A Message
From
The Chairman of the Board
and President of
AUL American Series Fund, Inc.
To Participants in AUL American Unit Trust
I am pleased to announce the opening of three new investment options for AUL's
retirement savings products. The AUL American Lifestyle Portfolios combine
equities, bonds and money market instruments to create portfolios with three
distinct levels of risk conservative, moderate, and aggressive. This allows you
to diversify your portfolio and simplify the decision making process.
In addition to announcing the new Lifestyle Portfolios, I would also like to
provide a brief recap of the economic environment and investment markets during
the last six months. The U.S. economy is exhibiting surprising strength despite
the opposing forces that exist. The Asian crisis worsened during the first half
of 1998 resulting in a decline in U.S. exports and an increase in inexpensive
imports. This created a great deal of pressure on U.S. corporate earnings and
resulted in an inventory build-up during the first quarter. In contrast, we
continue to experience the positive effects of low inflation and low nominal
interest rates. Another favorable development has been the amazing strength in
consumer spending right here at home. Consumers are benefiting from inexpensive
imports, low inflation, low mortgage rates and the wealth effect of a rising
stock market.
The stock market provided impressive returns during the first half of 1998, with
the average equity fund earning most of this return during the first quarter.
Second quarter returns were much more volatile as Asian concerns resurfaced.
Large capitalization companies continued to dominate the market as investors
searched for stability of earnings and liquidity.
Although bonds performed reasonably well in the first half of 1998, returns
still lagged the performance of the S&P 500 Index by a wide margin. Treasury
yields declined during the first half of the year with the biggest decrease
occurring in the longer maturities. The thirty year treasury bond yielded 5.63%
at the end of June, thirty basis points below the level at the beginning of the
year.
As we enter the second half of 1998, commonly used valuation measures suggest
that the stock market is expensive at current levels. It is expected that market
volatility will continue through the remainder of 1998 as investors closely
monitor economic and corporate earnings growth as well as the level of interest
rates. Bond performance will be dependent on interest rate movements and the
potential "flight to quality" in the event investors become concerned about the
stock market.
/s/James W. Murphy
James W. Murphy
Chairman of the Board of Directors and President
Indianapolis, Indiana
July 31, 1998
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AUL American Unit Trust
STATEMENTS OF NET ASSETS
June 30, 1998
(unaudited)
Series Fund Fidelity
--------------------------------------------------------- ----------
Equity Money Mkt Bond Managed Tact Asst High Inc
Assets:
Investments
at value $40,586,563 $7,764,124 $9,393,839 $26,859,883 $ 33,812 $16,837,197
Net Assets $40,586,563 $7,764,124 $9,393,839 $26,859,883 $ 33,812 $16,837,197
Units
out
standing 13,830,670 5,982,843 5,285,226 11,451,040 28,164 9,615,760
Accum
Unit Value $ 2.93 $ 1.30 $ 1.78 $ 2.35 $ 1.20 $ 1.75
The accompanying notes are an integral part of the financial statements.
3
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AUL American Unit Trust
STATEMENTS OF NET ASSETS (continued)
June 30, 1998
(unaudited)
Fidelity
---------------------------------------------------------------------
Growth Overseas Asset Mgr Index 500 Equity-Inc Contrafund
Assets:
Investments
at value $71,761,599 $17,044,828 $60,393,672 $64,588,321 $16,318,553 $23,567,794
Net
Assets $71,761,599 $17,044,828 $60,393,672 $64,588,321 $16,318,553 $23,567,794
Units
out
standing 29,135,985 9,694,432 34,097,950 24,211,147 8,496,167 10,928,539
Accum
Unit
Value $ 2.46 $ 1.76 $ 1.77 $ 2.67 $ 1.92 $ 2.16
The accompanying notes are an integral part of the financial statements.
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AUL American Unit Trust
STATEMENTS OF NET ASSETS (continued)
June 30, 1998
(unaudited)
American T. Rowe
Century Alger Calvert Price PBHG
----------- --------- --------- ---------- ---------------------
VP Capital American Social Mid- Equity Tech. &
Apprec. Growth Cap Growth Income Growth II Comm.
Assets:
Investments
at value $2,052,608 $28,686,361 $3,155,347 $30,861,793 $199,476 $195,116
Net
Assets $2,052,608 $28,686,361 $3,155,347 $30,861,793 $199,476 $195,116
Units
out
standing 1,746,860 12,980,816 1,603,565 15,803,547 170,981 169,302
Accum
Unit Value $ 1.18 $ 2.21 $ 1.97 $ 1.95 $ 1.17 $ 1.15
The accompanying notes are an integral part of the financial statements.
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AUL American Unit Trust
STATEMENTS OF NET ASSETS (continued)
June 30, 1998
(unaudited)
Janus Safeco
--------------------- ---------------------
Worldwide Flexible
Growth Income Equity Growth
Assets:
Investments
at value $6,553,870 $1,057,945 $702,021 $5,797,160
Net
Assets $6,553,870 $1,057,945 $702,021 $5,797,160
Units
out
standing 4,553,309 927,949 532,515 3,523,242
Accum
Unit Value $ 1.44 $ 1.14 $ 1.32 $ 1.65
The accompanying notes are an integral part of the financial statements.
6
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AUL American Unit Trust
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS
for the six months ended June 30, 1998 and 1997
(unaudited)
Series Fund
-------------------------------------------------------------------
Equity Money Market Bond
--------------------- --------------------- ---------------------
1998 1997 1998 1997 1998 1997
Operations:
Dividend
income $ 122,512 $ 192,068 $ 169,136 $ 129,177 $ 118,620 $ 190,487
Mortality
& expense
charges 233,474 152,860 43,576 32,462 55,702 46,342
Net
Investment
Income
(Loss) (110,962) 39,208 125,560 96,715 62,918 144,145
Gain(Loss) on Investments:
Net realized gain
(loss) 1,600,222 643,170 0 0 (1,319) 32,487
Net change in
unrealized gain
(loss) 1,543,605 3,068,273 0 0 230,734 (20,766)
Net Gain
(Loss) 3,143,827 3,711,443 0 0 229,415 11,721
Increase (Decrease)
in Net Assets from
Oper. 3,032,865 3,750,651 125,560 96,715 292,333 155,866
Contract Owner Transactions:
Proceeds from units
sold 7,064,375 4,063,825 19,480,408 14,786,100 3,560,523 1,147,101
Cost of units
redeemed (3,465,783) (2,120,912)(19,191,575)(13,597,922) (2,949,934) (892,888)
Increase
(Decrease) 3,598,592 1,942,913 288,833 1,188,178 610,589 254,213
Net increase
(decrease) 6,631,457 5,693,564 414,393 1,284,893 902,922 410,079
Net Assets,
beginning 33,955,106 22,318,068 7,349,731 4,836,248 8,490,917 7,327,011
Net Assets,
ending $40,586,563 $28,011,632 $7,764,124 $6,121,141 $9,393,839 $7,737,090
Units sold 2,445,363 1,823,499 15,125,090 11,913,470 2,028,974 720,241
Units
redeemed (1,200,729) (955,044)(14,906,680)(10,955,874) (1,681,176) (564,899)
Net increase
(decrease) 1,244,634 868,455 218,410 957,596 347,798 155,342
Units outstanding,
beginning 12,586,036 10,589,355 5,764,433 3,931,272 4,937,428 4,535,171
Units outstanding,
ending 13,830,670 11,457,810 5,982,843 4,888,868 5,285,226 4,690,513
The accompanying notes are an integral part of the financial statements.
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AUL American Unit Trust
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS (continued)
for the six months ended June 30, 1998 and 1997
(unaudited)
Series Fund Fidelity
-------------------------------------------- ---------------------
Managed Tactical Asset High Income
--------------------- --------------------- ---------------------
1998 1997 1998 1997(1) 1998 1997
Operations:
Dividend
income $ 186,479 $ 319,126 $ 4 $ 0 $ 1,597,595 $ 796,755
Mortality
& expense
charges 158,680 121,456 49 0 93,564 67,020
Net
Investment
Income
(Loss) 27,799 197,670 (45) 0 1,504,031 729,735
Gain (Loss) on Investments:
Net realized gain
(loss) 705,160 249,564 13 0 271,586 153,207
Net change in
unrealized gain
(loss) 897,320 1,526,362 (50) 4 (1,203,579) (131,645)
Net Gain
(Loss) 1,602,480 1,775,926 (37) 4 (931,993) 21,562
Increase (Decrease)
in Net Assets from
Oper. 1,630,279 1,973,596 (82) 4 572,038 751,297
Contract Owner Transactions:
Proceeds from units
sold 3,904,859 2,217,008 33,913 100 5,551,175 2,406,760
Cost of units
redeemed (2,440,555) (1,559,168) (131) 0 (2,827,903) (1,109,893)
Increase
(Decrease) 1,464,304 657,840 33,782 100 2,723,272 1,296,867
Net increase
(decrease) 3,094,583 2,631,436 33,700 104 3,295,310 2,048,164
Net Assets,
beginning 23,765,300 18,542,385 112 0 13,541,887 9,663,097
Net Assets,
ending $26,859,883 $21,173,821 $ 33,812 $ 104 $16,837,197 $11,711,261
Units sold 1,706,804 1,163,145 28,174 100 3,177,218 1,624,446
Units
redeemed (1,072,088) (822,425) (10) 0 (1,614,790) (741,328)
Net increase
(decrease) 634,716 340,720 28,164 100 1,562,428 883,118
Units outstanding,
beginning 10,816,324 10,087,186 0 0 8,053,332 6,679,227
Units outstanding,
ending 11,451,040 10,427,906 28,164 100 9,615,760 7,562,345
(1) for the Period from May 1, 1997 to June 30, 1997.
The accompanying notes are an integral part of the financial statements.
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AUL American Unit Trust
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS (continued)
for the six months ended June 30, 1998 and 1997
(unaudited)
Fidelity
-------------------------------------------------------------------
Growth Overseas Asset Manager
--------------------- --------------------- ---------------------
1998 1997 1998 1997 1998 1997
Operations:
Dividend
income $ 7,725,638 $ 1,439,710 $ 1,119,663 $ 1,001,818 $ 6,424,997 $4,572,177
Mortality
& expense
charges 388,889 261,517 100,004 78,265 341,872 249,781
Net
Investment
Income
(Loss) 7,336,749 1,178,193 1,019,659 923,553 6,083,125 4,322,396
Gain (Loss) on Investments:
Net realized gain
(loss) 1,579,066 1,445,452 454,946 524,569 720,769 440,935
Net change in
unrealized gain
(loss) 1,595,887 2,744,107 761,669 501,094 (2,344,437) (654,330)
Net Gain
(Loss) 3,174,953 4,189,559 1,216,615 1,025,663 (1,623,668) (213,395)
Increase (Decrease)
in Net Assets from
Oper. 10,511,702 5,367,752 2,236,274 1,949,216 4,459,457 4,109,001
Contract Owner Transactions:
Proceeds from units
sold 13,980,110 9,090,720 11,882,460 6,912,883 9,607,219 6,298,147
Cost of units
redeemed (7,849,191) (5,682,771)(11,277,918) (5,598,961) (3,965,214)(3,043,703)
Increase
(Decrease) 6,130,919 3,407,949 604,542 1,313,922 5,642,005 3,254,444
Net increase
(decrease)16,642,621 8,775,701 2,840,816 3,263,138 10,101,462 7,363,445
Net Assets,
beginning 55,118,978 38,471,516 14,204,012 11,408,246 50,292,210 36,766,256
Net Assets,
ending $71,761,599 $47,247,217 $17,044,828 $14,671,384 $60,393,672 44,129,701
Units sold 6,099,218 5,126,880 6,953,107 4,710,220 5,591,158 4,430,111
Units
redeemed (3,456,609) (3,204,937) (6,567,225) (3,801,504) (2,325,135)(2,128,273)
Net increase
(decrease) 2,642,609 1,921,943 385,882 908,716 3,266,023 2,301,838
Units outstanding,
beginning 26,493,376 22,560,070 9,308,550 8,245,189 30,831,927 26,868,078
Units outstanding,
ending 29,135,985 24,482,013 9,694,432 9,153,905 34,097,950 29,169,916
The accompanying notes are an integral part of the financial statements.
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AUL American Unit Trust
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS (continued)
for the six months ended June 30, 1998 and 1997
(unaudited)
Fidelity
-------------------------------------------------------------------
Index 500 Equity-Income Contrafund
-------------------------------------------------------------------
1998 1997 1998 1997 1998 1997
Operations:
Dividend
income $ 1,715,646 $ 653,527 $ 807,143 $ 626,460 $ 1,001,436 $ 231,986
Mortality
& expense
charges 323,084 142,850 88,800 44,138 122,866 57,165
Net Investment Income
(Loss) 1,392,562 510,677 718,343 582,322 878,570 174,821
Gain (Loss) on Investments:
Net realized gain
(loss) 2,307,962 1,321,811 287,901 55,534 591,893 201,525
Net change in
unrealized gain
(loss) 4,036,542 2,331,128 265,914 447,696 1,428,458 707,142
Net Gain
(Loss) 6,344,504 3,652,939 553,815 503,230 2,020,351 908,667
Increase (Decrease)
in Net Assets from
Oper. 7,737,066 4,163,616 1,272,158 1,085,552 2,898,921 1,083,488
Contract Owner Transactions:
Proceeds from units
sold 23,283,943 15,015,717 4,157,141 2,419,402 5,902,890 4,714,480
Cost of units
redeemed (8,436,180) (6,831,520) (1,288,651) (697,488) (1,902,223)(1,130,238)
Increase
(Decrease 14,847,763 8,184,197 2,868,490 1,721,914 4,000,667 3,584,242
Net increase
(decrease)22,584,829 12,347,813 4,140,648 2,807,466 6,899,588 4,667,730
Net Assets,
beginning 42,003,492 17,165,451 12,177,905 5,858,153 16,668,206 7,059,625
Net Assets,
ending $ 64,588,321 $29,513,264 $16,318,553 $ 8,665,619 $23,567,794 11,727,355
Units sold 9,193,249 7,948,068 2,227,241 1,647,369 2,914,636 3,035,990
Units
redeemed (3,356,835) (3,626,448) (690,749) (467,847) (951,720) (720,252)
Net increase
(decrease) 5,836,414 4,321,620 1,536,492 1,179,522 1,962,916 2,315,738
Units outstanding,
beginning 18,374,733 9,841,199 6,959,675 4,243,459 8,965,623 4,656,175
Units outstanding,
ending 24,211,147 14,162,819 8,496,167 5,422,981 10,928,539 6,971,913
The accompanying notes are an integral part of the financial statements.
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AUL American Unit Trust
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS (continued)
for the six months ended June 30, 1998 and 1997
(unaudited)
American Century Alger Calvert
--------------------- --------------------- ---------------------
VP Capital Social Mid-Cap
Appreciation American Growth Growth
--------------------- --------------------- ---------------------
1998 1997 1998 1997 1998 1997
Operations:
Dividend
income $ 108,260 $ 44,837 $ 4,116,684 $ 123,940 $ 0 $ 0
Mortality
& expense
charges 13,741 12,761 145,134 72,541 14,811 7,385
Net Investment Income
(Loss) 94,519 32,076 3,971,550 51,399 (14,811) (7,385)
Gain (Loss) on Investments:
Net realized gain
(loss) (82,679) (205,940) 1,036,955 660,936 202,755 61,706
Net change in
unrealized gain
(loss) 228 58,500 481,084 1,036,243 200,406 53,458
Net Gain
(Loss) (82,451) (147,440) 1,518,039 1,697,179 403,161 115,164
Increase (Decrease)
in Net Assets from
Oper. 12,068 (115,364) 5,489,589 1,748,578 388,350 107,779
Contract Owner Transactions:
Proceeds from units
sold 590,091 646,561 9,028,596 8,436,920 4,727,290 2,252,075
Cost of units
redeemed (859,251) (646,991) (4,947,882) (5,341,870) (3,715,337)(2,322,334)
Increase
(Decrease) (269,160) (430) 4,080,714 3,095,050 1,011,953 (70,259)
Net increase
(decrease) (257,092) (115,794) 9,570,303 4,843,628 1,400,303 37,520
Net Assets,
beginning 2,309,700 2,189,442 19,116,058 9,407,497 1,755,044 1,302,913
Net Assets,
ending $ 2,052,608 $2,073,648 $28,686,361 $14,251,125 $ 3,155,347 $1,340,433
Units sold 497,477 564,332 4,607,753 5,662,898 2,509,504 1,631,154
Units
redeemed (720,746) (588,448) (2,547,342) (3,585,552) (1,976,476)(1,689,190)
Net increase
(decrease) (223,269) (24,116) 2,060,411 2,077,346 533,028 (58,036)
Units outstanding,
beginning 1,970,129 1,785,854 10,920,405 6,674,992 1,070,537 970,440
Units outstanding,
ending 1,746,860 1,761,738 12,980,816 8,752,338 1,603,565 912,404
The accompanying notes are an integral part of the financial statements.
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AUL American Unit Trust
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS (continued)
for the six months ended June 30, 1998 and 1997
(unaudited)
T. Rowe Price PBHG
--------------------- --------------------------------------------
Technology &
Equity Income Growth II Communications
--------------------- --------------------- ---------------------
1998 1997 1998 1997(1) 1998 1997(1)
Operations:
Dividend
income $ 340,615 $ 179,073 $ 0 $ 0 $ 0 $ 0
Mortality
& expense
charges 161,908 59,499 803 1 870 0
Net Investment Income
(Loss 178,707 119,574 (803) (1) (870) 0
Gain (Loss) on Investments:
Net realized gain
(loss) 652,710 111,590 23 (9) (732) 0
Net change in
unrealized gain
(loss) 394,570 1,091,271 12,408 (1) 21,281 5
Net Gain
(Loss) 1,047,280 1,202,861 12,431 (10) 20,549 5
Increase (Decrease)
in Net Assets from
Oper. 1,225,987 1,322,435 11,628 (11) 19,679 5
Contract Owner Transactions:
Proceeds from units
sold 10,306,650 6,579,523 128,473 4,779 172,030 183
Cost of units
redeemed (2,196,970) (628,892) (2,970) (2,276) (101,504) 0
Increase
(Decrease) 8,109,680 5,950,631 125,503 2,503 70,526 183
Net increase
(decrease) 9,335,667 7,273,066 137,131 2,492 90,205 188
Net Assets,
beginning 21,526,126 6,185,542 62,345 0 104,911 0
Net Assets,
ending $30,861,793 $13,458,608 $ 199,476 $ 2,492 $ 195,116 $ 188
Units sold 5,289,684 4,274,380 115,109 4,585 156,033 182
Units
redeemed (1,132,819) (409,482) (2,633) (2,196) (88,316) 0
Net increase
(decrease) 4,156,865 3,864,898 112,476 2,389 67,717 182
Units outstanding,
beginning 11,646,682 4,259,154 58,505 0 101,585 0
Units outstanding,
ending 15,803,547 8,124,052 170,981 2,389 169,302 182
(1) for the Period from May 1, 1997 to June 30, 1997.
The accompanying notes are an integral part of the financial statements.
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AUL American Unit Trust
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS (continued)
for the six months ended June 30, 1998 and 1997
(unaudited)
Janus Safeco
-------------------------------------------- ---------------------
Worldwide Flexible
Growth Income Equity
--------------------- --------------------- ---------------------
1998 1997(1) 1998 1997(1) 1998 1997(1)
Operations:
Dividend
income $ 219,784 $ 590 $ 39,393 $ 4 $ 0 $ 0
Mortality
& expense
charges 25,228 21 3,804 1 2,483 0
Net Investment Income
(Loss) 194,556 569 35,589 3 (2,483) 0
Gain (Loss) on Investments:
Net realized gain
(loss) 56,897 12 2,174 (8) 437 0
Net change in
unrealized gain
(loss) 614,278 (56) (8,947) (4) 43,810 11
Net Gain
(Loss 671,175 (44) (6,773) (12) 44,247 11
Increase (Decrease)
in Net Assets from
Oper. 865,731 525 28,816 (9) 41,764 11
Contract Owner Transactions:
Proceeds from units
sold 3,662,629 60,782 757,839 2,391 454,825 100
Cost of units
redeemed (402,290) (5) (42,367) (2,282) (10,691) 0
Increase
(Decrease) 3,260,339 60,777 715,472 109 444,134 100
Net increase
(decrease) 4,126,070 61,302 744,288 100 485,898 111
Net Assets,
beginning 2,427,800 0 313,657 0 216,123 0
Net Assets,
ending $ 6,553,870 $ 61,302 $ 1,057,945 $ 100 $ 702,021 $ 111
Units sold 2,716,913 54,884 676,226 2,332 354,819 102
Units
redeemed (289,976) (4) (37,631) (2,234) (8,394) 0
Net increase
(decrease) 2,426,937 54,880 638,595 98 346,425 102
Units outstanding,
beginning 2,126,372 0 289,354 0 186,090 0
Units outstanding,
ending 4,553,309 54,880 927,949 98 532,515 102
(1) for the Period from May 1, 1997 to June 30, 1997.
The accompanying notes are an integral part of the financial statements.
13
<PAGE>
AUL American Unit Trust
STATEMENTS OF OPERATIONS AND CHANGES IN NET ASSETS (continued)
for the six months ended June 30, 1998 and 1997
(unaudited)
Safeco
-----------------------
Growth
-----------------------
1998 1997(1)
Operations:
Dividend
income $ 0 $ 0
Mortality
& expense
charges 20,976 2
Net Investment Income
(Loss) (20,976) (2)
Gain (Loss) on Investments:
Net realized gain
(loss) 20,223 33
Net change in
unrealized gain
(loss) 317,971 106
Net Gain
(Loss) 338,194 139
Increase (Decrease)
in Net Assets from
Oper. 317,218 137
Contract Owner Transactions:
Proceeds from units
sold 4,343,588 5,490
Cost of units
redeemed (368,951) (1,675)
Increase
(Decrease) 3,974,637 3,815
Net increase
(decrease) 4,291,855 3,952
Net Assets,
beginning 1,505,305 0
Net Assets,
ending $ 5,797,160 $ 3,952
Units sold 2,679,871 4,949
Units
redeemed (225,784) (1,493)
Net increase
(decrease) 2,454,087 3,456
Units outstanding,
beginning 1,069,155 0
Units outstanding,
ending 3,523,242 3,456
(1) for the Period from May 1, 1997 to June 30, 1997.
The accompanying notes are an integral part of the financial statements.
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16
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notes to financial statements
1. Summary of Significant Accounting Policies
The AUL American Unit Trust (Variable Account) was established by American
United Life Insurance Company (AUL) on August 17, 1989, under procedures
established by Indiana law and is registered as a unit investment trust under
the Investment Company Act of 1940, as amended. The Variable Account is a
segregated investment account of AUL and invests exclusively in shares of mutual
fund portfolios offered by the AUL American Series Fund, Inc. (Series Fund),
Fidelity Investments Variable Insurance Products Fund and Variable Insurance
Products Fund II(Fidelity), American Century Variable Portfolios, Inc. (American
Century), Acacia Capital Corporation (Calvert), T. Rowe Price Equity Series,
Inc. (T. Rowe Price), PBHG Insurance Series Fund, Inc. (PBHG), Janus Aspen
Series (Janus), and Safeco Resource Series Trust (Safeco).
Security Valuation, Transactions and Related Investment Income
The market value of investments is based on the closing bid prices at June 30,
1998. Investment transactions are accounted for on the trade date and dividend
income is recorded on the ex-dividend date. Mortality and Expense Risks Charges
AUL deducts a daily charge as compensation for the mortality and expense risks
assumed by AUL. The charge is equal on an annual basis to 1.25% of the average
daily net assets of each investment account. AUL guarantees that the mortality
and expense charge shall not increase. The charges incurred during the six
months ended June 30, 1998 and 1997, were $2,340,317 and $1,406,067,
respectively.
Taxes
Operations of the Variable Account are part of, and are taxed with, the
operations of AUL, which is taxed as a "life insurance company" under the
Internal Revenue Code. Under current law, investment income, including realized
and unrealized capital gains of the investment accounts, is not taxed to AUL to
the extent it is applied to increase reserves under the contracts. The Variable
Account has not been charged for federal and state income taxes since none have
been imposed.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increases and decreases in net assets from operations
during the reporting period. Actual results could differ from those estimates.
AUl American Lifestyle Portfolios
The Conservative, Moderate, and Aggressive portfolios, were added to the
Variable Account on May 1, 1998. The portfolios had no activity during the
period ended June 30, 1998, and are not included in the financial statements.
The accumulation unit values of the investment options are provided in Note 3 to
the financial statements.
2. Account Charges
AUL may assess a premium tax charge based on premium taxes incurred. Premium
taxes currently range between 0% and 3.5%, but are subject to change by
governmental entities. AUL deducts an annual administrative charge from each
participant's account which may not exceed the lesser of 0.5% of the
participant's account value or $7.50 per quarter. The charge is assessed every
quarter on a participant account if it is in effect on the quarterly contract
anniversary, and the charge is assessed only during the accumulation period. The
charges incurred during the six months ended June 30, 1998 and 1997, were
$132,503 and $173,130, respectively.
17
<PAGE>
notes to financial statements (continued)
2. Account Charges (continued)
AUL may assess a withdrawal charge on withdrawals that exceed 10% of the
participant's account value as of the last contract anniversary preceding the
request for the withdrawal. However, the contract owner has a right to a full
refund of the contributions made under a contract for any reason within ten days
of original contract purchase. The amount of the withdrawal charge depends upon
the number of account years the participant's account has been in existence, as
follows:
Account Year Withdrawal Charge
------------ -----------------
1 - 5 8%
6 - 10 4%
11 or more 0%
The aggregrate withdrawal charges will not exceed 9% of the contributions made
by or on behalf of a participant under a contract. The charges incurred during
the six months ended June 30, 1998 and 1997, were $157,063 and $90,541,
respectively.
3. Accumulation Unit Value
The change in the Accumulation Unit Value per unit for the six months ended June
30, 1998, or from inception of operation, May 1, 1998, through June 30, 1998,
is:
6/30/98 12/31/97 Change
-------- --------- -------
Series Fund:
Equity $ 2.933454 $ 2.696745 8.8%
Money Market 1.297616 1.274444 1.8%
Bond 1.777722 1.719983 3.4%
Managed 2.343370 2.194762 6.8%
Tactical 1.200471 1.110125 8.1%
Fidelity:
High Income 1.750726 1.680960 4.2%
Growth 2.461964 2.079525 18.4%
Overseas 1.756431 1.524164 15.2%
Asset Manager 1.770608 1.630253 8.6%
Index 500 2.666500 2.284968 16.7%
Equity Income 1.918468 1.746514 9.8%
Contrafund 2.156381 1.858720 16.0%
American Century:
VP Capital
Appreciation 1.173646 1.170649 0.3%
Alger:
American Growth 2.209658 1.750190 26.3%
Calvert:
Social Mid-Cap
Growth 1.967434 1.638970 20.0%
T. Rowe Price:
Equity Income 1.952635 1.847792 5.7%
PBHG:
Growth II 1.166877 1.066050 9.5%
Technology &
Communications 1.152096 1.032340 11.6%
18
<PAGE>
notes to financial statements (continued)
3. Accumulation Unit Value (continued)
6/30/98 12/31/97 Change
-------- -------- ------
Janus:
Worldwide Growth 1.439257 1.141625 26.1%
Flexible Income 1.140063 1.083840 5.2%
Safeco:
Equity 1.318015 1.160728 13.6%
Growth 1.645364 1.407808 16.9%
6/30/98 05/1/98 Change
-------- -------- ------
Series Fund:
Conservative 1.009450 1.002758 0.7%
Moderate 1.008657 1.003655 0.5%
Aggressive 1.008744 1.004549 0.4%
4. Cost of Investments
The cost of Investments at June 30, 1998, is:
Series Fund:
Equity $30,767,649
Money Market 7,764,124
Bond 9,240,647
Managed 21,923,564
Tactical 33,858
Conservative 0
Moderate 0
Aggressive 0
Fidelity:
High Income 16,643,957
Growth 61,290,703
Overseas 16,403,706
Asset Manager 55,376,219
Index 500 55,601,756
Equity Income 14,399,274
Contrafund 19,720,654
American Century:
VP Capital Apprec 2,183,628
Alger:
American Growth 26,853,501
Calvert:
Soc. Mid-Cap Grth 3,090,691
T. Rowe Price:
Equity Income 28,163,824
PBHG:
Growth II 188,942
Tech & Comm 187,385
Janus:
Worldwide Growth 5,950,429
Flexible Income 1,070,729
Safeco:
Equity 668,791
Growth 5,659,669
19
<PAGE>
notes to financial statements (continued)
5. Net Assets
Net Assets at June 30, 1998, are:
Series Fund Fidelity
---------------------------------------------------------- ----------
Equity Money Mkt Bond Managed Tac. Asset High Inc
Proceeds
from units
sold $40,808,658 $82,326,713 $15,975,907 $28,583,180 $ 34,012 $22,021,029
Cost of units
redeemed(16,517,883)(75,142,069) (8,137,718)(11,317,719) (131) (9,134,984)
Net investment
income
(loss) 1,583,333 579,480 1,395,944 2,842,560 (36) 2,883,102
Net realized
gain
(loss) 4,893,541 0 6,514 1,815,543 13 874,810
Unrealized
gain
(loss) 9,818,914 0 153,192 4,936,319 (46) 193,240
---------- --------- --------- ---------- ------- ----------
$40,586,563 $ 7,764,124 $ 9,393,839 $26,859,883 $ 33,812 $16,837,197
Fidelity
----------------------------------------------------------------------
Growth Overseas Asset Mgr Index 500 Eqty-Inc Contrafund
Proceeds
from units
sold $76,814,424 $47,448,762 $63,119,279 $76,110,684 $16,187,221 $22,963,450
Cost of
units
redeemed(32,666,240)(35,496,166)(21,467,065)(29,794,906) (3,588,057) (5,420,078)
Net investment
income
(loss) 9,448,916 1,849,834 11,956,140 1,805,592 1,254,445 935,740
Net realized
gain
(loss) 7,693,603 2,601,276 1,767,865 7,480,386 545,665 1,241,542
Unrealized
gain
(loss) 10,470,896 641,122 5,017,453 8,986,565 1,919,279 3,847,140
---------- ---------- ---------- ---------- ---------- ----------
$71,761,599 $17,044,828 $60,393,672 $64,588,321 $16,318,553 $23,567,794
American T. Rowe
Century Alger Calvert Price PBHG
---------- ---------- ---------- ---------- --------------------
VP Capital American Soc Mid-Cap Tech &
Apprec. Growth Growth Eqty Inc Growth II Comm.
---------- ---------- ---------- ---------- --------------------
Proceeds
from units
sold $ 4,590,129 $39,879,642 $17,091,375 $30,952,389 $ 214,941 $ 290,461
Cost of
units
redeemed (2,404,840)(20,037,936)(14,630,081) (5,061,102) (24,593) (101,523)
Net investment
income
(loss) 242,619 3,963,309 147,347 1,078,693 (1,089) (1,284)
Net realized
gain
(loss) (244,280) 3,048,486 482,050 1,193,844 (317) (269)
Unrealized
gain
(loss) (131,020) 1,832,860 64,656 2,697,969 10,534 7,731
--------- ---------- --------- ---------- --------- ---------
$ 2,052,608 $28,686,361 $ 3,155,347 $30,861,793 $ 199,476 $ 195,116
Janus Safeco
---------------------- ----------------------
Worldwide Flexible
Growth Income Equity Growth
Proceeds
from units
sold $ 6,223,280 $ 1,168,113 $ 667,528 $ 6,385,169
Cost of
units
redeemed (524,117) (145,023) (11,581) (1,011,508)
Net investment
income
(loss) 191,669 42,565 12,534 216,142
Net realized
gain
(loss) 59,597 5,074 310 69,866
Unrealized
gain
(loss) 603,441 (12,784) 33,230 137,491
--------- --------- -------- ---------
$ 6,553,870 $ 1,057,945 $ 702,021 $ 5,797,160
20
