenses 41 61 35
Amortization of deferred policy acquisition costs, net - Note 3 56 55 42
Amortization of cost of insurance purchased, net - Note 4 3 2 --
Policy acquisition costs deferred - Note 3 (196) (160) (138)
--------------------------------------------------------------------------------------------------------------
Total expenses 289 242 175
--------------------------------------------------------------------------------------------------------------
Total costs and expenses 1,521 1,538 1,461
- -------------------------------------------------------------------------------------------------------------------------------
EARNINGS Income before income tax expense 572 421 418
Income tax expense - Note 5 195 137 144
--------------------------------------------------------------------------------------------------------------
Net income $ 377 $ 284 $ 274
--------------------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
- --------------------------------------------------------------------------------
3
<PAGE> 90
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
For the years ended December 31,
In millions, except per share data
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK Balance at beginning and end of year $ 4 $ 4 $ 4
- -------------------------------------------------------------------------------------------------------------------------
ADDITIONAL Balance at beginning of year 833 711 459
PAID-IN-CAPITAL Capital contribution from stockholder 18 122 252
----------------------------------------------------------------------------------------------
Balance at end of year 851 833 711
- -------------------------------------------------------------------------------------------------------------------------
RETAINED Balance at beginning of year 1,142 1,039 1,144
EARNINGS Net income 377 284 274
Dividends paid to stockholder (124) (181) (379)
----------------------------------------------------------------------------------------------
Balance at end of year 1,395 1,142 1,039
- -------------------------------------------------------------------------------------------------------------------------
ACCUMULATED OTHER Balance at beginning of year 527 306 167
COMPREHENSIVE Change in net unrealized gains (losses) on securities (814) 221 139
----------------------------------------------------------------------------------------------
INCOME (LOSS) Balance at end of year (287) 527 306
- -------------------------------------------------------------------------------------------------------------------------
STOCKHOLDER'S
EQUITY Balance at end of year $ 1,963 $ 2,506 $ 2,060
----------------------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
<TABLE>
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
NET INCOME Net income $ 377 $ 284 $ 274
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OTHER Change in net unrealized gains (losses) on securities
COMPREHENSIVE Fair value of fixed maturity securities (1,684) 155 468
INCOME (LOSS) Deferred policy acquisition costs and
cost of insurance purchased 499 172 (251)
Deferred income taxes 351 (124) (78)
-------------------------------------------------------------------------------------------
Change in fixed maturity securities (834) 203 139
Change in equity securities and other 20 18 -
-------------------------------------------------------------------------------------------
Total (814) 221 139
- ----------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE
INCOME (LOSS) Comprehensive income (loss) $ (437) $ 505 $ 413
-------------------------------------------------------------------------------------------
See notes to consolidated financial statements.
</TABLE>
- --------------------------------------------------------------------------------
4
<PAGE> 91
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the years ended December 31,
In millions
<TABLE>
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
OPERATING Net income $ 377 $ 284 $ 274
ACTIVITIES Reconciling adjustments to net cash provided by
operating activities:
Insurance and annuity liabilities 1,213 1,296 1,286
Deferred policy acquisition costs
and cost of insurance purchased (137) (103) (96)
Other, net (74) (44) (51)
------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,379 1,433 1,413
- ----------------------------------------------------------------------------------------------------------------------
INVESTING Investment purchases (28,211) (15,180) (18,403)
ACTIVITIES Investment calls, maturities and sales 27,789 14,732 17,500
Net (increase) decrease in short-term investments 70 (104) (8)
------------------------------------------------------------------------------------------------
Net cash used for investing activities (352) (552) (911)
- ----------------------------------------------------------------------------------------------------------------------
FINANCING Policyholder account deposits 4,251 3,756 3,385
ACTIVITIES Policyholder account withdrawals (2,033) (1,777) (1,427)
Transfers to Separate Accounts (3,218) (2,728) (2,325)
Capital contribution from stockholder 18 122 252
Dividends paid to stockholder (124) (181) (379)
------------------------------------------------------------------------------------------------
Net cash used for financing activities (1,106) (808) (494)
- ----------------------------------------------------------------------------------------------------------------------
NET CHANGE Net increase (decrease) in cash (79) 73 8
IN CASH Cash at beginning of year 105 32 24
------------------------------------------------------------------------------------------------
Cash at end of year $ 26 $ 105 $ 32
------------------------------------------------------------------------------------------------
</TABLE>
See notes to consolidated financial statements.
- -------------------------------------------------------------------------------
5
<PAGE> 92
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1999
In millions, except per share data
1
SIGNIFICANT ACCOUNTING POLICIES
1.1 INTRODUCTION
The Variable Annuity Life Insurance Company (VALIC), an indirect, wholly
owned subsidiary of American General Corporation (AGC), provides tax-deferred
retirement annuities and employer-sponsored retirement plans to employees of
educational, health care, public sector and not-for-profit organizations. VALIC
markets products nationwide through exclusive sales representatives.
VALIC is 100% owned by American General Life Insurance Company (AGL), a
wholly owned subsidiary of AGC Life Insurance Company (AGC Life). AGC Life is a
wholly owned subsidiary of AGC. A summary of the accounting policies followed in
the preparation of the consolidated financial statements is set forth below.
1.2 PREPARATION OF FINANCIAL STATEMENTS
The consolidated financial statements have been prepared in accordance with
generally accepted accounting principles (GAAP) and include the accounts of
VALIC and its wholly owned subsidiaries. All material intercompany transactions
have been eliminated in consolidation.
The preparation of financial statements requires management to make
estimates and assumptions that affect amounts reported in the financial
statements and disclosures of contingent assets and liabilities. Ultimate
results could differ from these estimates.
1.3 ACCOUNTING CHANGES
DERIVATIVES. In 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) 133, "Accounting for
Derivative Instruments and Hedging Activities," which requires all derivative
instruments to be recognized at fair value in the balance sheet. Changes in the
fair value of a derivative instrument will be reported as earnings or other
comprehensive income, depending upon the intended use of the derivative
instrument. VALIC will adopt SFAS 133 on January 1, 2001. VALIC does not expect
adoption to have a material impact on the consolidated results of operation or
financial position.
1.4 INVESTMENTS
FIXED MATURITY AND EQUITY SECURITIES. At year end, all fixed maturity and
equity securities are classified as available-for-sale and recorded at fair
value. After adjusting related balance sheet accounts as if the unrealized gains
(losses) had been realized, the net adjustment is recorded in accumulated other
comprehensive income (loss) within stockholder's equity. If the fair value of a
security classified as available-for-sale declines below its cost and this
decline is considered to be other than temporary, the security's amortized cost
is reduced to its fair value, and the reduction is recorded as a realized loss.
Beginning in 1998, VALIC held trading securities at various times and
reported them at fair value. VALIC held no trading securities at December 31,
1999 or 1998. Realized gains (losses) related to trading securities are included
in net investment income; however, trading securities did not have a material
effect on net investment income in 1999 or 1998.
MORTGAGE LOANS. Mortgage loans are reported at amortized cost, net of an
allowance for losses. The allowance covers estimated losses based on our
assessment of risk factors such as potential non-payment or non-monetary
default. The allowance is primarily based on a loan-specific review.
VALIC considers loans to be impaired when collection of all amounts due
under the contractual terms is not probable. VALIC generally looks to the
underlying collateral for repayment of these loans. Therefore, impaired loans
are reported at the lower of amortized cost or fair value of the underlying
collateral, less estimated cost to sell.
POLICY LOANS. Policy loans are reported at unpaid principal balance.
INVESTMENT INCOME. Interest on fixed maturity securities and performing
mortgage loans is recorded as income when earned and is adjusted for any
amortization of premium or discount. Interest on delinquent mortgage loans is
recorded as income when received. Dividends are recorded as income on
ex-dividend dates.
REALIZED INVESTMENT GAINS (LOSSES). Realized investment gains (losses) are
recognized using the specific identification method.
1.5 DERIVATIVES RELATED TO INVESTMENTS
VALIC's use of derivative financial instruments is generally limited to
interest rate and currency swap agreements, and options to enter into interest
rate swap agreements (call swaptions). VALIC accounts for its derivative
financial instruments as hedges.
INTEREST RATE AND CURRENCY SWAP AGREEMENTS. Interest rate swap agreements
are used to convert specific investment securities from a floating-rate to a
fixed-rate basis, or vice versa. Currency swap agreements are used to convert
cash flows from specific investment securities denominated in foreign currencies
into U.S. dollars at specified exchange rates, and to hedge against currency
rate fluctuations on anticipated security purchases.
The difference between amounts paid and received on swap agreements is
recorded on an accrual basis as an adjustment to investment income over the
periods covered by the agreements. The related amount payable to or receivable
from counterparties is included in other liabilities or assets.
- --------------------------------------------------------------------------------
6
<PAGE> 93
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
In millions
1.5 DERIVATIVES RELATED TO INVESTMENTS-(CONTINUED)
The fair values of swap agreements are recognized in the consolidated
balance sheet if they hedge investments carried at fair value or if they hedge
anticipated purchases of such investments. In this event, changes in the fair
value of a swap agreement are reported in accumulated other comprehensive income
included in stockholder's equity, consistent with the treatment of the related
investment security.
For swap agreements hedging anticipated investment purchases, the net swap
settlement amount or unrealized gain or loss is deferred and included in the
measurement of the anticipated transaction when it occurs.
Swap agreements generally have terms of two to ten years. Any gain or loss
from early termination of a swap agreement is deferred and amortized into income
over the remaining term of the related investment. If the underlying investment
is extinguished or sold, any related gain or loss on swap agreements is
recognized in income.
SWAPTIONS. Options to enter into interest rate swap agreements are used to
limit VALIC's exposure to reduced spreads between investment yields and interest
crediting rates should interest rates decline significantly over prolonged
periods.
During prolonged periods of decreasing interest rates, the spread between
investment yields and interest crediting rates may be reduced as a result of
minimum rate guarantees on certain insurance and annuity contracts, which limit
VALIC's ability to reduce interest crediting rates. Call swaptions, which allow
VALIC to enter into interest rate swap agreements to receive fixed rates and pay
lower floating rates, effectively maintain the spread between investment yields
and interest crediting rates during such periods.
During prolonged periods of increasing interest rates, the spread between
investment yields and interest crediting rates may be reduced as a result of
VALIC's decision to increase interest crediting rates to limit surrenders. Put
swaptions, which allow VALIC to enter into interest rate swap agreements to pay
fixed rates and receive higher floating rates, effectively maintain the spread
between investment yields and interest crediting rates during such periods.
Premiums paid to purchase swaptions are included in investments and are
amortized to net investment income over the exercise period of the swaptions. If
a swaption is terminated, any gain is deferred and amortized to insurance and
annuity benefits over the expected life of the insurance and annuity contracts
and any unamortized premium is charged to income. If a swaption ceases to be an
effective hedge, any gain or loss is recognized in income.
1.6 DEFERRED POLICY ACQUISITION COSTS (DPAC)
Certain costs of writing an insurance policy, including commissions,
underwriting and marketing expenses, are deferred and reported as DPAC. DPAC is
charged to expense in relation to the estimated gross profits of the insurance
contracts, including realized gains (losses).
DPAC is adjusted for the impact on estimated future gross profits as if net
unrealized gains (losses) on securities had been realized at the balance sheet
date. The impact of this adjustment is included in accumulated other
comprehensive income within stockholder's equity.
VALIC reviews the carrying value of DPAC on at least an annual basis.
Management considers estimated future gross profit margins as well as expected
mortality, interest earned and credited rates, persistency, and expenses in
determining whether the carrying amount is recoverable. Any amounts deemed
unrecoverable are charged to expense.
1.7 COST OF INSURANCE PURCHASED (CIP)
The cost assigned to certain acquired insurance contracts in force at the
acquisition date is reported as CIP. Interest is accreted on the unamortized
balance of CIP at rates ranging from 5.0% to 5.9% for both 1998 and 1999. CIP is
charged to expense and adjusted for the impact of net unrealized gains (losses)
on securities in the same manner as DPAC. VALIC reviews the carrying amount of
CIP on at least an annual basis using the same methods used to evaluate DPAC.
1.8 SEPARATE ACCOUNTS
Separate Accounts are assets and liabilities associated with certain
contracts, principally annuities for which the investment risk lies solely with
the holder of the contract rather than VALIC. Consequently, VALIC's liability
for these accounts equals the value of the account's assets. Investment income,
realized investment gains (losses) and policyholder account deposits and
withdrawals related to Separate Accounts are excluded from the consolidated
statements of income and cash flows. Assets held in the Separate Accounts
consist primarily of shares in mutual funds, which are carried at fair value,
based on the quoted net asset value per share of the funds.
1.9 POLICY RESERVES
Net deposits made by fixed annuity policyholders are accumulated at
interest rates guaranteed by VALIC plus excess interest credited at the sole
discretion of the Board of Directors until benefits are payable. Reserves for
deferred annuities (accumulation phase) are equivalent to the policyholders'
account values. Reserves for annuities on which benefits are currently payable
(annuity payout phase) are provided based upon estimated mortality and other
assumptions, including provisions for the risk of adverse deviation from
assumptions, which were appropriate at the time the contracts were issued. The
1971 Individual or Group Annuity Mortality Tables, the 1983a Table, the Annuity
2000 Table, and the GAR 94 Table have been used to provide for future annuity
benefits in the annuity payout phase. Interest rates used in determining
reserves for policy benefits during both the accumulation and annuity payout
phases range from 3.5% to 13.5%.
- --------------------------------------------------------------------------------
7
<PAGE> 94
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
In millions
1.10 RECOGNITION OF REVENUES AND COSTS
Most receipts for annuities are classified as deposits instead of revenues.
Revenues for these contracts consist of mortality, expense, and surrender
charges. For limited-payment contracts, net premiums are recorded as revenue.
1.11 INCOME TAXES
Deferred tax assets and liabilities are established for temporary
differences between the financial reporting basis and the tax basis of assets
and liabilities, at the enacted tax rates expected to be in effect when the
temporary differences reverse. The effect of a tax rate change is recognized in
income in the period of enactment. State income taxes are included in income tax
expense.
A valuation allowance for deferred tax assets is provided if all or some
portion of the deferred tax asset may not be realized. An increase or decrease
in the valuation allowance that results from a change in circumstances that
causes a change in judgment about the realizability of the related deferred tax
asset is included in income. A change related to fluctuations in fair value of
available-for-sale fixed maturity securities is included in accumulated other
comprehensive income in stockholder's equity.
1.12 STATUTORY ACCOUNTING
State insurance laws and regulations prescribe accounting practices for
calculating statutory net income and equity of insurance companies. In addition,
state regulators may permit statutory accounting practices that differ from
prescribed practices. The use of such permitted practices did not have a
material effect on VALIC's statutory equity or net income at December 31, 1999,
1998, and 1997, or for the years then ended.
Statutory accounting practices differ from GAAP. Significant differences
were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------
<S> <C> <C> <C>
Statutory net income $ 256 $ 170 $ 238
Change in DPAC and CIP 137 103 96
Investment valuation
differences 21 48 --
Policy reserve adjustments 42 67 (5)
Deferred income taxes (58) (57) (27)
Other, net (21) (47) (28)
- -----------------------------------------------------------------
GAAP net income $ 377 $ 284 $ 274
- -----------------------------------------------------------------
Statutory equity $ 1,331 $ 1,237 $ 1,189
Asset valuation reserve 272 230 188
Investment valuation
differences* (550) 1,128 970
DPAC and CIP 1,320 687 392
Non-admitted assets 104 72 35
Policy reserve adjustments (92) (134) (187)
Deferred income taxes (266) (556) (375)
Other, net (156) (158) (152)
- -----------------------------------------------------------------
GAAP equity $ 1,963 $ 2,506 $ 2,060
- -----------------------------------------------------------------
</TABLE>
* Primarily GAAP unrealized gains (losses) on securities
1.13 COINSURANCE TRANSACTION
On May 21, 1998, VALIC completed the acquisition of a block of individual
annuity business in a coinsurance transaction for a cost of $24 million. This
transaction increased assets and insurance and annuity liabilities by $688
million.
2
INVESTMENTS
2.1 INVESTMENT INCOME
Income by type of investment was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------
<S> <C> <C> <C>
Non-affiliated fixed
maturity securities $1,670 $1,664 $1,563
Affiliated fixed
maturity securities 2 3 3
Equity securities 15 -- --
Mortgage loans on
real estate 104 113 124
Other 71 63 53
- ------------------------------------------------------------------
Gross investment income 1,862 1,843 1,743
Investment expense 28 32 13
- ------------------------------------------------------------------
Net investment income $1,834 $1,811 $1,730
- ------------------------------------------------------------------
</TABLE>
There were no investments during 1999 and 1998 that did not produce
investment income. The carrying value of investments that produced no investment
income during 1997 totaled $12 million or 0.05% of total invested assets. The
ultimate disposition of these assets is not expected to have a material effect
on VALIC's consolidated results of operations or financial position.
Derivative financial instruments related to investment securities did not
have a material effect on net investment income in any of the three years ended
December 31, 1999.
2.2 REALIZED INVESTMENT GAINS (LOSSES)
Realized investment gains (losses) were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturity securities
Gross gains $ 101 $ 14 $ 35
Gross losses (86) (50) (29)
- -------------------------------------------------------------------
Total fixed maturity
securities 15 (36) 6
- -------------------------------------------------------------------
Mortgage loans on real estate (4) 9 21
Real estate -- 7 4
Other long-term investments 2 -- --
DPAC amortization and
investment expense (8) (8) (11)
- -------------------------------------------------------------------
Realized investment gains
(losses) before taxes 5 (28) 20
Income tax expense (benefit) 2 (10) 7
- -------------------------------------------------------------------
Net realized investment
gains (losses) $ 3 $ (18) $ 13
- -------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
8
<PAGE> 95
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
In millions
- --------------------------------------------------------------------------------
2.3 FIXED MATURITY AND EQUITY SECURITIES
VALUATION. Amortized cost and fair value of fixed maturity and equity
securities at December 31 were as follows:
<TABLE>
<CAPTION>
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
----------------- ---------------------- ----------------------- -----------------
1999 1998 1999 1998 1999 1998 1999 1998
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury securities and
obligations of U.S. government
corporations and agencies $ 159 $ 299 $ 10 $ 38 $ (1) $ -- $ 168 $ 337
Obligations of states and
political subdivisions 105 56 -- 3 (7) -- 98 59
Debt securities issued by
foreign governments 134 232 3 17 -- -- 137 249
Corporate securities 16,584 16,153 122 934 (639) (73) 16,067 17,014
Mortgage-backed securities 4,774 4,948 31 227 (58) (1) 4,747 5,174
Affiliated fixed maturity securities 27 25 -- -- -- -- 27 25
Redeemable preferred stock 14 20 -- -- -- -- 14 20
- --------------------------------------------------------------------------------------------------------------------------------
Total fixed maturity securities $21,797 $21,733 $ 166 $ 1,219 $ (705) $ (74) $21,258 $22,878
- --------------------------------------------------------------------------------------------------------------------------------
Equity securities $ 182 $ 176 $ 38 $ 18 $ -- $ -- $ 220 $ 194
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
2.3 FIXED MATURITY AND EQUITY SECURITIES- (CONTINUED)
MATURITIES. The contractual maturities of fixed maturity securities at
December 31, 1999 were as follows:
<TABLE>
<CAPTION>
Amortized Fair
Cost Value
- ------------------------------------------------------------
<S> <C> <C>
Fixed maturity securities, excluding
mortgage-backed securities, due
In one year or less $ 600 $ 602
In years two through five 4,558 4,576
In years six through ten 6,584 6,383
After ten years 5,281 4,950
Mortgage-backed securities 4,774 4,747
- ------------------------------------------------------------
Total fixed maturity securities $ 21,797 $21,258
- ------------------------------------------------------------
</TABLE>
Actual maturities may differ from contractual maturities since borrowers
may have the right to call or prepay obligations. Corporate requirements and
investment strategies may result in the sale of investments before maturity.
2.4 NET UNREALIZED GAINS (LOSSES) ON SECURITIES
Net unrealized gains (losses) on fixed maturity and equity securities
included in accumulated other comprehensive income (loss) at December 31 were as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------
<S> <C> <C> <C>
Gross unrealized gains $ 204 $ 1,237 $ 1,011
Gross unrealized losses (705) (74) (21)
DPAC adjustments 159 (340) (512)
Deferred federal income taxes 55 (296) (172)
- ------------------------------------------------------------
Net unrealized gains
(losses) on securities $ (287) $ 527 $ 306
- ------------------------------------------------------------
</TABLE>
2.5 MORTGAGE LOANS ON REAL ESTATE
DIVERSIFICATION. Diversification of the geographic location and type of
property collateralizing mortgage loans reduces the concentration of credit
risk. For new loans, VALIC requires loan-to-value ratios of 75% or less, based
on management's credit assessment of the borrower.
At December 31 the mortgage loan portfolio was distributed as follows:
<TABLE>
<CAPTION>
1999 1998
- ---------------------------------------------
<S> <C> <C>
Geographic distribution:
Atlantic $ 656 $ 645
Pacific and Mountain 377 328
Central 459 252
Allowance for losses (14) (12)
- ---------------------------------------------
Total mortgage loans $ 1,478 $ 1,213
- ---------------------------------------------
Property type:
Office $ 577 $ 467
Retail 512 359
Industrial 265 250
Apartments 106 94
Residential and other 32 55
Allowance for losses (14) (12)
- ---------------------------------------------
Total mortgage loans $ 1,478 $ 1,213
- ---------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
9
<PAGE> 96
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
In millions
2.5 MORTGAGE LOANS ON REAL ESTATE - (CONTINUED)
ALLOWANCE. Activity in the allowance for mortgage loan losses was as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ----------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $ 12 $ 21 $ 44
Provision for (recovery of)
mortgage loan losses 4 (7) (18)
Deductions (2) (2) (5)
- ----------------------------------------------------------
Balance at December 31 $ 14 $ 12 $ 21
- ----------------------------------------------------------
</TABLE>
IMPAIRED LOANS. Impaired mortgage loans were $17 million, $13 million, and
$28 million at December 31, 1999, 1998, and 1997, respectively. The average
investment in impaired loans was $15 million, $20 million, and $37 million at
December 31, 1999, 1998, and 1997, respectively. Interest income related to
impaired loans was $0 for 1999 and 1998, and $3 million in 1997.
2.6 CASH FLOWS FROM INVESTING ACTIVITIES
Uses of cash for investment purchases were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturity securities $ 10,823 $ 5,469 $ 5,175
Other 17,388 9,711 13,228
- ------------------------------------------------------------
Total $ 28,211 $ 15,180 $ 18,403
- ------------------------------------------------------------
</TABLE>
Sources of cash from investment dispositions and repayments were as
follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------
<S> <C> <C> <C>
Fixed maturity securities $ 10,829 $ 4,444 $ 4,224
Mortgage loans on
real estate 133 241 299
Equity securities 42 8 3
Real estate 4 17 22
Other 16,781 10,022 12,952
- ------------------------------------------------------------
Total $ 27,789 $ 14,732 $ 17,500
- ------------------------------------------------------------
</TABLE>
3
DEFERRED POLICY ACQUISITION COSTS (DPAC)
Activity in DPAC was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $ 665 $ 392 $ 558
Deferrals:
Commissions 90 83 77
Other acquisition costs 106 77 61
Amortization:
Accretion of interest 78 73 65
Operating earnings (134) (128) (107)
Offset to realized gains (3) (4) (11)
Effect of net unrealized
(gains) losses on securities 499 172 (251)
- -----------------------------------------------------------------
Balance at December 31 $ 1,301 $ 665 $ 392
- -----------------------------------------------------------------
</TABLE>
4
COST OF INSURANCE PURCHASED (CIP)
Activity in CIP was as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -----------------------------------------------------------
<S> <C> <C> <C>
Balance at January 1 $ 22 $ -- $ --
Additions from acquisitions -- 24 --
Accretion of interest 1 1 --
Amortization (4) (3) --
- -----------------------------------------------------------
Balance at December 31 $ 19 $ 22 $ --
- -----------------------------------------------------------
</TABLE>
CIP amortization, net of accretion, expected to be recorded in each of the
next five years is $3 million, $2 million, $2 million, $2 million, and $1
million.
5
INCOME TAXES
5.1 TAX-SHARING AGREEMENT
VALIC, combined with its Separate Accounts, is taxed as a life insurance
company. VALIC and the Separate Accounts are included in the consolidated life
insurance company tax return of AGC. VALIC participates in a tax-sharing
agreement with the other companies included in the consolidated return. Under
this agreement, tax payments are made to AGC as if the companies filed separate
tax returns and companies incurring operating losses and/or capital losses are
reimbursed for the use of these losses by the consolidated return group.
5.2 TAX LIABILITIES
Components of income tax liabilities and assets at December 31 were as
follows:
<TABLE>
<CAPTION>
1999 1998
- ----------------------------------------------------------------------
<S> <C> <C>
Current tax liabilities (assets) $ 18 $ (14)
- ----------------------------------------------------------------------
Deferred tax liabilities, applicable to:
Basis differential of investments 31 438
DPAC and CIP 451 230
Other 40 32
- ----------------------------------------------------------------------
Total deferred tax liabilities 522 700
- ----------------------------------------------------------------------
Deferred tax assets, applicable to:
Policy reserves (140) (134)
Basis differential of investments (176) (2)
Other (8) (8)
- ----------------------------------------------------------------------
Gross deferred tax assets (324) (144)
Valuation allowance 68 --
- ----------------------------------------------------------------------
Total deferred tax assets, net (256) (144)
- ----------------------------------------------------------------------
Net deferred tax liabilities 266 556
- ----------------------------------------------------------------------
Total income tax liabilities $ 284 $ 542
- ----------------------------------------------------------------------
</TABLE>
The 1999 deferred tax asset applicable to basis differential of investments
was due to unrealized losses on securities. Since a portion of this deferred tax
asset may not be realized, a valuation allowance of $68 million was provided at
December 31, 1999. This valuation allowance had no income statement impact.
- --------------------------------------------------------------------------------
10
<PAGE> 97
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- -------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
In millions
5.3 TAX EXPENSE
Components of income tax expense were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 133 $ 78 $ 114
State 4 2 3
- ------------------------------------------------------------------------------
Total current income tax expense 137 80 117
- ------------------------------------------------------------------------------
Deferred, applicable to:
DPAC 48 35 29
Policy reserves (6) 4 (15)
Basis differential of investments 8 13 4
Other, net 8 5 9
- ------------------------------------------------------------------------------
Total deferred income tax expense 58 57 27
- ------------------------------------------------------------------------------
Income tax expense $ 195 $ 137 $ 144
- ------------------------------------------------------------------------------
</TABLE>
A reconciliation between the federal income tax rate and the effective tax
rate follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal income tax rate 35% 35% 35%
Income tax expense at applicable rate $ 200 $ 147 $ 146
Dividends received deduction (13) (8) (5)
Tax-exempt interest (ESOP) (2) (3) (4)
State income taxes 5 4 4
Other items 5 (3) 3
- ------------------------------------------------------------------------------
Income tax expense $ 195 $ 137 $ 144
- ------------------------------------------------------------------------------
</TABLE>
Income taxes paid were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Federal $ 99 $ 93 $ 106
State 1 3 3
- -------------------------------------------------------------------------------
</TABLE>
6
CAPITAL STOCK
VALIC has two classes of capital stock: preferred stock ($1.00 par value
with 2 million shares authorized) that may be issued with such dividend,
liquidation, redemption, conversion, voting and other rights as the Board of
Directors may determine, and common stock ($1.00 par value, 5 million shares
authorized).
VALIC is restricted by state insurance laws as to the amount it may pay as
dividends without prior approval from the Texas Department of Insurance. The
maximum dividend payout which may be made without prior approval in 2000 is
$240 million.
7
DERIVATIVE FINANCIAL INSTRUMENTS
7.1 INTEREST RATE AND CURRENCY SWAP AGREEMENTS
Interest rate and currency swap agreements related to investment
securities at December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
Interest rate swap agreements
to pay fixed rate
Notional amount $ 132 $ 332
Average receive rate 6.72 % 5.97%
Average pay rate 6.52 5.37
- -------------------------------------------------------------------------------------
Currency swap agreements (receive U.S. $/pay Canadian $)
Notional amount (in U.S. $) $108 $ 108
Average exchange rate 1.50 1.50
- -------------------------------------------------------------------------------------
Currency swap agreements (receive U.S. $/pay Australian $)
Notional amount (in U.S. $) $ 23 $ --
Average exchange rate 1.85 --
- -------------------------------------------------------------------------------------
</TABLE>
7.2 SWAPTIONS
Swaptions at December 31 were as follows:
<TABLE>
<CAPTION>
1999 1998
- -------------------------------------------------------------------------------------
<S> <C> <C>
Call swaptions
Notional amount $ 2 $ 950
Average strike rate 4.63% 4.07%
- -------------------------------------------------------------------------------------
Put swaptions
Notional amount $ 1 $ 690
Average strike rate 8.50% 8.33%
- -------------------------------------------------------------------------------------
</TABLE>
The swaptions outstanding at December 31, 1999 expire in 2000. Should the
strike rates remain below market rates (for call swaptions) and above market
rates (for put swaptions), the swaptions will expire and VALIC's exposure would
be limited to the premiums paid. These premiums were immaterial.
7.3 CREDIT AND MARKET RISK
Derivative financial instruments expose VALIC to credit risk in the event
of nonperformance by counterparties. VALIC limits this exposure by entering
into agreements with counterparties having high credit ratings and by regularly
monitoring the ratings. VALIC does not expect any counterparty to fail to meet
its obligation; however, nonperformance would not have a material impact on
VALIC's consolidated results of operations and financial position.
VALIC's exposure to market risk is mitigated by the offsetting effects of
changes in the value of the agreements and the related items being hedged.
- -------------------------------------------------------------------------------
11
<PAGE> 98
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
In millions
8
FAIR VALUE OF FINANCIAL INSTRUMENTS
Carrying amounts and fair values for certain of VALIC's financial
instruments at December 31 are presented below. Care should be exercised in
drawing conclusions based on fair value, since (1) the fair values presented do
not include the value associated with all VALIC's assets and liabilities,
including the values of underlying customer relationships and distribution
systems, and (2) the reporting of investments at fair value without a
corresponding revaluation of related policyholder liabilities can be
misinterpreted.
<TABLE>
<CAPTION>
1999 1998
---------------------------------- -------------------------------------
FAIR VALUE CARRYING AMOUNT Fair Value Carrying Amount
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Assets
Fixed maturity and equity securities $ 21,478* $ 21,478* $ 23,072 * $ 23,072
Mortgage loans on real estate 1,414 1,478 1,252 1,213
Policy loans 806 849 801 789
Short-term investments 94 94 164 164
Assets held in Separate Accounts 21,390 21,390 14,712 14,712
Liabilities
Insurance investment contracts $ 21,817 $ 23,441 $ 23,314 $ 23,219
Liabilities related to Separate Accounts 21,390 21,390 14,712 14,712
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Includes derivative financial instruments with a fair value of ($4) in
1999 and $19 in 1998.
The following methods and assumptions were used to estimate the fair values
of financial instruments.
FIXED MATURITY AND EQUITY SECURITIES. Fair values of fixed maturity and
equity securities were based on quoted market prices, where available. For
investments not actively traded, fair values were estimated using values
obtained from independent pricing services or, in the case of some private
placements, by discounting expected future cash flows using a current market
rate applicable to yield, credit quality and average life of the investments.
MORTGAGE LOANS ON REAL ESTATE. Fair value of mortgage loans was estimated
primarily using discounted cash flows, based on contractual maturities and
risk-adjusted discount rates.
POLICY LOANS. Fair value of policy loans was estimated using discounted
cash flows and actuarially-determined assumptions, incorporating market rates.
ASSETS AND LIABILITIES RELATED TO SEPARATE ACCOUNTS. Fair value of separate
account assets and liabilities was based on quoted net asset value per share of
the underlying mutual funds.
INSURANCE INVESTMENT CONTRACTS. Fair value of insurance investment
contracts was estimated using cash flows discounted at market interest rates.
9
TRANSACTIONS WITH AFFILIATED COMPANIES
In the ordinary course of business, VALIC is occasionally involved in
transactions with affiliated companies. Transactions involving the purchase or
disposal of securities are consummated at the market value of the security on
the date of the transaction. Transactions with affiliated companies during each
of the three years in the period ended December 31, 1999 were as follows:
Operating expenses include $44 million in 1999, $47 million in 1998, and
$22 million in 1997, for amounts paid to AGC or its subsidiaries primarily for
rent, data processing services, use of facilities and investment expenses.
Interest paid on borrowings from AGC totaled $2 million in 1999, $0 in 1998, and
$1 million in 1997.
On November 4, 1982, VALIC invested $12 million in ~13 1?2% Restricted
Subordinated Note due November 4, 2002 issued by AGC. Principal payments of $1
million were received on November 4, 1999, 1998, and 1997. VALIC recognized $1
million in interest income during 1999, 1998, 1997.
On December 31, 1984, VALIC entered into a $49 million note purchase
agreement with AGC. Under the agreement AGC issued an adjustable rate promissory
note in exchange for VALIC's holdings of AGC preferred stock, common stock and
warrants. The principal amount of the note is due in 20 equal installment
payments commencing December 29, 1985 and concluding December 29, 2004.
Principal payments of $2.4 million were received on December 29, 1999, 1998, and
1997. VALIC recognized $1 million of interest income on the note during 1999,
1998, and 1997.
VALIC paid common stock dividends of $124 million, $34.69 per share; $181
million, $50.63 per share; and $379 million, $106.01 per share, to AGL in 1999,
1998, and 1997, respectively.
- --------------------------------------------------------------------------------
12
<PAGE> 99
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
In millions
9. TRANSACTIONS WITH AFFILIATED COMPANIES - (CONTINUED)
VALIC received capital contributions of $17 million, $122 million, and $250
million from AGL in 1999, 1998, and 1997, respectively.
VALIC acquired bonds of various issuers from American General Life and
Accident Insurance Company at a cost of $22 million and $26 million on January
30, 1997, and April 8, 1997, respectively.
On December 5, 1997, VALIC acquired bonds of various issuers from Western
National Life Insurance Company at a cost of $130 million.
10
COMMENTS AND CONTINGENCIES
VALIC is a defendant in various lawsuits arising in the normal course of
business. VALIC believes it has valid defenses in these lawsuits and is
defending the cases vigorously. VALIC also believes that the total amounts that
would ultimately have to be paid arising from these lawsuits would have no
material effect on its consolidated financial position.
All 50 states have laws requiring solvent life insurance companies to pay
assessments to state guaranty associations to protect the interests of
policyholders of insolvent life insurance companies. The accrued liability for
anticipated assessments was $6 million, $5 million, and $7 million, at December
31, 1999, 1998, and 1997, respectively. The 1999 liability was estimated by
VALIC using the latest information available from the National Organization of
Life and Health Insurance Guaranty Associations. Although the amount accrued
represents VALIC's best estimate of its liability, this estimate may change in
the future. Additionally, changes in state laws could decrease the amount
recoverable against future premium taxes.
11
EMPLOYEE BENEFIT PLANS
11.1 PENSION PLANS
VALIC participates in several employee benefit plans which together cover
substantially all of its employees. One of these plans is a defined benefit
plan. Pension benefits under this plan are based on the participant's
compensation and length of credited service. VALIC's funding policy for this
plan is to contribute annually no more than the maximum amount that can be
deducted for Federal income tax purposes.
The components of pension expense and underlying assumptions for the
defined benefit plan were as follows:
<TABLE>
<CAPTION>
1999 1998 1997
- ------------------------------------------------------------
<S> <C> <C> <C>
Service cost (benefits earned)
during period $ 1 $ 2 $ 1
Interest cost on projected
benefit obligation 2 1 1
Expected return on plan assets (1) (1) --
- ------------------------------------------------------------
Total pension expense $ 2 $ 2 $ 2
- ------------------------------------------------------------
Weighted-average discount rate
on benefit obligation 7.75% 7.00% 7.25%
Rate of increase in
compensation levels 4.25 4.25 4.00
Expected long-term rate of
return on plan assets 10.35 10.25 10.00
- ------------------------------------------------------------
</TABLE>
The following table sets forth the funded status and amounts recognized in
the consolidated balance sheet at December 31, 1999 and 1998 for VALIC's defined
benefit pension plan:
<TABLE>
<CAPTION>
1999 1998
- -----------------------------------------------------------
<S> <C> <C>
Projected benefit obligation $ 22 $ 21
Plan assets at fair value 18 15
- -----------------------------------------------------------
Projected benefit obligation in excess of
plan assets (4) (6)
Unrecognized net gain (loss) (2) 1
- -----------------------------------------------------------
Net pension liability $ (6) $ (5)
- -----------------------------------------------------------
</TABLE>
At December 31, 1999, the plans' assets were invested as follows: (1) 71%
in equity mutual funds managed outside of AGC; (2) 26% in fixed income mutual
funds managed by one of AGC's subsidiaries; (3) 1% in AGC stock; and (4) 1% in
deposit administration insurance contracts issued by AGC subsidiaries.
11.2 POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
VALIC, through AGC, has life, medical, supplemental major medical, and
dental plans for certain retired employees and agents. Most plans are
contributory, with retiree contributions adjusted annually to limit employer
contributions to predetermined amounts. VALIC has reserved the right to change
or eliminate these benefits at any time.
The life plans are fully insured; the retiree medical and dental plans are
unfunded and self-insured. The accrued liability for postretirement benefits was
$2.7 million and $2.4 million at year-end 1999 and 1998, respectively. These
liabilities were discounted at the same rates used for the pension plans.
Postretirement benefit expense in 1999, 1998, and 1997 was immaterial.
- --------------------------------------------------------------------------------
13
<PAGE> 100
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
- --------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED
December 31, 1999
In millions
12
IMPACT OF YEAR 2000 (UNAUDITED)
As of March 10, 2000, all of VALIC's major technology systems, programs,
and applications, including those which rely on third parties, are operating
smoothly following the transition into 2000. No interruptions to normal business
operations have been experienced, including the processing of customer account
data and transactions. VALIC will continue to monitor its technology systems,
including critical third party dependencies, as necessary to maintain Year 2000
readiness. VALIC does not expect any future disruptions, if they occur, to have
a material effect on the results of operations, liquidity, or financial
condition.
Through December 31, 1999, VALIC incurred and expensed pretax costs of $32
million related to Year 2000 readiness, including $5 million in 1999, $20
million in 1998, and $6 million in 1997. In addition, the planned replacement of
certain systems was accelerated as part of the Year 2000 plans. The cost of
these replacement systems was immaterial. VALIC does not anticipate incurring
any significant costs in the future to maintain Year 2000 readiness.
- --------------------------------------------------------------------------------
14
<PAGE> 101
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
UNITS OF INTEREST UNDER GROUP UNIT PURCHASE AND
GROUP VARIABLE ANNUITY CONTRACTS
(GUP AND GTS-VA CONTRACT SERIES)
SEPARATE ACCOUNT A
PART C. OTHER INFORMATION
<TABLE>
<S> <C>
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
</TABLE>
(a) Financial statements
Filed with Part A:
Selected Purchase Unit Data for the Fund for the last ten years
Filed with Part B:
(i) Audited Financial Statements
The Variable Annuity Life Insurance Company
Report of Independent Auditors
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Changes in Stockholder Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
(ii) Audited Financial Statements
The Variable Annuity Life Insurance Company Separate Account A --
Statement of Net Assets
Statement of Operations
Statements of Changes in Net Assets
Notes to Financial Statements
Report of Independent Auditors
All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions, are inapplicable, or the related
information is included in the financial statements and therefore such
schedules have been omitted.
C-1
<PAGE> 102
(b) Exhibits
<TABLE>
<C> <S> <C>
1. -- Resolutions adopted by The Variable Annuity Life
Insurance Company Board of Directors at its Annual
Meeting of April 18, 1979 establishing The Variable
Annuity Life Insurance Company Separate Account A,
incorporated herein by reference to Post-Effective
Statement No. 52 filed with the Securities and Exchange
Commission ("SEC") on April 27, 1998 (File No.
2-32783/811-3240).
2. -- Not Applicable.
3. -- Underwriting Agreement between The Variable Annuity Life
Insurance Company, The Variable Annuity Life Insurance
Company Separate Account A and The Variable Annuity
Marketing Company, incorporated herein by reference to
Post-Effective Amendment No. 52 filed with the SEC on
April 27, 1998 (File No. 2-32783/811-3240).
4(a). -- Form of Group Annuity Contract (Form GTS-VA-1)
incorporated herein by reference to Post-Effective
Amendment No. 52 filed with the SEC on April 27, 1998
(File No. 2-32783/811-3240).
4(b). -- Form of Group Annuity Contract (Form GUP-64) incorporated
herein by reference to Post-Effective Amendment No. 52
filed with the SEC on April 27, 1998 (File No.
2-32783/811-3240).
4(c). -- Form of Group Annuity Contract (Form GUP-74) incorporated
herein by reference to Post-Effective Amendment No. 52
filed with the SEC on April 27, 1998 (File No.
2-32783/811-3240).
5(a). -- Form of Application for Annuity Contract Forms IFA-582,
GFA-582, GUP 64/74 and GTSVA incorporated herein by
reference to Post-Effective Amendment No. 52 filed with
the SEC on April 27, 1998 (File No. 2-32783/811-3240).
5(b). -- Form of Group Master Application for Group Unit Purchase
Annuity (GUP 64/74) incorporated herein by reference to
Post-Effective Amendment No. 52 filed with the SEC on
April 27, 1998 (File No. 2-32783/811-3240).
5(c). -- Form of Endorsement to Nonqualified Deferred Compensation
Plan.
6(a). -- Copy of Amended and Restated Articles of Incorporation of
The Variable Annuity Life Insurance Company effective as
of April 28, 1989 incorporated herein by reference to
Post-Effective Amendment No. 52 filed with the SEC on
April 27, 1998 (File No. 2-32783/811-3240).
6(b). -- Copy of Amendment Number One to Amended and Restated
Articles of Incorporation of The Variable Annuity Life
Insurance Company as amended through April 28, 1989,
effective March 28, 1990 incorporated herein by reference
to Post-Effective Amendment No. 52 filed with the SEC on
April 27, 1998 (File No. 2-32783/811-3240).
6(c). -- Copy of Amended and Restated Bylaws of The Variable
Annuity Life Insurance Company as amended through March
4, 1992 incorporated herein by reference to
Post-Effective Amendment No. 52 filed with the SEC on
April 27, 1998 (File No. 2-32783/811-3240).
7. -- Not Applicable.
8. -- Not Applicable.
9. -- Not Applicable.
10. -- Consent of Independent Auditors.
11. -- Not Applicable.
12. -- Not Applicable.
</TABLE>
C-2
<PAGE> 103
<TABLE>
<C> <S> <C>
13. -- Calculation of standard and nonstandard performance
information, incorporated herein by reference to
Post-Effective Amendment No. 51 filed with the SEC on
April 18, 1997 (File No. 2-32783/811-3240).
14. -- Not Applicable.
15. -- Supplemental Information Form which discloses Section
403(b)(11) withdrawal restrictions as set forth in a
no-action letter issued by the SEC on November 28, 1988.
Such form requires the signed acknowledgement of
participants who purchase Section 403(b) annuities with
regard to these withdrawal restrictions incorporated
herein by reference to Post-Effective Amendment No. 52
filed with the SEC on April 27, 1998 (File No.
2-32783/811-3240).
16(a). -- Copies of manually signed powers of attorney for The
Variable Annuity Life Insurance Company Directors John E.
Arant, Kent E. Barrett and Carl J. Santillo.
16(b). -- Copy of manually signed power of attorney for The
Variable Annuity Life Insurance Company Director, Robert
M. Devlin incorporated herein by reference to
Post-Effective Amendment No. 52 filed with the SEC on
April 27, 1998 (File No. 2-32783/811-3240).
16(c). -- Copy of manually signed powers of attorney for The
Variable Annuity Life Insurance Company Directors, Thomas
L. West, Jr., Bruce R. Abrams, John A. Graf and John P.
Newton incorporated herein by reference to Post-Effective
Amendment No. 52 filed with the SEC on April 27, 1998
(File No. 2-32783/811-3240).
16(d). -- Copy of manually signed powers of attorney for The
Variable Annuity Life Insurance Company Directors Bruce R.
Abrams, Kent E. Barrett, Rebecca G. Campbell, Robert P.
Condon, John A. Graf and Carl J. Santillo.
</TABLE>
C-3
<PAGE> 104
ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR
The directors and principal officers of the Company are set forth below.
The business address of each officer and director is 2929 Allen Parkway,
Houston, Texas 77019.
<TABLE>
<CAPTION>
NAMES AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES HELD WITH DEPOSITOR
------------------- -----------------------------------------
<S> <C>
John A. Graf Chairman, Director, President and Chief Executive Officer
Bruce R. Abrams Director
Kent E. Barrett Director, Executive Vice President and Chief Financial Officer
Rebecca G. Campbell Director and Senior Vice President - Human Resources
Robert P. Condon Director and Executive Vice President - Institutional Marketing
Robert M. Devlin Director
Carl J. Santillo Director and Executive Vice President - Operations
Mary Cavanaugh Executive Vice President - General Counsel and Secretary
Kathleen Adamson Senior Vice President - Customer Service
Michael J. Akers Senior Vice President and Chief Actuary
Dick Baily Senior Vice President - Planning and Expense Management
Michael A. Betts Senior Vice President - Systems
Stephen G. Kellison Senior Vice President - Product Management
Richard J. Lindsay Senior Vice President - Marketing
Robert E. Steele Senior Vice President - Specialty Products
Rosemary Beauvais Vice President - Corporate Technology Services
James D. Bonsall Vice President - Financial Reporting
Gregory S. Broer Vice President - Actuarial
Richard A. Combs Vice President - Actuarial
Neil J. Davidson Vice President - Actuarial
David H. denBoer Vice President - Compliance
Stephen R. Duff Vice President - New Account Acquisitions
Daniel Fritz Vice President - Actuarial
Michael D. Gifford Vice President - Case Development
Joseph P. Girgenti Vice President - Sales Support
Calvin King Vice President - North Houston Customer Care Center
Traci P. Langford Vice President - Account Management
Thomas G. Norwood Vice President - Broker/Dealer
Rembert R. Owen, Jr. Vice President and Assistant Secretary
Stephen J. Poston Vice President - Training and National Accounts
Larry Robinson Vice President - Product Development
Steven D. Rubinstein Vice President - Financial Planning and Reporting
Richard W. Scott Vice President and Chief Investment Officer
Gary N. See Vice President - Group Actuarial
Gregory R. Seward Vice President - Variable Product Accounting
Nancy K. Shumbera Vice President - Applications Development
Brenda Simmons Vice President - Premium Processing
Norman A. Skinrood, Jr. Vice President - Investment Products Group
David Snyder Vice President - Electronic Commerce
Paula F. Snyder Vice President - AGRS Marketing Communications
</TABLE>
C-4
<PAGE> 105
<TABLE>
<CAPTION>
NAMES AND PRINCIPAL
BUSINESS ADDRESS POSITIONS AND OFFICES HELD WITH DEPOSITOR
------------------- -----------------------------------------
<S> <C>
James P. Steele Vice President - Specialty Products
Kenneth R. Story Vice President - Information Technology
Brian R. Toldan Vice President and General Auditor
Michael A. Tompkins Vice President - PR Acquisitions
Peter V. Tuters Vice President and Investment Officer
William A. Wilson Vice President - Government Affairs
Jane E. Bates Chief Compliance Officer
Roger E. Hahn Investment Officer
C. Scott Inglis Investment Officer
Craig R. Mitchell Investment Officer
Julia S. Tucker Investment Officer
W. Lary Mask Real Estate Investment Officer and Assistant Secretary
D. Lynne Walters Tax Officer
</TABLE>
ITEM 26. PERSON CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
The following is a list of American General Corporation's subsidiaries as of
March 31, 2000. All subsidiaries listed are corporations, unless otherwise
indicated. Subsidiaries of subsidiaries are indicated by indentations and unless
otherwise indicated, all subsidiaries are wholly owned. Inactive subsidiaries
are denoted by an asterisk (*).
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- -------------------------------------------------------------------------------- ---------------
<S> <C>
AGC Life Insurance Company ..................................................... Missouri
American General Property Insurance Company(16) ............................. Tennessee
American General Property Insurance Company of Florida ................... Florida
American General Life and Accident Insurance Company(6) ..................... Tennessee
American General Life Insurance Company(7) .................................. Texas
American General Annuity Service Corporation ............................. Texas
American General Life Companies .......................................... Delaware
American General Life Insurance Company of New York ..................... New York
The Winchester Agency Ltd. ............................................ New York
The Variable Annuity Life Insurance Company .............................. Texas
Parkway 1999 Trust(17) ................................................ Maryland
PESCO Plus, Inc(14) ................................................... Delaware
American General Gateway Services, L.L.C(15) .......................... Delaware
The Variable Annuity Marketing Company ................................ Texas
American General Financial Advisors, Inc. ............................. Texas
VALIC Retirement Services Company ..................................... Texas
VALIC Trust Company ................................................... Texas
American General Assignment Corporation of New York ................... New York
The Franklin Life Insurance Company ......................................... Illinois
The American Franklin Life Insurance Company ............................. Illinois
Franklin Financial Services Corporation .................................. Delaware
HBC Development Corporation ................................................. Virginia
Templeton American General Life of Bermuda, Ltd(13) ......................... Bermuda
Western National Corporation ................................................ Delaware
WNL Holding Corp. ........................................................ Delaware
American General Annuity Insurance Company ............................ Texas
American General Assignment Corporation ............................... Texas
American General Distributors, Inc. ................................... Delaware
A.G. Investment Advisory Services, Inc. ............................... Delaware
American General Financial Institutions Group, Inc. ................... Delaware
WNL Insurance Services, Inc. .......................................... Delaware
American General International, Inc. ........................................... Delaware
American General Enterprise Services, Inc. ..................................... Delaware
American General Corporation* .................................................. Delaware
American General Delaware Management Corporation(1) ............................ Delaware
American General Finance, Inc. ................................................. Indiana
</TABLE>
C-5
<PAGE> 106
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- -------------------------------------------------------------------------------- ---------------
<S> <C>
HSA Residential Mortgage Services of Texas, Inc. ............................ Delaware
AGF Investment Corp. ........................................................ Indiana
American General Auto Finance, Inc. ......................................... Delaware
American General Finance Corporation(8) ..................................... Indiana
American General Finance Group, Inc. ..................................... Delaware
American General Financial Services, Inc.(9) .......................... Delaware
The National Life and Accident Insurance Company .................. Texas
Merit Life Insurance Co. ................................................. Indiana
Yosemite Insurance Company ............................................... Indiana
American General Finance, Inc. .............................................. Alabama
A.G. Financial Service Center, Inc. ......................................... Utah
American General Bank, FSB .................................................. Utah
American General Financial Center, Inc.* .................................... Indiana
American General Financial Center, Incorporated* ............................ Indiana
American General Financial Center Thrift Company* ........................... California
Thrift, Incorporated* ....................................................... Indiana
American General Investment Advisory Services, Inc.* .......................... Texas
American General Investment Holding Corporation(10) ............................ Delaware
American General Investment Management, L.P.(10) ............................ Delaware
American General Investment Management Corporation(10) ......................... Delaware
American General Realty Advisors, Inc. ......................................... Delaware
American General Realty Investment Corporation ................................. Texas
AGLL Corporation(11) ........................................................ Delaware
American General Land Holding Company ....................................... Delaware
AG Land Associates, LLC(11) .............................................. California
GDI Holding, Inc.*(12) ...................................................... California
Pebble Creek Service Corporation ............................................ Florida
SR/HP/CM Corporation ........................................................ Texas
Green Hills Corporation ........................................................ Delaware
Knickerbocker Corporation ...................................................... Texas
American Athletic Club, Inc. ................................................ Texas
Pavilions Corporation .......................................................... Delaware
USLIFE Corporation ............................................................. Delaware
All American Life Insurance Company ......................................... Illinois
American General Assurance Company .......................................... Illinois
American General Indemnity Company ....................................... Nebraska
USLIFE Credit Life Insurance Company of Arizona .......................... Arizona
American General Life Insurance Company of Pennsylvania ..................... Pennsylvania
I.C. Cal* ................................................................... California
North Central Administrators, Inc. .......................................... Minnesota
North Central Life Insurance Company ........................................ Minnesota
North Central Caribbean Life, Ltd. ....................................... Nevis
The Old Line Life Insurance Company of America .............................. Wisconsin
The United States Life Insurance Company in the City of New York ............ New York
</TABLE>
C-6
<PAGE> 107
<TABLE>
<CAPTION>
Jurisdiction of
Name Incorporation
- -------------------------------------------------------------------------------- ---------------
<S> <C>
American General Bancassurance Services, Inc. ............................... Illinois
USMRP, Ltd. .............................................................. Turks & Caicos
USLIFE Realty Corporation ................................................... Texas
USLIFE Real Estate Services Corporation ............................... Texas
USLIFE Systems Corporation .................................................. Delaware
</TABLE>
American General Finance Foundation, Inc. is not included on this list. It is a
non-profit corporation.
NOTES
(1) The following limited liability companies were formed in the State of
Delaware on March 28, 1995. The limited liability interests of each are
jointly owned by AGC and AGDMC and the business and affairs of each are
managed by AGDMC:
American General Capital, L.L.C. American General Delaware, L.L.C.
(2) On November 26, 1996, American General Institutional Capital A ("AG Cap
Trust A"), a Delaware business trust, was created. On March 10, 1997,
American General Institutional Capital B ("AG Cap Trust B"), also a
Delaware business trust, was created. Both AG Cap Trust A's and AG Cap
Trust B's business and affairs are conducted through their trustees:
Bankers Trust Company and Bankers Trust (Delaware). Capital securities of
each are held by non-affiliated third party investors and common securities
of AG Cap Trust A and AG Cap Trust B are held by AGC.
(3) On November 14, 1997, American General Capital I, American General Capital
II, American General Capital III, and American General Capital IV
(collectively, the "Trusts"), all Delaware business trusts, were created.
Each of the Trusts' business and affairs are conducted through its
trustees: Bankers Trust (Delaware) and James L. Gleaves (not in his
individual capacity, but solely as Trustee).
(4) On July 10, 1997, the following insurance subsidiaries o AGC became the
direct owners of the indicated percentages of membership units of SBIL B,
L.L.C. ("SBIL B"), a U.S. limited liability company: VALIC (22.6%), FL
(8.1%), AGLA (4.8%) and AGL (4.8%). Through their aggregate 40.3% interest
in SBIL B, VALIC, FL, AGLA and AGL indirectly own approximately 28% of the
securities of SBI, an English company, and 14% of the securities of ESBL,
an English company, SBP, an English company, and SBFL, a Cayman Islands
company. These interests are held for investment purposes only.
(5) Effective December 5, 1997, AGC and Grupo Nacional Provincial, S.A. ("GNP")
completed the purchase by AGC of a 40% interest in Grupo Nacional
Provincial Pensions S.A. de C.V., a new holding company formed by GNP, one
of Mexico's largest financial services companies.
(6) AGLA owns approximately 12% of Whirlpool Financial Corp ("Whirlpool")
preferred stock. AGLA's holdings in Whirlpool represents approximately 3%
of the voting power of the capital
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<PAGE> 108
stock of Whirlpool. The interests in Whirlpool (which is a corporation that
is not associated with AGC) are held for investment purposes only.
(7) AGL owns 100% of the common stock of American General Securities
Incorporated ("AGSI"), a full-service NASD broker-dealer. AGSI, in turn,
owns 100% of the stock of the following insurance agencies:
American General Insurance Agency, Inc. (Missouri)
American General Insurance Agency of Hawaii, Inc. (Hawaii)
American General Insurance Agency of Massachusetts, Inc. (Massachusetts)
In addition, the following agencies are indirectly related to AGSI, but not
owned or controlled by AGSI: American General Insurance Agency of Ohio,
Inc. (Ohio) American General Insurance Agency of Texas, Inc. (Texas)
American General Insurance Agency of Oklahoma, Inc. (Oklahoma) Insurance
Masters Agency, Inc. (Texas)
The foregoing indirectly related agencies are not affiliates or
subsidiaries of AGL under applicable holding company laws, but they are
part of the AGC group of companies under other laws.
(8) American General Finance Corporation is the parent of an additional 42
wholly-owned subsidiaries incorporated in 25 states for the purpose of
conducting its consumer finance operations, in addition to those noted in
footnote 9 below.
(9) American General Financial Services, Inc., is the direct or indirect parent
of an additional 8 wholly-owned subsidiaries incorporated in 5 states and
Puerto Rico for the purpose of conducting its consumer finance operations.
(10) American General Investment Management, L.P., a Delaware limited
partnership, is jointly owned by AGIHC and AGIMC. AGIHC holds a 99% limited
partnership interest, and AGIMC owns a 1% general partnership interest.
(11) AG Land Associates, LLC is jointly owned by AGLH and AGLL. AGLH holds a
98.75% managing interest and AGLL owns a 1.25% managing interest.
(12) AGRI owns a 75% interest in GDI Holding, Inc.
(13) AGCL owns 50% of the common stock of TAG Life. Templeton International,
Inc., a Delaware corporation, owns the remaining 50% of TAG Life. Templeton
International, Inc. is not affiliated with AGC.
(14) VALIC holds 90% of the outstanding common shares of PESC Plus, Inc. The
Florida Education Association/United, a Florida teachers union and
unaffiliated third party, holds the remaining 10% of the outstanding common
shares.
(15) VALIC holds 90% of the outstanding common shares of American General
Gateway Services, L.L.C. Gateway Investment Services, Inc., a California
corporation and an unaffiliated third party, holds the remaining 10% of the
outstanding common shares.
(16) AGPIC is jointly owned by AGCL and AGLA. AGCL owns 51.85% and AGLA owns
48.15% of the issued and outstanding shares of AGPIC.
(17) Parkway 1999 Trust was formed as a Maryland business trust to function as
an investment subsidiary. VALIC owns 100% of its common equity.
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COMPANY ABBREVIATIONS AS USED IN ITEM 26:
<TABLE>
<CAPTION>
State/Jur.
Abb. Company of Domicile
---- ------- -----------
<S> <C> <C>
AAL All American Life Insurance Company .................................... IL
AAth American Athletic Club, Inc. ........................................... TX
AFLI The American Franklin Life Insurance Company ........................... IL
AGAIC American General Annuity Insurance Company ............................. TX
ASGN-NY American General Assignment Corporation of New York .................... NY
AGAC American General Assurance Company ..................................... IL
AGAS American General Annuity Service Corporation ........................... TX
AGBS American General Distributors, Inc. .................................... DE
AGB American General Bank, FSB ............................................. UT
AGC American General Corporation ........................................... TX
AGCL AGC Life Insurance Company ............................................. MO
AGDMC American General Delaware Management Corporation ....................... DE
AGES American General Enterprise Services, Inc. ............................. DE
AGF American General Finance, Inc. ......................................... IN
AGFC American General Finance Corporation ................................... IN
AGFCI American General Financial Center, Incorporated ........................ IN
AGFCT American General Financial Center Thrift Company ....................... CA
AGFG American General Finance Group, Inc. ................................... DE
AGF Inv AGF Investment Corp. ................................................... IN
AGFn A.G. Financial Service Center, Inc. .................................... UT
AGFnC American General Financial Center, Inc. ................................ IN
AGFS American General Financial Services, Inc. .............................. DE
AGFA American General Financial Advisors, Inc. .............................. TX
AGFIG American General Financial Institutions Group, Inc. .................... DE
AGGS American General Gateway Services, L.L.C. .............................. DE
AGIA American General Insurance Agency, Inc. ................................ MO
AGIAH American General Insurance Agency of Hawaii, Inc. ...................... HI
AGIAM American General Insurance Agency of Massachusetts, Inc. ............... MA
AGIAO American General Insurance Agency of Ohio, Inc. ........................ OH
AGIAOK American General Insurance Agency of Oklahoma, Inc. .................... OK
AGIAS A.G. Investment Advisory Services, Inc. ................................ DE
AGIAT American General Insurance Agency of Texas, Inc. ....................... TX
AGII American General International, Inc. ................................... DE
AGIHC American General Investment Holding Corporation ........................ DE
AGIM American General Investment Management, L.P. ........................... DE
AGIMC American General Investment Management Corporation ..................... DE
AGIND American General Indemnity Company ..................................... NE
</TABLE>
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<PAGE> 110
<TABLE>
<CAPTION>
State/Jur.
Abb. Company of Domicile
---- ------- -----------
<S> <C> <C>
AGL American General Life Insurance Company ................................ TX
AGLC American General Life Companies ........................................ DE
AGLA American General Life and Accident Insurance Company ................... TN
AGLH American General Land Holding Company .................................. DE
AGLL AGLL Corporation ....................................................... DE
AGNY American General Life Insurance Company of New York .................... NY
AGPA American General Life Insurance Company of Pennsylvania ................ PA
AGPIC American General Property Insurance Company ............................ TN
AGRA American General Realty Advisors, Inc. ................................. DE
AGRI American General Realty Investment Corporation ......................... TX
AGSI American General Securities Incorporated ............................... TX
AGX American General Exchange, Inc. ........................................ TN
ASGN American General Assignment Corporation ................................ TX
FFSC Franklin Financial Services Corporation ................................ DE
FL The Franklin Life Insurance Company .................................... IL
GHC Green Hills Corporation ................................................ DE
HBDC HBC Development Corporation ............................................ VA
KC Knickerbocker Corporation .............................................. TX
ML Merit Life Insurance Co. ............................................... IN
NLA The National Life and Accident Insurance Company ....................... TX
NCA North Central Administrators, Inc. ..................................... MN
NCL North Central Life Insurance Company ................................... MN
NCCL North Central Caribbean Life, Ltd. ..................................... T&C
OLL The Old Line Life Insurance Company of America ......................... WI
PKWY Parkway 1999 Trust ..................................................... MD
PAV Pavilions Corporation .................................................. DE
PCSC Pebble Creek Service Corporation ....................................... FL
PIFLA American General Property Insurance Company of Florida ................. FL
PPI PESCO Plus, Inc. ....................................................... DE
RMST HSA Residential Mortgage Services of Texas, Inc. ....................... DE
SRHP SR/HP/CM Corporation ................................................... TX
TAG Life Templeton American General Life of Bermuda, Ltd. ....................... BA
TI Thrift, Incorporated ................................................... IN
UAS American General Bancassurance Services, Inc. .......................... IL
UC USLIFE Corporation ..................................................... DE
UCLA USLIFE Credit Life Insurance Company of Arizona ........................ AZ
URC USLIFE Realty Corporation .............................................. TX
USC USLIFE Systems Corporation ............................................. DE
USL The United States Life Insurance Company in the City of New York ....... NY
USMRP USMRP, Ltd. ............................................................ T&C
VALIC The Variable Annuity Life Insurance Company ............................ TX
VAMCO The Variable Annuity Marketing Company ................................. TX
VRSCO VALIC Retirement Services Company ...................................... TX
</TABLE>
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<PAGE> 111
<TABLE>
<CAPTION>
State/Jur.
Abb. Company of Domicile
---- ------- -----------
<S> <C> <C>
VTC VALIC Trust Company .................................................... TX
WA The Winchester Agency Ltd. ............................................. NY
WIS WNL Insurance Services, Inc. ........................................... DE
WNC Western National Corporation ........................................... DE
WNLH WNL Holding Corp. ...................................................... DE
YIC Yosemite Insurance Company ............................................. IN
</TABLE>
ITEM 27. NUMBER OF CONTRACT OWNERS
As of April 14, 2000, a date within 90 days prior to the date of filing,
VALIC Separate Account A, the Registrant, offered the following Contracts in
connection with this Registration Statement: 142 Non-Qualified Contracts; and
203,773 Qualified Contracts.
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<PAGE> 112
ITEM 28. INDEMNIFICATION
Set forth below is a summary of the general effect of applicable provisions
of the Depositor's Bylaws regarding indemnification of, and advancement of legal
expenses to, the Depositor's officers, directors and employees (collectively,
"Indemnitees").
The Depositor shall indemnify any Indemnitee who was or is a named
defendant or respondent or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative, arbitrative, or investigative (including any action by or in the
right of the Depositor), or any appeal of such action, suit or proceeding and
any inquiry or investigation that could lead to such an action, suit or
proceeding, by reason of the fact that the Indemnitee is or was a director, or
officer or employee of the Depositor, or is or was serving at the request of the
Depositor as a director, officer, partner, venturer, proprietor, trustee,
employee, or similar functionary of another foreign or domestic corporation or
nonprofit corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan or other enterprise, against judgments, penalties
(including excise and similar taxes), fines, amounts paid in settlement, and
reasonable expenses (including court costs and attorneys' fees) actually
incurred by him in connection with such action, suit or proceeding, if
Indemnitee acted in good faith and in a manner he reasonably believed, (i) in
the case of conduct in his official capacity as a director of the Depositor, to
be in the best interests of the Depositor and (ii) in all other cases, to be not
opposed to the best interests of the Depositor; and, with respect to any
criminal action or proceeding, if Indemnitee had no reasonable cause to believe
his conduct was unlawful; provided, however that in the case of any threatened,
pending or completed action, suit or proceeding by or in the right of the
Depositor, the indemnity shall be limited to reasonable expenses (including
court costs and attorneys' fees) actually incurred in connection with such
action, suit or proceeding; and no indemnification shall be made in respect of
any claim, issue or matter as to which such person shall have been adjudged to
be liable to the Depositor or liable on the basis that personal benefit was
improperly received by him, whether or not the benefit resulted from an action
taken in the person's official capacity as a director or officer. The
termination of any action, suit or proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent shall not, of
itself, create a presumption that the Indemnitee did not act in good faith and
in a manner which Indemnitee reasonably believed to be in the best interests of
the Depositor; and, with respect to any criminal action or proceeding, shall not
create a presumption that the person had reasonable cause to believe that his
conduct was unlawful.
Where an Indemnitee of the Depositor or other person entitled to indemnity
hereunder has been wholly successful, on the merits or otherwise, in defense of
any such action, suit or proceeding, Indemnitee shall be indemnified against
reasonable expenses (including court costs and attorneys' fees) actually
incurred by him in connection therewith.
Any indemnification (unless otherwise ordered by a court of competent
jurisdiction) shall be made by the Depositor only as authorized in a specific
case upon a determination that the applicable standard of conduct has been met.
Such determination shall be made (i) by the Board of Directors by a majority
vote of a quorum consisting of directors who at the time of the vote have not
been named as defendants or respondents in such action, suit or proceeding, or
(ii) if such a quorum cannot be obtained, by a majority vote of a committee of
the Board of Directors, designated to act in the matter by a majority vote of
all directors, consisting solely of two or more directors who at the time of the
vote are not named defendants or respondents in such action, suit or proceeding,
or (iii) by special legal counsel selected by the Board of Directors (or a
committee thereof) by vote in the manner set forth in subparagraphs (i) and (ii)
immediately above or if such a quorum cannot be obtained and such a committee
cannot be established, by a majority vote of all directors, or (iv) by the
shareholders in a vote that excludes the shares held by any Indemnitee who is
named as a defendant or respondent in such action, suit or proceeding.
Reasonable expenses incurred by an Indemnitee of the Depositor or other
person entitled to indemnity hereunder, who was, is or is threatened to be made
a named defendant or respondent in any such action, suit or proceeding described
above may be paid by the Depositor in advance of the final disposition thereof
upon (i) receipt of a written affirmation by the Indemnitee of his good faith
belief that he has met the standard of conduct necessary for indemnification
under this article and a written undertaking by or on behalf of the
C-12
<PAGE> 113
Indemnitee to repay such amount unless it shall ultimately be determined that he
is entitled to be indemnified by the Depositor as authorized under this article
and (ii) a determination that the facts then known to those making the
determination would not preclude indemnification under this article.
Notwithstanding any other provision of this article, the Depositor may pay
or reimburse expenses incurred by any Indemnitee of the Depositor or any other
person entitled to indemnity hereunder in connection with his appearance as a
witness or other participation in any action, suit or a proceeding described
above at a time when he is not named defendant or respondent in such action,
suit or proceeding.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant, as provided above or otherwise, the Registrant has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification by the Depositor is against public policy, as expressed in the
Act, and therefore may be unenforceable. In the event that a claim of such
indemnification (except insofar as it provides for the payment by the Depositor
of expenses incurred or paid by a director, officer or controlling person in the
successful defense of any action, suit or proceeding) is asserted against the
Depositor by such director, officer or controlling person and the Securities and
Exchange Commission is still of the same opinion, the Depositor or Registrant
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by the Depositor is against public
policy as expressed by the Act and will be governed by the final adjudication of
such issue.
ITEM 29. PRINCIPAL UNDERWRITERS
(a). American General Distributors, Inc. acts as exclusive distributor and
principal underwriter of the Registrant and as principal underwriter for the
American General Series Portfolio Company, a registered investment company.
(b). The following information is furnished with respect to each officer
and director of American General Distributors, Inc.:
<TABLE>
<CAPTION>
NAME AND PRINCIPAL POSITIONS AND OFFICES
BUSINESS ADDRESS WITH UNDERWRITER
---------------- ---------------------
<S> <C>
(*)
Robert P. Condon Chairman, Director, Chief Executive Officer
and President
(*)
Mary Cavanaugh Director and Secretary
(*)
Thomas G. Norwood Director, Chief Financial Officer and Treasurer
(*)
Jane E. Bates Vice President and Chief Compliance Officer
(*)
V. Keith Roberts Vice President- Operations
(*)
D. Lynne Walters Tax Officer
(*)
Cheryl G. Hemley Assistant Secretary
(*)
Daniel R. Cricks Assistant Tax Officer
(*)
James D. Bonsall Assistant Treasurer
(*)
Steven D. Rubinstein Assistant Treasurer
(*)
Marylyn S. Zlotnick Assistant Treasurer
</TABLE>
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<PAGE> 114
(c) American General Distributors, Inc. is the principal underwriter for
Registrant. The licensed agents who sell the Contracts are compensated for such
sales by commissions paid by Depositor. These commissions do not result in any
charge to the Registrant or to Contract Owners, Participants, Annuitants or
Beneficiaries in addition to the charges described in the prospectus for the
Contracts.
ITEM 30. BOOKS AND RECORDS OF VALIC
The books or other documents required to be maintained by Section 31(a) of
the Investment Company Act of 1940 and the Rules promulgated thereunder will be
in the physical possession of:
The Variable Annuity Life Insurance Company
2929 Allen Parkway
Houston, Texas 77019
ITEM 31. MANAGEMENT SERVICES
There have been no management-related services provided to the Separate
Account for the last three fiscal years.
ITEM 32. UNDERTAKINGS
a. VALIC hereby commits itself, on behalf of the Contract Owners, to the
following undertakings:
1. To file a post-effective amendment to this registration statement as
frequently as necessary to ensure that the audited financial statements
in the registration statement are never more than 16 months old for so
long as payments under the variable annuity contracts may be accepted;
2. To include either (1) as part of any application to purchase a contract
offered by the prospectus, a space that an applicant can check to
request a Statement of Additional Information, or (2) a post card or
similar written communication affixed to or included in the prospectus
that the applicant can remove to send for a Statement of Additional
Information;
3. To deliver any Statement of Additional Information and any financial
statements required to be made available under this form promptly upon
written or oral request.
b. The Company hereby represents that the fees and charges deducted under the
Contracts, in the aggregate, are reasonable in relation to the services
rendered, the expenses expected to be incurred and the risks assumed by the
Company.
ITEM 33. WITHDRAWAL RESTRICTIONS FOR 403(B) PLANS
The Tax Reform Act of 1986 added to the Internal Revenue Code a new Section
403(b)(11) which applies to tax years beginning after December 31, 1988. This
paragraph provides that withdrawal restrictions apply to contributions made and
interest earned subsequent to December 31, 1988. Such restrictions require that
distributions not begin before age 59 1/2, separation from service, death,
disability, or hardship (only employee contributions without accrued interest
may be withdrawn in case of hardship). These withdrawal restrictions appear in
the section "Federal Tax Matters" in either the Prospectus or the Statement of
Additional Information for Contracts of this Registration Statement.
The Company relies on a no-action letter issued by the Securities and
Exchange Commission on November 28, 1988 stating that no enforcement action
would be taken under sections 22(e), 27(c)(1), or 27(d) of the Investment
Company Act of 1940 (the "Act") if, in effect, the Company permits restrictions
on cash distributions from elective contributions to the extent necessary to
comply with Section 403(b)(11) of the Internal Revenue Code in accordance with
the following conditions:
(1) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in each registration statement,
including the prospectus, used in connection with the offer of the
Contract;
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<PAGE> 115
(2) Include appropriate disclosure regarding the redemption
restrictions imposed by Section 403(b)(11) in any sales literature used in
connection with the offer of the Contract;
(3) Instruct sales representatives who solicit participants to
purchase the Contract specifically to being the redemption restrictions
imposed by Section 403(b)(11) to the attention of the potential
participants;
(4) Obtain from each plan participant who purchases a Section 403(b)
annuity Contract, prior to or at the time of such purchase, a signed
statement acknowledging the participant's understanding of (1) the
restrictions on redemption imposed by Section 403(b)(11), and (2) the
investment alternatives available under the employer's Section 403(b)
arrangement, to which the participant may elect to transfer his contract
value.
The Company has complied, and is complying, with the provisions of
paragraphs (1)-(4) above.
The Company relies on Rule 6c-7 of the Act which states that a registered
separate account, and any depositor of or underwriter for such account, shall be
exempt from the provisions of sections 22(e), 27(c)(1) and 27(d) of the Act with
respect to this Contract participating in this account to the extent necessary
to permit compliance with the Texas Optional Retirement Program (Program) in
accordance with the following conditions:
(a) include appropriate disclosure regarding the restrictions on
redemption imposed by the Program in each registration statement, including
the prospectus, used in connection with the Program;
(b) include appropriate disclosure regarding the restrictions on
redemption imposed by the Program in any sales literature used in
connection with the offer of this Contract to Program participants;
(c) instruct salespeople who solicit Program participants to purchase
this Contract specifically to bring the restrictions on redemption imposed
by the Program to the attention of potential Program participants;
(d) obtain from each Program participant who purchases this Contract
in connection with the Program, prior to or at the time of such purchase, a
signed statement acknowledging the restrictions on redemption imposed by
the Program.
The Company has complied, and is complying, with the provisions of
paragraphs (a)-(d) above.
The Company relies on an order issued by the Securities and Exchange
Commission on May 19, 1993 exempting it from the provisions of section 22(e),
27(c)(1) and 27(d) of the Act with respect to this Contract participating in
this account to the extent necessary to permit compliance with the Optional
Retirement Program of the State University System of Florida ("Florida ORP") as
administered by the Division of Retirement of the Florida Department of
Management Services ("Division") in accordance with the following conditions:
(a) include appropriate disclosure regarding the restrictions on
redemption imposed by the Division in each registration statement,
including the prospectus, relating to the Contracts issued in connection
with the Florida ORP;
(b) include appropriate disclosure regarding the restrictions on
redemption imposed by the Division in any sales literature used in
connection with the offer of Contracts to Eligible Employees;
(c) instruct salespeople who solicit Eligible Employees to purchase
the Contracts specifically to bring the restrictions on redemption imposed
by the Division to the attention of the Eligible Employees;
(d) obtain from each Participant in the Florida ORP who purchases a
Contract, prior to or at the time of such purchase, a signed statement
acknowledging the Participant's understanding: (i) of the restrictions on
redemption imposed by the Division, and (ii) that other investment
alternatives are available under the Florida ORP, to which the Participant
may elect to transfer his or her Contract values.
The Company has complied, and is complying, with the provisions of
paragraphs (a)-(d) above.
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<PAGE> 116
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Depositor, The Variable Annuity Life Insurance Company, certifies that
it meets the requirements of Securities Act Rule 485 for effectiveness of this
Registration Statement has duly caused this amendment to be signed on its behalf
by the undersigned thereunto duly authorized, and its seal to be hereunto
affixed and attested, all in the City of Houston, State of Texas, on the 27th
day of April, 2000.
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
<TABLE>
<S> <C>
Attest: /s/ Mary L. Cavanaugh By: /s/ John A. Graf
---------------------------- --------------------------
Mary L. Cavanaugh John A. Graf
Senior Vice President, General Counsel Chairman, Chief Executive
and Secretary Officer and President
</TABLE>
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, The Variable Annuity Life Insurance Company Separate
Account A, certifies that it meets the requirements of Securities Act Rule 485
for effectiveness of this Registration Statement has duly caused this amendment
to be signed on its behalf by the undersigned thereunto duly authorized, and its
seal to be hereunto affixed and attested, all in the City of Houston, State of
Texas, on the 27th day of April 2000.
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY SEPARATE
ACCOUNT A
THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY
Attest: /s/ Mary L. Cavanaugh By: /s/ John A. Graf
---------------------------- --------------------------
Mary L. Cavanaugh John A. Graf
Senior Vice President, General Counsel Chairman, Chief Executive
and Secretary Officer and President
<PAGE> 117
Pursuant to the requirements of the Securities Act of 1933, this amendment
has been signed below by the following persons in the capacities and on the date
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ John A. Graf Chairman, Chief Executive April 27, 2000
- -------------------------------- Officer and President
John A. Graf
/s/ Kent E. Barrett Director, Executive Vice President, April 27, 2000
- -------------------------------- Chief Financial Officer and
Kent E. Barrett Principal Accounting Officer
* Director and Executive Vice President - April 27, 2000
- -------------------------------- Sales
Bruce R. Abrams
* Director and Executive Vice President - April 27, 2000
- -------------------------------- Operations
Carl J. Santillo
Director
- --------------------------------
Robert M. Devlin
* Director and Executive Vice President - April 27, 2000
- -------------------------------- Institutional Marketing
Robert P. Condon
* Director and Senior Vice President - April 27, 2000
- -------------------------------- Human Resources
Rebecca G. Campbell
</TABLE>
*By: /s/ Mary L. Cavanaugh
----------------------
Mary L. Cavanaugh
Attorney-in-Fact
<PAGE> 118
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. PAGE
- ------------ ------------
<C> <S> <C>
5(c). -- Form of Endorsement to Nonqualified Deferred
Compensation Plan.
10. -- Consent of Independent Auditors.
16(d). -- Copy of manually signed powers of attorney for The
Variable Annuity Life Insurance Company Directors Bruce
R. Abrams, Kent E. Barrett, Rebecca G. Campbell, Robert
P. Condon, John A. Graf and Carl J. Santillo.
</TABLE>
<PAGE> 1
EXHIBIT 5(c)
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
Houston, Texas
NONQUALIFIED DEFERRED COMPENSATION PLAN ENDORSEMENT
This Endorsement is made a part of the Contract or Certificate to which it is
attached.
If the contract has been issued for or held under an eligible deferred
compensation plan of a governmental employer, which meets or is
required to meet the requirements of Code Section 457(g)(1) by placing
the assets of the plan in a qualifying trust, custodial account, or
annuity contract, the Contract shall be held for the exclusive benefit
of Participants and their Beneficiaries. Any Contract provisions and
limitations regarding Plan provisions and/or assignment shall apply to
the Contract and to the interests of any Participant or Beneficiary
therein, to the fullest extent necessary to comply with the
requirements of the Code and the Plan. VALIC will rely upon the
Contract Owner's instructions as being consistent with the Plan unless
VALIC has actual notice to the contrary. Such a plan shall not be
treated as an "unfunded deferred compensation plan."
If there is any conflict between the provision of this Endorsement and the
Contract or Certificate, the Endorsement's provisions will apply.
The effective date of this Endorsement is the Date of Issue or the date the Plan
became subject to Section 457(g)(1) of the Internal Revenue Code of 1986, as
amended, whichever is later.
The Variable Annuity Life Insurance Company
By: /s/ William A. Wilson
William A. Wilson
Vice President and General Counsel
<PAGE> 1
EXHIBIT 10
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" and to the
use of our reports dated February 14, 2000 as to The Variable Annuity Life
Insurance Company and February 22, 2000 as to The Variable Annuity Life
Insurance Company Separate Account A in Post-Effective Amendment No. 54 to the
Registration Statement (Form N-4, No. 2-32783/811-3240) of The Variable Annuity
Life Insurance Company Separate Account A.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Houston, Texas
April 27, 2000
<PAGE> 1
EXHIBIT 16(d)
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of The Variable Annuity Life Insurance Company, a life insurance
corporation organized and existing under Chapter 3 of the Texas Insurance Code,
does hereby constitute and appoint John A. Graf, Kent E. Barrett, and Mary L.
Cavanaugh, and each of them, with full power of substitution as his true and
lawful attorney and agent, to do any and all acts and things and to execute any
and all instruments which said attorney and agent may deem necessary or
advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "VALIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
VALIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said VALIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said VALIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said VALIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
VALIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ Bruce R. Abrams
---------------------
Bruce R. Abrams
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------------
<PAGE> 2
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of The Variable Annuity Life Insurance Company, a life insurance
corporation organized and existing under Chapter 3 of the Texas Insurance Code,
does hereby constitute and appoint John A. Graf, Kent E. Barrett, and Mary L.
Cavanaugh, and each of them, with full power of substitution as his true and
lawful attorney and agent, to do any and all acts and things and to execute any
and all instruments which said attorney and agent may deem necessary or
advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "VALIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
VALIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said VALIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said VALIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said VALIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
VALIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ Kent E. Barrett
---------------------
Kent E. Barrett
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------------
<PAGE> 3
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of The Variable Annuity Life Insurance Company, a life insurance
corporation organized and existing under Chapter 3 of the Texas Insurance Code,
does hereby constitute and appoint John A. Graf, Kent E. Barrett, and Mary L.
Cavanaugh, and each of them, with full power of substitution as his true and
lawful attorney and agent, to do any and all acts and things and to execute any
and all instruments which said attorney and agent may deem necessary or
advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "VALIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
VALIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said VALIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said VALIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said VALIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
VALIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ Rebecca G. Campbell
---------------------
Rebecca G. Campbell
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------------
<PAGE> 4
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of The Variable Annuity Life Insurance Company, a life insurance
corporation organized and existing under Chapter 3 of the Texas Insurance Code,
does hereby constitute and appoint John A. Graf, Kent E. Barrett, and Mary L.
Cavanaugh, and each of them, with full power of substitution as his true and
lawful attorney and agent, to do any and all acts and things and to execute any
and all instruments which said attorney and agent may deem necessary or
advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "VALIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
VALIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said VALIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said VALIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said VALIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
VALIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ Robert P. Condon
----------------------
Robert P. Condon
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------------
<PAGE> 5
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of The Variable Annuity Life Insurance Company, a life insurance
corporation organized and existing under Chapter 3 of the Texas Insurance Code,
does hereby constitute and appoint John A. Graf, Kent E. Barrett, and Mary L.
Cavanaugh, and each of them, with full power of substitution as his true and
lawful attorney and agent, to do any and all acts and things and to execute any
and all instruments which said attorney and agent may deem necessary or
advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "VALIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
VALIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said VALIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said VALIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said VALIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
VALIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ John A. Graf
---------------------
John A. Graf
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------------
<PAGE> 6
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, an officer and/or
director of The Variable Annuity Life Insurance Company, a life insurance
corporation organized and existing under Chapter 3 of the Texas Insurance Code,
does hereby constitute and appoint John A. Graf, Kent E. Barrett, and Mary L.
Cavanaugh, and each of them, with full power of substitution as his true and
lawful attorney and agent, to do any and all acts and things and to execute any
and all instruments which said attorney and agent may deem necessary or
advisable:
(i) to enable the said corporation to comply with the Securities Act of
1933, as amended, and any rules, regulations and requirements of the Securities
and Exchange Commission in respect thereof, in connection with the registration
under the said Securities Act of variable annuity contracts of the said
corporation, interests under benefit plans for employees and agents and managers
of said corporation and of its affiliates, and the variable annuity contracts of
the said corporation with respect to such benefit plans (hereinafter
collectively called "VALIC Securities"), including specifically, but without
limiting the generality of the foregoing, the power and authority to sign for
and on behalf of the undersigned the name of the undersigned as officer and/or
director of the said corporation to a registration statement or to any amendment
thereto filed with the Securities and Exchange Commission in respect to said
VALIC Securities and to any instrument or document filed as a part of, as an
exhibit to or in connection with, said registration statement or amendment; and
(ii) to register or qualify said VALIC Securities for sale and to
register or license said corporation or any subsidiary thereof as a broker or
dealer in said VALIC Securities under the securities or Blue Sky Laws of all
such states as may be necessary or appropriate to permit therein the offering
and sale of said VALIC Securities as contemplated by said registration
statement, including specifically, but without limiting the generality of the
foregoing, the power and authority to sign for and on behalf of the undersigned
the name of the undersigned as an officer and/or director of said corporation to
any application, statement, petition, prospectus, notice or other instrument or
document, or to any amendment thereto, or to any exhibit filed as a part thereto
or in connection therewith, which is required to be signed by the undersigned
and to be filed with the public authority or authorities administering said
securities or Blue Sky Laws for the purpose of so registering or qualifying said
VALIC Securities or registering or licensing said corporation;
and the undersigned does hereby ratify and confirm as his own act and deed all
that said attorney and agent shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has subscribed these presents this
1st day of March, 2000.
/s/ Carl J. Santillo
---------------------
Carl J. Santillo
In the Presence of:
/s/ Cheryl G. Hemley
- --------------------------
