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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 2000
REGISTRATION NOS. 2-96223/811-3240
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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. 29 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT
COMPANY ACT OF 1940
Amendment No. 67 [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)
---------------------
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 and Individual
Variable Annuity Contracts
SEQUENTIAL NUMBER SYSTEM: PAGE OF PAGES
EXHIBIT INDEX ON SEQUENTIAL PAGE NUMBER
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[Momento Photo]
CONTRACT FORM UIT-981
SEPARATE ACCOUNT A
PROSPECTUS MAY 1, 1999
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THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
UNITS OF INTEREST UNDER INDIVIDUAL
VARIABLE ANNUITY CONTRACTS
CONTRACT FORM UIT-981
SEPARATE ACCOUNT A
May 1, 2000
PROSPECTUS
This prospectus describes flexible Purchase Payment individual variable annuity
contracts (the "Contracts") 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 as well as for certain after-tax arrangements that are not part of an
employer's plan.
The Contracts permit you to invest in and receive retirement benefits in up to 3
out of a total of 6 Fixed and Variable Account Options (1 fixed and 5 variable)
described in this prospectus. Each Variable Account Option invests in a separate
portfolio of the 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 the Contracts. This prospectus is accompanied by the current prospectus for
the mutual fund options 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 the Contracts 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.
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THE PROSPECTUS............................... 1
FEE TABLE.......................................... 2
SUMMARY............................................ 4
SELECTED PURCHASE UNIT DATA........................ 6
GENERAL INFORMATION................................ 7
About the Contracts............................ 7
About VALIC.................................... 7
About VALIC Separate Account A................. 7
Units of Interests............................. 7
Distribution of the Contracts.................. 7
VARIABLE ACCOUNT OPTIONS........................... 8
Summary of Funds............................... 8
PURCHASE PERIOD.................................... 8
Purchase Payments.............................. 8
Purchase Units................................. 9
Calculation of Purchase Unit Value............. 9
Choosing Investment Options.................... 9
Fixed Account Option...................... 9
Variable Account Options.................. 10
Stopping Purchase Payments..................... 10
TRANSFERS BETWEEN INVESTMENT OPTIONS............... 12
During the Purchase Period..................... 12
During the Payout Period....................... 12
Communicating Transfer or Reallocation
Instructions................................. 12
Effective Date of Transfer..................... 12
Market Timing.................................. 12
FEES AND CHARGES................................... 13
Account Maintenance Fee........................ 13
Surrender Charge............................... 13
Amount of Surrender Charge................ 13
10% Free Withdrawal....................... 13
Exceptions to Surrender Charge............ 13
Premium Tax Charge............................. 13
Separate Account Charges....................... 14
Fund Annual Expense Charges.................... 14
Other Tax Charges.............................. 14
Reduction or Waiver of Account Maintenance Fee
and Surrender Charge......................... 14
PAYOUT PERIOD...................................... 15
Fixed Payout................................... 15
Variable Payout................................ 15
Combination Fixed and Variable Payout.......... 15
Payout Date.................................... 15
Payout Options................................. 15
Enhancements to Payout Options................. 16
Payout Information............................. 16
SURRENDER OF ACCOUNT VALUE......................... 17
When Surrenders Are Allowed.................... 17
Amount That May Be Surrendered................. 17
Surrender Restrictions......................... 17
Partial Surrenders............................. 17
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DEATH BENEFITS..................................... 18
Beneficiary Information........................ 18
During the Purchase Period..................... 18
During the Payout Period....................... 18
HOW TO REVIEW INVESTMENT PERFORMANCE OF SEPARATE
ACCOUNT DIVISIONS................................ 19
Types of Investment Performance Information
Advertised................................... 19
Total Return Performance Information......... 19
Standard Average Annual Total Return......... 19
Nonstandard Average Annual Total Return...... 19
Cumulative Total Return...................... 19
Annual Change in Purchase Unit Value......... 19
Cumulative Change in Purchase Unit Value..... 20
Total Return Based on Different Investment
Amounts................................... 20
An Assumed Account Value of $10,000.......... 20
Yield Performance Information.................. 20
AGSPC Money Market Division.................. 20
Divisions Other Than The AGSPC Money Market
Divisions................................. 20
Performance Information: Average Annual Total
Return, Cumulative Return and Annual and
Cumulative Change in Purchase Unit Value
Tables....................................... 20
OTHER CONTRACT FEATURES............................ 23
Changes That May Not Be Made................... 23
Change of Beneficiary.......................... 23
Cancellation -- The 10 Day "Free Look"......... 23
We Reserve Certain Rights...................... 23
Relationship to Employer's Plan................ 23
VOTING RIGHTS...................................... 23
Who May Give Voting Instructions............... 23
Determination of Fund Shares Attributable to
Your Account................................. 23
During Purchase Period....................... 24
During Payout Period or after a Death Benefit
Has Been Paid............................. 24
How Fund Shares Are Voted...................... 24
FEDERAL TAX MATTERS................................ 24
Type of Plans.................................. 24
Tax Consequences in General.................... 24
Effect of Tax-Deferred Accumulations........... 25
THE POWER OF TAX-DEFERRED GROWTH................... 25
YEAR 2000.......................................... 26
Year 2000 Risks................................ 26
</TABLE>
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PARTICIPANT -- the
individual, (in most
cases you are the
Participant) for whom
Purchase Payments are made.
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.
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................ 12
Annuitant.................... 18
Assumed Investment Rate...... 15
Beneficiary.................. 18
Contract Owner............... 18
Divisions.................... 19
Fixed Account Option......... 18
Home Office.................. 12
Mutual Fund or Fund.......... 07
Participant.................. 01
Participant Year............. 13
Payout Period................ 12
Payout Unit.................. 15
Purchase Payments............ 8, 19
Purchase Period.............. 12
Purchase Unit................ 9
VALIC Separate Account A..... 23
Variable Account Options..... 8, 18
</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 Variable Account Options and 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 a contract in which units of interest in VALIC's
Separate Account A are offered. The Contracts will allow you to accumulate
retirement dollars in a Fixed Account Option and/or Variable Account Options.
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 Options, 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.
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 Funds 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.
CONTRACT OWNER/PARTICIPANT EXPENSES(1)
Maximum Surrender Charge (as a percentage of Purchase Payments received during
the last 36 months)(2) 5.00%
ACCOUNT MAINTENANCE FEE(2) $ 30
SEPARATE ACCOUNT EXPENSES
(as a percentage of Separate Account net assets):
Mortality and Expense Risk 1.00%
FUND ANNUAL EXPENSES
(as a percentage of net assets):
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FUND FEES EXPENSES(3) EXPENSES
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<S> <C> <C> <C>
AGSPC Asset Allocation Fund(4) 0.50% 0.07% 0.57%
AGSPC Capital Conservation Fund 0.50 0.10 0.60
AGSPC MidCap Index Fund 0.31 0.07 0.38
AGSPC Money Market Fund 0.50 0.07 0.57
AGSPC Stock Index Fund 0.26 0.06 0.32
</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 surrender charge and the account maintenance fee are
available if certain conditions are met. See "Reduction or Waiver of Account
Maintenance Fee and Surrender Charge" and "Exceptions to Surrender Charge"
in this prospectus. There will be no surrender charge on purchase payments
received more than 36 months prior to surrender. Also, in any Participant
Year, the first withdrawal of up to 10% of Account Value will not be subject
to a surrender charge.
(3) 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.
(4) The AGSPC Asset Allocation Fund was formerly known as the Timed Opportunity
Fund.
2
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EXAMPLE #1 -- If you 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 Contract without a surrender charge imposed, invested in a
single Separate Account Division 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>
AGSPC Asset Allocation Division 5........................... $16 $51 $88 $192
AGSPC Capital Conservation Division 1....................... 17 52 89 195
AGSPC MidCap Index Division 4............................... 14 45 78 171
AGSPC Money Market Division 2............................... 16 51 88 192
AGSPC Stock Index Division 10............................... 14 43 75 164
</TABLE>
EXAMPLE #2 -- If you surrender the Contract at the end of the period shown:
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Total Expenses: You would pay the following expenses on a $1,000 investment
under a typical Contract invested in a single Separate Account Division as
listed below, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
AGSPC Asset Allocation Division 5........................... $63 $101 $88 $192
AGSPC Capital Conservation Division 1....................... 63 101 89 195
AGSPC MidCap Index Division 4............................... 61 95 78 171
AGSPC Money Market Division 2............................... 63 101 88 192
AGSPC Stock Index Division 10............................... 60 93 75 164
</TABLE>
Note: These examples should not be considered representations of past or future
expenses for VALIC Separate Account A or for any 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
Funds which are, in effect, passed on to the Contract Owners and Participants.
3
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SUMMARY
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The following is a summary of the major features of the Contracts 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 from among 5 Variable Account Options. You will not
be able to invest in all of the Variable Account Options described below within
an annuity contract. If your Contract is part of your employer's retirement
program, that program will describe which Variable Account Options are available
to you. The Contracts also offer a Fixed Account Option.
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<TABLE>
<S> <C> <C> <C>
FIXED ACCOUNT
OPTION
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FIXED General Account --
OPTION
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VARIABLE OPTIONS VARIABLE ACCOUNT INVESTMENT ADVISER
OPTIONS STRATEGY
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INDEX EQUITY FUNDS
AGSPC MidCap Index Fund Growth through VALIC
investments
tracking the
S&P MidCap
400(R) Index
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AGSPC Stock Index Fund Growth through VALIC
investments
tracking the
S&P 500(R)
Index
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INCOME FUNDS AGSPC Capital Conservation Income and VALIC
Fund possible growth
through
investments in
high quality
debt securities
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MONEY MARKET FUNDS AGSPC Money Market Fund Income through VALIC
investments in
short-term
money market
securities
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ASSET ALLOCATION FUNDS AGSPC Asset Allocation Fund Maximum return VALIC
through
investments in
a mix of
stocks, bonds
and money
market
securities
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</TABLE>
A detailed description of the investment objective of each mutual fund can be
found in the section of the prospectus entitled "Variable Account Options," 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 the money in your account among the investment
options. You may transfer your Account Values between Variable Account Options
or to the Fixed Account Option once every 30 days during the Purchase Period.
Your Account Value in the Fixed Account must remain there for at least 90 days
before it can be transferred to other investment options.
Once you begin receiving payments from your account (called the Payout Period),
you may still transfer funds among Variable Account Options or to the Fixed
Account Option once every 365 days.
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 the prospectus.
FEES AND CHARGES
ACCOUNT MAINTENANCE FEE
An annual account maintenance fee which is currently $30, but may be increased
or decreased, is charged to your account.
SURRENDER CHARGE
Under some circumstances a surrender charge is made to your account. These
situations are discussed in detail in the section of the prospectus entitled
"Fees and Charges -- Surrender Charge." When this happens the surrender charge
is 5% of the contributions you made to your account during the last 36 months.
Withdrawals are always subject to your plan provisions and federal tax
restrictions, which generally include a tax penalty on withdrawals made prior to
age 59 1/2.
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.
More information on FEES
may be found in the
prospectus under the
headings "FEES AND
CHARGES" and "FEE TABLE."
4
<PAGE> 10
SUMMARY -- (CONTINUED)
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SEPARATE ACCOUNT CHARGES
If you choose a Variable Account Option you will incur a mortality and expense
risk fee computed at an aggregate annualized rate of 1.00% on the average daily
net asset value of VALIC Separate Account A.
FUND ANNUAL EXPENSE CHARGE
A daily charge based on a percentage of each Fund's average daily net asset
value is payable by each Fund to its investment adviser. In addition to the
management fees, each 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 the prospectus.
FEDERAL TAX INFORMATION
Although deferred annuity contracts such as the Contracts can be purchased with
after-tax dollars, they are primarily used in connection with retirement
programs which receive favorable tax treatment under federal law.
PURCHASE REQUIREMENTS
If the Contract is a flexible Purchase Payment Contract, Purchase Payments may
be made at any time but each Purchase Payment must be at least $30 per
Participant Account. The amount of each Purchase Payment allocated to each
Variable Account Option and Fixed Account Option must also be at least $30. If
the Contract is a single Purchase Payment Contract, the minimum Purchase Payment
is $1,000 per Contract. These minimums may be waived where one purchaser, such
as an employer, purchases a number of contracts.
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.
5
<PAGE> 11
SELECTED PURCHASE UNIT DATA
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<TABLE>
<CAPTION>
AGSPC AGSPC AGSPC AGSPC
AGSPC MIDCAP ASSET CAPITAL MONEY
STOCK INDEX INDEX ALLOCATION* CONSERVATION MARKET
DIVISION 10D(1) DIVISION 4(2) DIVISION 5 DIVISION 1 DIVISION 2
--------------- ------------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
December 31, 1999
Purchase Unit Values in Force................. 5,858,523 151,288,816 61,240,667 1,415,413 1,632,469
Purchase Unit Values.......................... $10.095883 $5.721920 $4.174280 $3.673180 $2.559979
December 31, 1998
Purchase Units in Force....................... 6,655,796 169,039,887 60,237,818 1,689,443 1,700,333
Purchase Unit Value........................... $8.457722 $5.029093 $3.772519 $3.726168 $2.468627
December 31, 1997
Purchase Units in Force....................... 7,438,537 171,065,657 57,307,351 1,831,961 1,931,439
Purchase Unit Value........................... $6.652806 $4.269122 $3.219282 $3.505970 $2.371163
December 31, 1996
Purchase Units in Force....................... 8,381,704 172,816,978 65,292,617 1,991,536 2,142,534
Purchase Unit Value........................... $5.049088 $3.272588 $2.651899 $3.262402 $2.277444
December 31, 1995
Purchase Units in Force....................... 9,885,873 172,613,690 75,851,431 2,402,085 2,917,361
Purchase Unit Value........................... $4.155057 $2.782677 $2.411022 $3.238370 $2.190686
December 31, 1994
Purchase Units in Force....................... 12,207,684 171,442,018 89,377,860 2,953,861 3,442,237
Purchase Unit Value........................... $3.056808 $2.153183 $1.951533 $2.709029 $2.096416
December 31, 1993
Purchase Units in Force....................... 14,043,516 134,621,879 93,899,802 3,590,916 4,129,981
Purchase Unit Value........................... $3.066025 $2.259378 $1.997266 $2.913980 $2.040131
December 31, 1992
Purchase Units in Force....................... 16,275,183 81,007,871 80,637,090 4,086,583 5,536,887
Purchase Unit Value........................... $2.818583 $2.021271 $1.846025 $2.628509 $2.006700
December 31, 1991
Purchase Units in Force....................... 17,981,945 49,106,844 76,624,765 4,464,580 7,282,083
Purchase Unit Value........................... $2.746708 $1.858030 $1.878219 $2.444253 $1.963118
December 31, 1990
Purchase Units in Force....................... 20,409,931 42,958,640 72,284,139 5,092,258 9,234,995
Purchase Unit Value........................... $2.097328 $1.538017 $1.563444 $1.995673 $1.879911
</TABLE>
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* The Asset Allocation Fund was formerly known as the Timed Opportunity Fund.
(1) Effective with the merger of Quality Growth Fund into Stock Index Fund on
May 1, 1992, Quality Growth Division 9 was merged into Stock Index Division
10D. The merger of Divisions was accomplished by an exchange of units of
Quality Growth Division 9 for units of Stock Index Division 10D of
equivalent value as calculated at the close of business on April 30, 1992.
(2) Effective October 1, 1991, the Fund underlying this Division changed its
name from the Capital Accumulation Fund to the MidCap Index Fund and amended
its investment objective, investment program and investment restrictions
accordingly. Selected Purchase Unit Data prior to October 1, 1991 reflects
investment experience prior to these changes.
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 each
Division of VALIC Separate Account A will not be the same on any given day as
the net asset value per share of the underlying Fund in which that 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 underlying Fund are reinvested by the Division in
additional shares. These distributions have the effect of reducing the value of
each share of the Fund and increasing the number of Fund shares outstanding.
However, the total cash value in VALIC Separate Account A does not change as a
result of such distributions.
6
<PAGE> 12
GENERAL INFORMATION
- --------------------------------------------------------------------------------
ABOUT THE CONTRACTS
The Contracts were developed to help you save money for your retirement. They
offer you a combination of fixed and variable investment options 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 Options 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 the Contracts. 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 Options, you will be
sending that money through VALIC's Separate Account A. You do not invest
directly in the Mutual Funds made available in the Contracts. VALIC's Separate
Account A invests in the Mutual Funds on behalf of your account. VALIC Separate
Account A is made up of what we call "Divisions." Five Divisions are available
and represent the Variable Account Options in the Contracts. Each of these
Divisions invests in a different Mutual Fund made available through the
Contracts. For example, Division Ten represents and invests in the Stock Index
Fund. The earnings (or losses) of each Division are credited to (or charged
against) the assets of that Division, and do not affect the performance of the
other Divisions of VALIC Separate Account A.
VALIC established Separate Account A on July
25, 1979 under Texas insurance law to allow you to be able to invest in a number
of Variable Account Options available in the Contracts. 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 a Contract be held exclusively for the benefit of the contract owner,
participants, annuitants, and beneficiaries of that Contract. When we discuss
performance information in this prospectus, we mean the performance of a VALIC
Separate Account A Division.
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.
The Company will pay the licensed agents who sell the Contracts a commission.
Currently, the commission paid by the Company will range up to 6.0% of each
Purchase Payment. In addition, the Company will pay managers who supervise the
agents overriding commissions ranging up to 1% of each Purchase Payment. These
various commissions are paid by the Company and do not result in any charge to
Contract Owners or to the Separate Account.
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.
THE DISTRIBUTOR'S address is
2929 Allen Parkway,
Houston, Texas 77019.
7
<PAGE> 13
VARIABLE ACCOUNT OPTIONS
- --------------------------------------------------------------------------------
The Contracts enable you to participate in Divisions that represent five
Variable Account Options. According to your retirement program, you may not be
able to invest in all five Variable Account Options described in this
prospectus. Certain additional limitations may also apply. See "About VALIC
Separate Account A" in this prospectus.
Each individual 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 a diversified open-end, management investment company and
is regulated under the Act. For complete information about each Mutual 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 FUNDS
A brief summary of the investment objectives of each Mutual Fund is shown below.
AGSPC ASSET ALLOCATION FUND
Seeks maximum aggregate rate of return over the long-term through controlled
investment risk by adjusting its investment mix among stocks, long-term debt
securities and short-term money market securities.
AGSPC CAPITAL CONSERVATION FUND
Seeks the highest possible total return consistent with preservation of capital
through current income and capital gains on investments in intermediate and
long-term debt instruments and other income producing securities.
AGSPC MIDCAP INDEX FUND
Seeks to provide growth of capital through investments primarily in a
diversified portfolio of common stocks that, as a group, are expected to provide
investment results closely corresponding to the performance of the Standard &
Poor's MidCap 400(R) Index**.
AGSPC MONEY MARKET FUND
Seeks liquidity, protection of capital and current income through investments in
short-term money market instruments.
AGSPC STOCK INDEX FUND
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 Standard & Poor's 500 Stock Index(R)**.
- ---------------
** "Standard & Poor's(R)", S&P(R), "S&P 500(R)" and "S&P MidCap 400(R)" are
trademarks of Standard and Poor's Corporation. Neither the MidCap Index Fund
nor the Stock Index Fund is sponsored, endorsed, sold or promoted by S&P and
S&P makes no representation regarding the advisability of investing in these
Funds.
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 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>
Periodic Payment $ 30 $30
Single Payment $1,000 -0-
</TABLE>
Periodic Payment minimums apply to each Periodic Payment made. In the case of a
Periodic Payment, the amount of each Purchase Payment allocated to each of the
Variable Account Options and the Fixed Account Option must be at least $30. The
Single Payment minimum applies to each of your Contracts.
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 Contract. We will also establish your
account and apply your Purchase Payment by crediting the amount to the Fixed
Account Option or Variable Account Option selected;
- - Reject the Application -- and return the Purchase Payment; or
- - Request Additional Information -- to correct or complete the application. In
the case of an individual variable annuity contract, we will return the
Purchase Payments within 5 business days if the requested information is not
provided, unless you otherwise so specify.
VARIABLE ACCOUNT
OPTIONS -- investment
options that correspond
to Separate Account
Divisions offered by
the Contracts.
Investment returns on
Variable Account
Options may be positive
or negative depending on
the investment
performance of the
underlying Mutual Fund.
PURCHASE PAYMENTS -- an
amount of money you pay to
VALIC to receive the benefits
of an annuity Contract offered
by the Contracts.
8
<PAGE> 14
- --------------------------------------------------------------------------------
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 Money Market Division, or other investment option chosen
by your employer. If your employer chooses an Option other than the Money Market
Division, the value of your investment may fluctuate and you could lose money.
You may not transfer these amounts until VALIC has received a completed
application or enrollment form.
Starter Account. If we have your name, address and social security number, but
we do not have an Employer-Directed Account Agreement from your employer, we
will deposit your Purchase Payment in a "starter" account invested in the Money
Market Division. We will send you follow-up letters requesting the information
necessary to complete the application, including your allocation instructions.
Unless a completed application or enrollment form is received by us within 105
days of establishment of your starter account, the account balance, including
earnings, will be returned to your employer. We are not responsible for any
adverse tax consequences to you that may result from the return of your
employer's contributions.
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 Options selected for
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 6 investment options offered in the Contracts. This includes the Fixed
Account Option and 5 Variable Account Options. The Funds that underlie the
Variable Account Options are registered as separate portfolios 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 interests in the Fixed Account Option are 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.
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 declared rates. 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 you have
selected.
9
<PAGE> 15
- --------------------------------------------------------------------------------
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 Variable Account Options 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 OPTIONS
You may allocate all or a portion of your Purchase Payments to the Variable
Account Options listed in this prospectus as permitted by your retirement
program. As noted elsewhere in the prospectus, you will not be permitted to
select from more than 3 investment options. A complete discussion of each of the
Variable Account Options may be found in the "Variable Account Options" section
in this prospectus and in the AGSPC prospectus. Based upon a Variable Account
Option's Purchase Unit Value your account will be credited with the applicable
number of Purchase Units. The Purchase Unit Value of each Variable Account
Option will change daily depending upon the investment performance of the
underlying 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. Each 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 each 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 account has been surrendered. While no Purchase Payments
are being made, the number of Purchase Units outstanding will remain the same.
(This is assuming no transfers or withdrawals are made.) The value of the
Purchase Units will continue to vary. Your Account Value will continue to be
subject to charges.
In the case of an individual contract, if both your Account Value and Purchase
Payments (less any withdrawals) falls below $300, and you do not make any
Purchase Payments for two years from the date we established your account, we
may close the account and pay the Account Value (less any surrender charge) to
you. In the case of a group contract, if your Account Value (less any
withdrawals) falls below $300, we may close the account and pay the Account
Value (less any surrender charge) to you. Any such account closures will be
subject to applicable distribution restrictions under the contract and/or under
your employer's plan.
10
<PAGE> 16
TRANSFERS BETWEEN INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
You may transfer all or part of your Account Value between the various Fixed
Account and Variable Account Options in your Contract 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 your Contract's Fixed
Account Option and Variable Account Options.
We currently permit transfers between Variable Account Options or from Variable
Account Options to the Fixed Account Option once every 30 days.
Transfers are also permitted from the Fixed Account Option subject to a 90-day
holding period for transfers previously made from the Variable Account Option.
DURING THE PAYOUT PERIOD
During the Payout Period, transfers may be made between your Contract's
investment options subject to the following limitations:
<TABLE>
<CAPTION>
OPTION OTHER
ACCOUNT OPTION VALUE FREQUENCY RESTRICTIONS
- -------------- ------------- ---------- -------------------
<S> <C> <C> <C>
Variable: Up to 100% Once every None
365 days
COMBINATION Up to 100% of Once every None
FIXED AND money in 365 days
VARIABLE variable
PAYOUT: option payout
Fixed: Not permitted -- --
</TABLE>
COMMUNICATING TRANSFER OR
REALLOCATION INSTRUCTIONS
A written instruction to transfer or reallocate all or part of your Account
Value between the various investment options in your Contract, 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.
ACCOUNT VALUE -- the total
sum of your Fixed Account
and/or Variable Account
Options 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).
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.
11
<PAGE> 17
FEES AND CHARGES
- --------------------------------------------------------------------------------
By investing in the Contracts, you may be subject to six basic types of fees and
charges:
- - Account Maintenance Fee
- - Surrender 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.
ACCOUNT MAINTENANCE FEE
An account maintenance fee of $30.00 will be deducted on the last day of the
calendar quarter following receipt of the first purchase payment and annually on
that date after that. We will sell Purchase Units from your Account to pay the
account maintenance fee. The fee will be assessed equally among the Variable
Account Options and the Fixed Account Option that make up your Account Value.
The account maintenance fee is to reimburse the Company for our administrative
expenses. This includes the expense for establishing and maintaining the record
keeping for your Contract. We do not expect that the amount of fees we receive
will be greater than our expenses.
The amount of the account maintenance fee may be reduced or waived if the
Contracts are issued to certain types of plans which are expected to result in
lower costs to VALIC. To learn more about how we determine if account
maintenance fees may be reduced or waived, see the "Reduction or Waiver of
Account Maintenance Fee and Surrender Charge" section in this prospectus. If you
have two or more accounts established under the same group contract, we may
agree to deduct an account maintenance fee from only one account.
No account maintenance fee will be assessed during the Payout Period.
SURRENDER CHARGE
When you withdraw money from your account, you may be subject to a surrender
charge that will be deducted from the amount withdrawn. For information about
your right to surrender, see "Surrender of Account Value" in this prospectus.
It is assumed that the most recent Purchase Payments are withdrawn first. No
surrender charge will be applied unless an amount is actually withdrawn. We
consider all Purchase Payments to be withdrawn before earnings are withdrawn.
Amounts exchanged from other contracts issued by the Company may or may not be
subject to a surrender charge. After exchange, it is assumed that any new
Purchase Payments are withdrawn before the exchanged amount. For more
information, see "Exchange Privilege" in the Statement of Additional
Information.
Amount of Surrender Charge
A surrender charge is equal to five percent (5%) of the amount of all Purchase
Payments received during the past 36 months.
10% Free Withdrawal
In any Participant Year, the first withdrawal of up to 10% of the Account Value
will not be subject to a surrender charge. The surrender charge will apply to
any amount withdrawn that exceeds this 10% limit or to any subsequent
withdrawals in that year. The percentage withdrawn will be determined by
dividing the amount withdrawn by the Account Value just prior to the withdrawal.
These 10% withdrawals without charge do not reduce Purchase Payments for the
purpose of computing the surrender charge. If a surrender charge is applied to
all or part of a Purchase Payment, no surrender charge will be applied to such
Purchase Payment (or portion thereof) again.
Exceptions to Surrender Charge
No surrender charge will be applied:
- - To money applied to provide a Payout Option;
- - To death benefits;
- - If no Purchase Payments have been received during the 36 months prior to the
date of surrender; or
- - If you are at least 55 years old, are no longer employed by the employer that
established the plan, and your account under the plan was established at least
5 years prior to the date of surrender (applicable to qualified contracts
only).
The surrender charge may be reduced or waived if a Contract is issued to certain
types of plans or similar arrangements which are expected to result in lower
costs to VALIC. To learn more about how we determine if a surrender charge may
be reduced or waived, see the "Reduction or Waiver of Account Maintenance Fee
and Surrender Charge" section in this prospectus.
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.
PARTICIPANT YEAR -- the first
twelve month period and
then each yearly anniversary
of that period following the
issue date of the contract or
certificate.
12
<PAGE> 18
- --------------------------------------------------------------------------------
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. This is a daily charge at an annualized rate of 1.00% 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.
FUND ANNUAL EXPENSE CHARGES
Investment management charges based on a percentage of each Fund's average daily
net assets are payable by each Fund. Depending on the Variable Account Option
selected, the charges will be paid by each Fund to its investment adviser. These
charges and other Fund charges and expenses are fully described in the
prospectuses for AGSPC. 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 OR WAIVER OF ACCOUNT
MAINTENANCE FEE AND SURRENDER CHARGE
We may, as described below, determine that the account maintenance fee and
surrender charges for the Contracts may be reduced or waived. We may reduce or
waive these fees and 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.
We review the following additional factors to determine whether we can reduce
or waive account maintenance fees:
- - The frequency of Purchase Payments for your retirement program. Purchase
Payments received no more than once a year can reduce administrative costs.
- - The administrative tasks performed by your employer for your retirement
program.
The employer sponsoring your retirement program can, through their method of
remitting Purchase Payments, reduce administrative costs.
We review the following additional factors to determine whether we can reduce or
waive surrender charges:
- - The size of your retirement program.
A retirement program which involves a larger group of employees may allow us
to reduce sales expenses.
- - The total amount of Purchase Payments to be received for your retirement
program.
Larger Purchase Payments can reduce sales expenses.
- - The use of mass enrollment or related administrative tasks performed by your
employer for your retirement program.
We will only do this if permitted by this Contract and by VALIC guidelines in
effect at the time. In no event will the reduction or waiver of fees and
charges be permitted where the reduction or waiver will unfairly discriminate
against any person.
13
<PAGE> 19
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) (IRA's and certain
nonqualified contracts);
- The portion of your Account Value being applied; and
- 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 may select from your existing Variable Account
Options. Your payments will vary accordingly. This is due to the varying
investment results that will be experienced by each of the Variable Account
Options you selected. The Payout Unit Value is calculated just like the Purchase
Unit Value for each 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). 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 choose:
- From your existing Variable Account Options (payments will vary); with
- The Fixed Account Option (payment is fixed and guaranteed).
Up to 3 Variable Account Options may be chosen, or up to 2 Variable Account
Options if the Fixed Account Option is chosen.
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:
- 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.
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 you have selected.
ASSUMED INVESTMENT
RATE -- the rate used to
determine your first monthly
Payout Payment per
thousand dollars of Account
Value in your Variable
Account Option(s).
14
<PAGE> 20
- --------------------------------------------------------------------------------
- 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.
- 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 Annuity 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.
- PAYMENT FOR A DESIGNATED PERIOD -- payments are made to you for a select
number of years between three and fifteen. Upon your death, payments will
continue to your beneficiary until the designated period is completed. The
Annuitant may elect during the payout period to receive a lump sum payment
equal to the remaining Annuity 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.
PAYOUT INFORMATION
Once your Payout Payments have begun, the option you have chosen may not be
stopped or changed. Any one of the Variable Account Options 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,
- The Fixed Account Option will be used to distribute payments to you on a
Fixed Payout basis, and
- Variable Account Options will be used to distribute payments to you on a
Variable Payout basis.
Your first Payout Payment must total at least $25.
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".
15
<PAGE> 21
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.
For an explanation of charges that may apply if you surrender your Account
Value, see "Fees and Charges" in this prospectus.
AMOUNT THAT MAY BE SURRENDERED
The amount that may be surrendered at any time can be determined as follows:
<TABLE>
<S> <C> <C>
Your
Account
Allowed Value(1)
Surrender - (MINUS)
Value = (EQUALS) Any
Applicable
Surrender
Charge
</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 a 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 an underlying Fund's
shares have been suspended or postponed. See your current AGSPC prospectus for a
discussion of the reasons why the redemption of shares may be suspended or
postponed.
We may defer payment of the Surrender Value in the Fixed Account Options for up
to 6 months. Interest will be paid on such amounts if payment of Fixed Account
Option Surrender Value is deferred for 30 calendar days or more.
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 for 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.
Other employer-sponsored plans may also impose restrictions on the timing and
form of surrenders from the contract.
PARTIAL SURRENDERS
You may request a partial surrender of your Account Value at any time, subject
to any applicable surrender restrictions. A partial surrender plus any surrender
charge will reduce your Account Value. Partial surrenders will be paid from the
Fixed Account Options and Variable Account Options 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>
The amount Your Purchase
surrendered Units next
+ (PLUS) computed after
Any Surrender Charge the written
/ (DIVIDED BY) request for
surrender is
received at our
Home Office
</TABLE>
16
<PAGE> 22
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 Contract.
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 Payments (to Fixed and/or Variable Account Options)
- (MINUS)
Amount of all Prior Withdrawals, Charges 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.
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. Currently,
the Fixed Account Option in
the Contracts is the General
Account. This option of this
type is guaranteed to earn
at least a minimum rate of
interest.
VARIABLE ACCOUNT
OPTIONS -- investment
options that correspond to
VALIC Separate Account A
Divisions offered by the
Contracts. Investment returns
on Variable Account Options
will be positive or negative
depending on the investment
performance of the
underlying mutual fund.
17
<PAGE> 23
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. This will include account maintenance fees and
surrender charges that would have been deducted if you surrendered the Contract
at the end of each period shown. Premium taxes are not deducted. This
information is calculated for each 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. Account
maintenance fees, surrender charges and premium taxes are not deducted.
CUMULATIVE TOTAL RETURN
Cumulative Total Return assumes the investment in the Contracts will stay in the
Division beyond the time that a surrender charge would apply. It may 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 of account maintenance fees, surrender charges or premium taxes.
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.
Account maintenance fees, surrender charges and premium taxes are not deducted.
The effect of these charges, if deducted, would reduce the Division's Annual
Change in Purchase Unit Value.
DIVISIONS -- subaccounts of
VALIC Separate Account A
which represent the Variable
Account Options in the
Contracts. Each Division
invests in a different mutual
fund, each having its own
investment objective and
strategy.
PURCHASE PAYMENTS -- an
amount of money you pay to
VALIC to receive the benefits
of an annuity Contract offered
by the Contracts.
For more information on how
TOTAL RETURN PERFORMANCE
INFORMATION is calculated,
see the Statement of
Additional Information.
18
<PAGE> 24
- --------------------------------------------------------------------------------
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
Contract 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 account maintenance fees, surrender charges and
premium taxes.
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.
AGSPC MONEY MARKET DIVISION
We may advertise the AGSPC Money Market Division's Current Yield and Effective
Yield.
The Current Yield refers to the income produced by an investment in the AGSPC
Money Market Division over a given 7-day period. The Current Yield does not take
into account surrender charges, account maintenance fees or premium taxes. The
income produced over a 7 day period is then "annualized." This means we are
assuming the amount of income produced during the 7-day period will continue to
be produced each week for an entire year. The annualized amount is shown as a
percentage of the investment. For the AGSPC Money Market Division the 7-day
Current Yield for the last 7 days ended December 31, 1999 was 4.31%.
The Effective Yield is calculated in a manner similar to the Current Yield. But,
when the yield is annualized the income earned is assumed to be reinvested. The
compounding effect will cause the Effective Yield to be higher than the Current
Yield. For the AGSPC Money Market Division the 7-day Effective Yield for the
last 7 days ended December 31, 1999 was 4.40%.
DIVISIONS OTHER THAN THE AGSPC MONEY MARKET DIVISION
We may advertise the standardized yield performance for each Division other than
the AGSPC Money Market Division. The yield for each of these Divisions will be
determined as follows:
- We will subtract the account maintenance fee from the average daily net
investment income per Purchase Unit;
- We will divide the remainder 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.
19
<PAGE> 25
TABLE I
AVERAGE ANNUAL TOTAL RETURN
WITH SURRENDER CHARGE AND ACCOUNT MAINTENANCE FEE IMPOSED*
(FROM SEPARATE ACCOUNT DIVISION INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
DIVISION
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Asset Allocation (Division 5) (1)..................... 09/06/83 9.13% 9.91% 16.39% 5.63%
AGSPC Capital Conservation (Division 1)..................... 02/11/82 7.53 5.09 6.25 (5.89)
AGSPC MidCap Index (Division 4)**........................... 10/01/91** 16.12 -- 21.56 8.73
AGSPC Money Market (Division 2)............................. 02/04/82 5.37 3.77 4.04 (1.00)
AGSPC Stock Index (Division 10)............................. 07/28/82 14.17 16.49 26.96 14.33
</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.
** The Division commenced operations on October 13, 1982 as the Capital
Accumulation Fund. Effective October 1, 1991, the Fund underlying the AGSPC
MidCap Index Division changed its name from the Capital Accumulation Fund to
the MidCap Index Fund and amended its investment objective, investment
program and investment restrictions accordingly. The performance figures for
the AGSPC MidCap Index Division reflect the performance of the MidCap Index
Fund since October 1, 1991.
(1) The AGSPC Asset Allocation Fund was formerly known as the Timed Opportunity
Fund.
TABLE II
AVERAGE ANNUAL TOTAL RETURN
WITH NO SURRENDER CHARGE OR ACCOUNT MAINTENANCE FEE IMPOSED*
(FROM SEPARATE ACCOUNT DIVISION INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
DIVISION
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Asset Allocation (Division 5)(1)...................... 09/06/83 9.15% 9.94% 16.42% 10.65%
AGSPC Capital Conservation (Division 1)..................... 02/11/82 7.55 5.12 6.28 (1.42)
AGSPC MidCap Index (Division 4)**........................... 10/01/91** 16.15 -- 21.59 13.78
AGSPC Money Market (Division 2)............................. 02/04/82 5.39 3.80 4.08 3.70
AGSPC Stock Index (Division 10)............................. 07/28/82 14.19 16.51 26.99 19.37
</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.
** The Division commenced operations on October 13, 1982 as the Capital
Accumulation Fund. Effective October 1, 1991, the Fund underlying the AGSPC
MidCap Index Division changed its name from the Capital Accumulation Fund to
the MidCap Index Fund and amended its investment objective, investment
program and investment restrictions accordingly. The performance figures for
the AGSPC MidCap Index Division reflect the performance of the MidCap Index
Fund since October 1, 1991.
(1) The AGSPC Asset Allocation Fund was formerly known as the Timed Opportunity
Fund.
20
<PAGE> 26
TABLE III
CUMULATIVE RETURN
WITH NO SURRENDER CHARGE OR ACCOUNT MAINTENANCE FEE IMPOSED*
(FROM SEPARATE ACCOUNT DIVISION INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
DIVISION
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Asset Allocation (Division 5)(1)...................... 09/06/83 317.43% 157.96% 113.90% 10.65%
AGSPC Capital Conservation (Division 1)..................... 02/11/82 267.32 64.83 35.59 (1.42)
AGSPC MidCap Index (Division 4)**........................... 10/01/91** 243.76 -- 165.74 13.78
AGSPC Money Market (Division 2)............................. 02/04/82 156.00 45.27 22.11 3.70
AGSPC Stock Index (Division 10)............................. 07/28/82 909.59 361.12 230.28 19.37
</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.
** The Division commenced operations on October 13, 1982 as the Capital
Accumulation Fund. Effective October 1, 1991, the Fund underlying the AGSPC
MidCap Index Division changed its name from the Capital Accumulation Fund to
the MidCap Index Fund and amended its investment objective, investment
program and investment restrictions accordingly. The performance figures for
the AGSPC MidCap Index Division reflect the performance of the MidCap Index
Fund since October 1, 1991.
(1) The AGSPC Asset Allocation Fund was formerly known as the Timed Opportunity
Fund.
TABLE IV
ANNUAL AND CUMULATIVE CHANGE IN PURCHASE UNIT VALUE
WITH NO SURRENDER CHARGE OR ACCOUNT MAINTENANCE FEE 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 Asset Allocation (Division
5)(1)................................. 10.65% 17.19% 21.40% 9.99% 23.54% (2.29)% 8.19% (1.71)% 20.13% (3.38)%
AGSPC Capital Conservation (Division
1).................................... (1.42) 6.28 7.47 0.74 19.54 (7.03) 10.86 7.54 22.48 (10.45)
AGSPC MidCap Index (Division 4)**....... 13.78 17.80 30.45 17.61 29.24 (4.70) 11.78 8.79 11.63 --
AGSPC Money Market (Division 2)......... 3.70 4.11 4.12 3.96 4.50 2.76 1.67 2.22 4.43 6.68
AGSPC Stock Index (Division 10)......... 19.37 27.13 31.76 21.52 35.93 (0.30) 8.78 2.62 30.96 (4.21)
CUMULATIVE CHANGE IN PURCHASE UNIT VALUE FOR EACH PERIOD END SINCE DECEMBER 31, 1989*
AGSPC Asset Allocation (Division
5)(1)................................. 157.96% 133.14% 98.95% 63.88% 49.00% 20.60% 23.43% 14.08% 16.07% (3.38)%
AGSPC Capital Conservation (Division
1).................................... 64.83 67.21 57.33 46.40 45.32 21.57 30.76 17.95 9.68 (10.45)
AGSPC MidCap Index (Division 4)**....... 243.76 202.14 156.48 96.61 67.18 29.36 35.74 21.43 11.63 --
AGSPC Money Market (Division 2)......... 45.27 40.09 34.56 29.24 24.31 18.97 15.77 13.87 11.40 6.68
AGSPC Stock Index (Division 10)......... 361.12 286.30 203.86 130.61 89.78 39.62 40.04 28.74 25.45 (4.21)
</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.
** The Division commenced operations on October 13, 1982 as the Capital
Accumulation Fund. Effective October 1, 1991, the Fund underlying the AGSPC
MidCap Index Division changed its name from the Capital Accumulation Fund
to the MidCap Index Fund and amended its investment objective, investment
program and investment restrictions accordingly. The performance figures
for the AGSPC MidCap Index Division reflect the performance of the MidCap
Index Fund since October 1, 1991.
(1) The AGSPC Asset Allocation Fund was formerly known as the Timed Opportunity
Fund.
21
<PAGE> 27
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;
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 description of the Contracts in this prospectus.
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 Funds which comprise
the Variable Account Options. From time to time the Funds are required to hold a
shareholder meeting to obtain approval from their 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 Funds' prospectuses.
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 Contract was
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.
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.
22
<PAGE> 28
- --------------------------------------------------------------------------------
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 Funds which comprise the Variable Account Options 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 Funds it holds based
on, and in the same proportion as, the instructions given by all Participant
Accounts invested in that Fund entitled to give instructions at that shareholder
meeting. VALIC Separate Account A will vote the shares of the Funds 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 other employers (including self-employed individuals);
- Section 408(b) IRAs;
- Section 457 deferred compensation plans of governmental and tax-exempt
employers;
- Section 408(k)SEPs and SARSEPs;
- Section 408(p) SIMPLE retirement accounts.
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."
Such Non-Qualified Contracts generally include unfunded, nonqualified deferred
compensation plans of corporate employers, as well as individual annuity
contracts issued to individuals outside of the context of any formal employer or
employee retirement plan or arrangement.
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
23
<PAGE> 29
- --------------------------------------------------------------------------------
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. Generally,
they would 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
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
maintenance fees and surrender 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 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
24
<PAGE> 30
- --------------------------------------------------------------------------------
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.
The 1998 expenses were excluded from 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.
25
<PAGE> 31
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 of Annuity Plans.......... 5
Section 408(b) Individual Retirement
Annuities (other than Roth IRAs)......... 6
Simplified Employee Pension Plans........... 7
Section 457 Deferred Compensation Plans of
Public Employers and Tax-Exempt
Organizations............................ 7
Private Employer Unfunded Deferred
Compensation Plans....................... 7
Non-Qualified Contracts..................... 8
Fund Diversification........................ 9
Calculation of Surrender Charge................. 9
Illustration of Surrender Charge on Total
Surrender................................ 9
Illustration of Surrender Charge on a 10%
Partial Surrender Followed by a Full
Surrender................................ 10
Purchase Unit Value............................. 10
Illustration of Calculation of Purchase
Units Value.............................. 10
Illustration of Purchase of Purchase
Units.................................... 10
Performance Calculations........................ 11
Money Market Division Yields.................... 11
Calculation of Current Yield for Money
Market Division Two...................... 11
Illustration of Calculation of Current Yield
Money Market Division Two................ 11
Calculation of Effective Yield for Money
Market Division Two...................... 11
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Illustration of Calculation of Effective
Yield for Money Market Division Two...... 11
Standardized Yield for Capital Conservation
Division One.................................. 11
Calculation of Standardized Yield for
Capital Conservation Division One........ 11
Illustration of Calculation of Standardized
Yield for Capital Conservation Division
One...................................... 11
Calculation of Average Annual Total Return...... 12
Performance Information......................... 13
Performance Compared to Market Indices...... 13
Asset Allocation Division Five Performance
Compared to S&P 500(C) Index, Merrill
Lynch Corporate and Government Master
Index and Certificate of Deposit Primary
Offering by New York City Banks, 30 Day
Index.................................... 14
Capital Conservation Division One
Performance Compared to Merrill Lynch
U.S. Corporate High Yield Index and
Merrill Lynch Corporate Master Index..... 15
MidCap Index Division Four Performance
Compared to S&P Index and S&P MidCap 400
Index.................................... 16
Money Market Division Two Performance
Compared to Certificate of Deposit
Primary Offering by New York City Banks,
30 Day Index............................. 17
Stock Index Division Ten Performance
Compared to S&P 500 Index................ 18
Payout Payments................................. 19
Assumed Investment Rate..................... 19
Amount of Payout Payments................... 19
Payout Unit Value........................... 19
Illustration of Calculation of Payout Unit
Value.................................... 20
Illustration of Payout Payments............. 20
Distribution of Variable Annuity Contracts...... 21
Experts......................................... 21
Comments on Financial Statements................ 21
</TABLE>
<PAGE> 32
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<PAGE> 33
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> 34
(This page intentionally left blank)
<PAGE> 35
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.
...............................................................................
UIT-981 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>
<PAGE> 36
(This page intentionally left blank)
<PAGE> 37
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 2620 REV 5/00
(C)The Variable Annuity Life Insurance Company, Houston, Texas
Recycled Paper (LOGO)
<PAGE> 38
[Momento Photo]
INDEPENDENCE PLUS
SEPARATE ACCOUNT A
PROSPECTUS MAY 1, 2000
<PAGE> 39
(This page intentionally left blank)
<PAGE> 40
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
UNITS OF INTEREST UNDER GROUP AND INDIVIDUAL
VARIABLE ANNUITY CONTRACTS
INDEPENDENCE PLUS
SEPARATE ACCOUNT A
May 1, 2000
PROSPECTUS
Independence Plus consists of flexible and single Purchase Payment group and
individual variable annuity contracts that are offered by The Variable Annuity
Life Insurance Company ("VALIC") to Participants in certain employer sponsored
retirement plans. Independence Plus 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 as well as for certain after-tax arrangements that are not part of an
employer's plan.
Independence Plus permits you to invest in and receive retirement benefits in up
to 7 out of a total of 12 Fixed and Variable Account Options (2 fixed and 10
variable) described in this prospectus. Each Variable Account Option invests in
a separate portfolio of the American General Series Portfolio Company ("AGSPC").
- --------------------------------------------------------------------------------
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 Independence Plus. This prospectus is accompanied by the current prospectus
for the mutual fund options 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 Independence Plus 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 INDEPENDENCE PLUS 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.
<PAGE> 41
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THE PROSPECTUS............................... 1
FEE TABLE.......................................... 2
SUMMARY............................................ 4
SELECTED PURCHASE UNIT DATA........................ 6
GENERAL INFORMATION................................ 7
About Independence Plus........................ 7
About VALIC.................................... 7
About VALIC Separate Account A................. 7
Units of Interests............................. 7
Distribution of the Contracts.................. 7
VARIABLE ACCOUNT OPTIONS........................... 8
Summary of Funds............................... 8
PURCHASE PERIOD.................................... 9
Purchase Payments.............................. 9
Purchase Units................................. 9
Calculation of Purchase Unit Value............. 10
Choosing Investment Options.................... 10
Fixed Account Options..................... 10
Variable Account Options.................. 10
Stopping Purchase Payments..................... 10
TRANSFERS BETWEEN INVESTMENT OPTIONS............... 11
During the Purchase Period..................... 11
During the Payout Period....................... 11
Communicating Transfer or Reallocation
Instructions................................. 11
Effective Date of Transfer..................... 12
Market Timing.................................. 12
FEES AND CHARGES................................... 12
Account Maintenance Fee........................ 12
Surrender Charge............................... 12
Amount of Surrender Charge................ 12
10% Free Withdrawal....................... 12
Exceptions to Surrender Charge............ 13
Premium Tax Charge............................. 13
Separate Account Charges....................... 13
Fund Annual Expense Charges.................... 13
Other Tax Charges.............................. 13
Reduction or Waiver of Account Maintenance Fee
and Surrender Charge......................... 13
PAYOUT PERIOD...................................... 14
Fixed Payout................................... 14
Variable Payout................................ 14
Combination Fixed and Variable Payout.......... 14
Payout Date.................................... 15
Payout Options................................. 15
Enhancements to Payout Options................. 15
Payout Information............................. 15
SURRENDER OF ACCOUNT VALUE......................... 16
When Surrenders Are Allowed.................... 16
Amount That May Be Surrendered................. 16
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Surrender Restrictions......................... 16
Partial Surrenders............................. 17
EXCHANGE PRIVILEGE................................. 17
Restrictions on Exchange Privilege............. 17
Agents' and Managers' Retirement Plan Exchange
Offer........................................ 17
DEATH BENEFITS..................................... 18
Beneficiary Information........................ 18
During the Purchase Period..................... 18
During the Payout Period....................... 18
HOW TO REVIEW INVESTMENT PERFORMANCE OF SEPARATE
ACCOUNT DIVISIONS................................ 19
Types of Investment Performance Information
Advertised................................... 19
Total Return Performance Information......... 19
Standard Average Annual Total Return......... 19
Nonstandard Average Annual Total Return...... 19
Cumulative Total Return...................... 19
Annual Change in Purchase Unit Value......... 19
Cumulative Change in Purchase Unit Value..... 20
Total Return Based on Different Investment
Amounts................................... 20
An Assumed Account Value of $10,000.......... 20
Yield Performance Information.................. 20
AGSPC Money Market Division.................. 20
Divisions Other Than The AGSPC Money Market
Divisions................................. 20
Performance Information: Average Annual Total
Return, Cumulative Return and Annual and
Cumulative Change in Purchase Unit Value
Tables....................................... 20
OTHER CONTRACT FEATURES............................ 23
Changes That May Not Be Made................... 23
Change of Beneficiary.......................... 23
Cancellation -- The 10 Day "Free Look"......... 23
We Reserve Certain Rights...................... 23
Relationship to Employer's Plan................ 23
VOTING RIGHTS...................................... 23
Who May Give Voting Instructions............... 23
Determination of Fund Shares Attributable to
Your Account................................. 23
During Purchase Period....................... 23
During Payout Period or after a Death Benefit
Has Been Paid............................. 24
How Fund Shares Are Voted...................... 24
FEDERAL TAX MATTERS................................ 24
Type of Plans.................................. 24
Tax Consequences in General.................... 24
Effect of Tax-Deferred Accumulations........... 25
THE POWER OF TAX-DEFERRED GROWTH................... 25
YEAR 2000.......................................... 26
</TABLE>
<PAGE> 42
ABOUT THE PROSPECTUS
- --------------------------------------------------------------------------------
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.
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.
- ------------- --------
<S> <C>
Account Value................ 11
Annuitant.................... 18
Assumed Investment Rate...... 14
Beneficiary.................. 18
Contract Owner............... 18
Divisions.................... 19
Fixed Account Options........ 18
Home Office.................. 11
Mutual Fund or Fund.......... 7
Participant.................. 1
Participant Year............. 12
Payout Period................ 11
Payout Unit.................. 14
Purchase Payments............ 9, 19
Purchase Period.............. 11
Purchase Unit................ 9
VALIC Separate Account A..... 24
Variable Account Options..... 8, 18
</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, Independence Plus, and
saving for your retirement.
The purpose of Variable Account Options and 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 a contract in which units of interest in VALIC's
Separate Account A are offered. Independence Plus will allow you to accumulate
retirement dollars in Fixed Account Options and/or Variable Account Options.
This prospectus describes only the variable aspects of Independence Plus except
where the Fixed Account Options are specifically mentioned.
For specific information about the Variable Account Options, 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
Independence Plus. This summary is intended to provide you with a brief overview
of those sections discussed in more detail in this prospectus.
PARTICIPANT -- the
individual, (in most
cases you are the
Participant) for whom
Purchase Payments are made.
1
<PAGE> 43
FEE TABLE
- --------------------------------------------------------------------------------
This Fee Table shows all charges and expenses which may be deducted from the
assets of VALIC Separate Account A and from the Funds 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.
CONTRACT OWNER/PARTICIPANT EXPENSES(1)
Maximum Surrender Charge (as a percentage of the lesser of all Purchase
Payments received during the last 60 months or the amount withdrawn)(2) 5.00%
ACCOUNT MAINTENANCE FEE ($5.00 per quarter, during the first Participant Year,
annualized)(2) $ 20
SEPARATE ACCOUNT EXPENSES
(as a percentage of Separate Account net assets):
Mortality and Expense Risk 1.00%
FUND ANNUAL EXPENSES
(as a percentage of net assets):
<TABLE>
<CAPTION>
MANAGEMENT OTHER TOTAL FUND
FUND FEES EXPENSES(3) EXPENSES
---- ---------- ----------- ----------
<S> <C> <C> <C> <C>
AGSPC Asset Allocation Fund(4) 0.50% 0.07% 0.57%
AGSPC Capital Conservation Fund 0.50 0.10 0.60
AGSPC Government Securities Fund 0.50 0.09 0.59
AGSPC International Equities Fund 0.35 0.08 0.43
AGSPC International Government Bond Fund 0.50 0.07 0.57
AGSPC MidCap Index Fund 0.31 0.07 0.38
AGSPC Money Market Fund 0.50 0.07 0.57
AGSPC Small Cap Index Fund 0.35 0.06 0.41
AGSPC Social Awareness Fund 0.50 0.07 0.57
AGSPC Stock Index Fund 0.26 0.06 0.32
</TABLE>
- ---------------
(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 surrender charge and the account maintenance fee are
available if certain conditions are met. See "Reduction or Waiver of Account
Maintenance Fee and Surrender Charge" and "Exceptions to Surrender Charge"
in this prospectus. Account maintenance fee reduces to $15 after first
Participant Year. No surrender charge will be applied if your account has
been in effect for 15 years or longer, or your account has been in effect
for 5 years or longer and you have attained age 59 1/2. There will be no
surrender charge on purchase payments received more than 60 months prior to
surrender. Also, in any Participant Year, withdrawals of up to 10% of
Account Value may be withdrawn without a surrender charge.
(3) 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.
(4) The AGSPC Asset Allocation Fund was formerly known as the Timed Opportunity
Fund.
2
<PAGE> 44
EXAMPLE #1 -- If you do not surrender Independence Plus at the end of the period
shown or you receive Payout Payments under a Payout Option:
- --------------------------------------------------------------------------------
Total Expenses. You would pay the following expenses on a $1,000 investment
under a typical Independence Plus contract without a surrender charge imposed,
invested in a single Separate Account Division as listed below, assuming a 5%
annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
AGSPC Asset Allocation Division 5 $16 $51 $88 $192
AGSPC Capital Conservation Division 7 $17 $52 $89 $195
AGSPC Government Securities Division 8 $17 $51 $89 $194
AGSPC International Equities Division 11 $15 $46 $80 $176
AGSPC International Government Bond Division 13 $16 $51 $88 $192
AGSPC MidCap Index Division 4 $14 $45 $78 $171
AGSPC Money Market Division 6 $16 $51 $88 $192
AGSPC Small Cap Index Division 14 $15 $46 $79 $174
AGSPC Social Awareness Division 12 $16 $51 $88 $192
AGSPC Stock Index Division 10 $14 $43 $75 $164
</TABLE>
EXAMPLE #2 -- If you surrender Independence Plus at the end of the period shown:
- --------------------------------------------------------------------------------
Total Expenses: You would pay the following expenses on a $1,000 investment
under a typical Independence Plus contract invested in a single Separate Account
Division as listed below, assuming a 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
AGSPC Asset Allocation Division 5........................... $63 $101 $138 $192
AGSPC Capital Conservation Division 7....................... $63 $101 $139 $195
AGSPC Government Securities Division 8...................... $63 $101 $139 $194
AGSPC International Equities Division 11.................... $62 $ 96 $130 $176
AGSPC International Government Bond Division 13............. $63 $101 $138 $192
AGSPC MidCap Index Division 4............................... $61 $ 95 $128 $171
AGSPC Money Market Division 6............................... $63 $101 $138 $192
AGSPC Small Cap Index Division 14........................... $61 $ 96 $129 $174
AGSPC Social Awareness Division 12.......................... $63 $101 $138 $192
AGSPC Stock Index Division 10............................... $60 $ 93 $125 $164
</TABLE>
Note: These examples should not be considered representations of past or future
expenses for VALIC Separate Account A or for any 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
Funds which are, in effect, passed on to the Contract Owners and Participants.
3
<PAGE> 45
SUMMARY
- --------------------------------------------------------------------------------
Independence Plus is VALIC's combination fixed and variable annuity that offers
you a wide choice of investment options and flexibility. A summary of
Independence Plus's major features is presented below. For a more detailed
discussion of Independence Plus, please read the entire prospectus carefully.
FIXED AND VARIABLE OPTIONS
Independence Plus offers a choice from among 10 Variable Account Options. You
will not be able to invest in all of the Variable Account Options described
below within a single group or individual annuity contract. If your contract is
part of your employer's retirement program, that program will describe which
Variable Account Options are available to you. Independence Plus also offers two
Fixed Account Options.
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
FIXED ACCOUNT
OPTIONS
- -----------------------------------------------------------------------------------------------------
FIXED Fixed Account Plus Guaranteed high current --
OPTIONS interest income
---------------------------------------------------------------------------------
Short-Term Fixed Guaranteed current --
Account interest income
- -----------------------------------------------------------------------------------------------------
VARIABLE OPTIONS VARIABLE ACCOUNT INVESTMENT STRATEGY ADVISER
OPTIONS
- -----------------------------------------------------------------------------------------------------
INDEX EQUITY FUNDS AGSPC International Growth through VALIC
Equities Fund investments tracking the
EAFE Index
---------------------------------------------------------------------------------
AGSPC MidCap Index Growth through VALIC
Fund investments tracking the
S&P MidCap 400(R) Index
---------------------------------------------------------------------------------
AGSPC Small Cap Index Growth through VALIC
Fund investments tracking the
Russell 2000(R) Index
---------------------------------------------------------------------------------
AGSPC Stock Index Fund Growth through VALIC
investments tracking the
S&P 500(R) Index
- -----------------------------------------------------------------------------------------------------
INCOME FUNDS AGSPC Capital Income and possible VALIC
Conservation Fund growth through
investments in high
quality debt securities
---------------------------------------------------------------------------------
AGSPC Government Income and possible VALIC
Securities Fund growth through
investments in
intermediate and
long-term government debt
securities
---------------------------------------------------------------------------------
AGSPC International Income and possible VALIC
Government Bond Fund growth through
investments in high
quality foreign
government debt
securities
- -----------------------------------------------------------------------------------------------------
SPECIALTY FUNDS AGSPC Social Awareness Growth through VALIC
Fund investments in stocks of
companies meeting social
criteria of the Fund
- -----------------------------------------------------------------------------------------------------
MONEY MARKET FUNDS AGSPC Money Market Income through VALIC
Fund investments in short-term
money market securities
- -----------------------------------------------------------------------------------------------------
ASSET ALLOCATION AGSPC Asset Allocation Maximum return through VALIC
FUNDS Fund investments in a mix of
stocks, bonds and money
market securities
- -----------------------------------------------------------------------------------------------------
</TABLE>
4
<PAGE> 46
SUMMARY -- (CONTINUED)
- --------------------------------------------------------------------------------
A detailed description of the investment objective of each mutual fund can be
found in the section of the prospectus entitled "Variable Account Options," and
also in the current prospectus for AGSPC.
GUARANTEED DEATH BENEFIT
Independence Plus offers 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 the money in your account among Independence
Plus's investment options. You may transfer your Account Values between Variable
Account Options at any time during the Purchase Period.
Your Account Value in the Short-Term Fixed Account must remain there for at
least 90 days before it can be transferred to other investment options. In Fixed
Account Plus, up to 20% of your Account Value may be transferred during each
contract year to other investment options.
Once you begin receiving payments from your account (called the Payout Period),
you may still transfer funds among Variable Account Options once every 365 days.
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 the prospectus.
FEES AND CHARGES
ACCOUNT MAINTENANCE FEE
During the first year a quarterly account maintenance fee of $5.00 is charged to
your account. After the first Participant Year, the quarterly account
maintenance fee is $3.75. Reductions in the account maintenance fee may be
available if certain conditions are met.
SURRENDER CHARGE
Under some circumstances a surrender charge is made to your account. These
situations are discussed in detail in the section of the prospectus entitled
"Fees and Charges -- Surrender Charge." When this happens the surrender charge
is computed in two ways and you are charged whichever amount is less. The first
amount is simply 5% of whatever amount you have withdrawn. The second amount is
5% of the contributions you made to your account during the last 60 months.
Withdrawals are always subject to your plan provisions and federal tax
restrictions, which generally include a tax penalty on withdrawals made prior to
age 59 1/2.
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 a Variable Account Option you will incur a mortality and expense
risk fee computed at an aggregate annualized rate of 1.00% on the average daily
net asset value of VALIC Separate Account A.
FUND ANNUAL EXPENSE CHARGE
A daily charge based on a percentage of each Fund's average daily net asset
value is payable by each Fund to its investment adviser. In addition to the
management fees, each 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 the prospectus.
FEDERAL TAX INFORMATION
Although deferred annuity contracts such as Independence Plus can be purchased
with after-tax dollars, they are primarily used in connection with retirement
programs which receive favorable tax treatment under federal law.
PURCHASE REQUIREMENTS
If the contract is a flexible Purchase Payment contract, Purchase Payments may
be made at any time but each Purchase Payment must be at least $30 per
Participant Account. The amount of each Purchase Payment allocated to each
Variable Account Option and Fixed Account Option must also be at least $30. If
the contract is a single Purchase Payment contract, the minimum Purchase Payment
is $1,000 per Participant Account. These minimums may be waived where one
purchaser, such as an employer, purchases a number of contracts.
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.
5
<PAGE> 47
Selected Purchase Unit Data
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AGSPC
AGSPC AGSPC AGSPC AGSPC INTERNATIONAL AGSPC
ASSET CAPITAL GOVERNMENT INTERNATIONAL GOVERNMENT AGSPC MONEY
ALLOCATION CONSERVATION SECURITIES EQUITIES BOND MIDCAP INDEX MARKET
DIVISION 5 DIVISION 7 DIVISION 8 DIVISION 11 DIVISION 13 DIVISION 4(3) DIVISION 6
---------- ------------ ---------- ------------- ------------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
DECEMBER 31, 1999
Purchase Unit Values
in Force 61,240,667 24,749,727 45,292,728 94,415,343 90,136,603 151,288,816 233,940,123
Purchase Unit Values $4.174280 $2.056559 $2.032753 $1.860227 $1.609098 $5.721920 $1.807351
DECEMBER 31, 1998
Purchase Units in
Force 60,237,818 28,751,662 53,729,671 101,811,751 97,473,851 169,039,887 147,547,688
Purchase Unit Value $3.772519 $2.085846 $2.111727 $1.454644 $1.728006 $5.029093 $1.742617
DECEMBER 31, 1997
Purchase Units in
Force 57,307,351 28,242,598 45,034,894 122,716,744 111,480,591 171,065,657 84,182,521
Purchase Unit Value $3.219282 $1.962239 $1.957755 $1.237299 $1.490645 $4.269122 $1.673590
DECEMBER 31, 1996
Purchase Units in
Force 65,292,617 30,286,494 47,130,169 156,226,314 112,601,593 172,816,978 75,124,095
Purchase Unit Value $2.651899 $1.825549 $1.815651 $1.222906 $1.582230 $3.272588 $1.607212
DECEMBER 31, 1995
Purchase Units in
Force 75,851,431 29,573,808 39,847,053 172,564,018 73,369,250 172,613,690 51,907,757
Purchase Unit Value $2.411022 $1.812011 $1.799475 $1.156454 $1.530780 $2.782677 $1.545802
DECEMBER 31, 1994
Purchase Units in
Force 89,377,860 26,859,219 26,667,073 187,749,916 25,691,713 171,442,018 75,765,781
Purchase Unit Value $1.951533 $1.515278 $1.547150 $1.054460 $1.301357 $2.153183 $1.479129
DECEMBER 31, 1993
Purchase Units in
Force 93,899,802 24,628,606 26,563,166 117,215,227 18,155,381 134,621,879 24,799,810
Purchase Unit Value $1.997266 $1.630069 $1.636228 $0.986387 $1.258340 $2.259378 $1.439327
DECEMBER 31, 1992
Purchase Units in
Force 80,637,090 14,922,749 16,609,444 52,524,165 6,245,713 81,007,871 23,414,474
Purchase Unit Value $1.846025 $1.470167 $1.491537 $0.767135 $1.112826 $2.021271 $1.415690
MAY 1, 1992
Purchase Unit Value(1) -- -- -- -- -- -- --
DECEMBER 31, 1991
Purchase Units in
Force 76,624,765 11,069,044 11,694,890 27,011,169 953,038 49,106,844 25,545,494
Purchase Unit Value $1.878219 $1.366905 $1.405236 $0.895250 $1.090499 $1.858030 $1.384882
OCTOBER 1, 1991
Purchase Unit Value(1) -- -- -- -- $1.000000 -- --
DECEMBER 31, 1990
Purchase Units in
Force 72,284,139 9,321,049 8,460,327 13,776,769 -- 42,958,640 25,246,481
Purchase Unit Value $1.563444 $1.178361 $1.237104 $0.813423 -- $1.538017 $1.325393
<CAPTION>
AGSPC AGSPC AGSPC
SMALLCAP SOCIAL STOCK
INDEX AWARENESS INDEX
DIVISION 14 DIVISION 12 DIVISION 10C(2)
----------- ----------- ---------------
<S> <C> <C> <C>
DECEMBER 31, 1999
Purchase Unit Values
in Force 94,031,183 136,226,993 766,975,696
Purchase Unit Values $2.522643 $4.419383 $5.696582
DECEMBER 31, 1998
Purchase Units in
Force 107,321,015 114,382,494 691,680,049
Purchase Unit Value $2.100506 $3.762308 $4.772052
DECEMBER 31, 1997
Purchase Units in
Force 106,279,077 81,577,104 615,053,124
Purchase Unit Value $2.163595 $2.985333 $3.753436
DECEMBER 31, 1996
Purchase Units in
Force 103,320,842 46,574,016 536,806,965
Purchase Unit Value $1.785442 $2.252673 $2.848437
DECEMBER 31, 1995
Purchase Units in
Force 98,335,995 32,750,120 455,255,243
Purchase Unit Value $1.544896 $1.835102 $2.343900
DECEMBER 31, 1994
Purchase Units in
Force 100,383,839 29,015,764 416,234,288
Purchase Unit Value $1.222329 $1.333899 $1.724134
DECEMBER 31, 1993
Purchase Units in
Force 56,159,647 26,230,566 369,550,060
Purchase Unit Value $1.277199 $1.366979 $1.729327
DECEMBER 31, 1992
Purchase Units in
Force 9,723,477 16,956,437 283,808,045
Purchase Unit Value $1.112790 $1.279516 $1.589718
MAY 1, 1992
Purchase Unit Value(1) $1.000000 -- --
DECEMBER 31, 1991
Purchase Units in
Force -- 8,447,711 90,526,907
Purchase Unit Value -- $1.250634 $1.505641
OCTOBER 1, 1991
Purchase Unit Value(1) -- -- --
DECEMBER 31, 1990
Purchase Units in
Force -- 2,947,418 46,016,297
Purchase Unit Value -- $0.987666 $1.179000
</TABLE>
- ---------------
(1) Purchase Unit Value At Date Of Inception.
(2) Effective with the merger of Quality Growth Fund into Stock Index Fund on
May 1, 1992, Quality Growth Division 9 was merged into Stock Index Division
10C. The merger of Divisions was accomplished by an exchange of units of
Quality Growth Division 9 for units of Stock Index Division 10C of
equivalent value as calculated at the close of business on April 30, 1992.
(3) Effective October 1, 1991, the Fund underlying this Division changed its
name from the Capital Accumulation Fund to the MidCap Index Fund and amended
its investment objective, investment program and investment restrictions
accordingly. Selected Purchase Unit Data prior to October 1, 1991 reflects
investment experience prior to these changes.
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 each
Division of VALIC Separate Account A will not be the same on any given day as
the net asset value per share of the underlying Fund in which that 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 underlying Fund are reinvested by the Division in
additional shares. These distributions have the effect of reducing the value of
each share of the Fund and increasing the number of Fund shares outstanding.
However, the total cash value in VALIC Separate Account A does not change as a
result of such distributions.
6
<PAGE> 48
GENERAL INFORMATION
- --------------------------------------------------------------------------------
ABOUT INDEPENDENCE PLUS
Independence Plus was developed to help you save money for your retirement. It
offers you a combination of fixed and variable investment options that you can
invest in to help you reach your retirement savings goals. Your contributions to
Independence Plus can come from different sources, like payroll deductions or
money transfers. Your retirement savings process with Independence Plus will
involve two stages: the Purchase Period; and the Payout Period. The first is
when you make contributions into Independence Plus 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 Options
and/or the Variable Account Options 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 Independence Plus.
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 Independence Plus. 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 Independence Plus's Variable Account Options, you will
be sending that money through VALIC's Separate Account A. You do not invest
directly in the Mutual Funds made available in Independence Plus. VALIC's
Separate Account A invests in the Mutual Funds on behalf of your account. VALIC
Separate Account A is made up of what we call "Divisions." Ten Divisions are
available and represent the Variable Account Options in Independence Plus. Each
of these Divisions invests in a different Mutual Fund made available through
Independence Plus. For example, Division Ten represents and invests in the AGSPC
Stock Index Fund. The earnings (or losses) of each Division are credited to (or
charged against) the assets of that Division, and do not affect the performance
of the other Divisions of VALIC Separate Account A.
VALIC established Separate Account A on July
25, 1979 under Texas insurance law to allow you to be able to invest in a number
of Variable Account Options available in Independence Plus. 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 Independence Plus, VALIC Separate Account A may not be charged with the
liabilities of any other VALIC operation. As stated in Independence Plus, the
Texas Insurance Code requires that the assets of VALIC Separate Account A
attributable to Independence Plus be held exclusively for the benefit of the
contract owners, participants, annuitants, and beneficiaries of Independence
Plus. When we discuss performance information in this prospectus, we mean the
performance of a VALIC Separate Account A Division.
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 subsidiary
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 up to 1% of each Purchase Payment. These various
commissions are paid by VALIC and do not result in any charge to Contract Owners
or to the Separate Account.
All inquiries regarding
INDEPENDENCE PLUS
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.
THE DISTRIBUTOR'S
ADDRESS IS
2929 ALLEN PARKWAY,
HOUSTON, TEXAS 77019.
7
<PAGE> 49
VARIABLE ACCOUNT OPTIONS
- --------------------------------------------------------------------------------
Independence Plus enables you to participate in Divisions that represent ten
Variable Account Options. You may not according to your retirement program be
able to invest in all ten Variable Account Options described in this prospectus.
Certain additional limitations may also apply. See "About VALIC Separate Account
A" in this prospectus.
Each individual Division represents and invests, through VALIC's Separate
Account A, in a specific portfolio of AGSPC. AGSPC serves as the investment
vehicle for Independence Plus.
AGSPC is registered as a diversified open-end, management investment company and
is regulated under the Act. For complete information about each Mutual 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 FUNDS
A brief summary of the investment objectives of each Mutual Fund is shown below.
AGSPC ASSET ALLOCATION FUND (DIVISION 5) -- Seeks maximum aggregate rate of
return over the long-term through controlled investment risk by adjusting its
investment mix among stocks, long-term debt securities and short-term money
market securities. Formerly known as the Timed Opportunity Fund.
AGSPC CAPITAL CONSERVATION FUND (DIVISION 7) -- Seeks the highest possible total
return consistent with preservation of capital through current income and
capital gains on investments in intermediate and long-term debt instruments and
other income producing securities.
AGSPC GOVERNMENT SECURITIES FUND (DIVISION 8) -- Seeks high current income and
protection of capital through investments in intermediate and long-term U.S.
Government debt securities.
AGSPC INTERNATIONAL EQUITIES FUND (DIVISION 11) -- Seeks to provide long-term
growth of capital through investments primarily in a diversified portfolio of
equity and equity related securities of foreign issuers that, as a group, are
expected to provide investment results closely corresponding to the performance
of the EAFE Index.
AGSPC INTERNATIONAL GOVERNMENT BOND FUND (DIVISION 13) -- Seeks high current
income through investments primarily in high quality debt securities issued or
guaranteed by foreign governments.
AGSPC MIDCAP INDEX FUND -- Seeks to provide growth of capital through
investments primarily in a diversified portfolio of common stocks that, as a
group, are expected to provide investment results closely corresponding to the
performance of the Standard & Poor's MidCap 400(R) Index*.
AGSPC MONEY MARKET FUND (DIVISION 6) -- Seeks liquidity, protection of capital
and current income through investments in short-term money market instruments.
AGSPC SMALL CAP INDEX FUND (DIVISION 14) -- Seeks to provide growth of capital
through investment primarily in a diversified portfolio of common stocks that,
as a group, are expected to provide investment results closely corresponding to
the performance of the Russell 2000(R) Index.**
AGSPC SOCIAL AWARENESS FUND (DIVISION 12) -- Seeks to obtain growth of capital
through investment, primarily in common stocks, in companies which meet the
social criteria established for the Fund.
AGSPC STOCK INDEX FUND (DIVISION 10) -- 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 Standard & Poor's 500
Stock Index(R)***.
* "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)" and "S&P MidCap 400" are
trademarks of Standard and Poor's ("S&P"). AGSPC MidCap 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.
** The Russell(R) Index is a trademark/servicemark of the Frank Russell Trust
Company. Russell(TM) is a trademark of the Frank Russell Company.
*** "Standard & Poor's(R)", "S&P(R)" and "S&P 500(R)" are trademarks of Standard
and Poor's ("S&P"). The AGSPC 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.
VARIABLE ACCOUNT
OPTIONS -- investment
options that correspond
to Separate Account
Divisions offered by
Independence Plus.
Investment returns on
Variable Account
Options may be positive
or negative depending on
the investment
performance of the
underlying Mutual Fund.
8
<PAGE> 50
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 Independence Plus account is surrendered before the Payout Period. The
amount, number, and frequency of your Purchase Payments is determined by the
retirement plan for which Independence Plus 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>
Periodic Payment $ 30 $30
Single Payment $1,000 -0-
</TABLE>
Periodic Payment minimums apply to each Periodic Payment made. In the case of a
Periodic Payment, the amount of each Purchase Payment allocated to each Variable
Account Option and Fixed Account Option must be at least $30. The Single Payment
minimum applies to each of your accounts.
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 contract. We will also establish your
account and apply your Purchase Payment by crediting the amount to the Fixed
Account Option or Variable Account Option selected;
- - Reject the Application -- and return the Purchase Payment; or
- - Request Additional Information -- to correct or complete the application. In
the case of an individual variable annuity contract, we will return the
Purchase Payments within 5 business days if the requested information is not
provided, unless you otherwise so specify.
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 Money Market Division, or other investment option chosen
by your employer. If your employer chooses an Option other than the Money Market
Division, the value of your investment may fluctuate and you could lose money.
You may not transfer these amounts until VALIC has received a completed
application or enrollment form.
Starter Account. If we have your name, address and social security number, but
we do not have an Employer-Directed Account Agreement from your employer, we
will deposit your Purchase Payment in a "starter" account invested in the Money
Market Division. We will send you follow-up letters requesting the information
necessary to complete the application, including your allocation instructions.
Unless a completed application or enrollment form is received by us within 105
days of establishment of your starter account, the account balance, including
earnings, will be returned to your employer. We are not responsible for any
adverse tax consequences to you that may result from the return of your
employer's contributions.
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 Options selected for
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.
PURCHASE PAYMENTS -- an
amount of money you pay to
VALIC to receive the benefits
of an annuity contract offered
by Independence Plus.
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 you have
selected.
For more information as to
how PURCHASE UNIT VALUES
are calculated, see the
Statement of Additional
Information.
9
<PAGE> 51
- --------------------------------------------------------------------------------
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 12 investment options offered in Independence Plus. This includes 2
Fixed Account Options and 10 Variable Account Options. The Funds that underlie
the Variable Account Options are registered as separate portfolios of AGSPC.
AGSPC is registered as an investment company under the Act and is subject to
regulation of the Act. The Fixed Account Options are not subject to regulation
under the Act and interests in the Fixed Account Options are 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 Options.
However, federal securities law does require such data to be accurate and
complete.
FIXED ACCOUNT OPTIONS
Each of the Fixed Account Options are part of the Company's general assets. You
may allocate all or a portion of your Purchase Payment to the Fixed Account
Options listed in the "Summary of Independence Plus" appearing in this
prospectus. Purchase Payments you allocate to these Fixed Account Options are
guaranteed to earn at least a minimum rate of interest. Interest is paid on each
of the Fixed Account Options at declared rates, which may be different for each
option. 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.
Here is how you may calculate the value of your Fixed Account Option during the
Purchase Period:
Value of Your Fixed Account Options
= (EQUALS)
All Purchase Payments made to the Fixed Account Options
+ (PLUS)
Amounts transferred from Variable Account Options to the Fixed
Account Options
+ (PLUS)
All interest earned
- - (MINUS)
Amounts transferred or withdrawn from Fixed Account Options
(including applicable fees and charges)
VARIABLE ACCOUNT OPTIONS
You may allocate all or a portion of your Purchase Payments to the Variable
Account Options listed in this prospectus as permitted by your retirement
program. As noted elsewhere in the prospectus, you will not be permitted to
select from more than seven investment options. A complete discussion of each of
the Variable Account Options may be found in the "Variable Account Options"
section in this prospectus. Based upon a Variable Account Option's Purchase Unit
Value your account will be credited with the applicable number of Purchase
Units. The Purchase Unit Value of each Variable Account Option will change daily
depending upon the investment performance of the underlying 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. Each 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 each 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 Independence Plus account has been surrendered. While no
Purchase Payments are being made, the number of Purchase Units outstanding will
remain the same. (This is assuming no transfers or withdrawals are made.) The
value of the Purchase Units will continue to
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<PAGE> 52
- --------------------------------------------------------------------------------
vary. Your Account Value will continue to be subject to charges.
In the case of an individual contract, if both your Account Value and Purchase
Payments (less any withdrawals) fall below $300, and you do not make any
Purchase Payments for two years from the date we established your account, we
may close the account and pay the Account Value (less any surrender charge) to
you. In the case of a group contract, if your Account Value (less any
withdrawals) falls below $300, we may close the account and pay the Account
Value (less any surrender charge) to you. Any such account closures will be
subject to applicable distribution restrictions under the contract and/or under
your employer's plan.
TRANSFERS BETWEEN INVESTMENT OPTIONS
- --------------------------------------------------------------------------------
You may transfer all or part of your Account Value between the various Fixed
Account and Variable Account Options in Independence Plus 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 Independence Plus's
Fixed Account Options and Variable Account Options.
We currently permit transfers between Variable Account Options or from Variable
Account Options to Fixed Account Options, at any time. We may, however, limit
the number of transfers you can make.
Transfers are also permitted from the Fixed Account Options subject to the
following limitations:
<TABLE>
<CAPTION>
OPTION OTHER
FIXED ACCOUNT VALUE FREQUENCY RESTRICTIONS
- -------------- ------------- ----------- ------------------------
<S> <C> <C> <C>
Fixed Account Up to 20% per At any time None (1)
Plus contract year
100% At any time If Account Value is less
than $500
Short-Term Up to 100% At any time 90-day Holding Period If
Fixed transfer was previously
Account: made into Short-Term
Fixed Account.(2)
</TABLE>
- ---------------
(1) Your employer may further limit or expand the restrictions. We may charge
for those modified restrictions if specified in your employer's retirement
plan.
(2) VALIC may change this holding period at any time in the future, but it will
never be more than 180 days.
DURING THE PAYOUT PERIOD
During the Payout Period, transfers may be made from Independence Plus's
investment options subject to the following limitations:
<TABLE>
<CAPTION>
OPTION OTHER
ACCOUNT OPTION VALUE FREQUENCY RESTRICTIONS
- -------------- ------------- ---------- -------------------
<S> <C> <C> <C>
Variable: Up to 100% Once every None
365 days
Combination Up to 100% of Once every None
Fixed and money in 365 days
Variable variable
Payout: option payout
Fixed: Not permitted -- --
</TABLE>
COMMUNICATING TRANSFER OR
REALLOCATION INSTRUCTIONS
A written instruction to transfer or reallocate all or part of your Account
Value between the various investment options in Independence Plus, 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
ACCOUNT VALUE -- the total
sum of your Fixed Account
and/or Variable Account
Options 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).
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.
11
<PAGE> 53
- --------------------------------------------------------------------------------
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 Independence Plus, you may be subject to six basic types of fees
and charges:
- - Account Maintenance Fee
- - Surrender 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.
ACCOUNT MAINTENANCE FEE
An account maintenance fee of $5.00 will be deducted on the last day of each
calendar quarter following receipt of the first purchase payment during the
first Participant Year. After the first Participant Year, the quarterly account
maintenance fee is $3.75. We will sell Purchase Units from your Account to pay
the account maintenance fee. The fee will be assessed equally among the Variable
Account Options and Fixed Account Options that make up your Account Value.
The account maintenance fee is to reimburse the Company for our administrative
expenses. This includes the expense for establishing and maintaining the record
keeping for Independence Plus. We do not expect that the amount of fees we
receive will be greater than our expenses.
The amount of the account maintenance fee may be reduced or waived if
Independence Plus is issued to certain types of plans which are expected to
result in lower costs to VALIC. To learn more about how we determine if account
maintenance fees may be reduced or waived, see the "Reduction or Waiver of
Account Maintenance Fee and Surrender Charge" section in this prospectus. If you
have two or more accounts established under the same group contract, we may
agree to deduct an account maintenance fee from only one account.
No account maintenance fee will be assessed during the Payout Period.
SURRENDER CHARGE
When you withdraw money from your account, you may be subject to a surrender
charge that will be deducted from the amount withdrawn. For information about
your right to surrender, see "Surrender of Account Value" in this prospectus.
It is assumed that the most recent Purchase Payments are withdrawn first. No
surrender charge will be applied unless an amount is actually withdrawn. We
consider all Purchase Payments to be withdrawn before earnings are withdrawn.
Amounts exchanged from other contracts issued by the Company may or may not be
subject to a surrender charge. After exchange, it is assumed that any new
Purchase Payments are withdrawn before the exchanged amount. For more
information, see "Exchange Privilege" in the Statement of Additional
Information.
Amount of Surrender Charge
A surrender charge may not be greater than:
- - Five percent (5%) of the amount of all Purchase Payments received during the
past 60 months; or
- - Five percent (5%) of the amount withdrawn.
10% Free Withdrawal
In any Participant Year, the first withdrawal of up to 10% of the Account Value
will not be subject to a surrender charge. The surrender charge will apply to
the lesser of any amount withdrawn that exceeds this 10% limit or the amount of
the
PARTICIPANT YEAR -- the first
twelve month period and
then each yearly anniversary
of that period following the
issue date of the contract or
certificate.
12
<PAGE> 54
- --------------------------------------------------------------------------------
surrender attributable to Purchase Payments received during the most recent 60
months. The percentage withdrawn will be determined by dividing the amount
withdrawn by the Account Value just prior to the withdrawal.
These 10% withdrawals without charge do not reduce Purchase Payments for the
purpose of computing the surrender charge. If a surrender charge is applied to
all or part of a Purchase Payment, no surrender charge will be applied to such
Purchase Payment (or portion thereof) again.
Exceptions to Surrender Charge
No surrender charge will be applied:
- - To money applied to provide a Payout Option;
- - To death benefits;
- - If no Purchase Payments have been received during the 60 months prior to the
date of surrender; or
- - If you are at least 55 years old, are no longer employed by the employer that
established the plan, and your account under the plan was established at least
5 years prior to the date of surrender (applicable to qualified contracts
only).
The surrender charge may be reduced or waived if Independence Plus is issued to
certain types of plans or similar arrangements which are expected to result in
lower costs to VALIC. To learn more about how we determine if a surrender charge
may be reduced or waived, see the "Reduction or Waiver of Account Maintenance
Fee and Surrender Charge" section in this prospectus.
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 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. This is a daily charge at an annualized rate of 1.00% 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
Independence Plus. 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 Independence Plus, 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.
FUND ANNUAL EXPENSE CHARGES
Investment management charges based on a percentage of each Fund's average daily
net assets are payable by each Fund. Depending on the Variable Account Option
selected, the charges will be paid by each Fund to its investment adviser. These
charges and other Fund charges and expenses are fully described in the
prospectuses for AGSPC. 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 OR WAIVER OF ACCOUNT
MAINTENANCE FEE AND SURRENDER CHARGE
We may, as described below, determine that the account maintenance fee and
surrender charges for Independence Plus may be reduced or waived. We may reduce
or waive these fees and 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.
13
<PAGE> 55
- --------------------------------------------------------------------------------
- - Other factors of which we are not presently aware which could reduce
administrative costs.
We review the following additional factors to determine whether we can reduce or
waive account maintenance fees:
- - The frequency of Purchase Payments for your retirement program. Purchase
Payments received no more than once a year can reduce administrative costs.
- - The administrative tasks performed by your employer for your retirement
program.
The employer sponsoring your retirement program can, through their method of
remitting Purchase Payments, reduce administrative costs.
We review the following additional factors to determine whether we can reduce or
waive surrender charges:
- - The size of your retirement program.
A retirement program which involves a larger group of employees may allow us
to reduce sales expenses.
- - The total amount of Purchase Payments to be received for your retirement
program.
Larger Purchase Payments can reduce sales expenses.
- - The use of mass enrollment or related administrative tasks performed by your
employer for your retirement program.
We will only do this if permitted by this Contract and by VALIC guidelines in
effect at the time. In no event will the reduction or waiver of fees and
charges be permitted where the reduction or waiver will unfairly discriminate
against any person.
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) (IRA's and certain
nonqualified contracts);
- The portion of your Account Value being applied; and
- 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 may select from your existing Variable Account
Options. Your payments will vary accordingly. This is due to the varying
investment results that will be experienced by each of the Variable Account
Options you selected. The Payout Unit Value is calculated just like the Purchase
Unit Value for each 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.) 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 choose:
- From your existing Variable Account Options (payments will vary); with
- A Fixed Account Option (payment is fixed and guaranteed).
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 you have selected.
ASSUMED INVESTMENT
RATE -- the rate used to
determine your first monthly
Payout Payment per
thousand dollars of Account
Value in your Variable
Account Option(s).
14
<PAGE> 56
- --------------------------------------------------------------------------------
Up to seven Variable Account Options may be chosen, or up to six Variable
Account Options if the Fixed Account Option is chosen.
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:
- 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.
- 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 Annuity 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.
- 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.
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.
PAYOUT INFORMATION
Once your Payout Payments have begun, the option you have chosen may not be
stopped or changed. Any one of the Variable Account Options 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,
For more information about
PAYOUT OPTIONS OR
ENHANCEMENTS of those
Payout Options available
under the Contract,
see the Statement of
Additional Information.
15
<PAGE> 57
- 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 Options will be used to distribute payments to you on a
Variable Payout basis.
Your first Payout Payment must total at least $25.
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.
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.
For an explanation of charges that may apply if you surrender your Account
Value, see "Fees and Charges" in this prospectus.
AMOUNT THAT MAY BE SURRENDERED
The amount that may be surrendered at any time can be determined as follows:
<TABLE>
<S> <C> <C>
Your
Account
Allowed Value(1)
Surrender - (MINUS)
Value = (EQUALS) Any
Applicable
Surrender
Charge
</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 a 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 an underlying Fund's
shares have been suspended or postponed. See your current AGSPC prospectus for a
discussion of the reasons why the redemption of shares may be suspended or
postponed.
We may defer payment of the Surrender Value in the Fixed Account Options for up
to 6 months. Interest will be paid on such amounts if payment of Fixed Account
Option Surrender Value is deferred for 30 calendar days or more.
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 for 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.
Other employer-sponsored plans may also impose restrictions on the timing and
form of surrenders from the contract.
16
<PAGE> 58
- --------------------------------------------------------------------------------
PARTIAL SURRENDERS
You may request a partial surrender of your Account Value at any time, subject
to any applicable surrender restrictions. A partial surrender plus any surrender
charge will reduce your Account Value. Partial surrenders will be paid from the
Fixed Account Options and Variable Account Options 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>
The amount Your Purchase
surrendered Units next
+ (PLUS) computed after
Any Surrender Charge the written
/ (DIVIDED BY) request for
surrender is
received at our
Home Office
</TABLE>
The Surrender Value will be reduced by a full quarterly account maintenance fee
charged in the case of a full surrender during a quarter.
EXCHANGE PRIVILEGE
- --------------------------------------------------------------------------------
We issue other fixed and/or variable annuity contracts (others contracts) in
addition to Independence Plus. We will allow you, under certain conditions, to
exchange from one of these other contracts to Independence Plus. This exchange
privilege will be available only to other contracts purchased through your
employer-sponsored retirement plan and for which we have not yet started making
payments under a Payout Option. If you elect to exercise one of these exchange
rights, you should contact your nearest Regional Office. An exchange may require
the issuance of a contract or may be subject to any other requirements that the
Company may impose.
RESTRICTIONS ON EXCHANGE PRIVILEGE
We will impose certain general restrictions and rules on the exchange privileges
- Partial exchanges are not permitted.
Additionally, if you have your money in a fixed account of one of the other
contracts or in a fixed annuity contract, you must exchange directly into the
Fixed Account Options of Independence Plus. You will be subject to all of the
rules that apply to the Fixed Account Options in Independence Plus. For example,
you will be subject to the rules concerning transfers among investment options
as stated in the Transfers Between Investment Options section in this
prospectus. We may, at our option, waive any transfer restrictions for a stated
period of time. If we waive these transfer restrictions, you will be allowed to
exchange to any investment option available in Independence Plus.
WE RESERVE THE RIGHT TO TERMINATE, MODIFY OR SUSPEND THESE EXCHANGE PRIVILEGES
AT ANY TIME.
AGENTS' AND MANAGERS' RETIREMENT PLAN
EXCHANGE OFFER
General. All eligible agents and managers of the Company are allowed to
participate in the Company's Agents' and Managers' Retirement Plan ("Plan"). We
grant to participants in the Plan the right to effect a voluntary exchange of
their units of interest under the Company's SA-1 Contracts for the equivalent
units of interest in Independence Plus.
Agents and managers of VALIC who enter into the voluntary exchange will not
incur under Independence Plus any surrender charges or account maintenance fees.
Other individuals who may exchange to Independence Plus from SA-1 Contracts may
have surrender charges and account maintenance fees imposed under Independence
Plus. All other provisions with regard to exchange offers referenced in the
section entitled "Exchange Offers" will apply to the Agents' and Managers'
Retirement Plan Exchange Offer.
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<PAGE> 59
DEATH BENEFITS
- --------------------------------------------------------------------------------
Independence Plus 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 Independence Plus 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 Independence Plus.
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 Payments (to Fixed and/or Variable Account Options)
- (MINUS)
Amount of all Prior Withdrawals, Charges 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 Independence Plus 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.
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 OPTIONS -- a
particular subaccount into
which your Purchase
Payments and Account Value
may be allocated to fixed
investment options. Currently,
the Fixed Account Options in
Independence Plus are Fixed
Account Plus and Short-Term
Fixed Account. Each option
of this type is guaranteed to
earn at least a minimum rate
of interest.
VARIABLE ACCOUNT
OPTIONS -- investment
options that correspond to
VALIC Separate Account A
Divisions offered by Independence
Plus. Investment returns on
Variable Account Options
will be positive or negative
depending on the investment
performance of the
underlying mutual fund.
18
<PAGE> 60
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. This will include account maintenance fees and
surrender charges that would have been deducted if you surrendered Independence
Plus at the end of each period shown. Premium taxes are not deducted. This
information is calculated for each 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. Account
maintenance fees, surrender charges and premium taxes are not deducted.
CUMULATIVE TOTAL RETURN
Cumulative Total Return assumes the investment in Independence Plus will stay in
the Division beyond the time that a surrender charge would apply. It may 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 of account maintenance fees, surrender charges or premium taxes.
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.
Account maintenance fees, surrender charges and premium taxes are not deducted.
The effect of these charges, if deducted, would reduce the Division's Annual
Change in Purchase Unit Value.
DIVISIONS -- subaccounts of
VALIC Separate Account A
which represent the Variable
Account Options in Independence
Plus. Each Division
invests in a different mutual
fund, each having its own
investment objective and
strategy.
PURCHASE PAYMENTS -- an
amount of money you pay to
VALIC to receive the benefits
of an annuity Contract offered
by Independence Plus.
For more information on how
TOTAL RETURN PERFORMANCE
INFORMATION is calculated,
see the Statement of
Additional Information.
19
<PAGE> 61
- --------------------------------------------------------------------------------
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
Independence Plus 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 account maintenance fees, surrender charges and
premium taxes.
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.
AGSPC MONEY MARKET DIVISION
We may advertise the AGSPC Money Market Division's Current Yield and Effective
Yield.
The Current Yield refers to the income produced by an investment in the AGSPC
Money Market Division over a given 7-day period. The Current Yield does not take
into account surrender charges, account maintenance fees or premium taxes. The
income produced over a 7 day period is then "annualized." This means we are
assuming the amount of income produced during the 7-day period will continue to
be produced each week for an entire year. The annualized amount is shown as a
percentage of the investment. For the AGSPC Money Market Division the 7-day
Current Yield for the last 7 days ended December 31, 1999 was 4.31%.
The Effective Yield is calculated in a manner similar to the Current Yield. But,
when the yield is annualized the income earned is assumed to be reinvested. The
compounding effect will cause the Effective Yield to be higher than the Current
Yield. For the AGSPC Money Market Division the 7-day Effective Yield for the
last 7 days ended December 31, 1999 was 4.40%.
DIVISIONS OTHER THAN THE AGSPC MONEY MARKET DIVISION
We may advertise the standardized yield performance for each Division other than
the AGSPC Money Market Division. The yield for each of these Divisions will be
determined as follows:
- We will subtract the account maintenance fee from the average daily net
investment income per Purchase Unit;
- We will divide the remainder 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 Independence Plus
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.
20
<PAGE> 62
TABLE I
AVERAGE ANNUAL TOTAL RETURN
WITH SURRENDER CHARGE AND ACCOUNT MAINTENANCE FEE IMPOSED*
(FROM SEPARATE ACCOUNT DIVISION INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
DIVISION
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Asset Allocation (Division 5)(1)...................... 09/06/83 9.05% 9.84% 15.79% 5.63%
AGSPC Capital Conservation (Division 7)..................... 01/16/86 5.20 5.49 5.43 (5.87)
AGSPC Government Securities (Division 8).................... 01/16/86 5.11 5.50 4.72 (8.10)
AGSPC International Equities (Division 11).................. 10/02/89 6.14 6.00 11.30 22.84
AGSPC International Government Bond (Division 13)........... 10/01/91 5.84 -- 3.40 (11.10)
AGSPC MidCap Index (Division 4)**........................... 10/01/91** 16.05 -- 21.04 8.74
AGSPC Money Market (Division 6)............................. 01/16/86 4.23 3.73 3.14 (0.99)
AGSPC Small Cap Index (Division 14)......................... 05/01/92 12.72 -- 14.95 15.05
AGSPC Social Awareness (Division 12)........................ 10/02/89 15.50 15.80 26.60 12.42
AGSPC Stock Index (Division 10)............................. 04/20/87 14.58 16.38 26.53 14.33
</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.
** The Division commenced operations on October 13, 1982 as the Capital
Accumulation Fund. Effective October 1, 1991, the Fund underlying the AGSPC
MidCap Index Division changed its name from the Capital Accumulation Fund
to the MidCap Index Fund and amended its investment objective, investment
program and investment restrictions accordingly. The performance figures
for the AGSPC MidCap Index Division reflect the performance of the MidCap
Index Fund since October 1, 1991.
(1) The AGSPC Asset Allocation Fund was formerly known as the Timed Opportunity
Fund.
TABLE II
AVERAGE ANNUAL TOTAL RETURN
WITH NO SURRENDER CHARGE OR ACCOUNT MAINTENANCE FEE IMPOSED*
(FROM SEPARATE ACCOUNT DIVISION INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
DIVISION
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Asset Allocation (Division 5)(1)...................... 09/06/83 9.15% 9.94% 16.42% 10.65%
AGSPC Capital Conservation (Division 7)..................... 01/16/86 5.30 5.59 6.30 (1.40)
AGSPC Government Securities (Division 8).................... 01/16/86 5.21 5.60 5.61 (3.74)
AGSPC International Equities (Division 11).................. 10/02/89 6.24 6.11 12.02 27.88
AGSPC International Government Bond (Division 13)........... 10/01/91 5.94 -- 4.34 (6.88)
AGSPC MidCap Index (Division 4)**........................... 10/01/91** 16.15 -- 21.59 13.78
AGSPC Money Market (Division 6)............................. 01/16/86 4.33 3.83 4.09 3.71
AGSPC Small Cap Index (Division 14)......................... 05/01/92 12.82 -- 15.59 20.10
AGSPC Social Awareness (Division 12)........................ 10/02/89 15.60 15.91 27.07 17.46
AGSPC Stock Index (Division 10)............................. 04/20/87 14.68 16.48 27.00 19.37
</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.
** The Division commenced operations on October 13, 1982 as the Capital
Accumulation Fund. Effective October 1, 1991, the Fund underlying the AGSPC
MidCap Index Division changed its name from the Capital Accumulation Fund to
the MidCap Index Fund and amended its investment objective, investment
program and investment restrictions accordingly. The performance figures for
the AGSPC MidCap Index Division reflect the performance of the MidCap Index
Fund since October 1, 1991.
(1) The AGSPC Asset Allocation Fund was formerly known as the Timed Opportunity
Fund.
21
<PAGE> 63
TABLE III
CUMULATIVE RETURN
WITH NO SURRENDER CHARGE OR ACCOUNT MAINTENANCE FEE IMPOSED*
(FROM SEPARATE ACCOUNT DIVISION INCEPTION TO DECEMBER 31, 1999)
<TABLE>
<CAPTION>
DIVISION
INCEPTION SINCE
FUND AND DIVISION DATE INCEPTION 10 YEARS 5 YEARS 1 YEAR
----------------- --------- --------- -------- ------- ------
<S> <C> <C> <C> <C> <C>
AGSPC Asset Allocation (Division 5)(1)...................... 09/06/83 317.43% 157.96% 113.90% 10.65%
AGSPC Capital Conservation (Division 7)..................... 01/16/86 105.66 72.30 35.72 (1.40)
AGSPC Government Securities (Division 8).................... 01/16/86 103.28 72.38 31.39 (3.74)
AGSPC International Equities (Division 11).................. 10/02/89 86.02 80.88 76.42 27.88
AGSPC International Government Bond (Division 13)........... 10/01/91 60.91 -- 23.65 (6.88)
AGSPC MidCap Index (Division 4)**........................... 10/01/91** 243.76 -- 165.74 13.78
AGSPC Money Market (Division 6)............................. 01/16/86 80.74 45.68 22.19 3.71
AGSPC Small Cap Index (Division 14)......................... 05/01/92 152.26 -- 106.38 20.10
AGSPC Social Awareness (Division 12)........................ 10/02/89 341.94 337.56 231.31 17.46
AGSPC Stock Index (Division 10)............................. 04/20/87 469.66 359.85 230.40 19.37
</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.
** The Division commenced operations on October 13, 1982 as the Capital
Accumulation Fund. Effective October 1, 1991, the Fund underlying the AGSPC
MidCap Index Division changed its name from the Capital Accumulation Fund to
the MidCap Index Fund and amended its investment objective, investment
program and investment restrictions accordingly. The performance figures for
the AGSPC MidCap Index Division reflect the performance of the MidCap Index
Fund since October 1, 1991.
(1) The AGSPC Asset Allocation Fund was formerly known as the Timed Opportunity
Fund.
TABLE IV
ANNUAL AND CUMULATIVE CHANGE IN PURCHASE UNIT VALUE
WITH NO SURRENDER CHARGE OR ACCOUNT MAINTENANCE FEE 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 Asset Allocation (Division
5)(1)................................ 10.65% 17.19% 21.40% 9.99% 23.55% (2.29)% 8.19% (1.71)% 20.13% (3.38)%
AGSPC Capital Conservation (Division
7)................................... (1.40) 6.30 7.49 0.75 19.58 (7.04) 10.88 7.55 16.00 (1.28)
AGSPC Government Securities (Division
8)................................... (3.74) 7.86 7.83 0.90 16.31 (5.44) 9.70 6.14 13.59 4.91
AGSPC International Equities (Division
11).................................. 27.88 17.57 1.18 5.75 9.67 6.90 28.58 (14.31) 10.06 (20.90)
AGSPC International Government Bond
(Division 13)........................ (6.88) 15.92 (5.79) 3.36 17.63 3.42 13.08 2.05 9.05 --
AGSPC MidCap Index (Division 4)**...... 13.78 17.80 30.45 17.61 29.24 (4.70) 11.78 8.79 11.63 --
AGSPC Money Market (Division 6)........ 3.71 4.12 4.13 3.97 4.51 2.77 1.67 2.22 4.49 6.83
AGSPC Small Cap Index (Division 14).... 20.10 (2.92) 21.18 15.57 26.39 (4.30) 14.77 11.28 -- --
AGSPC Social Awareness (Division 12)... 17.46 26.03 32.52 22.75 37.57 (2.42) 6.84 2.31 26.63 (2.21)
AGSPC Stock Index (Division 10)........ 19.37 27.14 31.77 21.53 35.95 (0.30) 8.78 5.58 27.70 (4.83)
CUMULATIVE CHANGE IN PURCHASE UNIT VALUE FOR EACH PERIOD END SINCE DECEMBER 31, 1989*
AGSPC Asset Allocation (Division
5)(1)................................ 157.96% 133.14% 98.95% 63.88% 49.00% 20.60% 23.43% 14.08% 16.07% (3.38)%
AGSPC Capital Conservation (Division
7)................................... 72.30 74.76 64.40 52.95 51.81 26.95 36.57 23.17 14.52 (1.28)
AGSPC Government Securities (Division
8)................................... 72.38 79.08 66.02 53.97 52.60 31.20 38.75 26.48 19.17 4.91
AGSPC International Equities (Division
11).................................. 80.88 41.45 20.31 18.91 12.45 2.53 (4.09) (25.41) (12.95) (20.90)
AGSPC International Government Bond
(Division 13)........................ 60.91 72.80 49.06 58.22 53.08 30.14 25.83 11.28 9.05
AGSPC MidCap Index (Division 4)**...... 243.76 202.14 156.48 96.61 67.18 29.36 35.74 21.43 11.63
AGSPC Money Market (Division 6)........ 45.68 40.47 34.90 29.55 24.60 19.23 16.02 14.11 11.63 6.83
AGSPC Small Cap Index (Division 14).... 152.26 110.05 116.36 78.54 54.49 22.23 27.72 11.28
AGSPC Social Awareness (Division 12)... 337.56 272.50 195.58 123.04 81.69 32.07 35.34 26.68 23.82 (2.21)
AGSPC Stock Index (Division 10)........ 359.85 285.22 202.99 129.94 89.21 39.18 39.60 28.33 21.54 (4.83)
</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.
** The Division commenced operations on October 13, 1982 as the Capital
Accumulation Fund. Effective October 1, 1991, the Fund underlying the AGSPC
MidCap Index Division changed its name from the Capital Accumulation Fund to
the MidCap Index Fund and amended its investment objective, investment
program and investment restrictions accordingly. The performance figures for
the AGSPC MidCap Index Division reflect the performance of the MidCap Index
Fund since October 1, 1991.
(1) The AGSPC Asset Allocation Fund was formerly known as the Timed Opportunity
Fund.
22
<PAGE> 64
OTHER CONTRACT FEATURES
- --------------------------------------------------------------------------------
CHANGES THAT MAY NOT BE MADE
The following terms in Independence Plus 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;
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 description of Independence Plus in this prospectus.
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 Funds which comprise
the Variable Account Options. From time to time the Funds are required to hold a
shareholder meeting to obtain approval from their 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 Funds' prospectuses.
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 Independence Plus was
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.
23
<PAGE> 65
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 Funds which comprise the Variable Account Options in Independence Plus 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 Funds it holds based
on, and in the same proportion as, the instructions given by all Participant
Accounts invested in that Fund entitled to give instructions at that shareholder
meeting. VALIC Separate Account A will vote the shares of the Funds 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
- --------------------------------------------------------------------------------
Independence Plus provides tax-deferred accumulation over time, but is 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. Independence
Plus is 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 other employers (including self-employed individuals);
- Section 408(b) IRAs;
- Section 457 deferred compensation plans of governmental and tax-exempt
employers;
- Section 408(k) SEPs and SARSEPs;
- Section 408(p) SIMPLE retirement accounts.
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, Independence Plus is also available through "Non-Qualified
Contracts." Such Non-Qualified Contracts generally include unfunded,
nonqualified deferred compensation plans of corporate employers, as well as
individual annuity contracts issued to individuals outside of the context of any
formal employer or employee retirement plan or arrangement.
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 Independence Plus 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
Independence Plus is offered and the previous tax characterization of
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.
24
<PAGE> 66
- --------------------------------------------------------------------------------
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. Generally,
they would 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
federal income tax purposes.
EFFECT OF TAX-DEFERRED ACCUMULATIONS
The chart below compares the results from Premium Payments made to:
- An Independence Plus 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
maintenance fees and surrender 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 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.
25
<PAGE> 67
- --------------------------------------------------------------------------------
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
- --------------------------------------------------------------------------------
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 AGC'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.
The 1998 expenses were excluded from 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.
26
<PAGE> 68
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 408(b) Individual Retirement
Annuities (other than Roth IRAs).......... 6
Simplified Employee Pension Plans............ 7
Section 457 Deferred Compensation Plans of
Public Employers and Tax-Exempt
Organizations............................. 7
Private Employer Unfunded Deferred
Compensation Plans........................ 7
Non-Qualified Contracts...................... 8
Fund Diversification......................... 9
Exchange Privilege............................... 9
General...................................... 9
Differences between New and Existing
Contracts................................. 9
Agents' and Managers' Retirement Plan
Exchange Offer............................ 12
Availability of Offer........................ 12
Calculation of Surrender Charge.................. 13
Illustration of Surrender Charge on Total
Surrender................................. 13
Illustration of Surrender Charge on a 10%
Partial Surrender Followed by a Full
Surrender................................. 14
Purchase Unit Value.............................. 15
Illustration of Calculation of Purchase Unit
Value..................................... 15
Illustration of Purchase of Purchase Units... 15
Performance Calculations......................... 16
Money Market Division Yields..................... 16
Calculation of Current Yield for Money Market
Division Six.............................. 16
Illustration of Calculation of Current Yield
Money Market Division Six................. 16
Calculation of Effective Yield for Money
Market Division Six....................... 16
Illustration of Calculation of Effective
Yield for Money Market Division Six....... 16
Standardized Yield for Divisions Seven, Eight and
Thirteen....................................... 16
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Calculation of Standardized Yield for
Divisions Seven, Eight and Thirteen....... 16
Illustration of Calculation of Standardized
Yield for Divisions Seven, Eight and
Thirteen.................................. 16
Calculation of Average Annual Total Return....... 17
Performance Information.......................... 18
Performance Compared to Market Indices....... 18
Stock Index Division Ten Performance Compared
to S&P 500 Index.......................... 20
MidCap Index Division Four Performance
Compared to S&P 500 Index and S&P MidCap
400 Index................................. 21
Small Cap Index Division Fourteen Performance
Compared to Russell 2000(R) Index......... 22
International Equities Division Eleven
Performance Compared to EAFE Index........ 22
Social Awareness Division Twelve Performance
Compared to S&P 500 Index................. 23
Asset Allocation Division Five Performance
Compared to S&P 500 Index, Merrill Lynch
Corporate and Government Master Index and
Certificate of Deposit Primary Offering by
New York City Banks, 30 Day Index......... 24
Capital Conservation Division Seven
Performance Compared to Merrill Lynch
Corporate Master Index.................... 25
Government Securities Division Eight
Performance Compared to Lehman Brothers
U.S. Treasury Composite Index............. 26
International Government Bond Division
Thirteen Performance Compared to Salomon
Brothers Non-U.S. Dollar World Government
Bond
Index..................................... 27
Money Market Division Six Performance
Compared to Certificate of Deposit Primary
Offering by New York City Banks, 30 Day
Index..................................... 28
Payout Payments.................................. 29
Assumed Investment Rate...................... 29
Amount of Payout Payments.................... 29
Payout Unit Value............................ 29
Illustration of Calculation of Payout Unit
Value..................................... 30
Illustration of Payout Payments.............. 30
Distribution of Variable Annuity Contracts....... 31
Experts.......................................... 31
Comments on Financial Statements................. 31
</TABLE>
<PAGE> 69
[This page intentionally left blank]
<PAGE> 70
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> 71
(This page intentionally left blank)
<PAGE> 72
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.
...............................................................................
INDEPENDENCE PLUS 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>
<PAGE> 73
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 10855 REV 5/00
(C)The Variable Annuity Life Insurance Company, Houston, Texas
Recycled Paper [RECYCLED PAPER LOGO]
32
<PAGE> 74
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
UNITS OF INTEREST UNDER
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
CONTRACT FORM UIT-981
--------------------------------------------------------------------
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 Contract
Form UIT-981 dated May 1, 2000 ("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 Variable Life Insurance Company (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> 75
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 of Annuity Plans.......... 5
Section 408(b) Individual Retirement
Annuities (other than Roth IRAs)......... 6
Simplified Employee Pension Plans........... 7
Section 457 Deferred Compensation Plans of
Public Employers and Tax-Exempt
Organizations............................ 7
Private Employer Unfunded Deferred
Compensation Plans....................... 7
Non-Qualified Contracts..................... 8
Fund Diversification........................ 9
Calculation of Surrender Charge................. 9
Illustration of Surrender Charge on Total
Surrender................................ 9
Illustration of Surrender Charge on a 10%
Partial Surrender Followed by a Full
Surrender................................ 10
Purchase Unit Value............................. 10
Illustration of Calculation of Purchase
Units Value.............................. 10
Illustration of Purchase of Purchase
Units.................................... 10
Performance Calculations........................ 11
Money Market Division Yields.................... 11
Calculation of Current Yield for Money
Market Division Two...................... 11
Illustration of Calculation of Current Yield
Money Market Division Two................ 11
Calculation of Effective Yield for Money
Market Division Two...................... 11
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Illustration of Calculation of Effective
Yield for Money Market Division Two...... 11
Standardized Yield for Capital Conservation
Division One.................................. 11
Calculation of Standardized Yield for
Capital Conservation Division One........ 11
Illustration of Calculation of Standardized
Yield for Capital Conservation Division
One...................................... 11
Calculation of Average Annual Total Return...... 12
Performance Information......................... 13
Performance Compared to Market Indices...... 13
Asset Allocation Division Five Performance
Compared to S&P 500(C) Index, Merrill
Lynch Corporate and Government Master
Index and Certificate of Deposit Primary
Offering by New York City Banks, 30 Day
Index.................................... 14
Capital Conservation Division One
Performance Compared to Merrill Lynch
U.S. Corporate High Yield Index and
Merrill Lynch Corporate Master Index..... 15
MidCap Index Division Four Performance
Compared to S&P Index and S&P MidCap 400
Index.................................... 16
Money Market Division Two Performance
Compared to Certificate of Deposit
Primary Offering by New York City Banks,
30 Day Index............................. 17
Stock Index Division Ten Performance
Compared to S&P 500 Index................ 18
Payout Payments................................. 19
Assumed Investment Rate..................... 19
Amount of Payout Payments................... 19
Payout Unit Value........................... 19
Illustration of Calculation of Payout Unit
Value.................................... 20
Illustration of Payout Payments............. 20
Distribution of Variable Annuity Contracts...... 21
Experts......................................... 21
Comments on Financial Statements................ 21
</TABLE>
2
<PAGE> 76
GENERAL INFORMATION
MARKETING INFORMATION
The Company has targeted not-for-profit organizations as the central focus
of its marketing efforts for its 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"), The Variable Annuity Research &
Data Services ("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> 77
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> 78
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 a 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> 79
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 408(b) INDIVIDUAL RETIREMENT ANNUITIES
(OTHER THAN ROTH IRAS)
408(b) Individual Retirement Annuities ("408(b) IRAs"). Annual
tax-deductible contributions for 408(b) IRA Contracts are limited to the lesser
of $2,000 or 100% of compensation, and generally may be made only by individuals
who:
(i) are not active participants in another
retirement plan, and are not married;
(ii) are not active participants in another
retirement plan, are married, but either (a) the spouse is not an active
participant in another retirement plan, or (b) the spouse is an active
participant, but the couple's adjusted gross income does not exceed
$150,000;
(iii) are active participants in another retirement
plan, are unmarried, and have adjusted gross income of $31,000 or less
($30,000 for 1998, $25,000 or less prior to 1998; adjusted upward for
inflation after 1998); or
(iv) are active participants in another retirement
plan, are married, and have adjusted gross income of $51,000 or less
($50,000 for 1998, $40,000 or less prior to 1998; adjusted upward for
inflation after 1998).
Active participants in other retirement plans whose adjusted gross income
exceeds the limits in (ii), (iii) or (iv) by less than $10,000 are entitled to
make deductible 408(b) IRA contributions in proportionately reduced amounts. If
a 408(b) IRA is established for a nonworking spouse who has no compensation, the
annual tax-deductible Purchase Payments for both spouses' Contracts cannot
exceed the lesser of $4,000 or 100% of the working spouse's earned income, and
no more than $2,000 may be contributed to either spouse's IRA for any year.
You may be eligible to make nondeductible IRA contributions of an amount
equal to the excess of:
(i) the lesser of $2,000 ($4,000 for you and your
spouse's IRA) or 100% of compensation, over
(ii) your applicable IRA deduction limit.
You may also make unlimited contributions of eligible rollover amounts from
other qualified plans and contracts. See Tax-Free Rollovers, Transfers and
Exchanges.
Taxation of Distributions. Distributions from IRA Contracts are taxed as
ordinary income to the recipient. In addition, a 10% penalty tax will be imposed
on taxable distributions received before the year in which the recipient attains
age 59 1/2, except that distributions made on account of certain events,
including death, disability or in the form of substantially equal periodic
payments over the life (or life expectancy) of the Participant (or the
Participant and Beneficiary), or for certain medical, higher education or
first-time homeowner expenses, or health insurance premiums are not subject to
the penalty tax.
Required Distributions. The minimum distribution requirements for IRA
Contracts are generally the same as described with respect to Section 403(b)
annuity Contracts, except that no amounts are exempted from the minimum
distribution requirements and in all events such distributions must commence no
later than April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
Tax-Free Rollovers. Federal law permits funds to be transferred in a
tax-free rollover from a qualified employer pension, profit-sharing, or annuity
plan, or a Section 403(b) annuity Contract, to an IRA Contract under certain
conditions. Amounts accumulated under such a rollover IRA generally may
subsequently be rolled over on a tax-free basis to another such plan or Section
403(b) annuity Contract. In addition, a tax-free rollover may be made from one
IRA to another, provided that not more than one such rollover may be made during
any twelve-month period. In order to qualify for tax-free treatment, all
rollovers must be completed within 60 days after the distribution is received.
6
<PAGE> 80
SIMPLIFIED EMPLOYEE PENSION PLANS
Purchase Payments. Under section 408(k) of the Code, employers may
establish a type of IRA plan referred to as a simplified employee pension plan
(SEP). Employer contributions under a SEP, which generally must be made at a
rate representing a uniform percent of the compensation of participating
employees, are excluded from the gross income of employees for federal income
tax purposes. Employer contributions to a SEP cannot exceed the lesser of
$30,000 or 15% of an employee's compensation for plan years beginning after
December 31, 1993.
Salary Reduction SEPs. Federal tax law allows employees of certain small
employers to have contributions made to the SEP on their behalf on a salary
reduction basis. These salary reduction contributions may not exceed $10,500
($9,500 prior to 1998; $10,000 in 1998 and 1999), indexed for inflation in later
years. Employees of tax-exempt organizations are not eligible for this type of
SEP. No new salary reduction SEPs may be established after 1996.
Taxation of Distributions. SEP distributions are subject to taxation in the
same manner as other IRA distributions.
Required Distributions. SEP distributions are subject to the same minimum
required distribution rules applicable to other IRAs.
Tax-Free Rollovers. Funds may be rolled over tax-free from one SEP to
another as long as the rollover is completed within 60 days after the
distribution is received and is done no more frequently than once every twelve
months.
SECTION 457 DEFERRED COMPENSATION
PLANS OF PUBLIC EMPLOYERS AND
TAX-EXEMPT ORGANIZATIONS
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 plans maintained by a unit of a state
or local government, the Contract is generally held for the exclusive benefit of
plan participants, although certain Contracts were subject to the claims of the
employer's creditors until January 1, 1999. The employee has no present rights
or vested interest in the Contract 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.
7
<PAGE> 81
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 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.
NON-QUALIFIED CONTRACTS
Purchase Payments. Purchase Payments made under certain Contracts are not
excludible from the gross income of the Contract Owner or deductible for tax
purposes ("Non-Qualified Contracts"). However, any increase in the Accumulation
Value of a Non-Qualified Contract resulting from the investment performance of
the Separate Account is not taxable to the Contract Owner until received by him.
Contract Owners that are not natural persons, however, are currently taxable on
any increase in the Accumulation Value attributable to Purchase Payments made to
such Contracts after February 28, 1986.
Taxation of Distributions. In general, partial redemptions under a
Non-Qualified Contract purchased after August 13, 1982 (or allocated to post-
August 13, 1982 Purchase Payments under a pre-existing Contract) that are not
received as an annuity are taxed as ordinary income to the extent of the
accumulated income or gain under the Contract. Partial redemptions from a
Non-Qualified Contract purchased before August 14, 1982, are taxed only after
the Contract Owner has received all of his pre-August 14, 1982 "investment in
the Contract" (Purchase Payments less any amounts previously received and
excluded from gross income.)
In the case of a complete redemption of a Non-Qualified Contract
(regardless of the date of purchase), the amount received will be taxed as
ordinary income to the extent that it exceeds the Contract Owner's investment in
the Contract.
If a Contract Owner purchases two or more Contracts from the Company (or an
affiliated company) within the same calendar year, after October 21, 1988 those
Contracts are treated as a single Contract for purposes of measuring the income
on a partial redemption or complete surrender.
When payments are received as an annuity, the Contract Owner's investment
in the Contract is treated as received ratably over the expected payment period
of the annuity and excluded from gross income as a tax-free return of capital.
Individuals who start receiving annuity payments on or after January 1, 1987,
can exclude from income only their unrecovered investment in the Contract. Where
such individuals die before they have recovered their entire investment in the
Contract on a tax-free basis, they generally are entitled to a deduction of the
unrecovered amount on their final tax return.
In addition to regular income taxes, there is a 10% penalty tax on the
taxable portion of a distribution received before age 59 1/2 under a
Non-Qualified Contract, unless the distribution is: (1) made to a Beneficiary on
or after death of the Contract Owner; (2) made upon the disability of the
Contract Owner; (3) part of a series of substantially equal annuity payments for
the life or life expectancy of the Contract Owner or the Contract Owner and
Beneficiary; (4) made under an immediate annuity contract; or (5) allocable to
Purchase Payments made prior to August 14, 1982.
Required Distributions. In contrast with the required distribution rules
described above for Contracts purchased under employer-sponsored retirement
programs, the Code does not require a Contract Owner under a Non-Qualified
Contract to commence receiving distributions at any particular time during the
Contract Owner's lifetime provided that the Contract Owner is a natural person,
and generally does not limit the duration of annuity payments. However, upon the
death of the Contract Owner prior to the commencement of annuity payments, the
amount accumulated under the Contract must be distributed within five years or,
if distributions to a beneficiary designated under the Contract start within one
year of the Contract Owner's death, distributions are permitted over the life of
the beneficiary or over a period not extending beyond the beneficiary's life
expectancy. If the Contract Owner
8
<PAGE> 82
has started receiving annuity distributions prior to his death, distributions
must continue at least as rapidly as under the method in effect at the date of
his death.
Tax-Free Exchanges. Certain of the Non-Qualified single payment deferred
annuity contracts permit the Contract Owner to exchange his contract for a new
deferred annuity contract prior to the commencement of annuity payments. Under
section 1035 of the Code, the exchange of one annuity contract for another is
not a taxable transaction, but is reportable to the IRS.
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.
CALCULATION OF SURRENDER CHARGE
The surrender charge is discussed in the Prospectus under "Fees and
Charges -- Surrender Charge." Examples of calculation of the surrender charge
upon total and partial surrender are set forth below.
ILLUSTRATION OF SURRENDER CHARGE ON TOTAL SURRENDER
Example 1.
TRANSACTION HISTORY
<TABLE>
<CAPTION>
DATE TRANSACTION AMOUNT
- ---- ----------- ------
<S> <C> <C>
2/1/95.......................... Purchase Payment $10,000
2/1/96.......................... Purchase Payment 5,000
2/1/97.......................... Purchase Payment 15,000
2/1/98.......................... Purchase Payment 2,000
7/1/98.......................... Total Purchase Payments (Assumes
Account Value is $38,000) 32,000
------
</TABLE>
Surrender Charge is lesser of (a) or (b):
a. Surrender Charge calculated on 36 months of Purchase Payments
<TABLE>
<S> <C>
1. Surrender Charge against Purchase Payment of 2/1/95...... $ 0
2. Surrender Charge against Purchase Payment of 2/1/96
(0.05 X $5,000).......................................... $ 250
3. Surrender Charge against Purchase Payment of 2/1/97
(0.05 X $15,000)......................................... $ 750
4. Surrender Charge against Purchase Payment of 2/1/98
(0.05 X $2,000).......................................... $ 100
Surrender Charge based on Purchase Payments
(1 + 2 + 3 + 4).......................................... $1,100
</TABLE>
b. Surrender charge calculated on the excess over 10% of the Account Value at
the time of surrender:
<TABLE>
<S> <C> <C> <C>
Account Value at time of surrender $ 38,000
Less 10% not subject to surrender charge -3,800
--------
Subject to surrender charge 34,200
X .05
--------
Surrender Charge based on Account Value $ 1,710 ............... $1,710
Surrender Charge is the lesser of a or b ............... $1,100
------
</TABLE>
9
<PAGE> 83
ILLUSTRATION OF SURRENDER CHARGE ON A 10% PARTIAL SURRENDER FOLLOWED BY A FULL
SURRENDER
Example 2.
TRANSACTION HISTORY (ASSUMES NO INTEREST EARNED)
<TABLE>
<CAPTION>
DATE TRANSACTION AMOUNT
- ---- ----------- ------
<S> <C> <C>
2/1/95.......................... Purchase Payment $ 4,000
2/1/96.......................... Purchase Payment 0
2/1/97.......................... Purchase Payment 0
2/1/98.......................... Purchase Payment 1,000
7/1/98.......................... Partial Surrender
(Assumes Account Value is $10,000) 2,500
</TABLE>
a. Since this is the first partial surrender in this Participant Year, calculate
the excess over 10% of the value of the Purchase Units.
10% of $10,000 = $1,000.
b. The Account Value upon which Surrender Charge on the Full Surrender may be
calculated (levied) is $2,500 - $1,000 = $1,500.
c. Since only $1,000 has been paid in Purchase Payments in the 36 months prior
to the Full Surrender, the charge can only be calculated on $1,000. Thus, the
charge is $1,000 X (0.05) = $50.00.
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
Example 3.
<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)
Example 4.
<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>
10
<PAGE> 84
PERFORMANCE CALCULATIONS
MONEY MARKET DIVISION YIELDS
CALCULATION OF CURRENT YIELD FOR MONEY MARKET DIVISION TWO
7-DAY CURRENT YIELD: 4.31%
ILLUSTRATION OF CALCULATION OF CURRENT YIELD FOR MONEY MARKET DIVISION TWO
Example 5.
The current yield quotation above is based on the seven days ended December
31, 1999, the date of the most recent balance sheet included in the registration
statement ("base period"). It is computed by determining the net change,
exclusive of capital changes, in the value of a hypothetical pre-existing
account having a balance of one Accumulation Unit at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from Contract
Owner Accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return and then
multiplying the base period return by 365/7.
CALCULATION OF EFFECTIVE YIELD FOR MONEY MARKET DIVISION TWO
7-DAY EFFECTIVE YIELD: 4.40%
ILLUSTRATION OF CALCULATION OF EFFECTIVE YIELD FOR MONEY MARKET DIVISION TWO
Example 6.
The effective yield quotation above is based on the seven days ended
December 31, 1999, the date of the most recent balance sheet included in the
registration statement ("base period"). It is computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one Purchase Unit at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from Contract
Owner accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return and then
compounding the base period return by adding 1, raising the sum to a power equal
to 365 divided by 7, and subtracting 1 from the result, according to the
following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)(365/7)] - 1
STANDARDIZED YIELD FOR CAPITAL CONSERVATION DIVISION ONE
CALCULATION OF STANDARDIZED YIELD FOR CAPITAL CONSERVATION DIVISION ONE
Standardized Yield: 6.31%
ILLUSTRATION OF CALCULATION OF STANDARDIZED YIELD
FOR CAPITAL CONSERVATION DIVISION ONE
Example 7.
The yield quotation based on a 30-day period ended December 31, 1999, the
date of the most recent balance sheet of the Registrant included in the
registration statement is computed by dividing
the net investment income per Purchase Unit earned during the period by the
maximum offering price per Unit on the last day of the period, according to the
following formula:
YIELD = 2 [( a - b + 1 )(6) - 1]
-----
cd
11
<PAGE> 85
Where:
<TABLE>
<S> <C> <C>
a = net investment income earned during the period by the Fund
attributable to shares owned by the Division
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of Purchase Units outstanding
during the period
d = the maximum offering price per Purchase Unit on the last day
of the period
</TABLE>
Yield on the Division is earned from dividends declared and paid by the
Fund, which are automatically reinvested in Fund shares.
CALCULATION OF AVERAGE ANNUAL TOTAL RETURN
Average Annual Total Return quotations for the 1, 5, and 10 year periods
ended December 31, 1998, 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 36 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.
12
<PAGE> 86
PERFORMANCE INFORMATION
PERFORMANCE COMPARED TO MARKET INDICES
The following tables show the Hypothetical $10,000 Account Value and
Cumulative Return of each Division as compared to the benchmarks shown.
These performance calculations for the Divisions, and the methods used for
calculating them, are explained in the Prospectus. (See "How to Review
Investment Performance of Separate Account Divisions" and "The Summary of
Funds").
These tables compare hypothetical investment performance and percentage
changes in Purchase Unit Values with the results of several benchmarks,
representing unmanaged market indices. The comparisons should be considered in
light of the investment policies and objectives of the Funds. Rates of return
for the Divisions include reinvestment of investment income, including capital
gains, interest and dividends. The rates of return on the market indices also
have 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 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 Asset Allocation Division Five may be compared to a
benchmark comprised of a weighted average of three market sectors in which the
Division, through the Asset Allocation Fund, will invest. The base allocation is
55% in equity securities, 35% in intermediate or long-term debt securities and
10% in money market or short-term debt securities. The Division's actual asset
allocation is determined daily by the Bankers Trust Asset Allocation Model. The
performance of the equity securities sector of the Division may be compared to
the S&P 500 Index. The performance of the intermediate or long-term debt
securities sector may be compared to the Merrill Lynch Corporate and Government
Master Index. The Merrill Lynch Corporate and Government Master Index consists
of an index of approximately 5,000 corporate and government bond holdings. The
average maturity of these corporate bond holdings is approximately 10 years. The
performance of the money market or short-term debt securities sector may be
compared to the Certificate of Deposit Primary Offering by New York City Banks,
30 Day Index.
Additionally, the performance of a Division from time to time may be
compared with other Indexes which have been deemed by the Company relevant to
the Division.
These benchmarks do not reflect any charges for investment advisory fees,
brokerage commissions or other fees and expenses of the type charged at either
the Separate Account or Fund level. Therefore, the comparisons with these
benchmarks are of limited use.
The performance of Capital Conservation Division One may be compared to the
Merrill Lynch Corporate Master Index. The Merrill Lynch Corporate Master Index
consists of an index of approximately 4,300 corporate bond holdings of
- ---------------
** "Standard & Poor's(R)", S&P(R), "S&P 500(R)" and "S&P MidCap 400(R)" are
trademarks of Standard and Poor's Corporation. Neither the MidCap Index Fund
nor the Stock Index Fund is sponsored, endorsed, sold or promoted by S&P and
S&P makes no representation regarding the advisability of investing in these
Funds. 13
<PAGE> 87
which assets are rated AAA to BBB-. The average years to maturity of these
corporate bond holdings are approximately 12 years.
The performance of MidCap Index Division Four may be compared to the record
of the S&P MidCap 400 Index. The S&P MidCap 400 Index was developed in 1991 by
S&P to track the stock market performance of medium-capitalization domestic
stocks. The S&P MidCap 400 Index is market weighted and consists of 400 stocks
of domestic companies having a median market capitalization of approximately
$1.998 billion. Stocks included in the S&P MidCap 400 Index are chosen on the
basis of their market size, liquidity and industry group representation. No
stocks included in the S&P 500 Index are included in the S&P MidCap 400 Index.
The performance of Money Market Division Two may be compared to the
Certificate of Deposit Primary Offering by New York City Banks, 30 Day Index.
The index is a money market index which reflects the average rate paid by New
York Banks on certificates of deposit of more than $100,000. The Index for 30
days is published daily.
The performance of Stock Index Division Ten may be compared to the record
of the Standard & Poor's(C) Corporation ("S&P(C)")* Composite Stock Price Index
("S&P 500 Index"). The S&P 500(C) Index is a well known measure of the price
performance of 500 leading larger domestic stocks which represents 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.
The Account Value of an assumed $10,000 investment in each of the Divisions
is shown in table form below. This will reflect a deduction for separate account
fees (mortality and expense risk fees) and underlying fund charges. This will
not reflect any deduction for account maintenance fees, surrender charges and
premium taxes. These charges would further reduce your return. See "How to
Review Investment Performance of Separate Account Divisions" in the prospectus
for information about how these returns were calculated as well as Standard
Average Annual Total Return information that reflects the deduction of all
separate account fees and charges.
ASSET ALLOCATION DIVISION FIVE PERFORMANCE COMPARED TO S&P 500 INDEX, MERRILL
LYNCH CORPORATE AND GOVERNMENT MASTER INDEX AND CERTIFICATE OF DEPOSIT PRIMARY
OFFERING BY NEW YORK CITY BANKS, 30 DAY INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE JANUARY 1, 1990
<TABLE>
<CAPTION>
ASSET
ALLOCATION
DIVISION S&P 500 BLENDED
FIVE INDEX INDEX*
---------- ------- -------
<S> <C> <C> <C>
01/01/90...................................... $10,000 $10,000 $10,000
12/31/90...................................... 9,662 9,689 10,221
12/31/91...................................... 11,607 12,642 12,556
12/31/92...................................... 11,408 13,605 13,467
12/31/93...................................... 12,343 14,976 14,773
12/31/94...................................... 12,060 15,174 14,772
12/31/95...................................... 14,900 20,876 18,819
12/31/96...................................... 16,388 25,671 21,422
12/31/97...................................... 19,895 34,234 26,122
12/31/98...................................... 23,314 44,018 31,313
12/31/99...................................... 25,796 53,283 34,750
</TABLE>
14
<PAGE> 88
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
Asset Allocation Division Five**.......................... 157.96% 113.90% 10.65%
------ ------ -----
Benchmark Comparison
S&P 500 Index................................ 432.83% 251.15% 21.05%
------ ------ -----
Blended Index*............................... 247.50% 135.23% 10.98%
------ ------ -----
</TABLE>
- ---------------
* The Blended Index reflects an allocation of investments in the following
Indexes: 55% of investments included in the S&P 500 Index, 35% of investments
included in the Merrill Lynch Corporate and Government Master Index, and 10%
of investments included in the Certificate of Deposit Primary Offering by New
York City Banks, 30 Day Index.
** This Division was initiated on September 6, 1983. Effective October 1, 1997
the Timed Opportunity Fund changed its name to the Asset Allocation Fund.
CAPITAL CONSERVATION DIVISION ONE PERFORMANCE COMPARED TO MERRILL LYNCH
CORPORATE MASTER INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE JANUARY 1, 1990
<TABLE>
<CAPTION>
CAPITAL
CONSERVATION MERRILL LYNCH
DIVISION CORPORATE MASTER
ONE INDEX
------------ ----------------
<S> <C> <C>
01/01/90............................................. $10,000 $10,000
12/31/90............................................. 8,955 10,737
12/31/91............................................. 10,968 12,695
12/31/92............................................. 11,795 13,853
12/31/93............................................. 13,076 15,575
12/31/94............................................. 12,157 15,051
12/31/95............................................. 14,532 18,299
12/31/96............................................. 14,640 18,919
12/31/97............................................. 15,733 20,884
12/31/98............................................. 16,721 22,705
12/31/99............................................. 16,483 22,277
</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
Capital Conservation Division One*........................ 64.83% 35.59% (1.42)%
------ ----- -----
Benchmark Comparison
Merrill Lynch U.S. Corporate High Yield
Index**.................................... 178.72% 58.26% 1.57%
Merrill Lynch Corporate Master Index......... 122.77% 48.01% (1.89)%
------ ----- -----
</TABLE>
- ---------------
* This Division was initiated on February 11, 1982.
** The Merrill Lynch U.S. Corporate Master Index commenced on October 31, 1984.
15
<PAGE> 89
MIDCAP INDEX DIVISION FOUR* PERFORMANCE COMPARED TO S&P INDEX AND S&P MIDCAP 400
INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE OCTOBER 1, 1991
<TABLE>
<CAPTION>
MIDCAP
INDEX S&P S&P
DIVISION 500 MIDCAP 400
FOUR INDEX INDEX
-------- ------- ----------
<S> <C> <C> <C>
10/01/91..................................... $10,000 $10,000 $10,000
12/31/91..................................... 11,163 10,838 11,229
12/31/92..................................... 12,143 11,664 12,566
12/31/93..................................... 13,574 12,840 14,320
12/31/94..................................... 12,936 13,009 13,806
12/31/95..................................... 16,718 17,898 18,078
12/31/96..................................... 19,661 22,009 21,557
12/31/97..................................... 25,648 29,351 28,506
12/31/98..................................... 30,214 37,739 33,947
12/31/99..................................... 34,376 45,682 38,948
</TABLE>
CUMULATIVE RETURN COMPARED TO MARKET INDEX
(PERIOD ENDED DECEMBER 31, 1999)
<TABLE>
<CAPTION>
SINCE
INCEPTION** 5 YEARS 1 YEAR
----------- ------- ------
<S> <C> <C> <C>
Investment Division
Division Four.......................................... 243.76% 165.74% 13.78%
------ ------ ------
Benchmark Comparison
S&P 500 Index............................. 356.82% 251.15% 21.05%
------ ------ ------
S&P MidCap 400 Index...................... 289.48% 182.11% 14.73%
------ ------ ------
</TABLE>
- ---------------
* Effective October 1, 1991, the Capital Accumulation Fund changed its name to
the MidCap Index Fund and revised its investment objective, investment
program and investment restrictions accordingly, pursuant to contract owner
vote.
** This Division was initiated on October 13, 1982.
16
<PAGE> 90
MONEY MARKET DIVISION TWO PERFORMANCE COMPARED TO CERTIFICATE OF DEPOSIT PRIMARY
OFFERING BY NEW YORK CITY BANKS, 30 DAY INDEX (PRIMARY CD INDEX)
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE JANUARY 1, 1990
<TABLE>
<CAPTION>
MONEY
MARKET
DIVISION PRIMARY CD
TWO INDEX
-------- ----------
<S> <C> <C>
01/01/90.................................................. $10,000 $10,000
12/31/90.................................................. 10,668 10,800
12/31/91.................................................. 11,140 11,390
12/31/92.................................................. 11,387 11,749
12/31/93.................................................. 11,577 12,053
12/31/94.................................................. 11,897 12,483
12/31/95.................................................. 12,431 13,100
12/31/96.................................................. 12,924 13,694
12/31/97.................................................. 13,456 14,349
12/31/98.................................................. 14,009 15,023
12/31/99.................................................. 14,527 15,693
</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
Money Market Division Two*................................ 45.27% 22.11% 3.70%
----- ----- ----
Benchmark Comparison
Primary CD Index............................. 56.93% 25.71% 4.46%
----- ----- ----
</TABLE>
- ---------------
* This Division was initiated on February 4, 1982.
17
<PAGE> 91
STOCK INDEX DIVISION TEN* 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
DIVISION S&P 500
TEN INDEX
-------- -------
<S> <C> <C>
01/01/90.................................................... $10,000 $10,000
12/31/90.................................................... 9,579 9,689
12/31/91.................................................... 12,545 12,642
12/31/92.................................................... 12,874 13,605
12/31/93.................................................... 14,004 14,976
12/31/94.................................................... 13,962 15,174
12/31/95.................................................... 18,978 20,876
12/31/96.................................................... 23,061 25,671
12/31/97.................................................... 30,386 34,234
12/31/98.................................................... 38,630 44,018
12/31/99.................................................... 46,112 54,283
</TABLE>
CUMULATIVE RETURN COMPARED TO MARKET INDEX
(PERIOD ENDED DECEMBER 31, 1998)
<TABLE>
<CAPTION>
10 YEARS 5 YEARS 1 YEAR
-------- ------- ------
<S> <C> <C> <C>
Investment Division
Stock Index Division Ten***........................... 361.12% 230.28% 19.37%
------ ------ -----
Benchmark Comparison
S&P 500 Index............................ 432.83% 251.15% 21.05%
------ ------ -----
</TABLE>
- ---------------
* Effective May 1, 1992, AGSPC Quality Growth Fund merged with AGSPC Stock
Index Fund, and Division Three was renamed Division Ten.
** "Standard & Poor's(R)", "S&P(R)", "S&P 500(R)" and "S&P MidCap 400 Index"
are trademarks of Standard and Poor's Corporation. Neither the MidCap Index
Fund nor the Stock Index Fund is sponsored, endorsed, sold or promoted by
S&P and S&P makes no representation regarding the advisability of investing
in these Funds.
*** This Division was initiated on July 28, 1982.
18
<PAGE> 92
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. 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% rate described in this prospectus as follows: 4 1/2% or 5% per annum. 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 Annuity 2000 Table (promulgated by the Society of Actuaries) and an Assumed
Investment Rate of 3 1/2%, 4% and 5% per annum (3 1/2% in the group Contract).
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.
In any subsequent month, the dollar amount of the variable payout payment
derived from each Division is determined by multiplying the number of Payout
Units in that Division by the value of such Payout Unit 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 return of the Division or Divisions
underlying the variable payout since the date of the previous payout payment,
less an adjustment to neutralize the 3 1/2% or other Assumed Investment Rate
referred to above.
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 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
calculation of Payout Unit value is discussed in the prospectus under "Payout
Period."
19
<PAGE> 93
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
Example 8.
<TABLE>
<S> <C>
1. Payout Unit value, beginning of period.................. $ .980000
2. Net investment factor for Period (see Example 3)........ 1.023558
3. Daily adjustments for 3 1/2% Assumed Investment Rate.... .999906
4. (2)X(3)................................................. 1.023462
5. Payout Unit value, end of period (1)X(4)................ $1.002993
</TABLE>
ILLUSTRATION OF PAYOUT PAYMENTS
Example 9. 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 3)..................... $ 1.800000
3. Account Value of Contract (1)X(2)....................... $18,000.00
4. First monthly Payout Payment per $1,000 of Account
Value.................................................... $ 6.57
5. First monthly Payout Payment (3)X(4)/1,000.............. $ 118.26
6. Payout Unit value (see Example 8)....................... $ .980000
7. Number of Payout Units (5)/(6).......................... $ 120.673
8. Assume Payout Unit value for second month equal to...... $ .997000
9. Second monthly Payout Payment (7)X(8)................... $ 120.31
10. Assume Payout Unit value for third month equal to....... $ .953000
11. Third monthly Payout Payment (7)X(10)................... $ 115.00
</TABLE>
20
<PAGE> 94
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 as defined above, an
affiliate of the Company. 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.
The licensed agents who sell the Contracts will be compensated for such
sales by commissions which will range up to 6.0% of each Purchase payment.
Managers who supervise the agents will receive overriding commissions ranging up
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 the
Separate Account. Sales commissions paid for 1999 were approximately $24,202;
with $0 retained in commissions for that same period.
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 One, Two, Four, Five, and Ten, 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.
21
<PAGE> 95
[THIS PAGE INTENTIONALLY LEFT BLANK]
22
<PAGE> 96
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 2620-1 REV 5/00
(C)The Variable Annuity Life Insurance Company, Houston, Texas
Recycled Paper --RECYCLED PAPER LOGO--
<PAGE> 97
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> 98
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> 99
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> 100
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> 101
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> 102
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> 103
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> 104
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> 105
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> 106
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> 107
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> 108
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> 109
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> 110
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> 111
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> 112
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> 113
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> 114
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> 115
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> 116
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> 117
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> 118
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> 119
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> 120
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> 121
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> 122
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> 123
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> 124
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> 125
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> 126
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> 127
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> 128
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> 129
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> 130
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> 131
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> 132
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> 133
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> 134
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> 135
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> 136
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> 137
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> 138
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> 139
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> 140
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> 141
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> 142
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> 143
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> 144
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> 145
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> 146
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> 147
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> 148
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> 149
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> 150
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> 151
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
UNITS OF INTEREST UNDER GROUP AND
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
INDEPENDENCE PLUS CONTRACT SERIES
--------------------------------------------------------------------
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 Independence
Plus Contract Series* dated May 1, 2000 ("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 Variable Life Insurance
Company (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.
- ---------------
(* The Independence Plus Contract Series is composed of Contract Forms
UIT-585-96 and UITG-585-96.)
<PAGE> 152
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 408(b) Individual Retirement
Annuities (other than Roth IRAs)......... 6
Simplified Employee Pension Plans........... 7
Section 457 Deferred Compensation Plans of
Public Employers and Tax-Exempt
Organizations............................ 7
Private Employer Unfunded Deferred
Compensation Plans....................... 7
Non-Qualified Contracts..................... 8
Fund Diversification........................ 9
Exchange Privilege.............................. 9
General..................................... 9
Differences between New and Existing
Contracts................................ 9
Agents' and Managers' Retirement Plan
Exchange Offer........................... 12
Availability of Offer....................... 12
Calculation of Surrender Charge................. 13
Illustration of Surrender Charge on Total
Surrender................................ 13
Illustration of Surrender Charge on a 10%
Partial Surrender Followed by a Full
Surrender................................ 14
Purchase Unit Value............................. 15
Illustration of Calculation of Purchase Unit
Value.................................... 15
Illustration of Purchase of Purchase
Units.................................... 15
Performance Calculations........................ 16
Money Market Division Yields.................... 16
Calculation of Current Yield for Money
Market Division Six...................... 16
Illustration of Calculation of Current Yield
Money Market Division Six................ 16
Calculation of Effective Yield for Money
Market Division Six...................... 16
Illustration of Calculation of Effective
Yield for Money Market Division Six...... 16
Standardized Yield for Divisions Seven, Eight
and Thirteen.................................. 16
</TABLE>
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Calculation of Standardized Yield for
Divisions Seven, Eight and Thirteen...... 16
Illustration of Calculation of Standardized
Yield for Divisions Seven, Eight and
Thirteen................................. 16
Calculation of Average Annual Total Return...... 17
Performance Information......................... 18
Performance Compared to Market Indices...... 18
Stock Index Division Ten Performance
Compared to S&P 500 Index................ 20
MidCap Index Division Four Performance
Compared to S&P 500 Index and S&P MidCap
400 Index................................ 21
Small Cap Index Division Fourteen
Performance Compared to Russell 2000(R)
Index.................................... 22
International Equities Division Eleven
Performance Compared to EAFE Index....... 22
Social Awareness Division Twelve Performance
Compared to S&P 500 Index................ 23
Asset Allocation Division Five Performance
Compared to S&P 500 Index, Merrill Lynch
Corporate and Government Master Index and
Certificate of Deposit Primary Offering
by New York City Banks, 30 Day Index..... 24
Capital Conservation Division Seven
Performance Compared to Merrill Lynch
Corporate Master Index................... 25
Government Securities Division Eight
Performance Compared to Lehman Brothers
U.S. Treasury Composite Index............ 26
International Government Bond Division
Thirteen Performance Compared to Salomon
Brothers Non-U.S. Dollar World Government
Bond Index............................... 27
Money Market Division Six Performance
Compared to Certificate of Deposit
Primary Offering by New York City Banks,
30 Day Index............................. 28
Payout Payments................................. 29
Assumed Investment Rate..................... 29
Amount of Payout Payments................... 29
Payout Unit Value........................... 29
Illustration of Calculation of Payout Unit
Value.................................... 30
Illustration of Payout Payments............. 30
Distribution of Variable Annuity Contracts...... 31
Experts......................................... 31
Comments on Financial Statements................ 31
</TABLE>
2
<PAGE> 153
GENERAL INFORMATION
MARKETING INFORMATION
The Company has targeted not-for-profit organizations as the central focus
of its marketing efforts for its 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"), The Variable Annuity Research and
Data Services ("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> 154
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> 155
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 a 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> 156
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 408(B) INDIVIDUAL RETIREMENT ANNUITIES
(OTHER THAN ROTH IRAS)
408(b) Individual Retirement Annuities ("408(b) IRAs"). Annual
tax-deductible contributions for 408(b) IRA Contracts are limited to the lesser
of $2,000 or 100% of compensation, and generally may be made only by individuals
who:
(i) are not active participants in another
retirement plan, and are not married;
(ii) are not active participants in another
retirement plan, are married, but either (a) the spouse is not an active
participant in another retirement plan, or (b) the spouse is an active
participant, but the couple's adjusted gross income does not exceed
$150,000;
(iii) are active participants in another retirement
plan, are unmarried, and have adjusted gross income of $32,000 or less
($31,000 for 1999, $30,000 for 1998, $25,000 or less prior to 1998;
adjusted upward for inflation after 1998); or
(iv) are active participants in another retirement
plan, are married, and have adjusted gross income of $52,000 or less
($51,000 for 1999, $50,000 for 1998, $40,000 or less prior to 1998;
adjusted upward for inflation after 1998).
Active participants in other retirement plans whose adjusted gross income
exceeds the limits in (ii), (iii) or (iv) by less than $10,000 are entitled to
make deductible 408(b) IRA contributions in proportionately reduced amounts. If
a 408(b) IRA is established for a nonworking spouse who has no compensation, the
annual tax-deductible Purchase Payments for both spouses' Contracts cannot
exceed the lesser of $4,000 or 100% of the working spouse's earned income, and
no more than $2,000 may be contributed to either spouse's IRA for any year.
You may be eligible to make nondeductible IRA contributions of an amount
equal to the excess of:
(i) the lesser of $2,000 ($4,000 for you and your
spouse's IRA) or 100% of compensation, over
(ii) your applicable IRA deduction limit.
You may also make unlimited contributions of eligible rollover amounts from
other qualified plans and contracts. See Tax-Free Rollovers, Transfers and
Exchanges.
Taxation of Distributions. Distributions from IRA Contracts are taxed as
ordinary income to the recipient. In addition, a 10% penalty tax will be imposed
on taxable distributions received before the year in which the recipient attains
age 59 1/2, except that distributions made on account of certain events,
including death, disability or in the form of substantially equal periodic
payments over the life (or life expectancy) of the Participant (or the
Participant and Beneficiary), or for certain medical, higher education or
first-time homeowner expenses, or health care premiums are not subject to the
penalty tax.
Required Distributions. The minimum distribution requirements for IRA
Contracts are generally the same as described with respect to Section 403(b)
annuity Contracts, except that no amounts are exempted from the minimum
distribution requirements and in all events such distributions must commence no
later than April 1 of the calendar year following the calendar year in which the
Participant attains age 70 1/2.
Tax-Free Rollovers. Federal law permits funds to be transferred in a
tax-free rollover from a qualified employer pension, profit-sharing, or annuity
plan, or a Section 403(b) annuity Contract, to an IRA Contract under certain
conditions. Amounts accumulated under such a rollover IRA generally may
subsequently be rolled over on a tax-free basis to another such plan or Section
403(b) annuity Contract. In addition, a tax-free rollover may be made from one
IRA to another, provided that not more than one such rollover may be made during
any twelve-month period. In order to qualify for tax-free treatment, all
rollovers must be completed within 60 days after the distribution is received.
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<PAGE> 157
SIMPLIFIED EMPLOYEE PENSION PLANS
Purchase Payments. Under section 408(k) of the Code, employers may
establish a type of IRA plan referred to as a simplified employee pension plan
("SEP"). Employer contributions under a SEP, which generally must be made at a
rate representing a uniform percent of the compensation of participating
employees, are excluded from the gross income of employees for federal income
tax purposes. Employer contributions to a SEP cannot exceed the lesser of
$30,000 or 15% of an employee's compensation for plan years beginning after
December 31, 1993.
Salary Reduction SEPs. Federal tax law allows employees of certain small
employers to have contributions made to the SEP on their behalf on a salary
reduction basis. These salary reduction contributions may not exceed $10,500
($10,000 in 1999 and 1998, $9,500 prior to 1998), indexed for inflation in later
years. Employees of tax-exempt organizations are not eligible for this type of
SEP. No new salary reduction SEPs may be established after 1996.
Taxation of Distributions. SEP distributions are subject to taxation in the
same manner as other IRA distributions.
Required Distributions. SEP distributions are subject to the same minimum
required distribution rules applicable to other IRAs.
Tax-Free Rollovers. Funds may be rolled over tax-free from one SEP to
another as long as the rollover is completed within 60 days after the
distribution is received and is done no more frequently than once every twelve
months.
SECTION 457 DEFERRED COMPENSATION PLANS OF
PUBLIC EMPLOYERS AND TAX-EXEMPT
ORGANIZATIONS
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 plans maintained by a unit of a state
or local government, the Contract is generally held for the exclusive benefit of
plan participants, although certain Contracts were subject to the claims of the
employer's creditors until January 1, 1999. The employee has no present rights
or vested interest in the Contract 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.
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<PAGE> 158
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 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.
NON-QUALIFIED CONTRACTS
Purchase Payments. Purchase Payments made under certain Contracts are not
excludible from the gross income of the Contract Owner or deductible for tax
purposes ("Non-Qualified Contracts"). However, any increase in the Accumulation
Value of a Non-Qualified Contract resulting from the investment performance of
the Separate Account is not taxable to the Contract Owner until received by him.
Contract Owners that are not natural persons, however, are currently taxable on
any increase in the Accumulation Value attributable to Purchase Payments made to
such Contracts after February 28, 1986.
Taxation of Distributions. In general, partial redemptions under a
Non-Qualified Contract purchased after August 13, 1982 (or allocated to post-
August 13, 1982 Purchase Payments under a pre-existing Contract) that are not
received as an annuity are taxed as ordinary income to the extent of the
accumulated income or gain under the Contract. Partial redemptions from a
Non-Qualified Contract purchased before August 14, 1982, are taxed only after
the Contract Owner has received all of his pre-August 14, 1982 "investment in
the Contract" (Purchase Payments less any amounts previously received and
excluded from gross income).
In the case of a complete redemption of a Non-Qualified Contract
(regardless of the date of purchase), the amount received will be taxed as
ordinary income to the extent that it exceeds the Contract Owner's investment in
the Contract.
If a Contract Owner purchases two or more Contracts from the Company (or an
affiliated company) within the same calendar year, after October 21, 1988 those
Contracts are treated as a single Contract for purposes of measuring the income
on a partial redemption or complete surrender.
When payments are received as an annuity, the Contract Owner's investment
in the Contract is treated as received ratably over the expected payment period
of the annuity and excluded from gross income as a tax-free return of capital.
Individuals who start receiving annuity payments on or after January 1, 1987,
can exclude from income only their unrecovered investment in the Contract. Where
such individuals die before they have recovered their entire investment in the
Contract on a tax-free basis, they generally are entitled to a deduction of the
unrecovered amount on their final tax return.
In addition to regular income taxes, there is a 10% penalty tax on the
taxable portion of a distribution received before age 59 1/2 under a
Non-Qualified Contract, unless the distribution is: (1) made to a Beneficiary on
or after death of the Contract Owner; (2) made upon the disability of the
Contract Owner; (3) part of a series of substantially equal annuity payments for
the life or life expectancy of the Contract Owner or the Contract Owner and
Beneficiary; (4) made under an immediate annuity contract; or (5) allocable to
Purchase Payments made prior to August 14, 1982.
Required Distributions. In contrast with the required distribution rules
described above for Contracts purchased under employer-sponsored retirement
programs, the Code does not require a Contract Owner under a Non-Qualified
Contract to commence receiving distributions at any particular time during the
Contract Owner's lifetime provided that the Contract Owner is a natural person,
and generally does not limit the duration of annuity payments. However, upon the
death of the Contract Owner prior to the commencement of annuity payments, the
amount accumulated under the Contract must be distributed within five years or,
if distributions to a beneficiary designated under the Contract start within one
year of the Contract Owner's death, distributions are permitted over the life of
the beneficiary or over a period not extending beyond the beneficiary's life
expectancy. If the Contract Owner
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<PAGE> 159
has started receiving annuity distributions prior to his death, distributions
must continue at least as rapidly as under the method in effect at the date of
his death.
Tax-Free Exchanges. Certain of the Non-Qualified single payment deferred
annuity contracts permit the Contract Owner to exchange his contract for a new
deferred annuity contract prior to the commencement of annuity payments. Under
section 1035 of the Code, the exchange of one annuity contract for another is
not a taxable transaction, but is reportable to the IRS.
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.
EXCHANGE PRIVILEGE
GENERAL
We are making an exchange offer to annuitants and contract owners under
certain of our outstanding fixed annuity contracts (including both "Fixed
Contracts" (i.e., 1FA-582 and 6FA-582) and "Compounder Contracts") or under
certain outstanding variable annuity contracts formerly issued through the
Company's Separate Account One ("SA-1 Contracts"), Separate Account Two ("SA-2
Contracts"), and certain variable annuity contracts currently issued through
Separate Account A ("UIT-981 Contracts"). The exchange will be available only as
to contracts under which we have not yet started making payout payments.
Eligible annuitants and contract owners may exchange their current Fixed,
Compounder SA-1, SA-2, and/or UIT-981 Contracts ("Existing Contracts") for one
of the new variable annuity Contracts ("New Contracts") of the type described
herein.
The New Contract will have the same accumulation value as the exchanged
Existing Contract and, in addition, will have certain new features which may
prove advantageous. Annuitants under New Contracts may choose up to seven of the
ten available investment options, including two fixed accumulation options,
whereas fewer options are available under the Existing Contracts. Also, the New
Contracts have a surrender charge rather than the front end sales load imposed
under the SA-1, SA-2 and Compounder Contracts. Fees and charges under the New
Contracts are different from those under Existing Contracts, and in some cases
may be higher, and the guaranteed annuity rates may be less favorable.
Differences between New and Existing Contracts are described more fully below.
DIFFERENCES BETWEEN NEW AND
EXISTING CONTRACTS
If you currently have a Fixed or a Compounder Contract, you should refer to
the form of contract (or certificate thereunder) for its terms and conditions.
You should refer to the most recently dated prospectus for a complete
description of your variable annuity contract's terms and conditions. That
prospectus is incorporated herein by reference, and you may obtain an additional
copy free of charge by contacting our nearest Regional Office. The most
important differences between Existing Contracts and New Contracts are discussed
below.
SALES CHARGES. Under the SA-1, SA-2 and Compounder Contracts, a sales and
administrative charge is deducted from each purchase payment. This charge ranges
from 5% on the first $5,000 of purchase payments to 3% of purchase payments in
excess of $15,000.
Under the Fixed and UIT-981 Contracts, no sales charge is deducted at the
time a purchase payment is made, but a surrender charge may be
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<PAGE> 160
imposed on total or partial surrenders. The surrender charge under UIT-981
Contracts is equal to 5% of any purchase payments withdrawn within three years
of the date such purchase payments were made. The surrender charge under the
Fixed Contracts is equal to the lesser of 7% of purchase payments withdrawn
within five years of the date such purchase payments were made or the amount
withdrawn. For these purposes, the most recent purchase payments are deemed to
be withdrawn first. A partial surrender of up to 10% of the account value may be
made once in a Participant Year without any surrender charge being imposed. No
surrender charge is imposed if an account under a Fixed Contract has been in
effect for fifteen years. If an individual type Existing Contract is exchanged
for a group type New Contract, different state nonforfeiture law provisions may
be applicable, which could result in a lesser amount being payable on surrender
than otherwise would be the case.
The New Contracts also impose a charge upon total or partial surrenders and
do not deduct a sales charge at the time a Purchase Payment is made. The
surrender charge under the New Contracts may not exceed 5% of any Purchase
Payments which are withdrawn within five years of the date such Purchase
Payments were made. The most recent Purchase Payments are deemed to be withdrawn
first. Furthermore, a partial surrender of up to 10% of the Account Value may be
made once in a Participant Year free of any surrender charge which would
otherwise apply. The Company may decrease the surrender charge applicable to a
particular New Contract if it estimates that its expenses will be lower for that
Contract. No surrender charge is imposed: (a) if an account has been in effect
for fifteen years, (b) if the employee has maintained the account for a period
of five years and has attained the age of 59 1/2, or (c) the Participant is
disabled. For purposes of satisfying these fifteen-year and seven-year holding
period requirements, the New Contract or certificate thereunder will be deemed
to have been issued on the same date as the Existing Contract or certificate
thereunder, but no earlier than January 1, 1982.
A sales charge has already been paid on purchase payments made in the past
under SA-1, SA-2 and Compounder Contracts. Therefore, if a SA-1, SA-2 or
Compounder Contract is exchanged for a New Contract, the surrender charge under
the New Contract will not apply to the amount of Account Value applied to the
New Contracts (the "Exchanged Amount.") Purchase payments made subsequent to the
exchange, however, will be subject to the surrender charge under the New
Contracts. In the case of a partial surrender, all such subsequent purchase
payments will be deemed to be withdrawn before any of the Exchanged Amount is
deemed to be withdrawn. No exchange pursuant to this offer will be allowed
within 120 days of a transfer of fixed accumulations under an SA-1 or SA-2
contract to the variable portion of such contract.
If a UIT-981 or Fixed Contract is exchanged for a New Contract, the
surrender charge under the UIT-981 or Fixed Contract will not apply to the
exchanged amount. However, in the case of a total or partial surrender, Purchase
Payments under the UIT-981 Contract or under the Fixed Contract, which were
exchanged for a New Contract and which were made within three years before the
date of the exchange in the case of the UIT-981 Contract or within five years
before the date of the exchange in the case of the Fixed Contract (Exchanged
Purchase Payments) will be subject to a surrender charge under the New Contract
if withdrawn within five years of the date the Exchanged Purchase Payments were
made. Exchanged Purchase Payments will be deemed to have been made under the New
Contract on the date they were made to the Fixed or the UIT-981 Contract for
purposes of calculating the surrender charge under the New Contracts. A 2%
additional surrender charge will be imposed on Exchanged Purchase Payments which
were made under a Fixed Contract within the preceding five years, which were not
previously subject to any surrender charge, and which are withdrawn within one
year after a Fixed Contract is exchanged for a New Contract. For purposes of
this 2% charge, such Exchanged Purchase Payments will be deemed to be withdrawn
first.
ADMINISTRATIVE AND RISK CHARGES. Under the SA-1, SA-2 and Compounder
Contracts, a charge of a percentage of each purchase payment is made for
administrative expenses. For Compounder Contracts and most SA-1 and SA-2
Contracts, the charge is 1.25%. For SA-1 and SA-2 Contracts, the charges are
included in the sales charges (see discussion above). An additional daily charge
(at an annual rate of 1% of total net assets attributable to a SA-1 Contract and
ranging from .21% to .85% of total net assets attributable to a SA-2 Contract)
is
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<PAGE> 161
made for mortality and expense risks assumed by the Company. The total of these
expense charges and certain other charges imposed against SA-1 and SA-2
Contracts is limited to a maximum of the rate imposed on SA-1 and SA-2 Contracts
which was charged on April 1, 1987. (See prospectus for SA-1 and SA-2 Contracts,
dated April 20, 1987.)
Under UIT-981 Contracts, a $30 annual charge is assessed once a year to
cover administrative expenses. The charge may, with prior regulatory approval if
required, be increased or decreased. In addition, a daily charge is made at an
annual rate of 1% of the net asset value allocable to the UIT-981 Contracts to
cover administrative expenses (other than those covered by the annual charge)
and the mortality risk assumed by us.
There are no administrative and risk charges under the Fixed Contracts.
Under the New Contracts, an account maintenance free of $20 is assessed for
the first Participant Year and an annual fee of $15 is assessed for the second
and later years during the Purchase Period. The fee is due in quarterly
installments. The fee may, with prior regulatory approval, if necessary, be
increased or decreased and may be reduced or waived on particular New Contracts
if the Company's administrative expenses are expected to be lower for that
contract.
If a UIT-981 Contract is exchanged for a New Contract on or after the
annual fee is assessed, the account maintenance fee will not be refunded. In
addition, the New Contract will be subject to the account maintenance fee under
the New Contract.
VARIABLE INVESTMENT ALTERNATIVES. Under SA-1 and SA-2 Contracts, only one
division of Separate Account A is available, which invests in a portfolio of the
American General Series Portfolio Company ("AGSPC"). This portfolio is managed
by us for advisory fees at annual rates ranging from .35% to .75% of the
portfolio's average monthly net assets. Under a "grandfathering" arrangement,
the total advisory fees and certain other charges imposed against SA-1 and SA-2
Contracts are limited to a maximum of the rate charged on April 1, 1987.
Under UIT-981 Contracts, five divisions of Separate Account A are
available, each investing in shares of a different underlying mutual fund of
AGSPC. The five mutual funds are managed by us for advisory fees at annual AGSPC
rates ranging from .32% to .75% of each respective portfolio's average daily net
assets.
Under the New Contracts, ten divisions of Separate Account A are available,
each investing in a different investment portfolio of AGSPC. The investment
portfolios are managed by us for advisory fees at annual rates ranging from .35%
to .75% of each portfolio's average monthly net assets. In addition, two Fixed
Account Options are available.
Payout Payments under SA-1, SA-2 and UIT-981 Contracts and the New
Contracts may be made on a fixed or variable basis, or a combination of both.
During the period following commencement of Payout Payments (the "Payout
Period") SA-1 and SA-2 Contracts make no provision for transfers from a separate
account to provide a Fixed Payout Option. The option, subject to certain
conditions, is available under the New Contracts as well as under UIT-981
Contracts.
PAYOUT OPTIONS. One option under the New Contracts provides for Payout
Payments to be made for a selected number of years between 3 and 30 on a fixed
basis only. Under SA-1, UIT-981, Fixed and Compounder Contracts, this option is
limited to 15 years. Under the SA-1 and SA-2 Contracts, such Payout Payments may
be on either a fixed or variable basis. SA-2 Contracts do not provide a
guaranteed period option. Under the UIT-981, SA-1, Fixed and Compounder
Contracts, the guaranteed period option may, subject to adverse tax
consequences, be commuted at any time for its remaining value. No such
commutation is available under the New Contracts.
The SA-1 Contracts provide an option for monthly Variable Payout Payments
to be made at a level payment basis during each year of the Payout Period. The
New Contracts do not provide this option.
To satisfy a federal tax law requirement, non-spouse beneficiaries under a
New Contract generally must receive the entire benefit payable upon the death of
the Annuitant over their life expectancy or within five years of the Annuitant's
death. This requirement is inapplicable to Existing Contracts or certificates
issued before January 19, 1985 if not exchanged.
BETTERMENT OF RATES. The New Contracts, the UIT-981 Contracts and the Fixed
Contracts provide that Payout Payments for Fixed Payouts will be
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based on mortality tables then being used by us, if more favorable to the
Annuitant then those included in the Contract. The SA-1 Contracts contain a
similar "betterment of rates" provision which is applicable to both Fixed and
Variable Payouts. The Compounder and SA-2 Contracts contain no betterment of
rates provision.
GUARANTEED PAYOUT PAYMENT RATES. Mortality rates have improved since Payout
Payment rates were developed for the Existing Contracts. Therefore, the Payout
Payment rates guaranteed in the New Contracts are less favorable to Contract
Owners and Annuitants than those guaranteed in the Existing Contracts. However,
the current Payout Payment rates being charged for Fixed Payout Payments under
the "betterment of rates" provisions discussed above are more favorable than
those guaranteed under the New or the Existing Contracts. Of course, no
assurance can be given that this will continue to be true at the time the Payout
Period commences for a given contract. Guaranteed Payout Payment rate tables are
set forth in your Existing Contract or in current endorsements thereto. Those
guaranteed for New Contracts are set forth therein, and copies may be obtained
from one of our regional offices.
AGENTS' AND MANAGERS' RETIREMENT PLAN EXCHANGE OFFER
GENERAL. All eligible agents and managers of the Company are allowed to
participate in the Company's Agents' and Managers' Retirement Plan ("Plan"). The
Company is granting to participants in the Plan the right to effect a voluntary
exchange of their units of interest under the SA-1 contracts for the equivalent
units of interest in the New Contracts.
Participants who enter into the voluntary exchange will not incur under the
New Contracts any surrender charges or annual account maintenance fees. Other
individuals who are not eligible agents and managers of the Company who may
exchange their Account Value under the SA-1 contracts for the equivalent in the
New contracts may have imposed under the New Contract such charges and fees. All
other provisions with regard to exchange offers referenced in the section
entitled "Exchange Offers" will apply to the Agents' and Managers' Retirement
Plan Exchange Offer.
Pursuant to this voluntary exchange offer, participants in the Plan will
have three options to choose from. As to the funding vehicle for their purchase
payment plan, the participant may choose to:
1. remain in the SA-1 contract;
2. leave current assets in the SA-1 contract and direct future Purchase Payments
to the New Contract; or
3. transfer Account Value and future Purchase Payments to the New Contract.
If you choose to remain in the SA-1 contract, future Purchase Payments and
Account Value will be controlled by the provisions of the SA-1 contract. If you
choose to leave Account Value in the SA-1 and direct future Purchase Payments to
the New Contract, your Account Value will be controlled by the provisions of the
SA-1 contract. Future Purchase Payments will be controlled by the terms of the
New Contract subject to the exception that surrender charges and annual account
maintenance fees will not be imposed under the New Contract. If you choose to
transfer all Account Value and future Purchase Payments to the New Contract,
such Account Value and Purchase Payments will be controlled by the provisions of
the New Contract subject to the exception that surrender charges and annual
account maintenance fees will not be imposed under the New Contract.
Once you transfer Account Value and future Purchase Payments to the New
Contract you will not be permitted to exchange back to the SA-1 contract. If you
choose to transfer future Purchase Payments but not Account Value to the New
Contract, you will be allowed at a later date to transfer Account Value to the
New Contract. For a complete analysis of the differences between the SA-1
contract and the New Contract, you should refer to the section entitled
"Differences Between New and Existing Contracts" and the form of the contract or
certificate for its terms and conditions.
AVAILABILITY OF OFFER
Current owners or Annuitants wishing to exchange should contact any
Regional Office at 1-800-44-VALIC for assistance. Partial exchanges are not
permitted and, once this privilege has been exercised, any exchange back to the
Existing Contract will not be made on these terms. This exchange offer is not
applicable to any outstanding fixed annuity contracts except the Compounder
series contracts (Contract Forms C-I-75 and IFA-78)
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and those fixed contracts on forms GFA-582 and IFA-582. THE COMPANY RESERVES THE
RIGHT TO TERMINATE OR SUSPEND THE EXCHANGE OFFER AT ANY TIME.
CALCULATION OF SURRENDER CHARGE
The surrender charge is discussed in the Prospectus under "Fees and
Charges -- Surrender Charge." Examples of calculation of the surrender charge
upon total and partial surrender are set forth below.
ILLUSTRATION OF SURRENDER CHARGE ON TOTAL SURRENDER
Example 1.
TRANSACTION HISTORY
<TABLE>
<CAPTION>
DATE TRANSACTION AMOUNT
---- ----------- ------
<S> <C> <C>
10/1/94......................... Purchase Payment $10,000
10/1/95......................... Purchase Payment 5,000
10/1/96......................... Purchase Payment 15,000
10/1/97......................... Purchase Payment 2,000
10/1/98......................... Purchase Payment 3,000
10/1/99......................... Purchase Payment 4,000
12/31/99........................ Total Purchase Payments (Assumes
Account Value is $50,000) 39,000
------
</TABLE>
Surrender Charge is lesser of (a) or (b):
a. Surrender Charge calculated on 60 months of Purchase Payments
<TABLE>
<S> <C>
1. Surrender Charge against Purchase Payment of 10/1/94..... $ 0
2. Surrender Charge against Purchase Payment of 10/1/95
(0.05 X $5,000)........................................... $ 250
3. Surrender Charge against Purchase Payment of 10/1/96
(0.05 X $15,000).......................................... $ 750
4. Surrender Charge against Purchase Payment of 10/1/97
(0.05 X $2,000)........................................... $ 100
5. Surrender Charge against Purchase Payment of 10/1/98
(0.05 X $3,000)........................................... $ 150
6. Surrender Charge against Purchase Payment of 10/1/99
(0.05 X $4,000)........................................... $ 200
Surrender Charge based on Purchase Payments
(1 + 2 + 3 + 4 + 5 + 6)................................... $1,450
</TABLE>
b. Surrender charge calculated on the excess over 10% of the Account Value at
the time of surrender:
<TABLE>
<S> <C> <C> <C>
Account Value at time of surrender $ 50,000
Less 10% not subject to surrender charge -5,000
--------
Subject to surrender charge 45,000
X .05
--------
Surrender Charge based on Account Value $ 2,250 ............... $2,250
Surrender Charge is the lesser of a or b ............... $1,450
------
</TABLE>
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<PAGE> 164
ILLUSTRATION OF SURRENDER CHARGE ON A 10% PARTIAL SURRENDER FOLLOWED BY A FULL
SURRENDER
Example 2.
TRANSACTION HISTORY (ASSUMES NO INTEREST EARNED)
<TABLE>
<CAPTION>
DATE TRANSACTION AMOUNT
---- ----------- ------
<S> <C> <C>
10/1/94......................... Purchase Payment $ 5,000
10/1/95......................... Purchase Payment 15,000
10/1/96......................... Purchase Payment 2,000
10/1/97......................... Purchase Payment 3,000
10/1/98......................... Purchase Payment 4,000
10/1/99......................... Purchase Payment 10,000
12/31/99........................ 10% Partial Surrender
(Assumes Account Value is $39,000) 3,900
2/1/00.......................... Full Surrender 35,100
</TABLE>
a. Since this is the first partial surrender in this Participant Year, calculate
the excess over 10% of the value of the Purchase Units.
10% of $39,000 = $3,900 [no charge on this 10% withdrawal].
b. The Account Value upon which Surrender Charge on the Full Surrender may be
calculated (levied) is $39,000 - $3,900 = $35,100.
c. The Surrender Charge calculated on the Account Value withdrawn
$35,100 X .05 = $1,755.
d. Since only $29,000 has been paid in Purchase Payments in the 60 months prior
to the Full Surrender, the charge can only be calculated on $29,000. The
$3,900 partial withdrawal does not reduce this amount. Thus, the charge is
$29,000 X (0.05) = $1,450.
14
<PAGE> 165
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>
15
<PAGE> 166
PERFORMANCE CALCULATIONS
MONEY MARKET DIVISION YIELDS
CALCULATION OF CURRENT YIELD FOR MONEY MARKET DIVISION SIX
7-DAY CURRENT YIELD: 4.31%
ILLUSTRATION OF CALCULATION OF CURRENT YIELD FOR MONEY MARKET DIVISION SIX
Example 5.
The current yield quotation above is based on the seven days ended December
31, 1999, the date of the most recent balance sheet included in the registration
statement ("base period"). It is computed by determining the net change,
exclusive of capital changes, in the value of a hypothetical pre-existing
account having a balance of one Accumulation Unit at the beginning of the
period, subtracting a hypothetical charge reflecting deductions from Contract
Owner Accounts, and dividing the difference by the value of the account at the
beginning of the base period to obtain the base period return and then
multiplying the base period return by 365/7.
CALCULATION OF EFFECTIVE YIELD FOR MONEY MARKET DIVISION SIX
7-DAY EFFECTIVE YIELD: 4.40%
ILLUSTRATION OF CALCULATION OF EFFECTIVE YIELD FOR MONEY MARKET DIVISION SIX
Example 6.
The effective yield quotation above is based on the seven days ended
December 31, 1999, the date of the most recent balance sheet included in the
registration statement ("base period"). It is computed by determining the net
change, exclusive of capital changes, in the value of a hypothetical pre-
existing account having a balance of one Purchase Unit at the beginning of the
period, subtracting a
hypothetical charge reflecting deductions from Contract Owner accounts, and
dividing the difference by the value of the account at the beginning of the base
period to obtain the base period return and then compounding the base period
return by adding 1, raising the sum to a power equal to 365 divided by 7, and
subtracting 1 from the result, according to the following formula:
EFFECTIVE YIELD = [(BASE PERIOD RETURN + 1)(365/7)] - 1
STANDARDIZED YIELD FOR DIVISIONS SEVEN, EIGHT AND THIRTEEN
CALCULATION OF STANDARDIZED YIELD FOR DIVISIONS SEVEN, EIGHT AND THIRTEEN
<TABLE>
<CAPTION>
DIV 7 DIV 8 DIV 13
----- ----- ------
<S> <C> <C> <C>
Standardized Yield.......................................... 6.31% 5.44% 3.28%
---- ---- ----
</TABLE>
ILLUSTRATION OF CALCULATION OF STANDARDIZED YIELD FOR DIVISIONS SEVEN, EIGHT AND
THIRTEEN
Example 7.
The yield quotation based on a 30-day period ended December 31, 1999, the
date of the most recent balance sheet of the Registrant included in the
registration statement is computed by dividing
the net investment income per Purchase Unit earned during the period by the
maximum offering price per Unit on the last day of the period, according to the
following formula:
YIELD = 2 [( a - b + 1 )(6) - 1]
cd
16
<PAGE> 167
Where:
<TABLE>
<S> <C> <C>
a = net investment income earned during the period by the Fund
attributable to shares owned by the Division
b = expenses accrued for the period (net of reimbursements)
c = the average daily number of Purchase Units outstanding
during the period
d = the maximum offering price per Purchase Unit on the last day
of the period
</TABLE>
Yield on each Division is earned from dividends declared and paid by the
Fund, which are automatically reinvested in Fund shares.
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.
17
<PAGE> 168
PERFORMANCE INFORMATION
PERFORMANCE COMPARED TO MARKET INDICES
The following tables show the Hypothetical $10,000 Account Value and
Cumulative Return of each Division as compared to the benchmarks shown.
These performance calculations for the Divisions, and the methods used for
calculating them, are explained in the Prospectus. (See "How to Review
Investment Performance of Separate Account Divisions" in the prospectus.)
These tables compare hypothetical investment performance and percentage
changes in Purchase Unit Values with the results of several benchmarks,
representing unmanaged market indices. The comparisons should be considered in
light of the investment policies and objectives of the Funds. Rates of return
for the Divisions include reinvestment of investment income, including capital
gains, interest and dividends. The rates of return on the market indices also
have 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 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 Division Ten and Social Awareness Division
Twelve may be compared to the record of the Standard & Poor's(R) Corporation
("S&P(R)")* Composite Stock Price Index ("S&P 500 Index"). The S&P 500(R) Index
is a well known measure of the price performance of 500 leading larger domestic
stocks which represents 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.
The performance of MidCap Index Division Four may be compared to the record
of the S&P MidCap 400 Index. The S&P MidCap 400 Index was developed in 1991 by
S&P to track the stock market performance of medium-capitalization domestic
stocks. The S&P MidCap 400 Index is market weighted and consists of 400 stocks
of domestic companies having a median market capitalization of approximately
$1.64 billion as of March 31, 2000. Stocks included in the S&P MidCap 400 Index
are chosen on the basis of their market size, liquidity and industry group
representation. No stocks included in the S&P 500 Index are included in the S&P
MidCap 400 Index.
The performance of Money Market Division Six may be compared to the
Certificate of Deposit Primary Offering by New York City Banks, 30 Day Index.
The index is a money market index which reflects the average rate paid by New
York Banks on certificates of deposit of more than $100,000. The Index for 30
days is published daily.
The performance of Capital Conservation Division Seven may be compared to
the Merrill Lynch Corporate Master Index. The Merrill Lynch Corporate Master
Index consists of an index of approximately 4,300 corporate bond holdings of
which assets are rated AAA to BBB-. The average
- ---------------
* "Standard & Poors(R)", S&P(R), "S&P 500(R)" and "S&P MidCap 400(R)" are
trademarks of Standard and
Poor's Corporation. Neither the MidCap Index Fund nor the Stock Index Fund is
sponsored, endorsed, sold
or promoted by S&P and S&P makes no representation regarding the advisability
of investing in these
Funds.
18
<PAGE> 169
years to maturity of these corporate bond holdings are approximately 12 years.
Performance of Government Securities Division Eight may be compared to the
Lehman Brothers U.S. Treasury Composite Index. The Lehman Brothers U.S. Treasury
Composite Index consists of an index of approximately 170 government Treasury
securities issues with all such issues having a maturity of greater than one
year.
The performance of International Equities Division Eleven may be compared
to the Morgan Stanley Capital International Europe, Australia and Far East Index
("EAFE Index"). The EAFE Index, which commenced in 1969, is an unmanaged stock
index consisting of approximately 1,100 companies from Europe, Australia and the
Far East. The index is capitalization weighted. It is a well known measure for
international stock performance. Total returns (with income reinvested) for the
EAFE Index are published using two methods. The first method includes gross
income (income earned without subtracting foreign income taxes which may be
withheld from foreign investors). The second method includes net income (income
earned after subtracting estimated foreign taxes). The Division currently
compares its performance with the index using the second method.
The performance of the International Government Bond Fund Division Thirteen
may be compared to the Salomon Brothers Non-US Dollar World Government Bond
Index ("Salomon Index"). Total returns with income reinvested for the Salomon
Index are published using two methods. The first method includes gross income
(income earned without subtracting foreign income taxes which may be withheld
from foreign investors). The second method includes net income (income earned
after subtracting estimated foreign taxes). The Division currently compares its
performance with the index using the second method. The Salomon Index is an
unmanaged aggregate index composed of 667 issues from sixteen foreign countries.
These countries include Austria, Australia, Belgium, Canada, Denmark, Finland,
France, Germany, Ireland, Italy, Japan, the Netherlands, Spain, Sweden,
Switzerland and the United Kingdom.
The performance of the Small Cap Index Division Fourteen may be compared
with the Russell 2000(R) Index ("Russell 2000").** The Russell 2000 was
developed in 1984 by the Frank Russell Company to track the stock market
performance of small capitalization domestic stocks. The Russell 2000 is market
weighted and consists of approximately 2000 stocks. Stocks included in the
Russell 2000 are chosen by the Frank Russell Company on the basis of their
market size.
The performance of Asset Allocation Division Five may be compared to a
benchmark comprised of a weighted average of three market sectors in which the
Division, through the Asset Allocation Fund, will invest. The base allocation is
55% in equity securities, 35% in intermediate or long-term debt securities and
10% in money market or short-term debt securities. The Division's actual asset
allocation is determined daily in accordance with an asset allocation model. The
performance of the equity securities sector of the Division may be compared to
the S&P 500 Index. The performance of the intermediate or long-term debt
securities sector may be compared to the Merrill Lynch Corporate and Government
Master Index. The Merrill Lynch Corporate and Government Master Index consists
of an index of approximately 5,000 corporate and government bond holdings. The
average maturity of these corporate bond holdings is approximately 10 years. The
performance of the money market or short-term debt securities sector may be
compared to the Certificate of Deposit Primary Offering by New York City Banks,
30 Day Index.
Additionally, the performance of a Division from time to time may be
compared with other Indexes which have been deemed by the Company relevant to
the Division.
These benchmarks do not reflect any charges for investment advisory fees,
brokerage commissions or other fees and expenses of the type charged at either
the Separate Account or Fund level. Therefore, the comparisons with these
benchmarks are of limited use.
- ---------------
** The Russell 2000(R) Index is a trademark/service mark of the Frank Russell
Trust Company. Russell(TM) is a
trademark of the Frank Russell Company.
19
<PAGE> 170
The Account Value of an assumed $10,000 investment in each of the Divisions
is shown in table form below. This will reflect a deduction for separate account
fees (mortality and expense risk fees) and underlying fund charges. This will
not reflect any deduction for account maintenance fees, surrender charges and
premium taxes. These charges would further reduce your return. See "How to
Review Investment Performance of Separate Account Divisions" in the prospectus
for information about how these returns were calculated as well as Standard
Average Annual Total Return information that reflects the deduction of all
separate account fees and charges.
STOCK INDEX DIVISION TEN 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
DIVISION S&P 500
TEN INDEX
-------- -------
<S> <C> <C>
01/01/90................................................... $10,000 $10,000
12/31/90................................................... 9,517 9,689
12/31/91................................................... 12,154 12,642
12/31/92................................................... 12,833 13,605
12/31/93................................................... 13,960 14,976
12/31/94................................................... 13,918 15,174
12/31/95................................................... 18,921 20,876
12/31/96................................................... 22,994 25,671
12/31/97................................................... 30,299 34,234
12/31/98................................................... 38,522 44,018
12/31/99................................................... 45,985 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 Ten................................ 359.85% 230.40% 19.37%
------ ------ -----
Benchmark Comparison
S&P 500 Index.............................. 432.83% 251.15% 21.05%
------ ------ -----
</TABLE>
- ---------------
* This Division was initiated on April 20, 1987.
20
<PAGE> 171
MIDCAP INDEX DIVISION FOUR* PERFORMANCE COMPARED TO S&P 500 INDEX AND S&P MIDCAP
400 INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE OCTOBER 1, 1991
<TABLE>
<CAPTION>
MIDCAP
INDEX S&P S&P
DIVISION 500 MIDCAP 400
FOUR INDEX INDEX
-------- ------- ----------
<S> <C> <C> <C>
10/01/91............................................... $10,000 $10,000 $10,000
12/31/91............................................... 11,163 10,838 11,229
------- ------- -------
12/31/92............................................... 12,143 11,664 12,566
------- ------- -------
12/31/93............................................... 13,574 12,840 14,320
------- ------- -------
12/31/94............................................... 12,936 13,009 13,806
------- ------- -------
12/31/95............................................... 16,718 17,898 18,078
------- ------- -------
12/31/96............................................... 19,661 22,009 21,557
------- ------- -------
12/31/97............................................... 25,648 29,351 28,506
------- ------- -------
12/31/98............................................... 30,214 37,739 33,947
------- ------- -------
12/31/99............................................... 34,376 45,682 38,948
</TABLE>
CUMULATIVE RETURN COMPARED TO MARKET INDEX
(PERIOD ENDED DECEMBER 31, 1999)
<TABLE>
<CAPTION>
SINCE
INCEPTION** 5 YEARS 1 YEAR
----------- ------- ------
<S> <C> <C> <C>
Investment Division
MidCap Index Division Four.............................. 243.76% 165.74% 13.78%
------ ------ -----
Benchmark Comparison
S&P 500 Index.............................. 356.82% 251.15% 21.05%
------ ------ -----
S&P MidCap 400 Index....................... 289.48% 182.11% 14.73%
------ ------ -----
</TABLE>
- ---------------
* Effective October 1, 1991, the Capital Accumulation Fund changed its name to
the MidCap Index Fund and revised its investment objective, investment
program and investment restrictions accordingly, pursuant to contract owner
vote.
** This Division was initiated on October 13, 1982.
21
<PAGE> 172
SMALL CAP INDEX DIVISION FOURTEEN PERFORMANCE COMPARED TO RUSSELL 2000 INDEX(R)
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE MAY 1, 1992
<TABLE>
<CAPTION>
SMALL
CAP
INDEX RUSSELL
DIVISION 2000
FOURTEEN INDEX
-------- -------
<S> <C> <C>
05/01/92................................................... $10,000 $10,000
12/31/92................................................... 11,128 11,416
------- -------
12/31/93................................................... 12,772 13,571
------- -------
12/31/94................................................... 12,223 13,324
------- -------
12/31/95................................................... 15,449 17,114
------- -------
12/31/96................................................... 17,854 19,937
------- -------
12/31/97................................................... 21,636 24,396
------- -------
12/31/98................................................... 21,005 23,775
------- -------
12/31/99................................................... 25,226 28,828
</TABLE>
CUMULATIVE RETURN COMPARED TO MARKET INDEX
(PERIOD ENDED DECEMBER 31, 1999)
<TABLE>
<CAPTION>
SINCE
INCEPTION* 5 YEARS 1 YEAR
---------- ------- ------
<S> <C> <C> <C>
Investment Division
Small Cap Index Division 14............................. 152.26% 106.38% 20.10%
------ ------ -----
Benchmark Comparison
Russell 2000............................... 188.28% 116.37% 21.26%
------ ------ -----
</TABLE>
- ---------------
* This Division was initiated on May 1, 1992.
INTERNATIONAL EQUITIES DIVISION ELEVEN PERFORMANCE COMPARED TO EAFE INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE JANUARY 1, 1990
<TABLE>
<CAPTION>
INTERNATIONAL
EQUITIES EAFE
DIVISION ELEVEN INDEX
--------------- -------
<S> <C> <C>
01/01/90.............................................. $10,000 $10,000
12/31/90.............................................. 7,910 7,655
12/31/91.............................................. 8,705 8,584
12/31/92.............................................. 7,459 7,539
12/31/93.............................................. 9,591 9,993
12/31/94.............................................. 10,253 10,771
12/31/95.............................................. 11,245 11,978
12/31/96.............................................. 11,891 12,702
12/31/97.............................................. 12,031 12,928
12/31/98.............................................. 14,145 15,513
12/31/99.............................................. 18,088 19,696
</TABLE>
22
<PAGE> 173
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
International Equities Division Eleven.................. 80.88% 76.42% 27.88%
----- ----- -----
Benchmark Comparison
EAFE Index................................. 96.96% 82.87% 26.96%
----- ----- -----
</TABLE>
- ---------------
* This Division was initiated on October 2, 1989.
SOCIAL AWARENESS DIVISION TWELVE 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>
SOCIAL
AWARENESS
DIVISION S&P 500
TWELVE INDEX
--------- -------
<S> <C> <C>
01/01/90................................................... $10,000 $10,000
12/31/90................................................... 9,779 9,689
12/31/91................................................... 12,382 12,642
12/31/92................................................... 12,668 13,605
12/31/93................................................... 13,534 14,976
12/31/94................................................... 13,207 15,174
12/31/95................................................... 18,169 20,876
12/31/96................................................... 22,304 25,671
12/31/97................................................... 29,558 34,234
12/31/98................................................... 37,250 44,018
12/31/99................................................... 43,756 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
Social Awareness Division Twelve........................ 337.56% 231.31% 17.46%
------ ------ -----
Benchmark Comparison
S&P 500 Index.............................. 432.83% 251.15% 21.05%
------ ------ -----
</TABLE>
- ---------------
* This Division was initiated on October 2, 1989.
23
<PAGE> 174
ASSET ALLOCATION DIVISION FIVE PERFORMANCE COMPARED TO S&P 500 INDEX, MERRILL
LYNCH CORPORATE AND GOVERNMENT MASTER INDEX AND CERTIFICATE OF DEPOSIT PRIMARY
OFFERING BY NEW YORK CITY BANKS, 30 DAY INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE JANUARY 1, 1990
<TABLE>
<CAPTION>
ASSET ALLOCATION S&P 500 BLENDED
DIVISION FIVE INDEX INDEX**
---------------- ------- -------
<S> <C> <C> <C>
01/01/90............................. $10,000 $10,000 $10,000
12/31/90............................. 9,662 9,689 10,221
12/31/91............................. 11,607 12,642 12,556
12/31/92............................. 11,408 13,605 13,467
12/31/93............................. 12,343 14,976 14,773
12/31/94............................. 12,060 15,174 14,772
12/31/95............................. 14,900 20,876 18,819
12/31/96............................. 16,388 25,671 21,422
12/31/97............................. 19,895 34,234 26,122
12/31/98............................. 23,314 44,018 31,313
12/31/99............................. 25,796 53,283 34,750
</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
Asset Allocation Division Five........................... 157.96% 113.90% 10.65%
------ ------ -----
Benchmark Comparison**
S&P 500 Index............................... 432.83% 251.15% 21.05%
------ ------ -----
Blended Index............................... 247.50% 135.23% 10.98%
------ ------ -----
</TABLE>
- ---------------
* The Asset Allocation Fund was formerly known as the Timed Opportunity Fund.
** The Blended Index reflects an allocation of investments in the following
Indexes: 55% of investments included in the S&P 500 Index, 35% of investments
included in the Merrill Lynch Corporate and Government Master Index, and 10%
of investments included in the Certificate of Deposit Primary Offering by New
York City Banks, 30 Day Index.
24
<PAGE> 175
CAPITAL CONSERVATION DIVISION SEVEN PERFORMANCE COMPARED TO MERRILL LYNCH
CORPORATE MASTER INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE JANUARY 1, 1990
<TABLE>
<CAPTION>
MERRILL LYNCH
CAPITAL CONSERVATION CORPORATE MASTER
DIVISION SEVEN INDEX
-------------------- ----------------
<S> <C> <C>
01/01/90..................................... $10,000 $10,000
12/31/90..................................... 9,872 10,737
12/31/91..................................... 11,452 12,695
12/31/92..................................... 12,317 13,853
12/31/93..................................... 13,657 15,575
12/31/94..................................... 12,695 15,051
12/31/95..................................... 15,181 18,299
12/31/96..................................... 15,295 18,919
12/31/97..................................... 16,440 20,884
12/31/98..................................... 17,476 22,705
12/31/99..................................... 17,230 22,277
</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
Capital Conservation Division Seven...................... 72.30% 35.72% (1.40)%
------ ----- -----
Benchmark Comparison
Merrill Lynch Corporate Master Index..................... 122.77% 48.01% (1.89)%
------ ----- -----
</TABLE>
- ---------------
* This Division was initiated on January 16, 1986.
25
<PAGE> 176
GOVERNMENT SECURITIES DIVISION EIGHT PERFORMANCE COMPARED TO LEHMAN BROTHERS
U.S. TREASURY COMPOSITE INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE JANUARY 1, 1990
<TABLE>
<CAPTION>
GOVERNMENT SECURITIES U.S. TREASURY
DIVISION EIGHT CORPORATE INDEX
--------------------- ---------------
<S> <C> <C>
01/01/90..................................... $10,000 $10,000
12/31/90..................................... 10,491 10,861
12/31/91..................................... 11,917 12,529
12/31/92..................................... 12,648 13,435
12/31/93..................................... 13,875 14,878
12/31/94..................................... 13,120 14,368
12/31/95..................................... 15,260 17,005
12/31/96..................................... 15,397 17,476
12/31/97..................................... 16,602 19,131
12/31/98..................................... 17,908 21,059
12/31/99..................................... 17,238 20,518
</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
Government Securities Division Eight.................... 72.38% 31.39% (3.74)%
------ ----- -----
Benchmark Comparison
U.S. Treasury Composite Index........................... 105.18% 42.81% (2.57)%
------ ----- -----
</TABLE>
- ---------------
* This Division was initiated on January 16, 1986.
26
<PAGE> 177
INTERNATIONAL GOVERNMENT BOND DIVISION THIRTEEN PERFORMANCE COMPARED TO SALOMON
BROTHERS NON-U.S. DOLLAR WORLD GOVERNMENT BOND INDEX
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE OCTOBER 1, 1991
<TABLE>
<CAPTION>
SALOMON BROS.
INTERNATIONAL NON-U.S. DOLLAR
GOVERNMENT WORLD
BOND GOVERNMENT
DIVISION THIRTEEN INDEX
----------------- ---------------
<S> <C> <C>
10/01/91........................................ $10,000 $10,000
12/31/91........................................ 10,905 11,042
------- -------
12/31/92........................................ 11,128 11,540
------- -------
12/31/93........................................ 12,583 13,246
------- -------
12/31/94........................................ 13,014 13,999
------- -------
12/31/95........................................ 15,308 16,692
------- -------
12/31/96........................................ 15,822 17,331
------- -------
12/31/97........................................ 14,906 16,568
------- -------
12/31/98........................................ 17,280 19,497
------- -------
12/31/99........................................ 16,091 18,489
------- -------
</TABLE>
CUMULATIVE RETURN COMPARED TO MARKET INDEX
(PERIOD ENDED DECEMBER 31, 1999)
<TABLE>
<CAPTION>
SINCE
INCEPTION* 5 YEARS 1 YEAR
---------- ------- ------
<S> <C> <C> <C>
Investment Division
International Government Bond Division Thirteen.......... 60.91% 23.65% (6.88)%
----- ----- -----
Benchmark Comparison
Salomon Bros. Non-U.S. Dollar World Government Bond
Index................................................. 84.89% 32.07% (5.17)%
----- ----- -----
</TABLE>
- ---------------
* This Division was initiated on October 1, 1991.
27
<PAGE> 178
MONEY MARKET DIVISION SIX PERFORMANCE COMPARED TO CERTIFICATE OF DEPOSIT PRIMARY
OFFERING BY NEW YORK CITY BANKS, 30 DAY INDEX (PRIMARY CD INDEX)
HYPOTHETICAL $10,000 ACCOUNT VALUE
ANNUAL VALUE OF A $10,000 STIPULATED PURCHASE PAYMENT MADE JANUARY 1, 1990
<TABLE>
<CAPTION>
MONEY MARKET PRIMARY
DIVISION SIX CD INDEX
------------ --------
<S> <C> <C>
01/01/90............................................... $10,000 $10,000
12/31/90............................................... 10,683 10,800
12/31/91............................................... 11,163 11,390
12/31/92............................................... 11,411 11,749
12/31/93............................................... 11,602 12,053
12/31/94............................................... 11,923 12,483
12/31/95............................................... 12,460 13,100
12/31/96............................................... 12,955 13,694
12/31/97............................................... 13,490 14,349
12/31/98............................................... 14,047 15,023
12/31/99............................................... 14,568 15,693
</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
Money Market Division Six................................ 45.68% 22.19% 3.71%
----- ----- ----
Benchmark Comparison
Primary CD Index......................................... 56.93% 25.71% 4.46%
----- ----- ----
</TABLE>
28
<PAGE> 179
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. 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% rate described in this prospectus as follows: 4 1/2% or 5% per annum. 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 Annuity 2000 Table (promulgated by the Society of Actuaries) and an Assumed
Investment Rate of 3 1/2%, 4% and 5% per annum (3 1/2% in the group Contract).
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.
In any subsequent month, the dollar amount of the variable payout payment
derived from each Division is determined by multiplying the number of Payout in
that Division by the value of such Payout Unit 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 return of the Division or Divisions underlying
the variable payout since the date of the previous payout payment, less an
adjustment to neutralize the 3 1/2% or other Assumed Investment Rate referred to
above.
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 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
calculation of Payout Unit value is discussed in the prospectus under "Payout
Period."
29
<PAGE> 180
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
Example 8.
<TABLE>
<S> <C>
1. Payout Unit value, beginning of period.................. $ .980000
2. Net investment factor for Period (see Example 3)........ 1.023558
3. Daily adjustments for 3 1/2% Assumed Investment Rate.... .999906
4. (2)X(3)................................................. 1.023462
5. Payout Unit value, end of period (1)X(4)................ $1.002993
</TABLE>
ILLUSTRATION OF PAYOUT PAYMENTS
Example 9. 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 3)..................... $ 1.800000
3. Account Value of Contract (1)X(2)....................... $18,000.00
4. First monthly Payout Payment per $1,000 of Account
Value.................................................... $ 5.63
5. First monthly Payout Payment (3)X(4)/1,000.............. $ 101.34
6. Payout Unit value (see Example 8)....................... $ .980000
7. Number of Payout Units (5)/(6).......................... $ 103.408
8. Assume Payout Unit value for second month equal to...... $ .997000
9. Second monthly Payout Payment (7)X(8)................... $ 103.10
10. Assume Payout Unit value for third month equal to....... $ .953000
11. Third monthly Payout Payment (7)X(10)................... $ 98.55
</TABLE>
30
<PAGE> 181
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 as defined above, an
affiliate of the Company. 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.
The licensed agents who sell the Contracts will be compensated for such
sales by commissions which will range up to 6.0% of each Purchase payment.
Managers who supervise the agents will receive overriding commissions ranging up
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 the
Separate Account. Sales commissions paid for 1999 were $3,137,540. The
Distributor retained $0 in commissions for 1999.
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 Four, Five, Six, Seven, Eight, Ten, Eleven, Twelve, Thirteen and
Fourteen 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.
31
<PAGE> 182
[THIS PAGE INTENTIONALLY LEFT BLANK]
32
<PAGE> 183
[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 9079-1 REV 5/00
(C)The Variable Life Insurance Company, Houston, Texas
Recycled Paper --RECYCLED PAPER LOGO--
<PAGE> 184
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> 185
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> 186
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> 187
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> 188
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> 189
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> 190
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> 191
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> 192
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> 193
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> 194
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> 195
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> 196
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> 197
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> 198
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> 199
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> 200
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> 201
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> 202
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> 203
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> 204
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> 205
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> 206
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> 207
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> 208
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> 209
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> 210
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> 211
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> 212
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> 213
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> 214
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> 215
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> 216
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> 217
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> 218
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> 219
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> 220
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> 221
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> 222
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> 223
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> 224
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> 225
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> 226
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> 227
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> 228
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> 229
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> 230
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> 231
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> 232
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> 233
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> 234
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> 235
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> 236
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> 237
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> 238
THE VARIABLE ANNUITY LIFE INSURANCE COMPANY
SEPARATE ACCOUNT A
CONTRACT FOR UIT-981
AND
INDEPENDENCE PLUS CONTRACT SERIES
PART C. OTHER INFORMATION
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
Filed with Part A:
Selected Purchase Unit Data for each Fund
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 Accountants
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.
(b) Exhibits
<TABLE>
<CAPTION>
<S> <C>
1. -- Resolution 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 is incorporated herein by
reference to Post-Effective Amendment No. 26 filed with the
SEC on April 18, 1997 (File No. 2-96223/811-3240).
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 is incorporated herein by reference to
Post-Effective Amendment No. 26 filed with the SEC on April
18, 1997 (File No. 2-96223/811-3240).
</TABLE>
C-1
<PAGE> 239
<TABLE>
<CAPTION>
<S> <C>
4(a). -- Form of Individual Annuity Contract (Form UIT-981) is
incorporated herein by reference to Post-Effective Amendment
No. 26 filed with the SEC on April 18, 1997 (File No.
2-96223/811-3240).
4(b). -- Form of Individual Annuity Contract (Form UIT-585-96) is
incorporated herein by reference to Post-Effective Amendment
No. 26 filed with the SEC on April 18, 1997 (File No.
2-96223/811-3240).
4(c). -- Form of Group Annuity Contract (Form UITG-585-96) is
incorporated herein by reference to Post-Effective Amendment
No. 26 filed with the SEC on April 18, 1997 (File No.
2-96223/811-3240).
4(d). -- Form of Certificate of Participation under Group Annuity
Contract (Form UITG-CB-585-96) is incorporated herein by
reference to Post-Effective Amendment No. 26 filed with the
SEC on April 18, 1997 (File No. 2-96223/811-3240).
5(a). -- Form of Application for Annuity Contract (Form UIT-981,
UIT-585-96 and UITG-CB-585-96) is incorporated herein by
reference to Post-Effective Amendment No. 27 filed with the
SEC on April 27, 1998 (File No. 2-96223/811-3240).
5(b). -- Form of Group Master Application for Flexible Payment Group
Annuity Contract (Form UITG-585-96) is incorporated herein
by reference to Post-Effective Amendment No. 26 filed with
the SEC on April 18, 1997 (File No. 2-96223/811-3240).
6(a). -- Copy of Amended and Restated Articles of Incorporation of
The Variable Annuity Life Insurance Company, effective as of
April 28, 1989, is incorporated herein by reference to
Post-Effective Amendment No. 26 filed with the SEC on April
18, 1997 (File No. 2-96223/811-3240).
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 is incorporated herein by reference
to Post-Effective Amendment No. 26 filed with the SEC on
April 18, 1997 (File No. 2-96223/811-3240).
6(c). -- Copy of Amended and Restated Bylaws of The Variable Annuity
Life Insurance Company as amended through March 4, 1992 is
incorporated herein by reference to Post-Effective Amendment
No. 27 filed with the SEC on April 27, 1998 (File No.
2-96223/811-3240).
7. -- Not Applicable.
8. -- Not Applicable.
9. -- Not Applicable.
10. -- Consent of Independent Auditors.
11. -- Not Applicable.
12. -- Not Applicable.
13. -- Calculation of standard and nonstandard performance
information is incorporated herein by reference to
Post-Effective Amendment No. 26 filed with the SEC on April
18, 1997 (File No. 2-96223/811-3240).
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 is incorporated
herein by reference to Post-Effective Amendment No. 27 filed
with the SEC on April 27, 1998 (File No. 2-96223/811-3240).
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-2
<PAGE> 240
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-3
<PAGE> 241
<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-4
<PAGE> 242
<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-5
<PAGE> 243
<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
C-6
<PAGE> 244
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.
C-7
<PAGE> 245
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>
C-8
<PAGE> 246
<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>
C-9
<PAGE> 247
<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,
there were 28,705 individual Contract Owners and 0 group Contract Owners of the
qualified Contracts offered by the UIT-981 prospectus of the Registrant; and
184,317 individual Contract Owners and 262,213 group Contract Owners qualified
Contracts offered by the Independence Plus prospectus. As of April 14, 2000,
there were 4,934 individual Contract Owners and 61 group Contract Owners of the
non-qualified Contracts offered by the Independence Plus prospectus. The
Registrant issues different contracts through other Registration Statements.
C-10
<PAGE> 248
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 attorney's 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-11
<PAGE> 249
Indemnitee to repay such amounts 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 that 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 in 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>
C-12
<PAGE> 250
(c) American General Distributors, Inc. is the principal underwriter for
Registrant. The licensed agents who sell the Contract 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 prospectuses for the
Contract.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
The books and 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
C-13
<PAGE> 251
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 application 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 application 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 the form promptly
upon written or oral request.
b. The Company hereby represents that the fees and charges deducted under
these 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 section 22(e), 27(c)(1), or 27(d) of the Investment Company
Act of 1940, 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;
(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 bring 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.
C-14
<PAGE> 252
The Company has complied, and is complying, with the provisions of
paragraphs (1)-(4).
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.
C-15
<PAGE> 253
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
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(b) for
effectiveness of this Registration Statement, and 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 this 27th day of April, 2000.
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> 254
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 April 27, 2000
- ----------------------------------------------------- President - Sales
Bruce R. Abrams
* Director and Executive Vice April 27, 2000
- ----------------------------------------------------- President - 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> 255
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
NUMBERED
EXHIBIT NO. PAGES
----------- ------------
<S> <C> <C>
10. -- Consent of Independent Auditors.
16(d). -- Copies 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 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. 29 to the
Registration Statement (Form N-4, No. 2-96223/811-3240) of The Variable Annuity
Life Insurance Company Separate Account A.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Houston, Texas
April 21, 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
- --------------------------
