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As Filed with the Securities and Exchange Commission on February 24, 2000
Registration Nos. 2-30771
811-01764
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
[ ] Pre-Effective Amendment No.
[x] Post Effective Amendment No. 46
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
[x] Amendment No. 46
AMERICAN FIDELITY SEPARATE ACCOUNT A
(FORMERLY AMERICAN FIDELITY VARIABLE ANNUITY FUND A)
(Exact Name of Registrant)
AMERICAN FIDELITY ASSURANCE COMPANY
(Name of Depositor)
2000 N. CLASSEN BOULEVARD, OKLAHOMA CITY, OKLAHOMA 73106
(Address of Depositor's Principal Executive Offices) (Zip Code)
Depositor's Telephone Number, Including Area Code (405) 523-2000
Stephen P. Garrett Copies to:
Senior Vice President
Law and Government Affairs Jerry A. Warren, Esq.
American Fidelity Assurance Company McAfee & Taft
2000 N. Classen Boulevard A Professional Corporation
Oklahoma City, Oklahoma 73106 10th Floor, Two Leadership Square
(Name and Address of Agent for Service) Oklahoma City, OK 73102-7103
Approximate Date of Proposed Public Offering: As soon as practicable after
effectiveness of the
Registration Statement
It is proposed that this filing will become effective (check appropriate box)
[ ] immediately upon filing pursuant to paragraph (b) of Rule 485
[ ] on (date) pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a) (1) of Rule 485
[x] on May 1, 2000 pursuant to paragraph (a) (1) of Rule 485
If appropriate, check the following box:
[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
Title of Securities Being Registered: Group variable annuity contracts
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AFPR1ME
GROWTH
Variable Annuity(TM)
FROM
[AMERICAN FIDELITY LOGO]
A MEMBER OF THE AMERICAN FIDELITY GROUP
May 1, 2000
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AFPR1ME
GROWTH
Variable Annuity(TM)
ISSUED BY
AMERICAN FIDELITY SEPARATE ACCOUNT A
AND
AMERICAN FIDELITY ASSURANCE COMPANY
PROSPECTUS
MAY 1, 2000
American Fidelity Separate Account A is offering the AFPR1ME GROWTH
Variable Annuity(TM) to employers and self-employed individuals for use in
qualified retirement plans. The AFPR1ME GROWTH Variable Annuity(TM) is issued by
American Fidelity Assurance Company in the form of group contracts between
American Fidelity and the employer or self-employed individual.
The assets of Separate Account A will be invested solely in American
Fidelity Dual Strategy Fund. Dual Strategy Fund's primary investment objective
is long-term capital growth; its secondary investment objective is the
production of income. The fund invests in a diversified portfolio consisting
primarily of common stock. Any income and realized capital gains from the fund
will be reinvested by Separate Account A in shares of the fund.
This prospectus contains important information about the AFPR1ME GROWTH
Variable Annuity(TM) and Separate Account A that a prospective investor should
know before investing. To learn more about the variable annuity and Separate
Account A, you should read our Statement of Additional Information dated May 1,
2000 that we filed with the Securities and Exchange Commission. The SEC
maintains a web site (http://www.sec.gov) that contains our Statement of
Additional Information, material incorporated by reference and other material
that we file electronically with the SEC.
The Statement of Additional Information is incorporated by reference into
this document. The table of contents of the Statement of Additional Information
appears on the last page of this prospectus. For a free copy of our Statement of
Additional Information, call us at (800) 662-1106 or write to us at P.O. Box
25523, Oklahoma City, Oklahoma 73125-0523 or e-mail us at [email protected].
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------
PLEASE READ THIS PROSPECTUS CAREFULLY AND KEEP IT FOR
FUTURE REFERENCE.
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GLOSSARY OF TERMS
SOME OF THE TERMS USED IN THIS PROSPECTUS ARE TECHNICAL. TO HELP YOU
UNDERSTAND THESE TERMS, WE HAVE DEFINED THEM BELOW.
Accumulation period: The period of time between becoming a participant and
the commencement of annuity payments. Until you begin receiving annuity
payments, your policy is in the accumulation period.
Accumulation unit: The unit of measurement we use to keep track of the
value of your account.
Annuitant: The person on whose life annuity payments are based.
Annuity: A series of installment payments for the life of the annuitant, or
for the joint lifetime of the annuitant and another person and thereafter during
the lifetime of their survivor, with either a minimum number of payments or a
specific sum.
Annuity date: The date annuity payments begin.
Annuity options: The various methods available to select as pay-out plans
for your annuity payments.
Annuity payments: Payments made after retirement to annuitants pursuant to
the contract.
Annuity period: The period during which we make annuity payments.
Annuity unit: The unit of measurement we use to calculate your annuity
payments during the annuity period.
Contract: The master group contract between American Fidelity and a
contract owner.
Contract owner: The entity to which a contract is issued, which is normally
the employer of participants or an organization representing an employer.
Participant: A person, like yourself, who has an interest in an annuity
contract due to making premium deposits.
Participant account: The account we maintain for you, as a participant,
reflecting the accumulation units credited to you.
Premium deposit: Money invested by or on behalf of participants in a
contract.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary..................................................... 1
Fee Table................................................... 2
Condensed Financial Information............................. 2
American Fidelity, Separate Account A and Dual Strategy
Fund...................................................... 3
The AFPR1ME GROWTH Variable Annuity(TM)..................... 4
Purchasing Accumulation Units............................... 5
Receiving Payments From the Annuity......................... 6
Expenses.................................................... 9
Withdrawals................................................. 10
Death Benefit............................................... 11
Performance................................................. 11
Federal Tax Matters......................................... 12
Legal Proceedings........................................... 16
Financial Statements........................................ 16
Table of Contents of Statement of Additional Information.... 16
</TABLE>
ii
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SUMMARY
IN THIS SUMMARY, WE DISCUSS SOME OF THE IMPORTANT FEATURES OF YOUR GROUP
ANNUITY CONTRACT. YOU SHOULD READ THE ENTIRE PROSPECTUS FOR MORE DETAILED
INFORMATION.
The AFPR1ME GROWTH Variable Annuity(TM). The AFPR1ME GROWTHVariable
Annuity(TM) is a contract between an employer, who is the contract owner on
behalf of its participants, and American Fidelity, which is the insurance
company. Money invested in the AFPR1ME GROWTH Variable Annuity(TM) is invested
on a tax deferred basis in Dual Strategy Fund. The AFPR1ME GROWTH Variable
Annuity(TM) is designed for people seeking long-term earnings, generally for
retirement or other long-term purposes. The tax deferred feature is most
attractive to people in high federal and state tax brackets. You should not
become a participant in the AFPR1ME GROWTH Variable Annuity(TM) if you are
looking for a short-term investment or if you cannot afford to lose some or all
of your investment.
Like all deferred annuities, the annuity contract has two phases: the
accumulation period and the annuity period. During the accumulation period, you
invest money in your annuity on a pre-tax basis, and your earnings accumulate on
a tax deferred basis. You can withdraw money from your participant account
during the accumulation period, but federal income tax and penalties may apply
if you make withdrawals before age 59 1/2.
The annuity period begins when you start receiving regular payments from
your participant account. Among other factors, the amount of the payments you
may receive during the annuity period will depend on the amount of money you
invest in your participant account during the accumulation period and on the
investment performance of Dual Strategy Fund.
Dual Strategy Fund. The money you invest in your AFPR1ME GROWTH Variable
Annuity(TM) is used to purchase, at net asset value, shares of Dual Strategy
Fund. You can make or lose money on your investment, depending on market
conditions.
Taxes. Generally, the premium deposits you make are excludable from your
gross income, and earnings are not taxed until you make a withdrawal. In most
cases, if you withdraw money from your participant account, earnings come out
first and are taxed as income. If you withdraw any money before you are 59 1/2,
you may be charged a federal tax penalty on the taxable amounts withdrawn. In
most cases, the penalty is 10% on the taxable amounts. All payments during the
annuity period are taxable.
Withdrawals. You may withdraw money at any time during the accumulation
period. No fees are charged for withdrawals. Restrictions exist under federal
tax law concerning when you can withdraw money from a qualified plan, and you
may have to pay income tax and a tax penalty on any money you withdraw. If a
withdrawal causes your participant account to have a remaining value of less
than $1,000, we may redeem all your accumulation units and cancel your account.
After a complete withdrawal, you may not establish a new participant account
without our consent.
Although the contract does not have a "free-look" provision, you do have
the right to withdraw all or part of the value of your participant account at
any time without paying a withdrawal fee.
Questions. If you have any questions about your contract or need more
information, please contact us at:
American Fidelity Assurance Company
Annuity Services Department
P.O. Box 25523
Oklahoma City, OK 73125-0523
Telephone: (800) 662-1106
E-mail: [email protected]
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FEE TABLE
<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES (AS A PERCENTAGE OF
PURCHASE PAYMENTS)
Sales Charges............................................. 3.00%
Administrative Expense.................................... 0.25%
Minimum Death Benefit Expense............................. 0.75%
Deferred Sales Load....................................... None
Surrender Fees............................................ None
Exchange Fee.............................................. None
PER PAYMENT CHARGE.......................................... $ 0.50
ONE-TIME CONTRACT CERTIFICATE FEE........................... $15.00
SEPARATE ACCOUNT A ANNUAL EXPENSES (AS A PERCENTAGE OF
AVERAGE ACCOUNT VALUE)
Mortality and Expense Risk Fees........................... .96025%
DUAL STRATEGY FUND ANNUAL EXPENSES (AS A PERCENTAGE OF ITS
AVERAGE NET ASSETS)
Management Fee............................................ 0.50%
</TABLE>
The purpose of the fee table is to show you the various costs and expenses
that you will bear directly or indirectly. The table reflects the expenses of
both Separate Account A and Dual Strategy Fund. For a more complete explanation
of each of the expense components, see "Expenses" on page 9 of this prospectus
as well as the description of expenses of Dual Strategy Fund in the accompanying
prospectus. Although premium taxes are not reflected in the fee table, they may
apply.
EXAMPLE
If you surrender your contract at the end of the applicable time period,
you would pay the following expenses on a $1,000 investment, 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>
$69 $99 $131 $221
</TABLE>
THIS EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN ABOVE.
SIMILARLY, THE 5% ANNUAL RATE OF RETURN ASSUMED IN THE EXAMPLE IS NOT AN
ESTIMATE OR GUARANTEE OF FUTURE PERFORMANCE.
CONDENSED FINANCIAL INFORMATION
The following table shows accumulation unit values and the number of
accumulation units outstanding for Separate Account A's predecessor, American
Fidelity Variable Annuity Fund A, as of the dates indicated. The information is
derived from the financial statements of American Fidelity Variable Annuity Fund
A. Beginning January 1, 1999, accumulation unit information for Separate Account
A will reflect its operations as a unit investment trust investing in Dual
Strategy Fund.
<TABLE>
<CAPTION>
1999 1998 1997 1996 1995(A) 1994 1993 1992 1991 1990
------- ------- ------- ------ ------- ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Accumulation Unit value:
Beginning of year....... $24.333 $19.463 $15.339 $12.199 $9.094 $9.709 $9.108 $8.866 $6.924 $6.514
End of year............. $28.552 $24.333 $19.463 $15.339 $12.199 $9.094 $9.709 $9.108 $8.866 $6.924
Number of Accumulation
Units outstanding at end
of year (in 000's)...... 7,985 7,584 7,044 6,443 5,997 5,616 5,114 4,644 4,268 4,041
</TABLE>
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(a) Investment management by the present sub-advisers commenced October 2, 1995.
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AMERICAN FIDELITY, SEPARATE ACCOUNT A AND DUAL STRATEGY FUND
AMERICAN FIDELITY
American Fidelity Assurance Company is an Oklahoma stock life insurance
company incorporated under the laws of the State of Oklahoma in 1960. Its
principal executive offices are located at 2000 N. Classen Boulevard, Oklahoma
City, Oklahoma 73106, telephone number 800-662-1106. American Fidelity is
licensed to conduct life, annuity and accident and health insurance business in
49 states and the District of Columbia.
American Fidelity has been a wholly-owned subsidiary of American Fidelity
Corporation since 1974. The stock of American Fidelity Corporation is controlled
by a family investment partnership, Cameron Enterprises, A Limited Partnership,
an Oklahoma limited partnership. William M. Cameron, an individual, and Lynda L.
Cameron, an individual, each own 50% of the common stock of Cameron Associates,
Inc., the sole general partner of Cameron Enterprises, A Limited Partnership.
The address of both American Fidelity Corporation and Cameron Enterprises, A
Limited Partnership, is 2000 N. Classen Boulevard, Oklahoma City, Oklahoma
73106. American Fidelity served as the investment adviser to Separate Account
A's predecessor, American Fidelity Variable Annuity Fund A, and is presently the
investment adviser to Dual Strategy Fund.
SEPARATE ACCOUNT A
American Fidelity's board of directors adopted a resolution on May 7, 1968
to establish Separate Account A as a separate account under Oklahoma insurance
law. The inception date of Separate Account A was January 1, 1970 under the name
American Fidelity Variable Annuity Fund A. It was organized as an open-end
diversified management investment company with its own portfolio of securities.
On January 1, 1999, Separate Account A became a unit investment trust. As part
of the reorganization, the assets of Separate Account A were transferred intact
to Dual Strategy Fund in exchange for shares of Dual Strategy Fund. Separate
Account A is registered with the SEC as a unit investment trust under the
Investment Company Act of 1940. Separate Account A has no sub-accounts.
The assets of Separate Account A are held in American Fidelity's name on
behalf of Separate Account A and legally belong to American Fidelity. Under
Oklahoma law, however, the assets of Separate Account A may not be charged with
liabilities arising out of other business activities of American Fidelity. All
income, gains and losses, realized or unrealized, are credited to or charged
against Separate Account A contracts without regard for income, gains and losses
of American Fidelity. American Fidelity is obligated to pay all benefits and
make all payments under the AFPR1ME GROWTH Variable Annuity(TM).
DUAL STRATEGY FUND
Separate Account A invests exclusively in American Fidelity Dual Strategy
Fund, an open-end diversified management investment company.
Pursuant to a management and investment advisory agreement and subject to
the authority of Dual Strategy Fund's board of directors, American Fidelity
serves as Dual Strategy Fund's investment adviser and conducts the business and
affairs of Dual Strategy Fund. American Fidelity has engaged Lawrence W. Kelly &
Associates, Inc. and Todd Investment Advisors, Inc. as sub-advisers to provide
day-to-day portfolio management for Dual Strategy Fund.
Dual Strategy Fund offers its shares to Separate Account A as a funding
vehicle for the annuity contracts. Dual Strategy Fund shares are also offered to
other separate accounts supporting other variable annuity contracts. Dual
Strategy Fund does not offer its shares directly to the general public.
Dual Strategy Fund's investment objectives are, first, long-term growth of
capital and, second, the production of income. Dual Strategy Fund invests in a
diversified portfolio consisting primarily of common stock. Meeting investment
objectives depends on various factors, including how well the portfolio managers
anticipate changing economic and market conditions. There is no assurance that
Dual Strategy Fund will achieve its objectives.
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ADDITIONAL INFORMATION CONCERNING DUAL STRATEGY FUND CAN BE FOUND IN THE
CURRENT PROSPECTUS FOR DUAL STRATEGY FUND WHICH ACCOMPANIES THIS PROSPECTUS. YOU
SHOULD READ DUAL STRATEGY FUND'S PROSPECTUS CAREFULLY BEFORE INVESTING.
VOTING RIGHTS
American Fidelity is the legal owner of the Dual Strategy Fund shares
allocated to Separate Account A. However, we believe that when Dual Strategy
Fund solicits proxies in conjunction with a shareholder vote, we are required to
obtain from contract owners (based on instructions they receive from their
respective participants and annuitants) instructions as to how to vote those
shares. When we receive the instructions, we will vote all of the shares we own
for the benefit of Separate Account A in proportion to those instructions.
Should we determine that we are no longer required to comply with the above, we
will vote the shares in our own right.
SUBSTITUTION
We cannot guarantee that Dual Strategy Fund will always be available for
our variable annuity products. If it should not be available, we will try to
replace it with a comparable fund. A substitution of shares attributable to the
contracts will not be made without prior notice to contract owners, participants
and annuitants and the prior approval of the SEC in conformity with the
Investment Company Act of 1940.
THE AFPR1ME GROWTH VARIABLE ANNUITY(TM)
ABOUT THE CONTRACT
The AFPR1ME GROWTH Variable Annuity(TM) is a group annuity. A group annuity
is a contract between the contract owner, on behalf of its participants, and an
insurance company (in this case American Fidelity), where the insurance company
promises to pay you (or someone else you choose) an income in the form of
annuity payments beginning on a date chosen by you. The person upon whose life
the policy is based is called the annuitant. You or someone else specified by
you may be the annuitant. If you, or the annuitant, as the case may be, die
during the accumulation period, American Fidelity will pay a death benefit to
your beneficiary.
We may change the AFPR1ME GROWTH Variable Annuity(TM) at any time if
required by state or federal laws. After a contract has been in force for three
years, we may change any term of the contract except that benefits already
earned by participants cannot be decreased and guaranteed monthly life incomes
cannot be decreased. We will notify contract owners of any change at least 90
days before a change will take effect.
NAMING A BENEFICIARY
A beneficiary is the person or entity you name to receive the benefit of
your policy upon the death of the annuitant. You name the beneficiary or
beneficiaries, as the case may be, at the time you become a participant in the
contract, but you may change beneficiaries at a later date. If the beneficiary
and you, or the annuitant, as applicable, die at the same time, we will assume
that the beneficiary died first for purposes of paying any death benefits.
You can change the beneficiary of your policy at any time during the
annuitant's life, unless you name the person as an irrevocable beneficiary. The
interest of an irrevocable beneficiary cannot be changed without his or her
consent.
To change a beneficiary, you need to send a request on a form we accept to
our home office. The change will go into effect when signed, subject to any
payments we make or actions we take before we record the change. A change
cancels all prior beneficiaries, except a change will not cancel any irrevocable
beneficiary without that person's consent. The interest of the beneficiary will
be subject to any annuity option in effect at the time of the annuitant's death.
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PURCHASING ACCUMULATION UNITS
PREMIUM DEPOSITS
In order to keep track of the value of your account, we use a measurement
called an accumulation unit. Each time you invest money with us, you are making
a premium deposit. Every premium deposit you make increases the number of
accumulation units in your participant account. You may make premium deposits at
any time during the accumulation period. Your first premium deposit must be at
least $20, and after that, each premium deposit must be at least $10. You may
increase, decrease or change the frequency of you deposits at any time. We
reserve the right to reject any application or premium deposit.
Once we receive your initial premium deposit and application, we will issue
you a certificate evidencing your participation in the annuity contract. We will
invest your first premium deposit within two business days of receiving it. If
you do not give us all of the information we need, we will contact you to get
it. If for some reason we are unable to complete the initial application process
within five business days, we will either send your money back to you or get
your permission to keep it until we get all of the necessary information. After
your initial premium deposit, we will credit all subsequent premium deposits to
your participant account using the accumulation unit value next determined after
we receive your deposit. If we receive a premium deposit by 3:00 p.m., Central
Time, we will apply same-day pricing to determine the number of accumulation
units to credit to your account.
ACCUMULATION UNITS
The value of your participant account will go up or down depending upon the
investment performance of Dual Strategy Fund and the expenses of, and deductions
charged by, Separate Account A. The value of your participant account is based
on the number of accumulation units in your account and the value of the
accumulation units.
We calculate the value of an accumulation unit after the New York Stock
Exchange closes on each day we are open for business and then credit your
participant account accordingly. We determine the value of an accumulation unit
by multiplying the accumulation unit value for the previous period by a factor
for the current period. The factor, which we call the net investment factor, is
determined by:
- dividing the value of a Dual Strategy Fund share at the end of the
current period, including the value of any dividends or gains per share
for the current period, by the value of a Dual Strategy Fund share for
the previous period, and
- subtracting from that amount the mortality and expense risk charge.
The value of an accumulation unit may go up or down from day to day.
The value of your account at any time before you begin receiving annuity
payments is determined by multiplying the total number of accumulation units
credited to your account by the current accumulation unit value. When you make a
premium deposit, we credit your participant account with accumulation units. The
number of accumulation units credited is determined by dividing the amount of
the net premium deposit (after deduction of 4% to cover sales, administrative
and maximum death benefit charges and $.50 per premium deposit) by the value of
the accumulation unit. A $15 contract certificate issuance fee will also be
deducted from the first premium deposit. Each participant is advised
semiannually of the number of accumulation units credited to his or her account,
the current accumulation unit value, and the total value of the account.
EXAMPLE:
On Thursday morning, we receive a premium deposit of $100 from you. At 3:00
p.m., Central Time, on that Thursday, we determine that the value of an
accumulation unit is $20.25. We then divide $95.50 by $20.25 and credit
your participant account on Thursday night with 4.72 accumulation units.
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UNDERWRITER
American Fidelity Securities, Inc., a wholly-owned subsidiary of American
Fidelity, is the principal underwriter for the annuity policies and acts as the
distributor of the policies. The principal business address of American Fidelity
Securities, Inc. is 2000 N. Classen Boulevard, Oklahoma City, Oklahoma 73106.
RECEIVING PAYMENTS FROM THE ANNUITY
ANNUITY DATE
Upon investing in the AFPR1ME GROWTH Variable Annuity(TM), you will select
an annuity date, which is the month and year that you will begin receiving
regular monthly income payments from the annuity. You may select your desired
annuity date at any time after your initial investment and you may change the
annuity date if you choose; however, you must notify us of your desired annuity
date at least 30 days before you want to begin receiving annuity payments. The
annuity date may not be later than the earliest to occur of the distribution
date required by federal law, the contract owner's tax qualified plan or, if
applicable, state law.
SELECTING AN ANNUITY OPTION
On your annuity date, we will begin making annuity payments in accordance
with one of our income plans. If the value of your participant account is at
least $1,000, you may choose from our various income plans offered, which we
call annuity options. You must designate the annuity option you prefer at least
30 days before your annuity date. If you do not choose an annuity option, we
will make annuity payments to you in accordance with Option 2 below, and the
full amount of your participant account will be paid out in 120 monthly
payments. If the value of your account is less than $1,000, we reserve the right
to pay you the entire amount of your participant account in one lump sum on your
annuity date.
You may change your annuity option by written request at any time before
you begin receiving annuity payments. Any change must be requested at least 30
days before the annuity date. If an option is based on life expectancy, we will
require proof of the payee's date of birth.
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You may choose one of the following annuity options at any time during the
accumulation period. After your annuity payments begin, you cannot change your
annuity option.
<TABLE>
<S> <C> <C>
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OPTION 1 LIFE VARIABLE ANNUITY We will make monthly payments during the life of
the annuitant. If this option is elected, payments
will stop when the annuitant dies.
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OPTION 2 LIFE VARIABLE ANNUITY WITH We will make monthly payments for the guaranteed
PAYMENTS CERTAIN period selected during the life of the annuitant.
When the annuitant dies, any amounts remaining under
the guaranteed period selected will be distributed to
the beneficiary at least as rapidly as they were
being paid as of the date of the annuitant's death.
If the beneficiary dies before the end of the
guaranteed period, the present value of the remaining
payments will be paid to the estate of the
beneficiary based on an annual compound interest rate
of 3.5%. The guaranteed period may be 10 years, 15
years or 20 years.
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OPTION 3 UNIT REFUND LIFE VARIABLE We will make monthly payments during the
ANNUITY lifetime of the annuitant. Upon the annuitant's
death, we will make an additional payment equal to
the value at the date of death of the number of
variable annuity units equal to the excess, if any,
of (a) the total amount applied under this option
divided by the variable annuity unit value on the
annuity date over (b) the variable annuity units
represented by each annuity payment multiplied by the
number of annuity payments paid prior to death.
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OPTION 4 JOINT AND SURVIVOR ANNUITY We will make monthly payments during the joint
lifetime of the annuitant and a joint annuitant.
Payments will continue during the lifetime of the
surviving annuitant based on 66 2/3% of the annuity
payment in effect during the joint lifetime. If the
joint annuitant is not the annuitant's spouse, this
annuity option may not be selected if, as of the
annuity date, the present value of the annuity
payments which would be payable to the joint
annuitant exceeds 49% of the present value of all
payments payable to the annuitant and the joint
annuitant.
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OPTION 5 FIXED ANNUITY You may elect forms of fixed annuities that have
essentially the same characteristics as Annuity
Options 1 through 4 above.
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</TABLE>
ANNUITY PAYMENTS
Annuity payments are paid in monthly installments, although we reserve the
right to change the frequency of payments. If the amount of your monthly annuity
payment becomes less than $20, we may change the payment interval to result in
payments of at least $20.
Annuity payments may be made on a variable basis and/or on a fixed basis.
Payments made on a variable basis are based on the actual investment performance
of Dual Strategy Fund. Payments made on a fixed basis are based on a dollar
amount that is fixed as of the annuity date and an annual rate of interest of
4%. If you choose a fixed annuity, your annuity payments will be based on an
interest rate of 4% regardless of the actual performance of Dual Strategy Fund.
If you choose to have any portion of your annuity payments based on a
variable annuity option, the amount of your first annuity payment will be based
on an assumed investment rate of 4.5%. The amount of
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subsequent annuity payments you receive may be more or less than your initial
payment depending on three things:
- the value of your participant account on the annuity date,
- the assumed investment rate of 4.5%, and
- the performance of Dual Strategy Fund.
After you receive your first annuity payment, if Dual Strategy Fund's
actual performance exceeds the 4.5% assumed rate, your monthly annuity payments
will increase if you chose a variable annuity. Similarly, if the actual
performance rate is less than 4.5%, your annuity payments will decrease relative
to the first payment you received. The amount of the first annuity payment will
depend on the annuity option elected and the age of the annuitant at the time
the first payment is due.
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EXPENSES
Charges and other expenses associated with the AFPR1ME GROWTH Variable
Annuity(TM) will reduce your investment return. These charges and expenses are
explained below.
<TABLE>
<S> <C>
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SALES CHARGE We deduct a 3% sales charge from each premium deposit
we receive. The sales charge is intended to recover our
distribution expenses associated with marketing contracts.
If the 3% sales charge is not adequate to recover our
distribution expenses, we pay the difference. We may pay
the difference, if there is one, from, among other things,
proceeds derived from the mortality and expense risk
charges discussed below. The sales charge for lump sum or
periodic payments of $2,000 or more may be less than 3%,
depending on the actual commission paid.
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INSURANCE CHARGES
Administrative Expenses We deduct .25% of each premium deposit we receive to
recover administrative expenses we incur, including
salaries, rent, postage, telephone and office equipment,
printing, travel, legal, actuarial and accounting fees.
We also charge an additional $.50 administrative
charge against each premium deposit and a one-time
certificate issuance fee of $15. We will not increase the
additional $.50 administrative charge until your premium
deposits equal twice the amount of premium deposits made
during your first year of participation. We may increase
the deduction on premium deposits in excess of such amount.
Minimum Death Benefit A deduction of .75% of each premium deposit is made to
cover our costs associated with the minimum death payment.
This deduction is not applicable after you reach age 65.
Mortality and Expense Risk We assume the risk that the actuarial estimate of
mortality rates among variable annuitants may be erroneous
and the reserves based on such estimate will not be
sufficient to meet annuity payment obligations. In other
words, we assume the risk that participants will live
longer than we expect and that we will not have enough
money to pay all of the annuity payments we are obligated
to pay. We receive .96025% on an annual basis (.0026308%
for each one-day valuation period) of average account value
for mortality and expense risks assumed. Of this amount,
.85% is for mortality risks and .11025% is for expense
risks.
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TAXES
Premium Taxes Some states and other governmental entities, such as
municipalities, charge premium or similar taxes. We are
responsible for paying these taxes and will deduct the
amount of taxes paid on your behalf from the value of your
participant account. Some taxes are due when premium
deposits are made; others are due when annuity payments
begin. Currently, we pay any premium taxes when they become
payable to the states. Premium taxes presently range from
0% to 4%, depending on the state.
Income Taxes We will deduct from each contract any income taxes
which it may incur because of the contract. Currently, we
are not making any such deductions.
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</TABLE>
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DUAL STRATEGY FUND EXPENSES Dual Strategy Fund pays us, its investment adviser, an
annual management and investment advisory fee of .50% of
the value of the average daily net assets of Dual Strategy
Fund.
Deductions are taken from, and expenses paid out of,
the assets of Dual Strategy Fund. Because Separate Account
A purchases shares of Dual Strategy Fund, the net assets of
Separate Account A will reflect the investment advisory fee
and portfolio expenses incurred by Dual Strategy Fund. You
should read the attached prospectus for Dual Strategy Fund
for information about such deductions
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</TABLE>
WITHDRAWALS
You may withdraw cash from the annuity by redeeming all or part of the
accumulation units in your participant account at any time before we begin
making annuity payments to you. The redemption value of your account is equal to
the value of the accumulation units in your account next computed after we
receive the request for redemption. There is no assurance that the redemption
value of your participant account will equal or exceed the aggregate amount of
premium deposits. We do not charge any administrative fees for withdrawals.
If you redeem part of the accumulation units in your account, the number of
accumulation units in your participant account will decrease. The reduction in
the number of accumulation units will equal the amount withdrawn divided by the
applicable accumulation unit value next computed after we receive the redemption
request. If a partial redemption reduces the value of your participant account
to less than $1,000, we reserve the right to pay you the cash value of all of
the accumulation units in your account and cancel your account. After full
redemption and cancellation of a participant's account, no further premium
deposits may be made on behalf of the participant without our consent.
A participant's request for redemption should be submitted to us in
writing, with the signature of the person in whose name the participant account
is registered, signed exactly as the name appears on our register. In certain
instances, we may require additional documents, such as trust instruments, death
certificates, appointments as executor or administrator, or certificates of
corporate authority. All proper redemption requests received before 3:00 p.m.,
Central Time, will receive same-day pricing.
Payments for accumulation units redeemed are made within three business
days after we receive a properly tendered request. However, we may delay the
mailing of a redemption check for recently purchased accumulation units until
such time as the payment check has cleared. Redemption rights may be suspended
or payment postponed at times when:
- the New York Stock Exchange is closed (other than customary weekend and
holiday closings) or trading on the New York Stock Exchange is
restricted;
- an emergency exists as a result of which disposal by Dual Strategy Fund
of securities owned by it is not reasonably practicable or it is not
reasonably practicable for Dual Strategy Fund to determine the value of
its net assets; or
- for such other periods as the SEC may by order permit for the protection
of participants.
Restrictions exist under federal income tax law concerning when you can
make withdrawals from a qualified plan. In addition, certain adverse tax
consequences may result from withdrawals, as explained below under "Federal Tax
Matters."
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DEATH BENEFIT
In the event of a participant's death before receipt of annuity payments,
death proceeds are payable to the person's named beneficiary in an amount equal
to:
- the value of the participant's account as of the valuation date (the date
on which we have received both written notice of death and the
beneficiary's written instructions), or
- if greater, and if the participant's death occurs before age 65, 100% of
the total premium deposits made by the participant, less any redemptions.
Payments normally are made within seven days of receipt of notice.
If a participant dies during the annuity period, we will pay any remaining
guaranteed payments to:
- the participant's beneficiary, or
- the participant's estate, if no beneficiary survives.
Any payments made to a beneficiary must be made on a payment schedule at least
as rapid as that made to the participant.
A beneficiary who is the spouse of a deceased participant may choose to
receive the death benefit in any form that the participant could have chosen to
receive annuity payments. Federal tax law requires that annuity contracts issued
after January 18, 1985 restrict the length of time over which non-spouse
beneficiaries may elect to receive death benefit proceeds. Contracts issued
after January 18, 1985 provide that non-spouse beneficiaries must either:
- take a total distribution within five years of the death of the
participant, or
- within one year of the participant's death, begin receiving annuity
payments under an annuity option for a period not to exceed the expected
lifetime of the beneficiary.
PERFORMANCE
Separate Account A may from time to time advertise performance in sales
literature, advertisements and reports to contract owners. Performance will be
calculated on the basis of total return and average annual total return for one,
five and ten year periods, assuming an initial investment of $1,000, the
deduction of all sales charges and other expenses from investment results and
the reinvestment of dividends and distributions during the period. Total return
is calculated by subtracting the initial investment from the ending value for a
specified period, dividing the difference by the initial investment and
converting the quotient to a percentage. Average annual total return is
calculated pursuant to a standardized formula and is expressed as a percentage
rate which, if applied on a compounded annual basis to the original investment,
would result in the value of the investment at the end of the period.
Performance calculations do not reflect the deduction of any premium taxes.
ANY PAST PERFORMANCE RESULTS ARE NOT AN INDICATION OF FUTURE RESULTS.
ADDITIONAL INFORMATION REGARDING SEPARATE ACCOUNT A'S PERFORMANCE IS CONTAINED
IN THE STATEMENT OF ADDITIONAL INFORMATION.
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FEDERAL TAX MATTERS
THE FOLLOWING DESCRIPTION OF FEDERAL INCOME TAX CONSEQUENCES UNDER THE
CONTRACTS IS NOT EXHAUSTIVE, AND SPECIAL RULES MAY APPLY TO SITUATIONS NOT
DISCUSSED HERE. FOR FURTHER INFORMATION, CONSULT A QUALIFIED TAX ADVISER BEFORE
ESTABLISHING ANY RETIREMENT PROGRAM. THIS DESCRIPTION IS NOT INTENDED AS TAX
ADVICE. WE HAVE INCLUDED ADDITIONAL INFORMATION REGARDING TAXES IN THE STATEMENT
OF ADDITIONAL INFORMATION.
GENERAL
Annuity contracts are a means of setting aside money for future
needs -- usually retirement. Congress has recognized how important saving for
retirement is and provided special rules in the Internal Revenue Code of 1986,
as amended, for annuities. Basically, these rules provide that you will not be
taxed on the money you contribute under your contract and/or the earnings on
your contributions until you receive a distribution from your contract. There
are different rules regarding how you will be taxed depending upon how you take
money out of your contract.
TAXES PAYABLE BY PARTICIPANTS AND ANNUITANTS
The contracts offered by this prospectus are used with retirement programs
which receive favorable tax-deferred treatment under federal income tax law.
Increases in the value of a participant's account are not subject to income tax
until annuity payments commence, at which time the amount of each payment is
considered as ordinary income.
Annuity payments and 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 and 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
Premium Deposits. Under Section 403(b) of the Internal Revenue Code,
payments made by 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 premium deposits 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 $15,000 per year (as adjusted from time to time
by the Internal Revenue Service). Additional catch-up contributions are
permitted under certain circumstances. Combined employer and salary reduction
contributions are generally limited to the individual's "exclusion allowance."
An employee's exclusion allowance for a taxable year is equal to 20% of
includible compensation times years of service, minus amounts previously
contributed by the employer for annuity contracts and excludable from the
employee's gross income. In addition, 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) reaching age 59 1/2, (2) separation from service, (3) death, (4)
disability, or (5) hardship (hardship distributions are limited to the amount of
salary reduction contributions, not including any earnings).
Distributions from a Section 403(b) annuity contract are taxed as ordinary
income to the recipient in accordance with Section 72 of the Internal Revenue
Code. Distributions received before the recipient reaches
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<PAGE> 18
age 59 1/2 generally are subject to a 10% penalty tax 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
joint lives (or joint life expectancy) of the participant and beneficiary), and
(5) distributions not in excess of tax deductible medical expenses.
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 reaches 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
the joint life expectancy of the participant and beneficiary). If a participant
dies prior to the commencement of annuity payments, the amount accumulated under
the account must be distributed within five years or, if distributions to a
beneficiary designated under the account start within one year of the
participant'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 designated beneficiary is the participant's surviving spouse,
the beneficiary must commence receiving benefits on or before the later of the
end of the calendar year in which the deceased spouse would have reached age
70 1/2 or the end of the calendar year following the year in which the
participant died. If the participant has started receiving annuity distributions
prior to his or her death, distributions must continue at least as rapidly as
under the method in effect at the date of death. 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 Internal Revenue Service has ruled
(Revenue Ruling 90-24) that total or partial amounts may be transferred tax free
between Section 403(b) annuity contracts and/or Section 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 Section 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.
SECTIONS 401(a), 401(k) AND 403(a) QUALIFIED PENSION, PROFIT-SHARING OR ANNUITY
PLANS
Premium Deposits. Premium deposits 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"). If a distribution is made in the form of an annuity, a fixed portion
of each payment is generally excludable from income for federal income tax
purposes to the extent it is allocable to the taxpayer's after-tax contributions
to the plan. In general, the excludable amount is determined by dividing the
after-tax contributions (basis) by the anticipated number of payments to be made
under the contract. For most individuals receiving lump sum distributions after
reaching age 59 1/2, the rate of tax may be determined under a special 5-year
income averaging provision. Those who reach 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 reached age 50 by
January 1, 1986 may elect capital gains treatment 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 from
an account under a qualified plan prior to reaching 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) annuities.
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<PAGE> 19
Required Distributions. The minimum distribution requirements for qualified
plans are generally the same as described with respect to Section 403(b)
annuities.
Tax-Free Rollovers. The taxable portion of certain distributions from a
plan qualified under Sections 401(a) 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 direct rollover of
such distribution to an IRA or other Section 401(a) or 403(a) plan.
INDIVIDUAL RETIREMENT ANNUITIES (IRAS)
Traditional IRAs
Premium Deposits. Federal tax laws limit the extent to which individuals
may make tax-deductible contributions for traditional IRA contracts. Deductible
contributions equal to the lesser of $2,000 or 100% of compensation are
permitted only for an individual who (i) is not (and whose spouse is not) an
active participant in another retirement plan; (ii) is an active participant in
another retirement plan, but is unmarried and has adjusted gross income in 2000
of $32,000 or less; (iii) is an active participant in another retirement plan,
but is married and has adjusted gross income in 2000 of $52,000 or less; or (iv)
is not an active participant in another retirement plan, but his or her spouse
is an active participant in another retirement plan and has adjusted gross
income of $150,000 or less. Such individuals may also establish an IRA for a
spouse during the tax year if the combined compensation of both spouses is at
least equal to the contributed amount. An individual who is an active
participant in another retirement plan and whose adjusted gross income exceeds
the cut-off point (for 2000, $32,000 if unmarried and $52,000 if married) by
less than $10,000 is entitled to make deductible IRA contributions in
proportionately reduced amounts.
An individual may make non-deductible IRA contributions to the extent of
the excess of (i) the lesser of $2,000 or 100% of compensation over (ii) the IRA
deduction limit with respect to the individual.
Taxation of Distributions. Distributions from IRA contracts are taxed as
ordinary income to the recipient except to the extent allocable to the
recipient's after-tax contributions (which constitute "investment in the
contract"). If a distribution is made in the form of an annuity, the rules for
determining the taxable portion of a distribution are similar to the rules
described with respect to pension, profit-sharing, and annuity plans. In
addition, a 10% penalty tax will be imposed on taxable distributions received
before the year in which the recipient reaches age 59 1/2, except that
distributions made on account of death, disability or in the form of
substantially equal periodic payments over the life (or life expectancy) of the
participant (or the joint lives (or joint life expectancies) of the participant
and beneficiary) are not subject to the penalty tax. In addition, early
withdrawals for the purchase of a home by a first-time home buyer (subject to a
$10,000 lifetime limit) or for the payment of qualified higher education
expenses or medical insurance (in limited circumstances) 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)
annuities, 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 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 maybe 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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Roth IRAs
Premium Deposits. The "Roth IRA" permits individuals to make non-deductible
contributions and, if specific requirements are met, receive distributions that
are tax free. The Roth IRA is an individual retirement account and is treated in
the same manner as a regular IRA with certain exceptions. An individual can make
an annual non-deductible contribution to a Roth IRA up to the lesser of $2,000
or 100% of the individual's annual compensation minus the aggregate amount of
contributions for the tax year to all other IRAs maintained for the benefit of
that individual. Unlike a traditional IRA, active participation in an employer's
qualified plan does not reduce the amount that an individual can contribute to a
Roth IRA. The contribution that can be made to a Roth IRA is phased out for
individuals with adjusted gross income of between $95,000 and $110,000, and for
joint filers with combined adjusted gross income of between $150,000 and
$160,000.
Taxation of Distributions. Distributions from a Roth IRA are not includible
in income if the contribution to which the distribution relates is a "qualified
distribution." A "qualified distribution" is a distribution which is made on or
after the recipient becomes age 59 1/2, on account of death or disability or for
a qualified first-time home buyer expense. A distribution is not considered to
be a "qualified distribution" if it is made within the five-year period
beginning with the first tax year for which the individual made a contribution
to a Roth IRA. A distribution is also not a "qualified distribution" for
payments properly allocable to a "qualified rollover contribution" from a
regular IRA if it is made within the five-year period beginning with the first
tax year in which the rollover contribution was made. Non-qualifying
distributions from a Roth IRA are includible in income to the extent of earnings
on contributions. Distributions that are attributable to contributions to a Roth
IRA are received tax free, since these contributions were nondeductible.
Required Distributions. Roth IRAs are not subject to minimum distribution
rules before death.
Tax-Free Rollovers. A tax-free rollover may be made to a Roth IRA from (a)
another Roth IRA or (b) a regular IRA that meets the requirements for the
exclusion of a rollover under Section 408(d)(3) of the Internal Revenue Code if
the taxpayer has adjusted gross income of not more than $100,000 and, if
married, does not file a separate return.
Simplified Employee Pension Plans
Premium Deposits. 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.
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 $7,000
indexed for inflation. Employees of tax-exempt organizations are not eligible
for this type of SEP. Additionally, only certain small employers who have SEPs
that permitted salary reduction contributions on December 31, 1996 may continue
to allow salary reduction contributions.
Taxation of Distributions. SEP distributions are subject to taxation in the
same manner as regular IRA distributions.
Required Distributions. SEP distributions are subject to the same minimum
required distribution rules applicable to traditional 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.
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DIVERSIFICATION
The Internal Revenue Code provides that the underlying investments for a
variable annuity must satisfy certain diversification requirements in order to
be treated as an annuity contract. American Fidelity believes that Dual Strategy
Fund is being managed so as to comply with the requirements.
DISTRIBUTION
American Fidelity Securities, Inc., a wholly-owned subsidiary of American
Fidelity, acts as the distributor of the contracts.
LEGAL PROCEEDINGS
There are no material pending legal proceedings affecting Separate Account
A, Dual Strategy Fund, American Fidelity or American Fidelity Securities, Inc.
FINANCIAL STATEMENTS
The financial statements of Separate Account A and of American Fidelity
will be included in the Statement of Additional Information by amendment.
TABLE OF CONTENTS OF
STATEMENT OF ADDITIONAL INFORMATION
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PAGE
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General Information and History............................. 1
Performance Information..................................... 1
Annuity Payments............................................ 1
Federal Income Tax Considerations........................... 3
Underwriter................................................. 7
Custodian and Independent Accountants....................... 7
Legal Matters............................................... 7
Financial Statements........................................ 7
</TABLE>
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- ------------------------------------ ---------------
- ------------------------------------ PLACE
- ------------------------------------ STAMP
HERE
---------------
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American Fidelity Assurance Company
P.O. Box 25523
Oklahoma City, OK 73125-0523
Attention: Annuity Services Department
<PAGE> 23
Please send me the Statement of Additional Information for the following:
[ ] AFPrime Growth Variable Annuity
[ ] American Fidelity Dual Strategy Fund, Inc.
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Name
------------------------------------------------------------
(please print)
Address
------------------------------------------------------------
(please print)
------------------------------------------------------------
(please print)
------------------------------------------------------------
(please print)
</TABLE>
<PAGE> 24
AFPR1ME
GROWTH
Variable Annuity(TM)
ISSUED BY
AMERICAN FIDELITY SEPARATE ACCOUNT A
AND
AMERICAN FIDELITY ASSURANCE COMPANY
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 2000
This Statement of Additional Information is not a prospectus. You should read
this document in conjunction with the Prospectus dated May 1, 2000 relating to
the AFPR1ME GROWTH Variable Annuity(TM).
The Prospectus concisely sets forth information that a prospective investor
should know before investing. For a copy of the Prospectus,
<TABLE>
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<S> <C> <C>
write to us at: call us at: e-mail us at:
P.O. Box 25523 (800) 662-1106 [email protected]
Oklahoma City, OK 73125-0523
</TABLE>
TABLE OF CONTENTS
<TABLE>
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PAGE
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General Information and History............................. 1
Performance Information..................................... 1
Annuity Payments............................................ 1
Federal Income Tax Considerations........................... 3
Underwriter................................................. 7
Custodian and Independent Accountants....................... 7
Legal Matters............................................... 7
Financial Statements........................................ 7
</TABLE>
<PAGE> 25
GENERAL INFORMATION AND HISTORY
American Fidelity Assurance Company ("Company") was organized in the State of
Oklahoma in 1960 and during its existence has never changed its name. Neither
the sales of variable annuity contracts nor the sales of any other insurance
product by the Company have ever been suspended by any state where the Company
has done or is presently doing business. American Fidelity Separate Account A is
offering the AFPR1ME GROWTH Variable Annuity (TM) to employers and self-employed
individuals for use in qualified retirement plans.
The Company is a wholly owned subsidiary of American Fidelity Corporation,
an insurance holding company. The stock of American Fidelity Corporation is
controlled by a family investment partnership, Cameron Enterprises, A Limited
Partnership, an Oklahoma limited partnership. William M. Cameron, an individual,
and Lynda L. Cameron, an individual, each own 50% of the common stock of Cameron
Associates, Inc., the sole general partner of Cameron Enterprises, A Limited
Partnership.
PERFORMANCE INFORMATION
American Fidelity Separate Account A's average annual total returns for the
one, five and ten year periods ended December 31, 1999 were 10.84%, 24.28% and
15.26%, respectively. The average annual total return (T) is computed by
equating the value at the end of the period (ERV) with a hypothetical initial
investment of $1,000 (P) over a period of years (n) according to the following
formula as required by the Securities and Exchange Commission: ERV = P(1 + T)**n
(where "**n" means to the nth power). Average annual total returns are
calculated after deduction of all applicable fees and expenses.
American Fidelity Separate Account A's total returns for the one, five and
ten year time periods ended December 31, 1999 were 10.84%, 196.54% and 313.97%,
respectively. Total return is measured by comparing the investment return at the
end of a specified period to the initial investment. To calculate total return,
an initial investment is multiplied by 96% (which gives effect to the 3.00%
sales charge, 0.25% administrative fee and 0.75% minimum death benefit expense).
The product is then reduced by the $0.50 per payment expense and the one-time
contract certificate fee of $15. The resulting amount is divided by the
Accumulation Unit value at the beginning of the period in order to determine the
initial number of Accumulation Units purchased. The number of Accumulation Units
purchased is multiplied by the Accumulation Unit value as of the end of the
period in order to determine the ending value. The difference between the ending
value and the initial investment divided by the initial investment converted to
a percentage equals total return. Total return may be calculated for one, five
and ten year periods and for other time periods.
Returns for periods prior to Separate Account A's reorganization on January
1, 1999 reflect the investment performance of American Fidelity Variable Annuity
Fund A. For periods subsequent to 1998, Separate Account A reports its
performance as a unit investment trust investing in Dual Strategy Fund.
Performance will fluctuate over time, and any past performance results are not
an indication of future results.
The following assumptions are reflected in computations of average annual
total returns and in calculating total return: (1) reinvestment of dividends and
other distributions, (2) a complete redemption at the end of any period
illustrated and (3) no deduction for premium taxes.
ANNUITY PAYMENTS
VARIABLE ANNUITY PAYMENTS
A Participant may elect a variable annuity payout. Variable Annuity
Payments reflect the investment performance of Dual Strategy Fund during the
Annuity Period. Variable Annuity Payments are not guaranteed as to dollar
amounts.
The Company will determine the first Annuity Payment by using the 4.5%
annuity table in the Contract. It shows the dollar amount of the first monthly
payment which can be purchased with each $1,000 of value in a Participant
Account after deducting any applicable premium taxes.
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<PAGE> 26
The value of a Participant Account is determined by multiplying the
Participant's Accumulation Units by the Accumulation Unit value on the
fourteenth day before the first Annuity Payment. The first Annuity Payment
varies according to the Annuity Option selected and the Participant's age.
The Company will determine the number of Annuity Units payable for each
payment by dividing the dollar amount of the first Annuity Payment by the
Annuity Unit value on the Annuity Date. This sets the number of Annuity Units.
The number of Annuity Units payable remains the same unless a Participant
transfers a portion of the annuity benefit to a fixed annuity. The dollar amount
is not fixed and will change from month to month.
The dollar amount of Annuity Payments after the first payment is determined
by multiplying the fixed number of Annuity Units per payment by the Annuity Unit
value on the fourteenth calendar day preceding the payment date. The result is
the dollar amount of the payment.
ANNUITY UNIT
The value of an Annuity Unit is determined by multiplying the value of an
Annuity Unit for the immediately preceding period by the product of
1. the net investment factor for the fourteenth calendar day prior to the
valuation date for which the value is being determined, and
2. .9998794.
VARIABLE ANNUITY FORMULAS
The following formulas summarize the Annuity Payment calculations described
above:
<TABLE>
<S> <C> <C>
Dollar Amount of First Monthly Payment
Number of Variable Annuity Units = -----------------------------------------------------
Variable Annuity Unit Value on Date of First Payment
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Value of Annuity Net Investment Factor
Annuity = Unit on Preceding X .9998794 X for 14th Day Preceding
Unit Value Valuation Date Current Valuation Date
</TABLE>
<TABLE>
<S> <C> <C> <C> <C>
Dollar Amount
of Second and Number of Annuity Unit Value
Subsequent Annuity = Annuity Units X for Period in Which
Payments Per Payment Payment is Due
</TABLE>
FIXED ANNUITY PAYMENTS
The dollar amount of each fixed Annuity Payment will be at least as great
as that determined in accordance with the 4% annuity table in the Contract. The
fixed annuity provides a 4% annual guaranteed interest rate on all Annuity
Options. The Company may pay or credit excess interest on a fixed annuity at its
discretion.
3
<PAGE> 27
FEDERAL INCOME TAX CONSIDERATIONS
Note: The following description is based upon the Company's understanding of
current federal income tax law applicable to tax-qualified annuities in general.
The Company cannot predict the probability that any changes in such laws will be
made. Purchasers are cautioned to seek competent tax advice regarding the
possibility of such changes. The Company does not guarantee the tax status of
the policies. Purchasers bear the complete risk that the policies may not be
treated as "Annuity Contracts" under federal income tax laws. It should be
further understood that the following discussion is not exhaustive and that
special rules not described herein may be applicable in certain situations.
Moreover, no attempt has been made to consider any applicable state or other tax
laws.
GENERAL
Section 72 of the Internal Revenue Code of 1986, as amended (the "Code"),
governs taxation of annuities in general. A Participant is not taxed on
increases in the value of his or her Participant Account until distribution
occurs, either in the form of a lump sum payment or as Annuity Payments under
the Annuity Option elected. For a lump sum payment received as a total surrender
(total redemption) or death benefit, the recipient is taxed on the portion of
the payment that exceeds the Participant's cost basis, which may be zero. The
taxable portion of a lump sum payment is taxed at ordinary income tax rates.
For Annuity Payments, a portion of each payment in excess of an exclusion
amount is includible in taxable income. For traditional IRA Contracts and SEP
and salary reduction SEP Contracts, the exclusion amount for payments based on a
fixed Annuity Option is determined by multiplying the payment by the ratio that
the Participant's cost basis (adjusted for any period certain or refund feature)
bears to the expected return under the Contract. For traditional IRA Contracts
and SEP and salary reduction SEP Contracts, the exclusion amount for payments
based on a variable annuity option is determined by dividing the Participant's
cost basis (adjusted for any period certain or refund feature) by the number of
years over which the annuity is expected to be paid. Payments received after the
Participant's investment has been recovered (i.e., when the total of the
excludable amounts equal the Participant's investment) are fully taxable. The
taxable portion is taxed at ordinary income rates. For Section 401(a), 401(k),
and 403(a) qualified pension, profit-sharing or annuity plans and 403(b)
tax-deferred annuities ("Qualified Plans"), the exclusion amount is generally
determined by dividing the cost-basis of the Contract by the anticipated number
of payments to be made under the Contract. Participants, Annuitants and
beneficiaries under the Contracts should seek competent financial advice about
the tax consequences of any distributions.
The Company is taxed as a life insurance company under the Code. For
federal income tax purposes, Separate Account A is not a separate entity from
the Company, and its operations form a part of the Company.
DIVERSIFICATION
Section 817(h) of the Code imposes certain diversification standards on the
underlying assets of variable annuity contracts. The Code provides that a
variable annuity contract will not be treated as an annuity contract for any
period (and any subsequent period) for which the investments are not adequately
diversified in accordance with regulations prescribed by the United States
Treasury Department ("Treasury Department"). Disqualification of the Contract as
an annuity contract would result in imposition of federal income tax to the
Participant with respect to earnings allocable to the Contract prior to the
receipt of payments under the Contract. The Code contains a safe harbor
provision which provides that annuity contracts such as the Contract meet the
diversification requirements if, as of the end of each quarter, the underlying
assets meet the diversification standards for a regulated investment company and
no more than 55% of the total assets consist of cash, cash items, U.S.
government securities and securities of other regulated investment companies.
On March 2, 1989, the Treasury Department issued regulations (Treas. Reg.
1.817-5) which established diversification requirements for the investment
portfolios underlying variable contracts such as the Contract. The regulations
amplify the diversification requirements for variable contracts set forth in the
Code and provide an alternative to the safe harbor provision described above.
Under the regulations, an investment
4
<PAGE> 28
portfolio will be deemed adequately diversified if: (1) no more than 55% of the
value of the total assets of the portfolio is represented by any one investment;
(2) no more than 70% of the value of the total assets of the portfolio is
represented by any two investments; (3) no more than 80% of the value of the
total assets of the portfolio is represented by any three investments; and (4)
no more than 90% of the value of the total assets of the portfolio is
represented by any four investments.
The Code provides that for purposes of determining whether or not the
diversification standards imposed on the underlying assets of variable contracts
by Section 817(h) of the Code have been met, "each United States government
agency or instrumentality shall be treated as a separate issuer."
The Company intends that Dual Strategy Fund will be managed in such a
manner as to comply with these diversification requirements.
MULTIPLE IRA CONTRACTS
For purposes of applying Section 72 of the Code to Contracts issued
pursuant to IRAs, SEPs and salary reduction SEPs ("IRA Contracts"), all IRA
Contracts are treated as one Contract and all distributions during a taxable
year are treated as one distribution.
TAX TREATMENT OF ASSIGNMENTS
Contracts issued pursuant to Qualified Plans generally may not be assigned.
The assignment or pledge of an IRA Contract may be a taxable event. The Owner of
a Contract should consult competent tax advisers before assigning or pledging
the Contract.
INCOME TAX WITHHOLDING
All distributions or the portion thereof which is includible in the gross
income of the Participant are subject to federal income tax withholding.
Generally, amounts are withheld from periodic payments at the same rate as wages
and at the rate of 10% from non-periodic payments. However, the Participant, in
most cases, may elect not to have taxes withheld or to have withholding done at
a different rate.
Effective January 1, 1993, certain distributions from Qualified Plans which
are not directly rolled over to another eligible retirement plan or individual
retirement account or individual retirement annuity are subject to a mandatory
20% withholding for federal income tax. The 20% withholding requirement
generally does not apply to: (a) a series of substantially equal payments made
at least annually for the life or life expectancy of the participant or joint
and last survivor expectancy of the participant and a designated beneficiary, or
for a specified period of 10 years or more; or (b) distributions which are
required minimum distributions; or (c) the portion of the distributions not
includible in gross income (i.e., returns of after-tax contributions).
Participants should consult their own tax counsel or other tax adviser regarding
withholding requirements.
QUALIFIED PLANS
The Contracts offered by the Prospectus are designed to be suitable for use
under various types of Qualified Plans and IRAs. Because of the minimum Premium
Deposit requirements, the Contracts may not be appropriate for some periodic
payment retirement plans. Taxation of participants in each Qualified Plan or IRA
varies with the type of plan and terms and conditions of each specific plan.
Participants, Annuitants and beneficiaries are cautioned that benefits under a
Qualified Plan or IRA may be subject to the terms and conditions of the plan
regardless of the terms and conditions of the Contracts issued pursuant to the
plan. Some retirement plans are subject to distribution and other requirements
that are not incorporated into the Company's administrative procedures.
Participants, Annuitants and beneficiaries are responsible for determining that
contributions, distributions and other transactions with respect to the
Contracts comply with applicable law. The Prospectus, under "Federal Tax
Matters," describes the types of qualified plans with which the Contract may be
used. Such descriptions are not exhaustive and are for general informational
purposes only. The tax rules regarding qualified plans are very complex and will
have differing applications,
5
<PAGE> 29
depending on individual facts and circumstances. Each purchaser should obtain
competent tax advice prior to participating in a Contract issued under a
qualified plan.
Contracts issued pursuant to qualified plans include special provisions
restricting Contract provisions that may otherwise be available and described in
this Statement of Additional Information. Generally, Contracts issued pursuant
to qualified plans are not transferable except upon surrender or annuitization.
Various penalty and excise taxes may apply to contributions or distributions
made in violation of applicable limitations. Furthermore, certain withdrawal
penalties and restrictions may apply to surrenders from qualified policies.
TAX TREATMENT OF WITHDRAWALS
Special Tax Treatment for Lump Sum Distributions from Qualified Plans. If
the taxpayer receives an amount from a Qualified Plan issued pursuant to a
Qualified Plan and the distribution qualifies as a lump sum distribution under
the Code, the portion of the distribution that is included in income may be
eligible for special tax treatment. The plan administrator should provide the
taxpayer with information about the tax treatment of a lump sum distribution at
the time the distribution is made.
Special Rules for Distributions that are Rolled Over. Special rules apply
to a distribution from a Contract that relates to a Qualified Plan Contract or a
rollover IRA Contract if the distribution is properly rolled over in accordance
with the provisions of the Code. These provisions contain various requirements,
including the requirement that the rollover be made directly from the
distributing plan or within 60 days of receipt:
- To a traditional IRA under Section 408 of the Code.
- To another, similar Qualified Plan.
These special rules only apply to distributions that qualify as "eligible
rollover distributions" under the Code. In general, a distribution from a
Qualified Plan Contract will be an eligible rollover distribution except to the
extent:
- It represents the return of "after-tax" contributions or is not otherwise
includable in income.
- It is part of a series of payments made for the taxpayer's life (or life
expectancy) or the joint lives (or joint life expectancies) of the
taxpayer and his beneficiary under the plan or for a period of more than
ten years.
- It is a required minimum distribution under Section 401(a)(9) of the Code
as described below.
- It is made from a Qualified Plan by reason of a hardship.
The administrator of the applicable Qualified Plan should provide
additional information about these rollover tax rules when a distribution is
made.
Distributions in the Form of Annuity Payments. If any distribution from a
Qualified Plan Contract or IRA Contract is made in the form of annuity payments
(and is not eligible for rollover or is not in any event rolled over), a fixed
portion of each payment is generally excludable from income for federal income
tax purposes to the extent it is treated as allocable to the taxpayer's
"after-tax" contributions to the Contract (and any other cost basis in the
Contract). To the extent the payment exceeds such portion, it is includable in
income. The portion of the annuity payment that is excludable from income is
determined under detailed rules provided in the Code. If the annuity payments
continue after all excludable amounts have been paid, such additional payments
will generally be included in full in income.
Penalty Tax on Withdrawals. Generally, there is a penalty tax equal to 10%
of the portion of any payment from a Qualified Plan Contract or IRA Contract
that is included in income. This 10% penalty will
6
<PAGE> 30
not apply if the distribution meets certain conditions. Some of the
distributions that are excepted from the 10% penalty are listed below:
- A distribution that is made on or after the date the taxpayer reaches age
59 1/2.
- A distribution that is properly rolled over to a traditional IRA or to
another eligible employer plan or account.
- A distribution that is made on or after the death of the taxpayer.
- A distribution that is made when the taxpayer is totally disabled (as
defined in Section 72(m)(7) of the Code).
- A distribution that is made as part of a series of substantially equal
periodic payments which are made at least annually for the taxpayer's
life (or life expectancy) or the joint lives (or joint life expectancies)
of the taxpayer and his joint beneficiary under the Qualified Contract
(and, with respect to Qualified Plan Contracts, which begin after the
taxpayer separates from service with the employer maintaining the plan).
- A distribution that is made to the taxpayer by reason of separation from
service with the employer of the applicable plan during or after the
calendar year in which the taxpayer reaches age 55.
- A distribution that is made to the taxpayer to the extent it does not
exceed the amount allowable as a deduction for medical care under Section
213 of the Code (determined without regard to whether the taxpayer
itemizes deductions).
- A distribution that is made to an alternate payee pursuant to a qualified
domestic relations order (that meets the conditions of Section 414(p) of
the Code) (not applicable to IRA Contracts).
- Distributions from an IRA Contract for the purchase of medical insurance
(as described in Section 213(d)(1)(D) of the Code) for the taxpayer and
his or her spouse and dependents if the taxpayer has received
unemployment compensation for at least 12 weeks (this exception will no
longer apply after the taxpayer has been reemployed for at least 60
days).
- Distributions from an IRA Contract made to the taxpayer to the extent
such distributions do not exceed the qualified higher education expenses
(as defined in Section 72(t)(7) of the Code) of the taxpayer for the
taxable year.
- Distributions from an IRA Contract made to the taxpayer which are
qualified first-time home buyer distributions (as defined in Section
72(t)(8) of the Code).
Required Distributions. Distributions from a Contract issued pursuant to a
Qualified Plan or IRA Contract (other than a Roth IRA) must meet certain rules
concerning required distributions that are set forth in the Code. Such rules are
summarized below:
- Required distributions generally must start by April 1 of the calendar
year following the calendar year in which the taxpayer reaches age
70 1/2.
- If the Contract is issued pursuant to a Qualified Plan and the taxpayer
does not own more than 5% of the employer maintaining the plan, the
required distributions generally do not have to start until April 1 of
the calendar year following the later of the calendar year in which the
taxpayer reaches age 70 1/2 or the calendar year in which the taxpayer
terminates employment with the employer.
- When distributions are required under the Code, a certain minimum amount,
determined under the Code, must be distributed each year.
In addition, other rules apply under the Code to determine when and how
required minimum distributions must be made in the event of the taxpayer's
death. The applicable plan documents will contain such rules.
7
<PAGE> 31
WITHDRAWAL LIMITATIONS
Contracts issued pursuant to 401(k) Qualified Plans and 403(b) tax-deferred
annuities are subject to limitations on when amounts may be distributed. The
Prospectus, under "Federal Tax Matters," describes the applicable limitations.
UNDERWRITER
The Contracts are offered on a continuous basis by the Company's wholly
owned subsidiary, American Fidelity Securities, Inc. ("AFS"), 2000 N. Classen
Boulevard, Oklahoma City, Oklahoma 73106. AFS may also serve as an underwriter
and distributor of other separate accounts of the Company. The aggregate
underwriting commissions paid to and retained by AFS for 1997, 1998, and 1999
were $449,200, $600,700 and $655,000, respectively.
CUSTODIAN AND INDEPENDENT ACCOUNTANTS
The name and address of the person who maintains physical possession of
the accounts, books and other documents of American Fidelity Separate Account A
required by Section 31(a) of the Investment Company Act of 1940 is David R.
Carpenter, Senior Vice President and Treasurer, American Fidelity Assurance
Company, 2000 N. Classen Boulevard, Oklahoma City, Oklahoma 73106.
The financial statements of American Fidelity Separate Account A included
in this Statement of Additional Information have been audited by KPMG LLP,
independent auditors, as set forth in its report appearing below. KPMG LLP's
address is 700 Oklahoma Tower, Oklahoma City, Oklahoma 73102.
LEGAL MATTERS
McAfee & Taft A Professional Corporation has provided advice on certain
matters relating to the federal securities and income tax laws applicable to the
Contracts.
FINANCIAL STATEMENTS
Following are the financial statements of Separate Account A and the
Company. The consolidated financial statements of the Company should be
considered only as bearing on the ability of the Company to meet its obligations
under the Contracts. They should not be considered as bearing on the investment
performance of the assets held in Separate Account A.
8
<PAGE> 32
PART C
OTHER INFORMATION
ITEM 24 -- FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The following financial statements will be included by amendment in
Part B of this registration statement:
AMERICAN FIDELITY SEPARATE ACCOUNT A
Independent Auditors' Report
Statement of Assets and Liabilities as of January 1, 1999
Notes to Statement of Assets and Liabilities
AMERICAN FIDELITY ASSURANCE COMPANY AND SUBSIDIARIES
Independent Auditors' Report
Consolidated Balance Sheets as of December 31, 1999 and 1998
Consolidated Statements of Income for the Years Ended December 31,
1999, 1998 and 1997
Consolidated Statements of Stockholder's Equity for the Years Ended
December 31, 1999, 1998 and 1997
Consolidated Statements of Cash Flows for the Years Ended December 31,
1999, 1998 and 1997
Notes to Consolidated Financial Statements
Schedule III - Business Segment Information for the Years Ended
December 31, 1999, 1998 and 1997
Schedule IV - Reinsurance for the Years Ended December 31, 1999, 1998
and 1997
(b) Exhibits
<TABLE>
<CAPTION>
Exhibit
Number
<S> <C>
1.1 - Resolution adopted by the Board of Directors of American Fidelity on
May 7, 1968, authorizing establishment of the Registrant. Incorporated
herein by reference to Exhibit 1.1 to Post-Effective Amendment No. 43
to Registrant's registration statement on Form N-4 filed on November
25, 1998 (No. 2-30771).
1.2 - Resolution adopted by the Board of Directors of American Fidelity on
April 6, 1998, authorizing reorganization of the Registrant as a unit
investment trust. Incorporated herein by reference to Exhibit 1.2 to
Post-Effective Amendment No. 43 to Registrant's registration statement
on Form N-4 filed on November 25, 1998 (No. 2-30771).
1.3 - Resolution adopted by the Board of Managers of the Registrant on March
19, 1998, authorizing reorganization of the Registrant as a unit
investment trust. Incorporated herein by reference to Exhibit 1.3 to
Post-Effective Amendment No. 43 to Registrant's registration statement
on Form N-4 filed on November 25, 1998 (No. 2-30771).
</TABLE>
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<PAGE> 33
3 - Underwriting Contract between the Registrant and American Fidelity
Securities, Inc. dated December 20, 1972. Incorporated herein by
reference to Exhibit 3 to Post-Effective Amendment No. 43 to
Registrant's registration statement on Form N-4 filed on November 25,
1998 (No. 2- 30771).
4.1 - Form of Variable Annuity Master Contract. Incorporated herein by
reference to Exhibit 4.1 to Post-Effective Amendment No. 43 to
Registrant's registration statement on Form N-4 filed on November 25,
1998 (No. 2-30771).
4.2 - Form of Variable Annuity Contract Certificate. Incorporated herein by
reference to Exhibit 4.2 to Post-Effective Amendment No. 43 to
Registrant's registration statement on Form N-4 filed on November 25,
1998 (No. 2-30771).
5 - Forms of Variable Annuity Application. Incorporated herein by reference
to Exhibit 5 to Post- Effective Amendment No. 43 to Registrant's
registration statement on Form N-4 filed on November 25, 1998 (No.
2-30771).
6.1 - Articles of Incorporation of American Fidelity and all amendments
through November 4, 1987. Incorporated herein by reference to Exhibit
6.1 to Post-Effective Amendment No. 43 to Registrant's registration
statement on Form N-4 filed on November 25, 1998 (No. 2-30771).
6.2 - Amended and Restated Bylaws of American Fidelity dated November 24,
1997. Incorporated herein by reference to Exhibit 8.2 to Post-Effective
Amendment No. 42 to Registrant's registration statement on Form N-3
filed on April 24, 1998 (No. 2-30771).
8 - Fund Participation Agreement dated December 22, 1998 between Registrant
and American Fidelity. Incorporated herein by reference to
Post-Effective Amendment No. 44 to Registrant's registration statement
on Form N-4 filed on January 11, 1999 (No. 2-30771).
9** - Opinion and Consent of Counsel.
10** - Independent Auditors' Consent.
13* - Schedule for computation of performance quotations.
C-2
<PAGE> 34
99* - American Fidelity organization chart.
- -----------------
* Filed herewith.
** To be filed by amendment.
ITEM 25 -- DIRECTORS AND OFFICERS OF THE DEPOSITOR
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with American Fidelity
------------------ ----------------------
<S> <C>
Lynda L. Cameron Director
2000 N. Classen Boulevard
Oklahoma City, OK 73106
William M. Cameron Chairman and Chief
2000 N. Classen Boulevard Executive Officer, Director
Oklahoma City, OK 73106
David R. Carpenter Senior Vice President, Treasurer
2000 N. Classen Boulevard
Oklahoma City, OK 73106
William E. Durrett Senior Chairman, Director
2000 N. Classen Boulevard
Oklahoma City, OK 73106
Stephen P. Garrett Senior Vice President, Secretary
2000 N. Classen Boulevard
Oklahoma City, OK 73106
William A. Hagstrom Director
204 N. Robinson, Suite 1300
Oklahoma City, OK 73102
Charles R. Eitel Director
One Concourse Parkway
Atlanta, Georgia 30328
Kenneth D. Klehm Senior Vice President
2000 N. Classen Boulevard
Oklahoma City, OK 73106
</TABLE>
C-3
<PAGE> 35
<TABLE>
<S> <C>
Alfred L. Litchenburg Senior Vice President
2000 N. Classen
Boulevard Oklahoma City, OK 73106
David R. Lopez Director
1616 Guadalupe, Rm. 630
Austin, TX 78701
Paula Marshall-Chapman Director
2745 East 11th Street
Tulsa, OK 74104
John W. Rex President, Chief Operating Officer,
2000 N. Classen Boulevard Director
Oklahoma City, OK 73106
Galen P. Robbins, M.D. Director
11901 Quail Creek Road
Oklahoma City, OK 73120
John D. Smith Director
3400 Peach Tree Road, Suite 831
Atlanta, GA 30326
</TABLE>
ITEM 26 -- PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT
American Fidelity's organization chart is included as Exhibit 99. The
subsidiaries of American Fidelity reflected in the organization chart are
included in the consolidated financial statements of American Fidelity in
accordance with generally accepted accounting principles.
ITEM 27 -- NUMBER OF CONTRACT OWNERS
As of ___________, 2000, there were _____ Contract Owners of qualified
contracts offered by the Registrant.
ITEM 28 -- INDEMNIFICATION
The Bylaws of American Fidelity (Article VIII, Section 3) generally
provide that American Fidelity shall indemnify its directors, officers,
employees and agents, as well as any person serving at the request of American
Fidelity as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, against liabilities
incurred in acting in any such capacity if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interest of
American Fidelity and, with respect to any criminal action, if they had no
reasonable cause to believe their conduct was unlawful. Indemnification of these
persons is also provided for derivative actions. See American Fidelity's Bylaws
filed as Exhibit 6.2 to this registration statement.
Insofar as indemnification for liability arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or
C-4
<PAGE> 36
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the 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 whether such
indemnification by it 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 Fidelity Securities, Inc. is the sole underwriter for the
Registrant, American Fidelity Separate Account B and American Fidelity Dual
Strategy Fund, Inc.
(b) Director and officer information for American Fidelity Securities,
Inc. is as follows:
<TABLE>
<CAPTION>
Name and Principal Positions and Offices
Business Address with Underwriter
- ------------------ ---------------------
<S> <C>
David R. Carpenter Director, Chairman, President, Chief Executive
P. O. Box 25523 Officer, Treasurer, Chief Financial Officer and
Oklahoma City, OK 73125 Registered Limited Principal
Marvin R. Ewy Director, Vice President, Secretary, Chief
P. O. Box 25523 Compliance Officer and Registered
Oklahoma City, OK 73125 Limited Principal
Nancy K. Steeber Director, Vice President, Operations Officer and
P. O. Box 25523 Registered Limited Principal
Oklahoma City, OK 73125
</TABLE>
(c) The net underwriting discounts and commissions received by American
Fidelity Securities, Inc. from the Registrant in 1999 were $654,983,
representing the 3% sales fee deducted from premium deposits to the Registrant.
It received no other compensation from or on behalf of the Registrant during the
year.
ITEM 30 -- LOCATION OF ACCOUNTS AND RECORDS
The name and address of the person who maintains physical possession of
the accounts, books and other documents of the Registrant required by Section
31(a) of the Investment Company Act of 1940 are:
David R. Carpenter
Senior Vice President and Treasurer
American Fidelity Assurance Company
2000 N. Classen Boulevard
Oklahoma City, Oklahoma 73106
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<PAGE> 37
ITEM 31 -- MANAGEMENT SERVICES
Not applicable.
ITEM 32 -- UNDERTAKINGS
UNDERTAKINGS
The Registrant hereby undertakes to:
(a) file a post-effective amendment to this registration statement
as frequently as is 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;
(b) include either (1) as part of any application to purchase a
contract offered by the Prospectus, a space that an applicant
can check to request a Statement of Additional Information, or
(2) a postcard or similar written communication affixed to or
included in the Prospectus that the applicant can remove to
send for a Statement of Additional Information; and
(c) deliver any Statement of Additional Information and any
financial statements required to be made available under this
Form promptly upon written or oral request.
REPRESENTATIONS
American Fidelity hereby represents that the fees and charges deducted
under the Variable Annuity Contract, in the aggregate, are reasonable in
relation to the services rendered, the expenses expected to be incurred, and the
risks assumed by American Fidelity.
American Fidelity hereby represents that it is relying upon a No-Action
Letter issued to the American Council of Life Insurance dated November 28, 1988
(Commission ref. IP-6-88) and that the following provisions have been complied
with:
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) other investment alternatives
available under the employer's Section 403(b) arrangement to which the
participant may elect to transfer his contract value.
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<PAGE> 38
SIGNATURES
As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant has caused this Registration Statement to be signed on
its behalf, in the City of Oklahoma City and State of Oklahoma on this 24th day
of February, 2000.
AMERICAN FIDELITY SEPARATE ACCOUNT A
(Registrant)
By: American Fidelity Assurance Company
(Depositor)
By /s/ John W. Rex
---------------------------------------
John W. Rex, President
AMERICAN FIDELITY ASSURANCE COMPANY
(Depositor)
By /s/ John W. Rex
---------------------------------------
John W. Rex, President
Each of the undersigned officers and directors of American Fidelity Assurance
Company (the "Company"), hereby severally constitute and appoint John W. Rex,
his true and lawful attorney-in-fact with full power to him to sign for him, and
in his name as officer or director, or both, of the Company, a Registration
Statement (and any and all amendments thereto, including post-effective
amendments) on Form N-4 to be filed with the Securities and Exchange Commission,
granting unto said attorney-in-fact and agent, full power and authority to do
and to perform each and every act and thing requisite and necessary to be done
in and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, may lawfully do or cause to be done by virtue
hereof.
As required by the Securities Act of 1933, this Registration Statement has been
signed by the following persons in the capacities indicated on February 24,
2000.
<TABLE>
<CAPTION>
Signature Title
- --------- -----
<S> <C>
/s/ William M. Cameron Chairman, Chief Executive Officer and
- ----------------------------------- Director (Principal Executive Officer)
William M. Cameron
/s/ William E. Durrett Senior Chairman and Director
- -----------------------------------
William E. Durrett
/s/ Lynda L. Cameron Director
- -----------------------------------
Lynda L. Cameron
/s/ John W. Rex Director, President and Chief Operating
- ----------------------------------- Officer
John W. Rex
/s/ Charles R. Eitel Director
- -----------------------------------
Charles R. Eitel
/s/ Galen P. Robbins, M.D. Director
- -----------------------------------
Galen P. Robbins, M.D.
/s/ John D. Smith Director
- -----------------------------------
John D. Smith
/s/ William A. Hagstrom Director
- -----------------------------------
William A. Hagstrom
/s/ David R. Lopez Director
- -----------------------------------
David R. Lopez
/s/ Paula Marshall-Chapman Director
- -----------------------------------
Paula Marshall-Chapman
/s/ David R. Carpenter Senior Vice President, Controller and
- ----------------------------------- Treasurer (Principal Financial and
David R. Carpenter Accounting Officer)
</TABLE>
C-7
<PAGE> 39
INDEX TO EXHIBITS
<TABLE>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
9** - Opinion and Consent of Counsel
10** - Independent Auditors' Consent
13* - Schedule for computation of Performance Quotations
99* - American Fidelity organization Chart
</TABLE>
* Filed herewith.
** To be filed by amendment.
<PAGE> 1
EXHIBIT 13
AMERICAN FIDELITY
SEPARATE ACCOUNT A
SCHEDULE OF COMPUTATIONS FOR EACH PERFORMANCE QUOTATION PROVIDED IN THE
REGISTRATION STATEMENT
<TABLE>
<CAPTION>
ONE YEAR FIVE YEAR TEN YEAR
(1) TOTAL RETURN TOTAL RETURN TOTAL RETURN TOTAL RETURN
------------ ------------ ------------
<S> <C> <C> <C>
(A) INITIAL INVESTMENT $ 1,000.00 $ 1,000.00 $ 1,000.00
multiplied by x x x
0.96 0.96 0.96 0.96
less $15.00 - - -
less $.50 $ 15.00 $ 15.00 $ 15.00
equals - - -
NET INITIAL INVESTMENT $ 0.50 $ 0.50 $ 0.50
= = =
$ 944.50 $ 944.50 $ 944.50
(B) NET INITIAL INVESTMENT $ 944.50 $ 944.50 $ 944.50
divided by / / /
ACCUMULATION UNIT VALUE ON PURCHASE DATE $ 24.3329 $ 9.0938 $ 6.5142
equals = = =
NUMBER OF ACCUMULATION UNITS PURCHASED 38.82 103.86 144.99
(C) ACCUMULATION UNIT VALUE AT THE END OF TIME PERIOD $ 28.5519 $ 28.5519 $ 28.5519
multiplied by x x x
NUMBER OF ACCUMULATION UNITS PURCHASED 38.82 103.86 144.99
equals = = =
ENDING VALUE $ 1,108.38 $ 2,965.40 $ 4,139.74
(D) ENDING VALUE $ 1,108.38 $ 2,965.40 $ 4,139.74
minus - - -
INITIAL INVESTMENT $ 1,000.00 $ 1,000.00 $ 1,000.00
equals = = =
TOTAL DOLLAR RETURN $ 108.38 $ 1,965.40 $ 3,139.74
(E) TOTAL DOLLAR RETURN $ 108.38 $ 1,965.40 $ 3,139.74
divided by / / /
INITIAL INVESTMENT $ 1,000.00 $ 1,000.00 $ 1,000.00
multiplied by 100 x x x
equals 100 100 100
TOTAL RETURN FOR THE PERIOD EXPRESSED AS A PERCENTAGE = = =
10.84% 196.54% 313.97%
</TABLE>
(2) AVERAGE ANNUAL TOTAL RETURN
Average annual total return quotations for the one, five and ten year periods
ending 31-Dec-99 are computed using the formula below:
n
P ( 1 + T ) = ERV
Where P = a hypothetical initial investment of $1,000
T = average annual total return
n = number of years
ERV = ending value of a hypothetical $1,000 investment
as of the end of the one, five and ten year
periods computed in accordance with the formula
shown in (1) above.
Thus:
<TABLE>
<CAPTION>
ONE YEAR AVERAGE FIVE YEAR AVERAGE TEN YEAR AVERAGE
ANNUAL RETURN ANNUAL RETURN ANNUAL RETURN
<S> <C> <C>
1 5 10
$1,000 (1 + T)= $1,108.38 $1,000 (1 + T)= $2,965.40 $1,000 (1 + T) = $4,139.74
T = 10.84% T = 24.28% T = 15.26%
</TABLE>
<PAGE> 1
EXHIBIT 99
WILLIAM M. CAMERON ("WMC")/LYNDA L. CAMERON ("LLC")
Cameron Associates, Inc.
50% WMC; 50% LLC - OK
73-1533495
**Cameron Enterprises,
A Limited Partnership (Celp) - OK
73-1267299
<TABLE>
<S> <C> <C> <C> <C>
American Fidelity Corp. (AFC)
94.0% - NV 73-0966202
- --------------------------------------------------------------------------------------------------------------------------
Market Place *Security General Shade Works, LLC American Fidelity American Mortgage
Realty Corp. Life Ins. Co. (SGL) 16.67% - OK Assurance Co. (AFA) & Investment Co.
(MPRC) 100% - OK 73-1475654 100% - OK (AMICO)
100% - OK 73-0741925 73-0714500 98.7% - OK
73-1160212 NAIC #68691 NAIC #60410 73-1232134
Education - Concourse C, Inc. American Fidelity ASC Holding, L.L.C. American Fidelity
World.Com, Inc. 100% - OK Property Co. (AFPC) 75% - OK International
100% - OK 73-1575531 100% - OK 73-1528120 Holdings, Inc.
73-1505641 73-1290496 100% - OK
73-1421879
==========================================================================================================================
*American Fidelity Assurance Co. (AFA)
100% - OK
73-0714500
NAIC #60410
- --------------------------------------------------------------------------------------------------------------------------
AF Apartments, Inc. Senior Partners, LLC American Fidelity Balliet's, L.L.C. Apple Creek American Fidelity
100% - OK 50% - OK Securities, Inc. 75% - OK Apartments, Inc. Ltd. Agency, Inc.
73-1512985 73-1559624 (AFS) 73-1529608 100% - OK (AFLA)
100% - OK 73-1408485 100% - OK
73-0783902 73-1352430
==========================================================================================================================
Concourse C, Inc.
100% - OK
73-1575531
- --------------------------------------------------------------------------------------------------------------------------
EnrollCom, Inc Concourse Two, Inc Concourse Three, Inc
100% - OK 100% - OK 100% - OK
(Tax ID) (Tax ID (Tax ID
(applied for) (applied for) (applied for)
==========================================================================================================================
American Fidelity Property Co. (AFPC)
100% - OK
73-1290496
- --------------------------------------------------------------------------------------------------------------------------
Home Rentals, Inc. Western Partners, LLC
100% - OK 100% - OK
73-1364266 73-1544275
==========================================================================================================================
ASC Holding, L.L.C.
75% - OK
73-1528120
- --------------------------------------------------------------------------------------------------------------------------
InvesTrust, N.A. Asset Services Co., L.L.C.
100% - OK 100% - OK
73-1546867 73-1547246
==========================================================================================================================
American Fidelity International Holdings, Inc.
100% - OK
73-1421879
- --------------------------------------------------------------------------------------------------------------------------
American Fidelity American Fidelity
Offshore Investments, Ltd. Care, LLC
100% - Bermuda 33% - OK
NAIC #20400 73-1424864
Reg. #EC20754
==========================================================================================================================
Senior Partners, LLC
50% - OK
73-1559624
- --------------------------------------------------------------------------------------------------------------------------
Bordeaux, LLC Vineyard Cottages, LLC
75% - OK 66.7% - OK
73-1559626 73-1559625
==========================================================================================================================
American Fidelity Ltd. Agency, Inc. (AFLA)
100% - OK
73-1352430
- --------------------------------------------------------------------------------------------------------------------------
American Fidelity General Agency, Inc.
(AFGA) - 100% - OK
73-1352431
- --------------------------------------------------------------------------------------------------------------------------
American Fidelity General Agency of Alabama, Inc.
100% - AL
74-2945370
==========================================================================================================================
American Fidelity Offshore Investments, Ltd.
100% - Bermuda
NAIC #20400
Reg. #EC20754
- --------------------------------------------------------------------------------------------------------------------------
****American Fidelity ****Covenant ****Pacific World ****American Fidelity Mari El Development
(China), Ltd. Underwriters Holdings, Ltd. (Cypress) Ltd. Corporation Limited
93% - Bermuda (Bermuda) Ltd. 55% - Labuan 99% - Republic of 51.3% - Republic of
33.33% - Bermuda Cyprus Cyprus
Reg. #7035
- AFOI
==========================================================================================================================
****American Fidelity (Cypress) Ltd.
99% - Republic of
Cyprus
- --------------------------------------------------------------------------------------------------------------------------
****Soyuznik Insurance Co
34% - Russian Federation
</TABLE>
<PAGE> 2
WILLIAM M. CAMERON ("WMC")/LYNDA L. CAMERON ("LLC")
Cameron Associates, Inc.
50% WMC; 50% LLC - OK
73-1533495
**Cameron Enterprises,
A Limited Partnership (Celp) - OK
73-1267299
<TABLE>
<CAPTION>
==========================================================================================================================
<S> <C> <C> <C> <C>
CELP Ltd. Agency, Inc.
100% - OK
73-1369092
==========================================================================================================================
North American Ins. Agency, Inc. (NAIA)
91.5% - OK
73-0687265
- --------------------------------------------------------------------------------------------------------------------------
Shade Works, LLC Agar Ins. Agency, Inc. North American Ins. N.A.I.A. of Louisiana, Inc.
33.33% - OK 95.4% - OK Agency of Colorado, Inc. 100% - LA
73-1475654 73-0675989 100% - CO 72-0761691
84-0599059
North American North American North American N.A.I.A. Ins. Agency,
Insurance Agency of Ins. Agency of Ltd. Agency, Inc. Inc.
New Mexico, Inc. Tulsa, Inc. 100% - OK 100% - OK
100% - NM 100% - OK 73-1356772 73-1527682
85-0441542 73-0778755
==========================================================================================================================
</TABLE>
* Insurance Company
** A Limited Partnership
*** No tax or registration numbers
NOTE: All of the above organizations are corporations that have the word
Company, Inc., or Corp. The above organizations which have the
letters L.L.C. or L.C. are limited liability companies.
