1998
ANNUAL REPORT
American Fidelity Separate Account A
(Formerly American Fidelity Variable Annuity Fund A)
American Fidelity Assurance Company
<PAGE>
January, 1999
Dear Participant:
The U.S. equity markets soared to new all time highs during the
fourth quarter capping off a record setting three-year advance.
The swift rise in stock prices, following the sharp correction in
the third quarter, was fueled by the strong resilience of the
U.S. economy, falling interest rates, low inflation and an
improved outlook for corporate profits. During the fourth
quarter, the Federal Reserve lowered the federal funds rate an
additional .50% to 4.75% to aggressively address the domestic
and foreign liquidity crisis. However, the underlying
fundamental strength of the domestic economy combined with low
inflation continued to be the primary catalysts behind the
market's historic advance. American Fidelity Variable Annuity
Fund A also reported a gain for the year. The unit value was
$24.33 on December 31, 1998, up 25.0% from $19.46 on December 31,
1997.
U.S. economic growth accelerated in the third quarter to a 3.7%
annual rate in real Gross Domestic Product ("GDP") following a
more modest 1.8% growth rate for the second quarter. Steady
consumer spending levels, inventory rebuilding from the second
quarter and a better than expected trade deficit were the primary
factors lifting GDP growth above the 3.0% level. For the full
year 1998, we are projecting a 3.7% rate of real GDP growth
compared to 3.9% for 1997. Looking forward, we expect economic
growth to moderate in 1999 as consumer spending slows and the
trade deficit rises.
Overall inflation rates, as measured by the Consumer Price Index
("CPI"), fell modestly during 1998 to a 1.5% annual rate through
November versus a 1.7% rate of growth for all of 1997. A
significant drop in energy prices and several other commodity
prices were the primary factors in maintaining moderate price
levels for the entire year. Prices for the "core" CPI rate
(excluding food and energy costs) increased slightly in 1998 to
2.3% through November versus 2.2% in 1997 as robust economic
growth continued to pressure a tight labor market. The employment
cost index, which is the best measure of total labor costs, hit a
six year high in the third quarter with a 3.7% year over year
growth rate. We do not expect any significant change in the
inflation rate for 1999 outside of an increase in the overall CPI
to compensate for a firming in energy prices from the current
depressed levels.
After reaching a low of 4.69% in early October, long-term
interest rates, as measured by the 30 year U.S. Treasury Bond,
ended the year at 5.08%. The Federal Reserve cut the Federal
Funds rate three times for a total of .75% from the last week of
September to mid-November. The objective of the Federal Reserve
was to alleviate a tightening in credit conditions spurred by
Russia's devaluation, Japan's economic deterioration and growing
domestic liquidity concerns. We expect long-term interest rates
to remain relatively stable over the next few quarters and to
begin to rise in the latter part of 1999 as economic conditions
improve.
Despite the sharp advance in the equity markets over the past few
years, we continue to believe that the long-term outlook for the
U.S. stock market is quite positive. However, political
uncertainty, continued international instability and heightened
concerns over corporate earnings are likely to make investors
more cautious as we head into 1999.
If you have any questions about American Fidelity Variable
Annuity Fund A, please let us know.
Sincerely,
JOHN W. REX
John W. Rex, Chairman
Board of Managers
<PAGE>
OBJECTIVES:
The Fund's principal investment objective is long-term growth of
capital. Occasional investments to seek short-term capital
appreciation may be made. A secondary investment objective is the
production of income.
Variable Annuity Fund A
Historical Unit Values
1988 5.1103
1989 6.5142
1990 6.9245
1991 8.8663
1992 9.1083
1993 9.7090
1994 9.0938
1995 12.1993
1996 15.3389
1997 19.4632
1998 24.3329
<PAGE>
SCHEDULE OF PORTFOLIO INVESTMENTS
AMERICAN FIDELITY VARIABLE ANNUITY FUND A
DECEMBER 31, 1998
Market Value
Shares or -------------
Principal Percentage of
Common Stocks Amount Amount Net Assets
- -----------------------------------------------------------------
Chemicals and Allied Products:
Abbott Laboratories 33,600 $1,646,400
American Home Products
Corporation 47,000 2,646,664
Avery-Dennison Corporation 84,400 3,803,233
Bristol-Meyers Squibb Company 28,900 3,867,167
Dupont 14,400 764,093
Johnson & Johnson 44,000 3,690,500
Lilly Eli and Company 12,800 1,137,600
Merck & Company, Inc. 11,700 1,727,938
Pfizer, Inc. 35,800 4,490,644
---------------------------------
23,774,239 12.88%
Business Services:
Automatic Data Processing 34,000 2,726,358
Cisco Systems, Inc.* 80,250 7,448,162
Computer Associates
International 25,800 1,099,725
Interpublic Group of
Companies 25,500 2,033,625
Microsoft Corporation* 41,400 5,741,642
WPP Group PLC** 39,000 2,408,250
---------------------------------
21,457,762 11.63%
Electronic and Other Electric Equipment:
General Electric Company 61,600 6,287,018
Intel Corporation 45,200 5,359,003
Lucent Technologies 35,000 3,850,000
Phillips Electronics NV 37,000 2,504,419
---------------------------------
18,000,440 9.75%
Petroleum Refining and Related Industries:
Chevron Corporation 31,600 2,620,809
Exxon Corporation 26,000 1,901,250
Kerr-McGee Corporation 44,000 1,683,000
Royal Dutch Petroleum 61,200 2,929,950
Texaco, Inc. 55,200 2,918,700
---------------------------------
12,053,709 6.53%
Food and Kindred Products:
Anheuser-Busch Companies,
Inc. 31,000 2,034,375
The Coca-Cola Company 53,600 3,584,500
Pepsico, Inc. 58,000 2,374,346
Sara Lee Corporation 103,000 2,903,261
---------------------------------
10,896,482 5.91%
Industrial Machinery and Equipment:
Compaq Computer Corporation 80,000 3,354,960
Hewlett-Packard Company 16,400 1,120,317
IBM Corporation 11,800 2,180,050
United Technologies 32,500 3,534,375
---------------------------------
10,189,70 5.52%
Depository Institutions:
First Union Corporation 29,484 1,792,981
MBNA 87,750 2,188,222
Mellon Bank Corporation 35,000 2,406,250
J.P. Morgan & Company, Inc. 10,000 1,050,620
Regions Financial Corporation 17,600 709,491
Wachovia Corporation 20,000 1,748,740
---------------------------------
9,894,304 5.36%
Insurance Carriers:
AFLAC, Inc. 70,200 3,088,800
American International Group 58,725 5,674,303
----------------------------------
8,763,103 4.75%
Food Stores:
Albertsons, Inc. 23,600 1,503,013
Safeway, Inc.* 105,200 6,410,572
----------------------------------
7,913,585 4.29%
Electric, Gas and Sanitary Services:
Duke Energy Company 16,000 1,024,992
GTE 34,800 2,262,000
Northern States Power
Company 38,000 1,054,500
Teco Energy, Inc. 55,500 1,564,379
Texas Utilities 34,500 1,610,702
----------------------------------
7,516,573 4.07%
Communications:
Ameritech 33,400 2,116,725
Bell Atlantic Corporation 31,792 1,684,976
Bellsouth Corporation 30,000 1,496,250
SBC Communications, Inc. 37,600 2,016,300
----------------------------------
7,314,251 3.96%
Holding Other Investment Offices:
BankAmerica Corporation 42,032 2,527,174
Flecor Lodging Trust, Inc. 23,300 537,345
First Industrial Realty
Trust 28,000 750,736
Mack-Cali Realty Corporation 25,400 784,225
Simon Property Group, Inc. 20,000 570,000
----------------------------------
5,169,480 2.80%
Non-Depository Institutions:
American Express Company 19,600 2,004,100
FNMA 34,400 2,545,600
----------------------------------
4,549,700 2.47%
Personal Services:
H & R Block 39,300 1,768,500
Service Corp International 64,000 2,435,968
----------------------------------
4,204,468 2.28%
General Merchandise:
Sears Roebuck & Company 16,800 714,000
Wal-Mart Stores, Inc. 29,700 2,418,679
----------------------------------
3,132,679 1.70%
Miscellaneous Retail:
Costco, Inc.* 40,500 2,923,574
----------------------------------
2,923,574 1.58%
Building Materials and Gardening Supplies:
Home Depot, Inc. 46,000 2,814,602
----------------------------------
2,814,602 1.53%
Transportation Equipment:
Allied Signal, Inc. 30,000 1,329,360
DaimlerChrysler* 14,964 1,437,472
----------------------------------
2,766,832 1.50%
Home Furniture and Equipment Store:
Circuit City Stores 53,000 2,646,661
----------------------------------
2,646,661 1.43%
Nondurable Goods-Wholesale:
Unilever NV 31,000 2,571,047
----------------------------------
2,571,047 1.39%
Miscellaneous Manufacturing Industries:
Tiffany & Company 47,200 2,448,500
----------------------------------
2,448,500 1.33%
Motion Pictures:
Disney (Walt) Company 57,600 1,728,000
----------------------------------
1,728,000 0.94%
Security and Commodity Brokers:
Charles Schwab Corporation 29,500 1,657,517
----------------------------------
1,657,517 0.90%
Eating and Drinking Places:
McDonald's Corporation 16,000 1,226,000
Norrell Corporation 20,000 295,000
----------------------------------
1,521,000 0.82%
Air Transportation:
Delta Airlines, Inc. 24,000 1,248,000
----------------------------------
1,248,000 0.68%
Primary Metal Industries:
Englehard Corporation 58,000 1,131,000
----------------------------------
1,131,000 0.61%
Oil and Gas Extraction:
Diamond Offshore* 44,400 1,051,703
----------------------------------
1,051,703 0.57%
Instruments and Related Products:
Raytheon Company 16,000 852,000
----------------------------------
852,000 0.46%
Health Services:
Phycor, Inc. 39,000 265,668
----------------------------------
265,668 0.14%
----------------------------------
Total Common Stocks
(Cost $104,548,952) $180,458,581 97.78%
----------------------------------
Short Term Investments:
Associates Corporation of
North America Master Note
(4.71% at 12/31/98) 3,748,018 3,748,018
----------------------------------
Total Short-Term Investments: $ 3,748,018 2.03%
----------------------------------
Total Investments: $184,206,599 99.81%
----------------------------------
Other Assets and Liabilities, net: 341,850 0.19%
----------------------------------
Total Net Assets: $184,548,449 100.00%
==================================
* Presently not producing dividend income
** Foreign Investments
STATEMENT OF ASSETS AND LIABILITIES:
December 31, 1998
-----------------
ASSETS:
Cash $116,675
Investments at market value (Cost:
$108,296,970 and $85,275,367
in 1998 and 1997, respectively) 184,206,599
Accrued interest and dividends 225,175
Accounts Receivable for Securities Sold 0
Total assets 184,548,449
------------
LIABILITIES: 0
Total Liabilities: 0
============
NET ASSETS $184,548,449
============
ACCUMULATION UNITS OUTSTANDING 7,584,332
============
NET ASSET VALUE PER UNIT $ 24.3329
See accompanying notes to financial statements.
STATEMENT OF OPERATIONS
Year Ended December 31, 1998
----------------------------
INVESTMENT INCOME:
Income:
Dividends $ 2,248,472
Interest 237,909
-------------
2,486,381
-------------
Expenses:
Mortality and expense
guaranty fees (note 2) 1,523,825
Investment management
fees (note 2) 793,659
-------------
2,317,484
NET INVESTMENT INCOME 168,897
-------------
REALIZED GAINS ON INVESTMENTS:
Proceeds from sales 63,452,797
Cost of securities sold 52,493,327
-------------
NET REALIZED GAINS 10,959,470
-------------
UNREALIZED APPRECIATION
ON INVESTMENTS:
End of year 75,909,629
Beginning of year 51,266,737
-------------
INCREASE IN UNREALIZED
APPRECIATION 24,642,892
-------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $35,771,259
=============
See accompanying notes to financial statements.
STATEMENTS OF CHANGES IN NET ASSETS
Years Ended December 31,
--------------------------------
1998 1997
---- ----
Increase in net assets from operations:
Net investment income $ 168,897 $ 479,513
Net realized gains on investments 10,959,470 8,150,950
Increase in unrealized appreciation
of investments 24,642,892 19,126,495
------------------------------
Net increase in net assets
resulting from operations 35,771,259 27,756,958
------------------------------
Changes from principal transactions:
Net purchase payments received
(note 2) 27,107,727 21,031,010
Withdrawal of funds (15,421,088) (10,526,816)
------------------------------
Increase in net assets derived
from principal transactions 11,686,639 10,504,194
------------------------------
Increase in net assets 47,457,898 38,261,152
NET ASSETS:
Beginning of year 137,090,551 98,829,399
------------------------------
End of year $184,548,449 137,090,551
==============================
ACCUMULATION UNITS:
Outstanding, beginning of year 7,043,575 6,443,056
Increase for payments received 1,258,128 1,190,147
Decrease for withdrawal of funds (717,371) (589,628)
------------------------------
Outstanding, end of year 7,584,332 7,043,575
==============================
See accompanying notes to financial statements.
<PAGE>
FINANCIAL HIGHLIGHTS
Per Accumulation Unit Income and Capital Changes
Years Ended December 31,
------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
INVESTMENT INCOME AND EXPENSES:
Investment Income $0.3370 $0.3284 $0.2817 $0.2163 $0.2105
Operating Expenses 0.3141 0.2576 0.1882 0.1364 0.1193
------ ------ ------ ------ ------
Net Investment Income 0.0229 0.0708 0.0935 0.0799 0.0912
CAPITAL CHANGES:
Net realized and unrealized gains
(losses) from securities 4.8468 4.0535 3.0468 3.0251 (0.7066)
------- ------- ------- ------- -------
Net increase (decrease) in
accumulation unit value 4.8697 4.1243 3.1403 3.1050 (0.6154)
Accumulation unit value,
beginning of period 19.4632 15.3389 12.1986 9.0936 9.7090
------- ------- ------- ------- -------
Accumulation unit value,
end of period $24.3329 $19.4632 $15.3389 $12.1986 $ 9.0936
======= ======= ======= ======= =======
NUMBER OF ACCUMULATION
UNITS OUTSTANDING,
END OF PERIOD 7,584,332 7,043,575 6,443,056 5,996,795 5,615,645
========= ========= ========= ========= =========
RATIOS:
Ratio of expenses to
average net assets 1.4603% 1.4603% 1.3777% 1.2880% 1.2826%
Ratio of net investment income
to average net assets 0.1070% 0.4042% 0.6850% 0.7542% 0.9797%
Portfolio turnover rate 40.1% 26.6% 36.9% 66.1% 43.5%
See accompanying notes to financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
General
- -------
American Fidelity Variable Annuity Fund A (the Fund) is a
separate account of American Fidelity Assurance Company (AFA).
The Fund is registered as an open-end, diversified management
investment company under the Investment Company Act of 1940, as
amended. The purpose of the Fund is to provide a means of
investing for supplemental retirement income. Shares are only
available in connection with variable annuity policies issued by
AFA.
The Fund's investment objectives are primarily long-term growth
of capital and secondarily the production of income. In order to
achieve these investment objectives, the Fund normally invests in
a diversified portfolio consisting primarily of common stocks.
Investments
- -----------
Investments in corporate stocks are valued by Merrill Lynch
Pricing Service. Securities for which published quotations are
not available are valued at the quotation obtained from the
Fund's primary broker. Short-term investments are valued on the
basis of amortized cost, which approximates market, and include
all investments with maturities less than one year.
The Fund's portfolio of investments is diversified such that not
more than five percent (5%) of the value of the total assets of
the Fund are invested in any one issuer and not more than
twenty-five percent (25%) are invested in any one industry or
group of industries. Management does not believe the fund has any
significant concentrations of credit risk.
Realized gains and losses from investment transactions and
unrealized appreciation or depreciation of investments are
determined on the average cost basis.
Dividend income is recorded on the ex-dividend date, and interest
income is recorded on the daily accrual basis. For certain
securities in which the exact dividend is unknown on the
ex-dividend date, such as stock in foreign companies, an estimate
of the dividend is recorded on the ex-dividend date, and any
necessary adjustments are added to the Fund's investment income
on the date the dividend is received by the Fund. Any taxes
withheld by foreign governments or any foreign exchange
experience (gains or losses) incurred by investment in such
securities are paid by the Fund and are recorded as reductions of
dividend income. The Fund does not expect these costs to be
significant.
Income Taxes
- ------------
The Fund is not taxed separately because the operations of the
Fund are part of the total operations of AFA. AFA files its
federal income tax returns under sections of the Internal Revenue
Code applicable to life insurance companies. The Fund's net
increase in net assets from operations is not expected to result
in taxable income under present regulations. The Fund will not be
taxed as a "Regulated Investment Company" under Subchapter "M" of
the Internal Revenue Code.
Annuity Reserves
- ----------------
Annuity reserves are computed for currently payable contracts
according to the Progressive Annuity Mortality Table. The assumed
interest rate is 3.5 percent unless the annuitant elects
otherwise, in which case the rate may vary from zero to 5 percent
as regulated by the laws of the respective states. Charges to
annuity reserves for mortality and expense risks experience are
reimbursed to AFA if the reserves required are less than
originally estimated. If additional reserves are required, AFA
reimburses the Fund. At December 31, 1998, there were no contract
owners who had elected the variable annuity method of payout.
Accordingly, the Fund held no annuity reserves at December 31,
1998.
Use of Estimates
- ----------------
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of increase and decrease in net assets from
operations during the period. Actual results could differ from
those estimates.
NOTE 2 - VARIABLE ANNUITY CONTRACTS
Net purchase payments received represent gross payments less
deductions of $1,021,967 and $803,592 for the years ended
December 31, 1998 and 1997, respectively. The deductions are
comprised of sales and administrative expenses, minimum death
benefits, administrative charges, and certificate issuance fees.
These deductions were paid to AFA.
AFA acts as the Fund's investment manager and assumes certain
mortality and expense risks under the variable annuity contracts.
Investment management fees are equal to .0013698% of the Fund's
daily net assets (.5% per annum). Mortality and expense guaranty
fees are equal to .0026308% of the Fund's daily net assets
(.96025% per annum). Such fees were paid to AFA.
During the accumulation period, contract owners may partially or
totally withdraw from the Fund by surrendering a portion or all
of their accumulation units. The Internal Revenue Code may limit
certain withdrawals based upon age, disability, and other
factors. When contract owners withdraw, they receive the current
value of their accumulation units.
Certain officers and directors of the Fund are also officers and
directors of AFA.
Subsequent Event
- ----------------
Effective January 1, 1999, the Fund was converted to a unit
investment trust separate account (known as American Fidelity
Separate Account A), and it transferred its investment portfolio
to the American Fidelity Dual Strategy Fund (Dual Strategy Fund)
in exchange for shares of the Dual Strategy Fund. There was no
impact on the net assets or net asset value per unit as a result
of this transfer.
Year 2000 Risks
- ---------------
Like other variable annuity funds, financial and business
organizations and individuals around the world, the Fund could be
adversely affected if the computer systems used by AFA and the
Fund's other service providers do not properly process and
calculate date-related information and data from and after
January 1, 2000. This is commonly known as the "Year 2000
Problem." AFA has had a formal project team (including 22
information systems professionals) working to correct the problem
since 1996. In the briefest terms, the correction is to change
all date related fields in AFA's computer systems to four digits
instead of two digits. At the same time, all relationships with
systems outside AFA must be checked for the same change and all
must be tested to determine that relationships continue to be
compatible. Those systems were tested on December 31, 1997 and
went through year-end processing without incident. The final test
of all systems will be run in 1999. Even though management of AFA
is expending considerable resources in a concerted effort to meet
this technology-related threat, there is no guarantee that there
will be no adverse impact on the Fund of some sort as January 1,
2000 passes.
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Managers and Contract Owners
American Fidelity Variable Annuity Fund A:
We have audited the accompanying statement of assets and
liabilities of American Fidelity Variable Annuity Fund A (the
Fund), including the schedule of portfolio investments, as of
December 31, 1998, and the related statement of operations for
the year then ended, the statements of changes in net assets for
each of the two years in the period then ended, and the financial
highlights for each of the years in the five-year period then
ended. These financial statements and financial highlights are
the responsibility of the Fund's management. Our responsibility
is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether
the financial statements and financial highlights 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, 1998, by correspondence with
the custodian. An audit also includes assessing the accounting
principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
As discussed in Note 3 to the financial statements, effective
January 1, 1999, the Fund was converted to a unit investment
trust separate account.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of American Fidelity Variable Annuity Fund A as of December 31,
1998, the results of its operations for the year then ended, the
changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the years in
the five-year period then ended, in conformity with generally
accepted accounting principles.
KPMG LLP
Oklahoma City, Oklahoma
January 12, 1999
<PAGE>
PARTICIPANTS' BENEFITS
As a participant of Variable Annuity Fund A, you benefit from a
number of valuable and helpful services which help you meet your
investment needs. Some of the services you currently enjoy are
the following:
RE-INVESTMENT WITHOUT CHARGE
Dividends and interest from investment income as well as capital
gain contributions are automatically re-invested without charge.
PROFESSIONAL MANAGEMENT
Knowledgeable, full-time management constantly monitors market
opportunities for your fund.
CAPITAL FULLY INVESTED
Accumulation units are issued in full and fractional amounts so
that your net payments are immediately available for investment
purposes.
ANNUAL STATEMENT OF ACCOUNT
You receive a semi-annual statement of account each year. This
statement is a valuable, permanent, personal record. In the
event that you should have occasion to redeem some of your
accumulation units, you are also provided with the proper tax
form for your convenience in filing your income tax return.
REDEMPTION WITHOUT CHARGE
American Fidelity Variable Annuity Fund A will redeem your
accumulation units without charge at the full value when your
request is received in Oklahoma City as described in the
Prospectus.
SYSTEMATIC RETIREMENT OPTIONS
At your retirement a range of pay out options is available in
order to tailor your retirement income payments as closely as
possible to your needs.
PERSONAL SERVICE
Continuous personal service is available to you through the team
of American Fidelity trained salaried representatives or directly
from the Annuity Services Department in our Home Office.
<PAGE>
Board of Managers JOHN W. REX, Chairman
American Fidelity President and Director
Variable Annuity American Fidelity Assurance Company
Fund A DANIEL D. ADAMS, JR., Secretary
Vice President and Investment Officer
American Fidelity Assurance Company
JEAN G. GUMERSON
President and Chief Executive Officer
Presbyterian Health Foundation
EDWARD C. JOULLIAN, III
Chairman of the Board and
Chief Executive Officer
Mustang Fuel Corporation
GREGORY M. LOVE
President and Chief Operating Officer
Love's Country Stores, Inc.
J. DEAN ROBERTSON, D.D.S., M. Ed.
Pediatric Dentistry
Private Practice
G. RAINEY WILLIAMS, JR.
President, Pinnacle Asset
Management, Inc.
- ------------------------------------------------------------------------------
Safekeeping of Securities InvestTrust, N.A.
Oklahoma City, Oklahoma
- ------------------------------------------------------------------------------
Independent Auditors KPMG
Oklahoma City, Oklahoma
- ------------------------------------------------------------------------------
Investment Manager American Fidelity Assurance Company
Oklahoma City, Oklahoma
- ------------------------------------------------------------------------------
Investment Sub-Advisors Lawrence W. Kelly & Associates, Inc.
Pasadena, California
Todd Investment Advisors, Inc.
Louisville, Kentucky
- ------------------------------------------------------------------------------
Board of Directors LYNDA L. CAMERON
American Fidelity President
Assurance Company Cameron Equestrian Centers, Inc.
WILLIAM M. CAMERON
Chairman of the Board and Chief
Executive Officer
American Fidelity Assurance Company
WILLIAM E. DURRETT
Senior Chairman of the Board
American Fidelity Assurance Company
WILLIAM A. HAGSTROM
Chairman of the Board and President
UroCorp, Inc.
EDWARD C. JOULLIAN, III
Chairman of the Board and
Chief Executive Officer
Mustang Fuel Corporation
DAVID R. LOPEZ
Vice President - National Local
Regulatory
SBC Communications, Inc.
PAULA MARSHALL-CHAPMAN
Chief Executive Officer
The Bama Companies, Inc.
JOHN W. REX
President and Chief Operating Officer
American Fidelity Assurance Company
GALEN P. ROBBINS, M.D.
Physician
JOHN D. SMITH
Director and President
John D. Smith Developments, Inc.
<PAGE>
American Fidelity
Assurance Company
A member of the American Fidelity Group
2000 N. Classen Boulevard
Oklahoma City, Oklahoma 73106
Telephone: 1-800-654-8489
